Editor’s Note: Why is commentary about Illinois relevant to California? Because if you read this, written by economics blogger Mike Shedlock, all you have to do is substitute “California” into every sentence where “Illinois” appears, and it would still be accurate. The only thing missing from California is an entrenched speaker of the state legislature – thanks to term limits. But otherwise California is worse than Illinois, where at least a fiscal conservative GOP governor opposes the corrupt power of the union controlled legislature. Because in California, government union backed candidates occupy every higher office, from state superintendent of public instruction to attorney general to governor. Union backed candidates control super-majorities in both houses of the state legislature. California, even more than Illinois, is firmly in the grip of unionized government, serving itself, colluding with wealthy elites, and waging war on the middle class.
One Word: Corruption
One Idea: Public Unions
One Person: House Speaker Mike Madigan
On Saturday, union servitude came to an end in Kentucky: State Kills Prevailing Wages, Passes Right-to-Work
No such chance exists in Illinois despite the fact that corruption, prevailing wages, pension disasters, public unions, and the dire fiscal straits of Illinois all go hand in hand.
Illinois is under the hard control of House Speaker Mike Madigan who is the Legislative Branch Dictator. Nothing gets passed without his approval.
- Dole out committee chair positions and the stipends that come with them.
- Control who votes in committees.
- Dictate when a bill will be called for a vote.
- Control what bills make it to a vote.
Under House rules in Illinois, these committee chairs are appointed by and serve at the pleasure of the speaker. This means the speaker may remove and replace committee chairs for any reason at any time. Additionally, the speaker can create new special committees, and thus dole out even more chair positions.
The speaker’s influence doesn’t end there. Each of these committee leadership positions comes with a generous $10,000 yearly stipend. These stipends help push Illinois lawmakers’ salaries to the fifth-highest in the nation.
Total average compensation for lawmakers is now nearly $100,000 for what is essentially part-time work. Those stipends help boost the pensionable salaries of lawmakers who participate in the state pension plan, making the positions much more attractive than one might guess at first glance.
Illinois legislators benefit from their own corruption and Mike Madigan intends to keep it that way. His tax firm is one of the biggest beneficiaries of his power.
The state could benefit from pension reform, workers’ compensation reform, property tax reform, school reform, bankruptcy reform, prevailing wage reform, and right to work reform.
None of them have a chance because Madigan will not let a single bill out of committee.
Those who cross Madigan find themselves ousted from committee perks at a cost of $10,000 per.
Illinois corruption is so bad that it’s no wonder Illinois loses 1 resident every 4.6 minutes, and could fall behind Pennsylvania in population.
About to Become Number Five
Plea for Help
Madigan’s only answer is higher taxes. But higher taxes and union corruption are the driving force behind citizens leaving the state.
Higher taxes, union work rules, and unfriendly corporate rules, especially workers’ compensation, are the driving force behind the Illinois business exodus.
Meanwhile, cities are squeezed by prevailing wage laws and the lack of right-to-work laws that drive up expenses for every public project.
There is some hope at the national level thanks to the incoming Trump administration. To get things off on the right foot, the new U.S. legislature needs to do three things to help states like Illinois right themselves.
Three National Level Priorities
- National right-to-work legislation that supersedes state legislation
- Scrap Davis-Bacon and all prevailing wage laws
- Bankruptcy legislation that allows municipalities to file when they want to, not when dictators like Madigan allow them.
In regards to point number 3, bankruptcy law is currently a mixed bag. Municipal bankruptcies are governed by Federal law, not state law. However, the existing law lets states decide whether to opt in. Illinois did not.
The Chicago Public school system is bankrupt in all but name. There are also more than a handful of Illinois cities that desperately need to get out from pension promises that absolutely cannot be met.
The only rational solution is bankruptcy, not higher taxes. The later will drive more businesses and citizens away.
It’s not just for Illinois that needs help. The National Right To Work Map looks like this (Kentucky not penned in yet).
Illinois and other states hamstrung by public unions, pension woes, and high costs three things at the national level: right-to-work laws, bankruptcy reform, and prevailing wage elimination.
The Illinois Chamber of Commerce and the Chamber of Commerce of each Illinois city need to make their representatives aware of what needs to be done.
It would also behoove the Illinois chambers’ of commerce to reach out to plighted cities in other states so their respective chambers preach the same message to their legislative representatives.
Mike “Mish” Shedlock is an American investment advisor and financial commentator. He operates the blog MishTalk.com, offering economic trend analysis. Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management, an asset management firm whose goal is strong performance and low volatility, regardless of market direction. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education.