Slowly But Surely, the Shit Has Hit the Fan
Not long after I graduated from the University of Illinois in the 70s, politicians were talking about the risky business of uncontrolled deficit spending, the rapidly growing State of Illinois debt, and the urgent need for radical fiscal reform to prevent a very bad problem from getting any worse because it would be inevitably inherited by “our kids and grandkids” (politicians never pass up an opportunity to say this on camera). Well guess what: one week went by, one month went by, one year went by, one decade went by, and now half a century later nothing has been done, and the fiscal crisis is bigger than we could have imagined.
How did this happen?
Mostly by failing to regularly invest the recommended annual amounts into public employee pension funds for the last 30 years or so. Blame for this falls on both sides of the aisle even though Democrats have held majorities in both chambers of the General Assembly for 20 of the past 30 years. Shamefully during this period, legislators used accounting and other gimmicks to mask the truth of how bad Illinois’ situation was, and they spent money the State didn’t actually have. The consequence is that Illinois hasn’t had a true balanced budget since 2001.
A Bankruptcy in Slow Motion
Illinois is in a slow bankruptcy burn. Where does this all end?
For seemingly intractable, massive financial problems such as social security, healthcare, and the federal deficit, most Americans are hoping the axe will not fall on these programs (and them) in their lifetimes – sorry kids, grandkids, and great-grandkids!
But eventually, if/when the doomsday clock strikes midnight, the State will hit the wall and go through a simulated bankruptcy process since there is no legal foundation or precedent for states to file a bankruptcy; or continue to collapse in slow motion while
- towns start failing
- main streets are abandoned and shops boarded up
- construction projects come to a halt unfinished
- people, families and businesses leave Illinois in huge numbers
- much of Illinois will rust in place and blow away in the wind, and
- some banks start freezing customer accounts.
The Burning Platform
Some Illinois citizens may feel this hypothetical apocalyptic vision just can’t happen. Well it is happening, but it is happening so slowly
($drip, $drip, $drip…) yet relentlessly as we continue to live our day-to-day lives, that we just don’t see it or feel it — at least, not yet.
There is an expression – the burning platform – that captures this condition in a very graphic way. The burning platform metaphor emphasizes that radical change by people only comes when survival instincts finally overtake selfish personal wants. Mega-problems like Illinois’ only reach a tipping point of citizen action when really bad things happen such as a 9/11, or a Hurricane Katrina, or banks closing their doors and freezing accounts. If you stick your head in the sand too long, then you stayed too long on the burning platform and bad things will happen.
Illinois’ burning platform is very hot, but not hot enough (yet) to force citizens to jump off the platform and take their chances. There is a much-quoted passage in Hemingway’s “The Sun Also Rises” when the character Mike Campbell is asked how he went bankrupt. His reply is “gradually, and then suddenly,” and that is the simple and scary truth facing Illinois. It all feels “gradual” right now on the burning platform, but when Illinois’ margin call comes down, it will come suddenly and painfully to the good citizens of Illinois.
Jumping off the platform in this case means saying “enough is enough,” and having a majority of Illinois residents get so frustrated and mad and scared that they vote to pass a constitutional mandate to take back responsibility to deal head-on with Illinois’ financial disaster-in-the-making, take their chances, accept whatever tradeoffs and radical actions and sacrifices it takes, and SOLVE THIS PROBLEM! (if it’s solvable)
Where Were the Politicians?
“Why not let the politicians figure this out?” you say. “Isn’t that why we elected them?” Well how has that worked out for us?
The fact is, if they knew how to solve the problem, they would have done it by now, but they don’t know how and I think every Illinois citizen suspects this. They talk a great game in front of a camera about what should be done to solve the problem, but that’s about it and then they go home to do those things that you and I do every day. They’re really not too worried about it all because it won’t affect them if it all goes bad. There’s no collective sense of urgency and there’s no collective political will. On any given day, their most important job number #1 is to get reelected
Don’t you get tired of the same old political bullshit?
The End of Kick the Can
The problem is that there has been a massive dereliction of fiduciary responsibility by politicians to the people of Illinois that has occurred for decades. We the people have allowed politicians to get away with this by allowing them to “kick the can” year after year, decade after decade. Kicking the budget can down the road to another year has been perceived in the past as simply frustrating and maddening political business as usual, but as far as the politicians go, there’s no accountability for their non-action.
Until kicking the can potentially rises to the level of serious misconduct, there will never be enough fear and urgency in a politician’s gut to start doing the right thing. If you think this is an absurd notion where the accountability (punishment) does not match up to the crime (kicking the can), then consider these two examples:
From the perspective of social destructiveness, consider that Bernie Madoff defrauded 4800 clients to the tune of $65 billion in 2008. In many cases, the life savings and retirement funds for these clients were wiped out. For that negative impact, Bernie Madoff received 150 years in prison and forfeited $18 billion. If the state “goes bankrupt,” the long-term negative financial impact to Illinois citizens and existing and future retirees (annuitants) would dwarf the social destruction caused by Madoff. But who would go to jail for that? How would the people be paid back?
Politicians for decades have had full access to all the financial data and pertinent facts, they knew what the long-term projections were, and yet they kicked the can down the road year after year knowing full well that a disaster was in the making but they’d probably be dead by then; so, NOT MY PROBLEM! That kind of dereliction of fiduciary duty should rise to the level of a very serious if not a criminal act. This kicking the can down the and has been in effect a massive Ponzi scheme, kept alive by attracting new state employees to make pension contributions, and the accumulation of massive debt.
The massive and neglectful kicking of the can by Illinois politicians rises to an equivalent level of misconduct (criminal act) given that they collectively had full knowledge of the long-term disastrous financial impact that could result from their derelict performance while in office. Illinois politicians all had a hand in enabling this gigantic disaster because they had full knowledge of what they were doing, and they proceeded with stubbornness and arrogance in a cavalier manner that ignored the pleas of citizens to stop kicking the can and solve the problem.
Until we make kicking the can a very serious offense where there will be accountability, it will continue to happen over and over. When are we the people going to rise up and say enough is enough and make these politicians accountable for their misdeeds? Politicians should fear kicking the can knowing that the accountability for this kind of fiduciary misconduct is extremely serious.
Until we have a zero tolerance policy for kicking the budget can down the road, we will never solve the problem.
Visualizing the Apocalypse
In my humble opinion, the Illinois politicians will NEVER untie Illinois’ fiscal Gordian Knot in our lifetimes. That is because they are too conflicted, too (at times) corrupted, absolutely paralyzed by the poisonous gridlock driven by two-party partisan politics, and most importantly, they don’t know what to do and oh by the way, they are wealthy enough that it will never be a problem for them if Illinois’ platform burns to the ground.
But for the rest of us, the flames are nipping at our heels. If this was a game of chess, the politicians have been CHECKED. If the financial doomsday clock keeps ticking faster and faster, eventually the clock will DONG! and it will be CHECKMATE….. game over for Illinois and the average Illinois voter, taxpayer, worker, and family. The meaning of this is that no pension, receivable, bank account, health plan, and job will be safe. It will be a looters’ state, every man and woman for themselves.
If there was some way for the average citizen to visualize and truly understand what this scenario might look like and how it would affect each one of us, I think it would frighten and then madden us to the core. The politicians know this which is why they continue to spew stalling rhetoric with no action. They fear that if we really understood what was at stake and how close we are to a financial and operational meltdown, it would create a run on the bank that could not be stopped. Banker and financial elites know that there is no way for a bank (state) to survive a run on the bank short of closing the doors to the bank, and if that’s what has to be done, then it’s already too late.
So, what do we do? We Take Back Illinois!! from the politicians.
Only the people (all of us, united) can solve this, and here’s a “Moonshot Illinois” plan to do that:
- Recuse every sitting politician all the way up to the governor from any responsibility and authority to address this problem: In Illinois, and indeed across our entire national political system, the two-party construct is like a divorced couple after a really nasty separation: there is no way these two parties are going to get together and get anything accomplished.
- Assign full responsibility and leadership for solving this problem by the PEOPLE by hiring a third-party Emergency Manager who
- does not live in Illinois
- does not have any vested fiscal interest in Illinois that could be compromised, and
- is absolutely clean of any conflicts of interest and commitment, political or otherwise, and
- will report directly to the PEOPLE.
- Have the Emergency Manager run an open “MOONSHOT-Illinois” competition which facilitates the following:
- The development of a long-term workout plan to reach financial sustainability.
- Participation by any person or team on the planet to submit their Moonshot Plan with the exception that sitting state politicians cannot participate unless they resign from office during the competition.
- Implementation of a special vote by registered Illinois voters only, to vote for the moonshot plan(s) they like the best by the process of approval voting.
- Distribution of a lottery-scale cash award to the winning moonshot participant, paid out in performance-based installments contingent upon meeting plan fiscal milestones.
- Re-engineer and revolutionize Illinois governance so this disaster never happens again by
- term limits, and
- approval voting.
- gerrymandering, and
- non-balanced annual budgets, and
- adopting other common sense items demanded by the people.
Guiding Principles for the Plan
We the people can formulate some guiding principles to organize and direct the moonshot competition, such as:
- The plan should include beginning break-even budgets that transition to surplus-producing budgets over a long period (possibly 30 to 50 years, the “Term”).
- All state pensions should be fully funded by the end of the Term (if not sooner).
- The state should catch up and be on pace with all current liabilities within several years (if not sooner).
- The plan should include a prioritized list of all activities the state should not be in the business of, by carefully applying the Principle of Subsidiarity: matters ought to be handled by the smallest, lowest, and least centralized competent authority; state to county; county to municipality; municipality to local organization; local organization to local family/individual.
- The plan should include a prioritized list for the sale and/or lease of all underutilized and nonessential assets.
- The plan should include a prioritized list for substantial layoffs of marginal to nonessential state jobs.
- The plan should include a prioritized list of all activities and critical infrastructure that could be better privatized.
- The plan should be balanced, fair, equitable, void of any urban vs rural lopsidedness, and clean and clear of any political partisanship.
- The plan by its design should show robustness and resiliency supporting long-term sustainability.
- The plan should maximize opportunities for integrating new technology, organizational and process best practices, and successful business models driving the new gig economy.
- The plan should address the sustainability (feasibility) of continuing to subsidize the “land-grant institution” legacy and propose a strategic recommendation.
- The plan should be a living document easily understood by all Illinois citizens, and publicly available online to the world with an ongoing forum for education, discussion and fresh ideas.
Not a Chance in Hell?
Maybe not, but have you got a better idea? If it’s out there, why aren’t we doing it!
You are thinking this is ludicrously unrealistic and unfeasible given state statutes, federal law, legal precedent, history, tradition, contracts, political protocol, voter complacency, complexity, risk of unintended consequences, blah, blah, blah…. But, is it more ludicrous than the very disaster-in-motion the politicians have put us in? I don’t think so.
Is it any crazier than Warren Buffet’s idea: “I could end the deficit in five minutes. You just pass a law that says that any time there’s a deficit of more than three percent of GDP, all sitting members of Congress are ineligible for re-election.” It needs to be a bold and crazy idea because if it’s not, then we the people will have not accomplished a thing and would have kicked the can down the road like the politicians we complain about so much.
It needs to be a…..
I’ve heard people say we should just raise taxes and be done with it. Would it be fair to say that the politicians who have been in charge of our tax money these last decades are the most irresponsible, inefficient, wasteful, untrustworthy, and at times corrupt caretakers when it comes to their fiduciary responsibility and performance with our tax dollars? So why would you double-down on putting your hard-earned tax money into the Illinois General Fund money pit one more time? That’s a bad bet and a fool’s game that we should not play anymore.
What Have We Got to Lose?
What have we got to lose by mobilizing and incentivizing the world’s most radical, innovative, clear-thinking people out there to make their mark and in the process, design a revolutionary financial road map for Illinois and other cities and states struggling with the same problem.
And what might the psychological impact be on Illinois citizens, businesses, investors, and society at large, if we could develop and unleash a successful Moonshot Illinois? I think it has the potential to pump positive spirit, energy, hope, and confidence into our state that would ripple across every city, town, and village like nothing we’ve ever seen before in Illinois.
Are there any fearless thinkers out there ready to take this on?