A piece in the Wall Street Journal at the end of last week with the above title and subtitle reported more about what we already know—but they got an important fact wrong.
The precarious financial situation in liberal states is the big story no one wants to talk about, but maybe Illinois voters will start to pay attention with the new report from former New York Lieutenant Governor Richard Ravitch and former Federal Reserve Chairman Paul Volcker. “Illinois has been doing backflips on a high wire, without a net,” they write as part of their State Budget Crisis Task Force.
Make that a triple flip with a double twist. The problems are familiar yet keep getting worse. Unfunded pension liabilities now total more than $85 billion, while Medicaid liabilities have doubled in 10 years and are “growing far more rapidly than tax revenue.” Rampant borrowing through the sale of pension bonds has made Illinois debt per capita one of the highest and its credit rating the worst.
Based on a projected $27 billion cash deficit in Illinois in 2021, the University of Illinois Institute of Government and Public Affairs Fiscal Futures calculates that “if the projected deficits were paid for by borrowing, debt service costs would grow to consume all sales tax and income tax collections in just five years.”
Here’s what they got wrong:
The underlying political problem, which Messrs. Volcker and Ravitch tiptoe around, is the double helix of government unions and Democratic politicians. Each side sustains the other, as if they can keep soaking Illinois taxpayers forever. Sooner or later the charade will collapse. Maybe sooner.
Democratic politicians? Who told them that? Republican politicians in Illinois have been an important part of the bankrupting of Illinois for decades.
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