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Wednesday, May 14, 2014 10:29 PM


Chicago Mayor Rahm Emanuel Reverses Course, Now in Support of Massive Tax Hikes and Non-Reforms; Approval Rating Plunges


Those who thought Mayor Rahm Emanuel would bring change to the city of Chicago thought wrong.  As with president Obama, people in Chicago believed in change, but all they got was promises, lies, and the status quo.

Thus it should be no surprise that Rahm Emanuel's Reelection Bid Is Not Looking So Hot Right Now.

Conducted on Wednesday by McKeon & Associates for the Chicago Sun-Times' Early & Often page, the survey found that only 29 percent of Chicago voters would support Emanuel if the mayoral election were held today. The results also showed that only one in five Chicago voters believe Emanuel is doing a better job than his predecessor, former Mayor Richard M. Daley.

“Right now, Rahm is not connecting," McKeon said, according to the Sun-Times report. "If he doesn’t do that, he’s gonna lose."

Back in February 2011, Emanuel easily ousted five rivals with 55 percent of the vote, avoiding a runoff by earning the simple majority. By August 2013, a Crain/Ipsos poll showed Emanuel's approval rating had dipped to a point where only two percent of Chicagoans strongly supported his job performance.
Backtracking on Tax Hikes and Reforms

Ted Dabrowski at the Illinois Policy Institute has some interesting facts on Emanuel's flip-flop on taxes and pension reform. Via email, Dabrowski writes ...
In 2012, Mayor Rahm Emanuel traveled to Springfield to call for Chicago pension reforms. Testifying at the Statehouse is a rare move for a Chicago mayor.

Emanuel’s proposal included raising the retirement age for city workers and freezing cost-of-living adjustments for retirees. He also wanted 401(k)-style retirement plans for new employees, which would have provided more retirement options for city workers.

Emanuel cautioned that without these reforms, "Chicago's economy and the quality of life will falter."

Two years later, that Rahm Emanuel and those reform proposals are gone.

Now, Emanuel’s recently released pension “fix” for the city’s municipal workers and laborers has almost no elements of reform. Instead, it relies heavily on property-tax hikes and increased worker contributions to keep the collapsing systems from going bankrupt.

The plan calls for a five-year, $750 million property tax increase on Chicagoans.

But what Emanuel and supporters of the plan don’t tell you is how much more in property tax increases they’ll call for to bail out the city’s other pension funds. Both the city and Chicago Public Schools face $1 billion operating shortfalls, and neither seems willing to take on spending reforms.

The teachers’ pension fund alone is roughly the same size as the municipal and laborers’ pension funds combined. If the politicians stick with their same fix, Chicago taxpayers could expect another tax hike similar to the one already proposed.

Police and firefighter pensions, the worst funded of the lot, might need half as much.

Don’t forget about the park district and transit pension funds.

Is this the Rahm/Madigan plan? Both politicians roll out their fixes and tax hikes in doses so that no one can figure out how much it will all cost.

City workers aren’t spared, either. They, too, are being asked to put more money into a system that is collapsing. Under Emanuel’s plan, laborers and municipal workers will contribute 30% more toward their pensions once the increase is phased in.

The problem with the Rahm/Madigan plan is that it does nothing to solve the actual crisis. They just use more tax hikes and employee contributions to prop up a failed defined-benefit system run by the same politicians who bankrupted it in the first place.

Sadly, many in the press and the political elite think the city can get away with another round of fake reforms. They refuse to see that politicians are just throwing more good money after bad plans.

The bottom line is politicians control pensions, and they’ve run them into the ground. It’s time to take that control away and put it where it belongs – with the workers.

We have a new reform plan for Chicago that picks up where the 2012 Rahm Emanuel left off. It gives workers control over their own retirements, and makes the tough choices necessary to bring about real retirement security for city workers.

It also does what Emanuel’s current plan doesn’t do. It aims to end the city’s crisis and to preserve Chicago’s status as a world-class city.

Ted Dabrowski
Radical Change Needed

I am not a huge cheering fan of the Illinois Policy Institute's proposal, but it does have a couple of things going for it:

  1. It is a pragmatic proposal
  2. It has a better chance of passing than the radical approach I think is necessary

The operative word in the above bullet point list is "better". Don't take that to mean good.

In all likelihood, Chicago will keep hiking taxes, people will flee, the tax base will shrink, another recession will hit, and the next liar will come along with promises of reform and not deliver.

Failure to Deliver Not Surprising

That Emanuel failed to deliver is hardly surprising. Promises of reform are nearly always lies.

Sadly, Emanuel was actually the better of the two choices in the last election. My fear is the choices in the next election will be even worse.

Unless and until someone is willing and able to actually stand up to Chicago unions, more of the same kind of lies and backtracking is in store. Ultimately, Chicago's financial mess blows up in bankruptcy court, just as happened in Detroit.

Certainly the city of Chicago looks better than Detroit and has far better services, pay, and demographics. Chicago is a beautiful, vibrant-appearing city. Yet, outward appearances are deceiving. beneath the surface things are not so pretty. Chicago is on the verge of bankruptcy unless there is serious pension and work-rule reform now, not four elections from now.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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