budget deficits
Motorola CEO: Illinois ‘Asleep At The Switch, And The Day Of Reckoning Will Come’
You know the state of Illinois has real fiscal challenges when a member of the U.S. President’s Management Advisory Board (PMAB) says that’s the case. Greg Brown, President and CEO of Schaumburg-based Motorola Solutions, spoke to Crain’s Chicago Business last week and said the following about his company’s relationship to the Midwestern state:
Illinois remains front and center for us for a variety of reasons: incumbency, skills that are resident, our existing footprint. It’s Illinois’ to lose, but Illinois is on a path to lose it. The state of Illinois is asleep at the switch, and the day of reckoning will come. You can’t have the state’s fiscal house being what it is and be able to attract capital. If Illinois kicks the can and stays in a four-corner offense, then capital will move out of state, including ours. I’ve had governors of Florida and Michigan proactively call me and say: “Would you consider moving a division, opening a plant? Would you consider moving R&D here? Would you deploy a sales division here?” Illinois doesn’t think like that. It needs a complete overhaul. It needs to happen soon.
Judging by the continued inaction in Springfield (seat of Illinois government) on issues of significant fiscal importance to the state and its 12.9 million residents, something tells me that can will keep being kicked down the road until the “day of reckoning” Brown talked about finally arrives.
In the meantime, the State of Illinois continues to languish.
Consider what Ted Dabrowski, Vice President of Policy at the Illinois Policy Institute, wrote back on November 28 on the organization’s website:
Today, Illinois still has more than $9 billion in unpaid bills. The Legislature continues to run structural deficits, appropriating more funds than the revenues it receives. The state’s pension systems are more than $200 billion in the hole and facing insolvency. And the state has been downgraded 10 times by the three major rating agencies since Gov. Quinn took office.
I am truly concerned about what lies in store for the “Land of Lincoln” going forward.
Sources:
Pletz, John. “Motorola’s CEO on taxes, tablets and why Illinois is dying.” Crain’s Chicago Business. 24 Dec. 2012. (http://www.chicagobusiness.com/article/20121222/ISSUE01/312229987/motorolas-ceo-on-taxes-tablets-and-why-illinois-is-dying). 26 Dec. 2012.
Dabrowski, Ted. “Forget reform: Illinois legislators want to borrow $4 billion.” Illinois Policy Institute. 28 Nov. 2012. (http://illinoispolicy.org/blog/blog.asp?ArticleSource=5283). 26 Dec. 2012.
Best- And Worst-Run U.S. States In 2012
New York City-based financial news and opinion organization 24/7 Wall St. has just released their 2012 list of best- and worst-run states in America. While they ranked all 50 based on financial health, standard of living, and government services data, 24/7 Wall St. declared the top 5 best-run states to be:
1. North Dakota
2. Wyoming
3. Nebraska
4. Utah
5. Iowa
The top 5 worst-run states are:
1. California
2. Rhode Island
3. Illinois
4. Arizona
5. New Jersey
Last November, 24/7 Wall St. named Illinois the 2nd worst-run state in America. Up to 3rd this year? High-fives all around the “Land of Lincoln” today. Here’s what 24/7 Wall St. had to say about Illinois this year:
48. Illinois
> Debt per capita: $4,790 (11th highest)
> Budget deficit: 40.2% (2nd largest)
> Unemployment: 9.8% (tied-10th highest)
> Median household income: $53,234 (18th highest)
> Pct. below poverty line: 15.0% (25th highest)Although many states have budget issues, Illinois’ faces among the biggest problems. In 2010, the state’s budget shortfall was more than 40% of its general fund, the second-highest of any state. Both S&P and Moody’s gave Illinois credit ratings that were the second-worst of all states. In addition, the state only funded 45% of its pension liability in 2010, the lowest percentage of any state. Governor Patrick Quinn has made the now-$85 billion pension gap a top priority for the new legislative session beginning in January.
“$85 billion pension gap.” Make that $96.8 billion last I heard.
And as for Wisconsin, where I plan on moving to in a couple of years? 24/7 Wall St. ranked the “Badger State” the 21st best-run state in America this year- down from 16th in 2011.
You can find out where 24/7 Wall St. ranked your state this year by going here on their website.
2012 Election Thoughts
For months now I’ve been saying to those people closest to me that Barack Obama will be reelected as President of the United States of America. Granted, last week I did mention to my girlfriend that Mitt Romney might have a shot at the White House based on analysis done by FOX News and Glenn Beck’s The Blaze TV (these two media outlets need to win back any confidence I had in them as a result). Now that Election Day has come and gone, here are some thoughts about the whole spectacle.
The main reason I kept saying Obama would get reelected as President was that the votes were already “bought and paid for.” A lot of Americans receive government benefits (49.1 percent of Americans lived in a household where at least one member of the family received such benefits in 2011, according to the Wall Street Journal earlier this year). The Obama administration has demonstrated these past four years that it’s willing to provide these benefits (part ideology, part political strategy). If you are someone receiving this, why would you endanger the status quo by voting for someone else who might take it away as part of some publicized push for smaller government living within its means? Where could all this lead to? Full-fledged dependency and eventual bondage, if one buys into the Cycle of the Body Politic.
Young American voters could be more “left-leaning” than their predecessors. How left? Well, “socialist” might not be too far off the mark if one subscribes to the findings of a Pew Research Center survey from December 2011. I wrote back on September 27:
You see, not only am I aware that a good number of Americans aren’t put-off by the idea of socialism anymore, but a recent poll even showed a majority of young Americans aged 18-29 have a positive view of it.
From the Pew Research Center website back on December 28, 2011:
Socialism is a negative for most Americans, but certainly not all. Six-in-ten (60%) say they have a negative reaction to the word; 31% have a positive reaction…
Fully nine-in-ten conservative Republicans (90%) view socialism negatively, while nearly six-in-ten liberal Democrats (59%) react positively.
The poll of 1,521 adults conducted back in early December 2011 revealed that among the 18-29 age group, 49 percent had a positive view of socialism as compared to 43 percent having a negative view.
Is Obama and his White House socialist? I don’t know. Are they “left-leaning?” The available evidence suggests so. Which could be why a lot of young American voters are drawn to the Democrats.
Public sector unions obviously played a big role in this election. I understand that such groups work toward the benefit of their members. However, does such activity work contrary to the common good, destabilizing increasingly financially-challenged public agencies, as critics suggest? Plenty of insolvent government organizations could be available for study shortly.
While incumbent politicians can be more difficult to dislodge from office, President Obama retained the White House despite a dismal economic record in his first term. Measures of (un)employment, food stamps, poverty, budget deficits, national debt, for example, grew increasingly worse over the past four years. I know, what about those “5 million jobs created” the Democrats kept touting during the campaign? Problem is, a closer look at what was “created” reveals a lot of low-paying positions. Burger flippers won’t be spearheading a U.S. economic recovery anytime soon. Perhaps Americans aren’t voting based on their wallets as much anymore. Or perhaps their pocketbooks haven’t been hit hard enough. That may be just a matter of time.
The past four years confirmed for many Americans the transformation of the news media from watchdog journalists to unofficial mouthpieces of the Democratic Party (the press being merely a mouthpiece for any party is bad). I have some journalism experience in my background, and my training included an emphasis on unbiased reporting. Being exposed to the amount of news material I am on a daily basis, it’s all too obvious to me that either that training is no longer given, a refresher course is desperately needed, or today’s journalists just don’t give a damn about it anymore. Sad. The way I look at it, if reporters not assigned to pen an op-ed/column feel the need to express the political creature in them, then get a personal blog! And let’s exchange links. Otherwise, do your country a huge favor and once again occupy the role of the “Fourth Estate”- an independent press. Continue on as the “American Pravda” and suffer the inevitable consequences.
Since Chicago/Cook County/Illinois Democrats play a significant role in running the country, one need only look at where they originate from to get an idea of where they might be taking the country these next four years. Anyone who spends enough time on this blog reading those posts written for my local audience knows exactly where that is:
Into the ground.
While Chicago and Cook County have significant financial woes, the State of Illinois is essentially bankrupt. Too many benefits, too much spending, too little cutbacks, too much borrowing, and now the fee and tax hikes on residents and businesses. It’s going to get ugly in the “Land of Lincoln” real fast. California and Illinois are the two U.S. states competing with each other to go under first as the financial crisis worsens, according to some very smart people. Yet, don’t expect any regime change in “Madiganistan” any time soon. As I wrote back on March 21:
As a result of this redistricting, Democrats could very likely control the state legislature in Illinois for a number of years. Monique Garcia, Alissa Groeninger, and Ray Long wrote on the Chicago Tribune website last night:
Even before unofficial results rolled in, some sitting Republican lawmakers were bound to lose in DuPage County, casualties of the Democratic-drawn state legislative districts. The map is tilted so heavily toward Democrats that the party led by House Speaker Michael Madigan, the Illinois Democratic chairman, is all but ensured November general election victories that could set it on a course to control the General Assembly for the next decade.
And from a Chicago Tribune editorial piece this morning:
Democrats had virtually locked in their Springfield majorities before the first voters cast the first early ballots on Oct. 22. More than half of these legislative races weren’t even contested by both major parties. And while some of the new district boundaries gave Republicans tremendous advantage, the aggregate effect was to keep Illinois and its 12.8 million citizens under one-party rule.
Voters evidently like it that way.
Yes they do. Especially as votes were also “bought and paid for” here in the ‘Stan.
Before this post is misconstrued as being merely some Obama/Democrat-bashing piece, regular readers of the blog know that I foresee a U.S. financial crash at the end of all this “kicking the can down the road.” That being said, at this point in the game, I don’t think it really matters anymore whether the Democrats or Republicans are in charge as it concerns where our economy and larger financial system is eventually heading. Enough damage has already been done (think of the Titanic and her compartments being punctured just enough to guarantee her inevitable demise) that America is fast-approaching a tipping point as both major national political parties make matters worse by refusing to scale back the obscene amounts of government spending when given the chance. If you think about it, when it comes to fiscal policy, both parties have shown to be no better than a two-headed monster. Barack Obama’s economic polices from 2008-2012, in general, were really just an extension of George W. Bush’s economic policies. Spending, stimulus, government intervention, you get the picture. Rather than sit down, have a mature conversation with the nation about the unsustainable track we’re on concerning our finances, and stop the spending, both the Democrats and Republicans continue to pander to Main Street’s desire for more stuff, more benefits, more borrowing, more debt. This time around, Barack Obama and the Democrats won. In the longer run, everyone looks to lose.
In the meantime, congratulations Mr. President and the Democratic Party on your Election Day victory.
Sources:
Izzo, Phil. “Number of the Week: Half of U.S. Lives in Household Getting Benefits.” Real Time Economics. 26 May 2012. (http://blogs.wsj.com/economics/2012/05/26/number-of-the-week-half-of-u-s-lives-in-household-getting-benefits/?KEYWORDS=number+of+the+week). 7 Nov. 2012.
“Illinois Democrats and their realm.” Chicago Tribune. 7 Nov. 2012. (http://www.chicagotribune.com/news/opinion/editorials/ct-edit-legis-1107-20121107,0,2900759.story). 7 Nov. 2012.
Paul Volcker-Led Group: Illinois Could Have Trouble Meeting ‘Its Population’s Basic Needs’
Any remaining doubts I may have had about my home state of Illinois being in bad shape are gone after reading a new report from the non-partisan, Paul Volcker-led State Budget Crisis Task Force. In June 2011, former New York Lieutenant Governor Richard Ravitch and former Federal Reserve Chairman Paul Volcker assembled the task force to examine threats to near- and long-term fiscal sustainability in six U.S. states: California, Illinois, New Jersey, New York, Texas, and Virginia. From the “Summary” portion of the Report of the State Budget Crisis Task Force: Illinois Report that was released Wednesday:
Illinois’ budget is not fiscally sustainable. Despite recent progress and difficult choices, it is still in a deep hole. It cannot simultaneously continue current services, keep taxes at current levels, provide all promised benefits, and make needed investments in education and infrastructure. All of the major threats identified by the Task Force in its July 2012 report have contributed to Illinois’ current problems and will contribute to future budget-balancing struggles.
Illinois has the worst unfunded pension liability of any state, an estimated $85 billion. It has underfunded its pension systems since the early 1980s. Contributions now must escalate rapidly if Illinois is to honor promised benefits; by fiscal year 2015, pension costs (and related debt service) could take up one-fourth of the state’s resources. Illinois will not be able to fund other priorities unless it adopts serious pension reform.
Medicaid enrollment and expenditures in Illinois doubled between 2000 and 2011, growing far more rapidly than tax revenue. In June 2012 the state made major changes that reduce spending, but rising health care costs and the aging population will continue to drive costs upward. Without further reform, unsustainable Medicaid growth will crowd out other essential areas of the budget.
Illinois’ debt is also crowding out the budget. In 2003 Illinois sold a record-breaking $10 billion in pension obligation bonds, and again in fiscal years 2010 and 2011, the state sold bonds to cover its required contributions. The result of pension borrowing is that Illinois’ debt per capita is one of the highest of any state. Over 60 percent of Illinois’ total outstanding debt is due to pension bonds.
Illinois has compounded its challenges with poor fiscal management and opaque budgeting. At the onset of the 2008 financial crisis, Illinois was essentially insolvent. In the years leading up to the crisis, Illinois borrowed and shifted money across years and funds to “balance” the budget, without providing sustainable resources to pay for ongoing commitments. Budget gimmicks became a standard practice. The state has perennially pushed its bills off to the future; at the start of fiscal year 2013, unpaid obligations from prior years were approximately $8 billion. Illinois did all this without any sort of long-term financial plan to restore balance, and without reserves. Illinois has been doing backflips on a high wire, without a net.
Narrow, eroding tax bases have contributed to Illinois’ fiscal difficulties. State tax revenues were stagnant for at least a decade before the recent recession. Illinois enacted a major, temporary, income tax increase in 2011, but the additional revenues are being offset by reductions in federal American Recovery and Reinvestment Act of 2009 (ARRA) monies. Income tax revenues will not keep up with growth in the aging population because Illinois exempts retirement income. Other tax bases — on corporate income, cigarettes, and motor fuel — have been eroding and failing to keep up with economic growth. Illinois’ sales tax rates are high, but its base is narrow and the state taxes relatively few services. Illinois tax revenues are not likely to grow enough to meet future needs.
Federal deficit reduction threatens Illinois, as other states. Federal dollars account for approximately a quarter of the state’s all-funds budget and, after the expiration of federal stimulus spending, currently are $14.8 billion. Federal aid matches about 50 percent of Illinois’ Medicaid spending, and constitutes about 35 percent of the budget of the Department of Human Services, 30 percent of transportation, 20 percent of K-12 education, and 20 percent of spending for environment and natural resources. Federal spending cuts will put these programs at risk.
Illinois’ aging and deteriorating infrastructure is in urgent need of immediate repairs to meet basic standards of public safety. Beyond that, it needs expansion and modernization to accommodate future growth. Over the next several decades, Illinois’ infrastructure needs will likely exceed $300 billion, yet the state does not have a comprehensive plan to address this critical need. There are real costs associated with underfunding of infrastructure: shipping and travel delays, congestion, pollution, and diminished economic growth.
The state’s fiscal problems affect local governments in Illinois by shrinking revenue transfers at a time when these monies are most needed. The state has also proposed shifting funding responsibility for teachers’ pensions from the state to local school districts. This would eliminate some incentives that can drive pension costs upward, but would put considerable pressure on local finances. Local governments struggle with their own revenue problems, unfunded pension liabilities, and bond rating downgrades. The state does minimal monitoring of local government finances, and budget cuts could further reduce this oversight.
Illinois’ past fiscal choices and future threats challenge the state’s ability to meet its population’s basic needs, let alone accommodate future growth. Infrastructure is deteriorating. Education is threatened. Public safety, public health, and care for the needy all are at risk. Taxpayers and the state’s competitiveness are also at risk.
Illinois needs to make tough choices — now…
“Illinois’ past fiscal choices and future threats challenge the state’s ability to meet its population’s basic needs.”
Basic needs? That’s pretty bad.
This report comes on the heels of an analysis by the Tax Foundation, a non-partisan tax research group, in which Illinois residents were found to pay the 11th highest state-local tax burden in the United States in fiscal year 2010.
Early in 2011, Illinois Governor Pat Quinn hiked personal income taxes 67 percent.
It will be interesting (scary?) to see where the “Land of Lincoln” stands in next year’s Annual State-Local Tax Burden Rankings, when FY 2011 is factored in.
You can read the entire State Budget Crisis Task Force report on their website here (.pdf file).
You can view the latest Tax Foundation tax-burden rankings on their website here.
Romney 3, Obama 0
Last night I watched the last in a series of U.S. Presidential debates between former Massachusetts Governor Mitt Romney and the sitting President Barack Obama.
Once again, the incumbent came out swinging. However, despite it sounding once again like the audience was in his corner, President Obama lost.
More so than in the second debate, if you ask me.
An analyst on one of the TV stations covering the debate said it best when she pointed out that Obama was, in effect, debating himself. Since his Republican challenger lacked significant foreign policy experience (the supposed focus of last night’s exchange), it was the incumbent’s record in this area over the past four years that came under scrutiny.
And plenty of dedicated observers of U.S. foreign policy- myself included- will tell you that it’s in shambles.
Particularly in the Middle East.
As I see it, the Obama administration, in its attempt to tone-down what it perceives as an overly-aggressive U.S. foreign policy under the Republicans, has:
• Not deterred Iran from advancing towards a nuclear weapon. Regular readers of this blog know that I believe the Islamic Republic of Iran continues to take advantage of proposed “talks” and other delays to continue work on such a weapon. Notwithstanding military action, they will get a nuke. The prospect of having one is just too tempting. Pop one or two of these over the U.S., and we’ll have a real problem on our hands.
• Not left a stable regime in place in Iraq. I predict a real power vacuum here in the coming years, with a number of internal and external actors vying for ultimate control of the geopolitically-important failed state and its resources.
• Made a big blunder in announcing the withdrawal of U.S. combat troops from Afghanistan in 2014. Nothing like giving an enemy a timetable to work with. I suspect Al-Qaeda, the Taliban, and their allies will throw everything they’ve got at our men and women in uniform over there as the end of 2014 draws closer, knowing full-well they need only sustain such intensity until the announced exit date. Then what? Attack us on our home soil, possibly. Some terrorism experts have suggested one reason why Al-Qaeda hasn’t launched a massive operation against the United States mainland since 9/11 is because they’ve figured out it’s simply easier to kill scores of Americans on the battlefields of Iraq and Afghanistan. Remember, their stated goal is 4 million Americans dead. Back to being another failed state down the road.
• Alienated our ally Israel. President Obama seems to see Israel- like past U.S. foreign policy- as being too aggressive. And it doesn’t appear the sitting President doesn’t care too much for Israeli Prime Minister Benjamin Netanyahu either- despite Vice President Biden and all that “Bibi” talk from the Vice Presidential debate. Consider the following:
November 3, 2011- Several media outlets reported an open-mic incident where then French President Nicolas Sarkozy told his American counterpart, “Netanyahu, I can’t stand him. He’s a liar.” Obama reportedly responded with, “You are sick of him, but I have to work with him every day.”
September 11, 2012- The White House said President Obama would not meet Prime Minister Netanyahu during a U.S. visit later that month. A number of media outlets suggested the Israeli leader was being spurned.
September 12, 2012- President Obama was taped for the CBS show 60 Minutes. From an exchange with Steve Kroft:
KROFT: You’re—you’re saying you don’t feel any pressure from Prime Minister Netanyahu in the middle of a campaign to try and get you to change your policy and draw a line in the sand? You don’t feel any pressure?
OBAMA: When it comes to our national security decisions, any pressure that I feel is simply to do what’s right for the American people. And I am going to block out any noise that’s out there.
Israeli concern over an Iranian nuke is “noise?”
Don’t even get me started on Libya and the deaths of 4 Americans, including an ambassador.
How the Obama administration has handled the Middle East is indicative of U.S. foreign policy as a whole.
Weak.
Worse yet, our adversaries recognize it and actively exploit it.
It shouldn’t be too much of surprise U.S. foreign policy has come to this. After all, Democrats aren’t really known to be big on foreign affairs. If anything, they seem to look at it as an annoyance.
Whenever I think of foreign policy in the Clinton years, two words come to mind.
Cruise missiles.
These days, perhaps it can reduced to just one word.
Drones.
Mitt Romney did a good job at pointing out the poor foreign policy record of the Obama administration.
But, truth be told, most Americans don’t care too much about international affairs.
The Republican challenger won this last debate not by talking about foreign policy- as was the intended focus- but by leading the discussion back to President Obama’s equally-dismal record on the economy.
This is what I meant when I said “more so than in the second debate, if you ask me” earlier in this post.
Romney kept hammering away at Obama’s domestic record as it pertains to take-home pay, unemployment, food stamps, government overreach, over-regulation, small-business woes, trillion dollar deficits, the $16 trillion national debt, the list goes on, and all the way to the end.
It was circling back to the Chicago Democrat’s domestic record these past four years that won the Republican challenger the debate.
In fact, all three debates.
Whether this will translate into a White House win come November 6 remains to be seen.
Regrettably, when it comes to that financial crash I predict is in store for us, I doubt a Romney win will make much of a difference at this point in the game. Economic pain is a certainty. Still, if he’s elected President of the Unites States and implements a sustained, meaningful program of fiscal responsibility, our financial “reckoning day” may not be as devastating as I suspect it would be should the nation continue on its current path.
Cook County’s Proposed ‘Violence Tax’ On Shaky Ground
It’s official. Cook County Board President Toni Preckwinkle has presented her 2013 budget, and the Chicago Democrat is pushing a $25 tax on every firearm purchase and a nickel-per-bullet tax on ammunition purchases that take place within the county.
To give you an idea of what the proposed “violence tax” would look like as it concerns ammunition, a $22 525-round “value pack” of 22 LR ammo (a very popular purchase) would now cost $48.25, even before sales tax is applied. Like to buy bulk? An $85 2,100-round bulk purchase of the same ammunition would cost more than $200 after taxes.
(Editor’s note: Prices from Cabela’s, which operates a store in the Cook County portion of Hoffman Estates)
Taxing law-abiding gun owners in Cook County for the actions of criminals is bad enough, but to jack up the price of ammunition as to make it unaffordable for many? It will surely be argued that such a tax infringes on residents’ Second Amendment rights.
And President Preckwinkle’s response to a possible lawsuit? Don Babwin wrote on the Yahoo! News website yesterday:
Preckwinkle said she wasn’t worried about a lawsuit.
“You’re welcome to sue,” she said. “We’ve looked at this and we believe we can survive any challenge.”
“You’re welcome to sue.”
I have a feeling many Cook County residents would disagree with Ms. Preckwinkle here. They are becoming more knowledgeable of the dire financial situation the nation’s second most populous county is in, and might not relish the idea of handing over a big chunk of their hard-earned money to gun rights groups and their attorneys à la the City of Chicago and the Village of Oak Park because some gun “control” scheme that wasn’t of their making was found to be unconstitutional by the courts.
At this point, even some Cook County commissioners are questioning whether the proposed tax on guns and ammo will make it into the approved budget. Greg Hinz wrote in his blog yesterday on the Crain’s Chicago Business website:
County Commissioner John Fritchey termed the proposal overall “fundamentally sound and solid and honest.” But he predicted some of the revenue raisers will have trouble and are improperly being posed as social goods…
And the ammunition tax on a standard, 2,100-round box of .22 bullets would boost the price from $85 now to $190, he said, predicting that tax will have particular difficulty passing.
(Editor’s note: Italics added for emphasis)
Alejandra Cancino and Hal Dardick mentioned Commissioner Larry Suffredin- a known gun “control” supporter out of Evanston- this morning on the Chicago Tribune website. Cancino and Dardick wrote:
He also said he’s not sure Preckwinkle can muster sufficient votes to pass the guns and ammunition tax because even some Democrats oppose it.
(Editor’s note: Italics added for emphasis)
“Even some Democrats oppose it.”
What does that say about the proposed new tax?
Gun rights groups will have to work quickly to bury the proposed tax, as President Preckwinkle has indicated she’d like to have the budget enacted by mid-November, meaning the measure would cover the 12 months beginning December 1, 2012.
Stay tuned…
Sources:
Babwin, Don. “Official proposes bullet tax to curb Chicago crime.” Yahoo! News. 18 Oct. 2012. (http://news.yahoo.com/official-proposes-bullet-tax-curb-chicago-crime-070551870.html). 19 Oct. 2012.
Hinz, Greg. “Preckwinkle asks new sin, use taxes, but cuts spending and payroll in new budget.” Greg Hinz On Politics. 19 Oct. 2012. (http://www.chicagobusiness.com/article/20121018/BLOGS02/121019789/preckwinkle-asks-new-sin-use-taxes-but-cuts-spending-and-payroll-in). 19 Oct. 2012.
Cancino, Alejandra and Dardick, Hal. “Preckwinkle budget would raise cigarette, gun taxes.” Chicago Tribune. 19 Oct. 2012. (http://www.chicagotribune.com/news/local/ct-met-preckwinkle-budget-1019-20121019,0,2638703,full.story). 19. Oct. 2012.
Cook County’s Proposed ‘Violence Tax’ Calls For $25 On Each Gun Purchase, Nickel-Per-Bullet On Ammo Purchases
Cook County (Illinois) Board President Toni Preckwinkle is scheduled to present her budget proposal for 2013 today, and the word is out she’s pushing that “violence tax” on law-abiding residents which I talked about the other day.
In short, the newswires are saying President Preckwinkle wants a $25 tax on every firearm purchase and a nickel-per-bullet tax on ammunition purchases that take place within the county.
This comes among a whole slew of proposed new and higher taxes and fees in hopes of closing a projected budget gap of $115 million in FY 2013.
Preckwinkle is attempting to justify the “violence tax” by pointing out costs incurred by Cook County’s criminal justice and public health systems as a result of the violence taking place in Chicago and elsewhere in the nation’s second-largest county.
Taxing law-abiding gun owners in Cook County for the actions of criminals.
Makes a whole lot of sense.
Ms. Preckwinkle and her entourage are citing a report from last summer and argue that 29 percent of the guns used in Chicago crimes were purchased legally in the suburbs of Cook County. Dan Hinkel wrote on the Chicago Tribune website on August 27:
A study of guns seized by Chicago police shows that suburban gun shops are a main source of guns used in crimes in the city.
The research shows that some 29 percent of the guns recovered on Chicago’s streets between 2008 and the end of March were bought in the Cook County suburbs.
I wonder how many of the “29 percent” were originally purchased by law-abiding citizens, but were subsequently stolen in robberies? Lots of those taking place in the Chicagoland area these days.
As further justification for this additional tax on guns and ammo, President Preckwinkle is referencing a remark made by comedian Chris Rock. Hal Dardick wrote on the Chicago Tribune website earlier today:
“I make no apology for this,” she added, before making a reference to a popular comedian. “As Chris Rock would say, if it costs a million dollars to society for every gunshot wound, we ought to charge a tax of a million dollars per bullet.”
Chris Rock? Last I heard, the man was a comedian, not a public policy guru.
And nowhere else does such a joke show its short-sightedness than in this particular situation, where many Cook County residents can (and probably) will just purchase their firearms and ammunition outside of the county should the tax become reality.
Good luck collecting that “tax of a million dollars per bullet.”
And consider this. According to an Associated Press piece earlier today:
Preckwinkle declined to speak with The Associated Press ahead of the announcement Thursday, but her spokeswoman Kristen Mack confirmed the details of the plan.
Mack said the office has found no other jurisdiction in the nation that has imposed a tax on bullets, even though several have considered it.
(Editor’s note: Italics added for emphasis)
“No other jurisdiction in the nation that has imposed a tax on bullets.”
Gee, why do you think that is?
Because in addition to what I pointed out above, it eventually dawned on those jurisdictions that a tax on ammunition and/or firearms would result in businesses packing up and leaving to adjacent/other jurisdictions and kill-off much needed revenue.
Not rocket science here.
From Dardick’s piece:
Unlike the cigarette tax, the levies on gambling machines and guns and ammo would raise a relatively small sum: $1.3 million for the gambling tax and $1 million for the guns ‘n ammo tax, according to county projections.
(Editor’s note: Italics added for emphasis)
“1 million for the guns ‘n ammo tax.”
Now that I’d like to see. I wouldn’t be surprised if the 40 or so gun shops and other retailers potentially affected by this tax aren’t already looking at what would need to be done to close up shop in Cook County and move elsewhere.
And about that $1 million. I’d be shocked if the county gets even $1,000 after a couple of years of having this tax in place.
How about sporting goods retailers like Dick’s Sporting Goods? The one by me seems to do brisk business in firearm and ammunition sales. In fact, on the occasions I’ve been at their store, it seems to be the only department that’s not dead these days.
Slap that “violence tax” on them, and I’m guessing big retailers like Dick’s (and Cabela’s out in the Cook County portion of Hoffman Estates) could see their bottom-line hit big time.
I wonder where they are in all this?
It bears repeating here.
It eventually dawned on those jurisdictions that a tax on ammunition and/or firearms would result in businesses packing up and leaving to adjacent/other jurisdictions and kill-off much needed revenue.
Revenue that Cook County can ill-afford to lose these days.
Then there’s the increasing chatter about a lawsuit.
Lisa Donovan wrote on the Chicago Sun-Times website this morning:
While most commissioners who talked to the Sun-Times declined to weigh in on the budget because they wanted more details, one was displeased with the tax on guns and ammunition sold in the city and suburbs.
“I think it’s unnecessary,” the commissioner said. “It’s only going to bring in something like $1 million next year, and we’ll easily spend that in legal fees and trying to collect the money,” the commissioner said, explaining that there is some concern the county will be sued over the tax and collecting it could be a costly venture.
(Editor’s note: Italics added for emphasis)
Some concern the county will be sued? Try most likely.
And the Cook County Board President’s take on a potential lawsuit? From that AP piece:
Even Preckwinkle seemed resigned to a legal challenge in her comments to the newspaper board.
“You can’t make decisions based on the basis of whether or not somebody’s going to sue you or then you’ll never do anything,” she said.
The thing is, if the “violence tax” stays in the budget, “whether” will most likely be the case here, and Cook County is clearly not in a financial position these days to fight such a lawsuit.
In the end, President Preckwinkle and Cook County commissioners hopefully use common sense here. Because the word is out that the proposed “violence tax” would generate such a low amount of revenue for Cook County, residents already recognize it’s primarily a ploy to try and convince us that something is being done to stem the violence that plagues Chicago and its suburbs. Still others will figure out the proposed tax is also an attempt by Cook County politicians to push more gun “control” on its residents. As such, it will hardly be a surprise when Cook County is slapped with a lawsuit in defense of the Second Amendment. Throw in the 40-plus businesses that will probably take their much-needed revenue elsewhere (other nearby counties have got to be celebrating their potential good fortune right now), and it becomes conceivable that the proposed tax on guns and ammo might even end up costing Cook County money when all is said and done.
Sources:
Hinkel, Dan. “Study: Suburbs are major source of guns used in Chicago crimes.” Chicago Tribune. 27 Aug. 2012. (http://www.chicagotribune.com/news/politics/clout/chi-preckwinkle-wants-1apack-cigarette-tax-hike-20121018,0,6843888.story). 18 Oct. 2012.
Dardick, Hal. “Preckwinkle wants $1-a-pack cigarette tax hike.” Chicago Tribune. 18 Oct. 2012. (http://www.chicagotribune.com/news/politics/clout/chi-preckwinkle-wants-1apack-cigarette-tax-hike-20121018,0,6843888.story). 18 Oct. 2012.
“County official proposes bullet tax to curb Chicago crime.” Associated Press. 18 Oct. 2012. (http://www.foxnews.com/politics/2012/10/18/county-official-proposes-bullet-tax-to-curb-chicago-crime/?test=latestnews). 18 Oct. 2012.
Donovan, Lisa. “Cigarettes, golf all could cost more under Cook County tax plan.” Chicago Sun-Times. 18 Oct. 2012. (http://www.suntimes.com/15816423-761/cigarettes-golf-all-could-cost-more-under-cook-county-tax-plan.html). 18 Oct. 2012.
Romney 2, Obama 0
Just got done watching the second in a series of U.S. Presidential debates between former Massachusetts Governor Mitt Romney and the sitting President Barack Obama.
Predictably, the incumbent came out swinging after getting spanked in their first meeting.
However, despite a venue that sounded like it was full of his supporters tonight, Barack Obama fell short.
I give the President credit. It’s obvious he’s worked tremendously hard to get back into the game.
Yet, it’s become all too clear to many on Main Street- painfully in quite a number of cases- that regardless of how it’s spun, Barack Obama’s record in the White House over the past 4 years has been pretty poor.
Something which his challenger, Mitt Romney, seized on and kept hammering home tonight. As the Republican presidential candidate pointed out:
We have a record to look at.
And it’s a handicap I’m sure even Obama’s closest advisers are aware of (in spite of what they tell the public).
I know. “5 million jobs created.” Ever bother to look at what kinds of jobs were created? I have. Lots of low-paying ones.
Throw in where the country’s at with (un)employment, food stamps, poverty, budget deficits, national debt, the list goes on, and the last 4 years have been pretty ugly in retrospect.
Which is probably why President Obama kept talking up other subjects tonight like ObamaCare, the auto industry bailout, Planned Parenthood- things the government can give/provide for you, yet way beyond the scope of what the Founding Fathers ever intended for our republic.
Now, Mitt Romney didn’t bring his “A” game like last time, but his performance was still good enough to win the debate. In addition to the Republican contender pointing out the dismal economic reality of the last 4 years, his arguments made more sense. Especially as it concerned job creation. Consider this. Due to the state of the nation’s labor market these days, I’m guessing many Americans voters will be casting ballots with their pocketbooks in mind come November. The vastly-experienced challenger repeatedly emphasized his intent to create jobs and grow incomes by building-up small businesses and making America more attractive to foreign investment.
President Obama plans on creating more jobs by continuing his same policies and by expanding educational and training opportunities.
More burger flippers?
And education and training is nice and all, but what good is a degree/certificate if no one’s hiring in the first place?
Sounds like the U.S. President might be putting the cart before the horse here.
To many Americans watching the debate, Romney’s repeated emphasis on job creation was probably music to their ears.
One more thing. Barack Obama may have inadvertently shot himself in the foot (no pun intended) when he admitted tonight his desire to re-introduce the assault “weapons” ban that expired a few years back. Anti-gun groups and many in the mainstream media have tried desperately-hard for some time now to try and convince Americans that President Obama wouldn’t push gun “control” if he’s re-elected.
And then he goes on national TV and says he supports a new gun ban.
That’ll go over real well in those “swing states” with lots of firearm enthusiasts.
1994 all over again?
Anyway, it was a feisty debate. Barack Obama looked like a different man (still not as eloquent as with a teleprompter though), but Mitt Romney remained composed and pulled out the victory by repeatedly bringing up the sitting President’s track record in his first term and by emphasizing the Republican plan for creating new jobs, something I think will be key come Election Day.
On to the next, and final, debate…
Looking At Cook County’s Proposed ‘Violence Tax’
Notable events related to the focus of this blog unfold so fast these days they sometimes don’t register on my radar. Case in point, last week Cook County, Illinois, proposed levying a “violence tax” on the sale of guns and ammo (thanks Devin). Lisa Donovan wrote on the Chicago Sun-Times website back on October 9:
Drawing the ire of the gun lobby, Cook County Board President Preckwinkle is eyeing a violence tax on guns and ammunition sold in the city and suburbs, the Chicago Sun-Times has learned.
Such a tax alone wouldn’t close a $115 million budget gap in 2013, but it could at least funnel money into the county’s $3 billion operation — where roughly two-thirds of the budget pays for both the county’s public health clinics and two hospitals along with the criminal justice system that includes the courts and jail.
“If we were to pursue a tax on something like guns and ammo, clearly that wouldn’t be popular with the [gun lobby] out there, and it may not generate $50 million, but … it is consistent with our commitment to pursuing violence reduction in the city and in the county,” Kurt Summers, Preckwinkle’s chief of staff, said on Monday.
The idea is to curb the number of guns in circulation, he said, citing a report issued last summer showing that nearly one-third of the guns recovered on Chicago’s streets were purchased in suburban gun shops. Other statistics are more dire: Murders in Chicago are up 25 percent this year, according to recent police statistics, and the county jail is filling up — with 9,000-plus inmates, nearing the 10,155 capacity.
Taxing law-abiding gun owners in Cook County for the actions of criminals.
That makes a lot sense.
To hammer this idea home, Steve Chapman wrote in a prominent opinion piece in the Chicago Tribune this past weekend:
Action against the possession and use of guns by violent felons would be a good idea, but the proposal offered by Cook County Board President Toni Preckwinkle is something else: a penalty on nonviolent citizens who bear no blame for the carnage.
(Editor’s note: Italics added for emphasis)
Cook County hasn’t make public just how much firearm and ammunition sales would be taxed under this scheme. However, past ammo tax proposals have asked for between 10 to 50 cents a bullet.
Critics have pointed out that Cook County residents could avoid paying this “violence tax” by purchasing such items outside of the county, thereby hampering the county’s efforts to plug its anticipated budget deficit.
However, as Lisa Donovan noted in a follow-up piece yesterday:
But that so-called violence tax appears to be more message than a substantial money-maker.
Would that be a gun “control” message?
Consider what Chicago’s WLS 890AM reported on their website on October 9:
Preckwinkle shrugged off the idea that law-abiding citizens might be the ones who suffer – even punished — by a tax aimed at paying for the fallout from criminal acts of those who don’t legally possess firearms.
(Editor’s note: Italics added for emphasis)
Logic has it that it’s not just “law-abiding” citizens who would be impacted here. Consider this. According to the Chicago radio station, Preckwinkle herself said there are 40 licensed gun shops in the suburbs and several other stores that sell ammunition (one of these “other stores” happens to include Dick’s Sporting Goods, by the way). Should the proposed “violence tax” become a reality, I’m guessing most- if not all- Cook County gun shops will pack up and leave the county.
In a time of booming gun and ammo sales, I can’t help but think this would have a significant negative impact on the County’s coffers.
So, is sending yet another gun “control” message worth chasing 40-plus businesses, all their employees, and all that much-needed revenue out of Cook County?
Neighboring counties probably think it is.
“Do it, Toni. Pull the plug on them. We wouldn’t want those bad, evil gun shops either.” (Salivating)
The Cook County Board President will release her roughly $3 billion budget plan on Thursday.
Stay tuned…
Sources:
Chapman, Steve. “Taxing bullets criminal.” Chicago Tribune. 14 Oct. 2012. (http://articles.chicagotribune.com/2012-10-14/news/ct-oped-1014-chapman-20121013_1_gun-owners-gun-control-destructive-bullets). 16 Oct. 2012.
Donovan, Lisa. “Cook County mulling violence tax on guns and ammunition.” Chicago Sun-Times. 9 Oct. 2012. (http://www.suntimes.com/news/metro/15644719-418/cook-county-mulling-violence-tax-on-guns-and-ammunition.html). 16 Oct. 2012.
Donovan, Lisa. “Mixed reaction from commissioners on Cook County slot machine tax.” Chicago Sun-Times. 15 Oct. 2012. (http://www.suntimes.com/news/metro/15774704-418/mixed-reaction-from-commissioners-on-slot-machine-tax.html). 16 Oct. 2012.
“Preckwinkle defends proposal to tax guns, ammo in Cook County.” WLS 890AM. 9 Oct. 2012. (http://www.wlsam.com/Article.asp?id=2549276&spid=). 16 Oct. 2012.
Thoughts On Chicago Mayor Rahm Emanuel’s Proposed 2013 Budget
Sorry about not posting new material earlier in the week. I’ve been utilizing a relatively-new high-speed wireless Internet connection up in Wisconsin, but haven’t gotten rid of all the gremlins just yet. Hopefully, I’ll have this wrapped-up in the next couple of days so I can blog just as efficiently there as in Chicago.
Speaking of the “Windy City,” on Wednesday Mayor Rahm Emanuel presented his proposed 2013 budget to the Chicago City Council. From the City of Chicago website:
Mayor Rahm Emanuel today presented the proposed 2013 budget to the City Council, an $8.3 billion budget that balances the City’s finances without introducing new taxes, fines or fees, and completely eliminates the employee head tax by the end of 2013, earlier than promised…
The City began the 2013 budget process with a projected deficit of $369 million deficit, half of what had originally been projected, but still a substantial gap. This deficit was cut to $298 million in September when the City identified $71 million in additional savings and revenue for the remainder of 2012 and 2013, including $26 million in cost additional savings and $45 million in additional revenue. The $298 million gap is the smallest since the 2008 recession…
The City closed the remaining 2013 gap through $67 million of spending reforms and cuts, including $10 million in savings from strategic sourcing on city contracts and $5.8 million in information technology reforms; $45 million in personnel savings including $20 million in layoffs, attrition and vacancy sweeps, and $5 million from partnerships with labor; $70 million in healthcare savings; $10 million from TIF reform; $24 million in improved debt collection; $42 million in additional revenue growth; and $40 million from refinancing long-term debt.
(Editor’s note: Italics added for emphasis)
About that “$45 million in additional revenue.” That’s just projected tax revenue on real property transfer, hotel, sales and electricity taxes until the end of September 2013- something I noted back on September 29.
You don’t need me to point out that in these uncertain times, a lot could happen to the U.S. and local economy over the next 12 months.
And what of this “$42 million in additional revenue growth?” More projections. Greg Hinz wrote in his blog on the Crain’s Chicago Business website Wednesday:
$42 million in other revenue enhancements such as income from selling more taxi medallions and finding corporate sponsors for city programs.
Because I’ve witnessed so many revisions to government forecasts over the years, I am skeptical about this projected revenue.
And since the barbarians are already at that gates of the Northwest Side neighborhood I reside in, I was very interested in Mayor Emanuel’s plans for public safety going forward. From that piece on the City’s website:
Investing to Enhance Public Safety
• Funding for CPD to hire officers to remain at full strength at all times
• There will be 457 recruits in the police academy by the end of the year and quarterly classes throughout 2013, ensuring that CPD remains at full strength throughout the year.
• Because CPD will be at full strength, weekend surge overtime will be available year-round instead of summer weekends only
• CAPS reorganization – Resources that are concentrated at CPD headquarters will be allocated to the police districts and communities where they belong.
(Editor’s note: Italics added for emphasis)
The Chicago Police Department to finally be at “full strength?”
That I’ve got to see.
Why do I suspect the goal posts are going to be moved here?
City Hall does know some people actually read this stuff, and won’t hesitate calling them out if these things don’t materialize, right?
Just checking.
Anyway, Rahm Emanuel’s proposed budget for FY 2013 is certainly ambitious, and if the Chicago ends up being better off for it, then more power to him.
Probably want to strike that last part, huh?
You can read the City of Chicago press release on the city’s website here.
Source:
Hinz, Greg. “Mayor’s new budget: No new taxes, but lots of new revenue.” Greg Hinz On Politics. 10 Oct. 2012. (http://www.chicagobusiness.com/article/20121010/BLOGS02/121019992/mayors-new-budget-no-new-taxes-but-lots-of-new-revenue). 12 Oct. 2012.
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