Illinois Democrats' Astounding Reversal On Pensions

Are they wrong now or were they wrong then? Today, they say the opposite of what they told the public and the courts five years ago...

Governor J.B. Pritzker has made his position clear on pensions: No benefit reductions. No reforms. Not necessary. Just pay them.Nobody in his Democratic party has voiced any dissent and they hold super-majorities in both the House and the Senate.

But consider what the state argued in court and the General Assembly said in legislative findings five years ago to defend SB-1, a pension reform bill: Benefit reductions, not tax increases, were essential. That was in 2014 when Democrats also held the governorship and supermajorities in the legislature.

Democratic Attorney General Lisa Madigan, daughter of the House speaker, made the case. The pension problem and the fiscal crisis it caused were so severe that the rarely used “police power” doctrine justified cutting pensions, as SB-1 would have done, overriding the state’s constitutional pension protection clause. Her court pleadings were based on extensive analyses completed by three economists she offered as expert witnesses.

Her case was based on the same points that financial realists and pension critics had been saying all along – that increasing taxes or cutting services instead of cutting some benefits would worsen the flight of employers from the state and devastate the poor. Our article on her arguments from that time is linked here. Today, that article reads as if Madigan was prescient.

She and her economists got specific:

Raising taxes instead of making the pension cuts under SB-1 wasn’t a workable alternative, they told the courts. Doing so would reduce economic activity in Illinois by 1.1% and cost the state 64,000 jobs, “economically disadvantaging Illinois and worsening its competitive position.”

If the state tried to pay for pensions through spending cuts instead of higher taxes, cuts would hurt those most economically disadvantaged, they argued, hitting education, healthcare and social programs.

Respecting the flight of employers from Illinois, they said it was not the big corporate headquarters with well paid executives that were most subject to flight. Instead, manufacturers and transportation companies providing living wage jobs were most at risk.

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