Chicago’s Fiscal Storm

Chicago’s problems are due to Democratic Party rule for decades. What logically follows is the need for Republicans to offer something different. Anyone who thinks everyone in Chicago is insane is wrong. Chicago’s problems can be solved if Chicagoans are offered something better by Republicans. So far, they haven’t been offered anything. Why? One big reason is because Illinois Republicans don’t know how to fight the information war.

Here is Steven Malanga writing at City Journal:

The deeply indebted city, with bonds already rated as junk, considers borrowing billions to cover its pension costs.

When Chicago issued half a billion dollars in new bonds late last year, some investors balked, though the offering was designed to protect them by guaranteeing that they would be paid with tax revenues that Illinois sends to its biggest city. “It’s an untested model,” the research head at Gurtin, a municipal bond firm, said of the offering—Chicago’s first under a new state law. Ominously, he worried that if Chicago defaults, it was unclear how much protection holders of the new debt would really get.

Even as Chicago grapples with nightmarish violent crime, the city faces imposing fiscal challenges. The city, which says that it will collect about $8.5 billion in local revenues this year, is burdened by an astounding $28 billion in unfunded pension liabilities and another $9 billion or so in money that it owes to general-obligation bondholders, as well as billions more in other debts. Chicago’s bonds, graded as “junk” by analysts, are among the lowest-rated of any major municipality. That forces the city to stretch the limits of municipal finance, seeking innovative techniques that might get new borrowers on board, but at the potential expense of taxpayers and holders of Chicago’s other debts. It’s becoming increasingly difficult to see how this ends well in the Windy City.

Read more at City Journal: “Chicago’s Fiscal Storm.”

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