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Archive → July 7th, 2017

Illinois lawmakers are coming for taxpayers’ pocketbooks again

Moody’s Investors Service issued a statement July 5 explaining that Illinois is in a deep debt crisis, which the tax hike passed by the General Assembly won’t resolve. Moody’s is reviewing Illinois’ debt and might downgrade the state’s credit to “junk” status even if lawmakers override Gov. Bruce Rauner’s veto of the tax hike and budget proposal and they become law. That’s because the tax increase and budget proposal passed by the legislature don’t tackle the state’s core problems; they merely address the symptoms.

In other words, the General Assembly is putting a tax hike Band-Aid on a gaping financial wound. And that Band-Aid is paid for by raising taxes by $1,100 on the average Illinois household.

Illinois’ massive debt means long-term budget problems

The problem is that Illinois has unsustainable debts and not enough economic growth to expand the tax base. House Speaker Mike Madigan and Senate President John Cullerton have shepherded a tax hike plan that raises taxes but does nothing to rein in the cost drivers – such as pensions and unaffordable government worker compensation and benefits – that have saddled Illinois with so much debt. And the new tax hike will further hamper economic growth by driving still more people – and taxable income – out of the state, and reducing economic activity.

The legislative Democrats’ tax proposal only prolongs Illinois’ unsustainable spending while putting off the day of reckoning with the debt. In Moody’s words:

“So far, the plan appears to lack concrete measures that will materially improve Illinois’ long-term capacity to address its unfunded pension liabilities.”

Moody’s statement helps illustrate the difference between a debt crisis and a cash-flow crisis. Illinois has both – the state’s inability to pay its current bills is a cash-flow crisis, and the state is drowning in long-term debt. These two crises exacerbate each other. The interest payments on the state’s long-term debt increasingly soak up the state’s financial resources, making it more difficult to produce an annual budget in which spending commitments do not outrun tax revenues and other money that flows to state coffers.

Illinois’ debt stands to be downgraded by Moody’s even if tax rates rise. Moody’s pointed out that the Democrats’ tax and budget plan fails to address core credit issues, including:

  • Illinois’ $251 billion pension liability (Moody’s estimate)
  • Illinois’ $15 billion backlog of bills

It’s worth noting the budget plan also fails to address nearly $60 billion in long-term debt for retiree health care and tens of billions in bonded state government debt; the state is not even covering the annual interest cost on these debts. And the budget plan and tax hike don’t solve the problem of the tens of billions more in unsustainable debt carried by major local governments in Illinois, such as Chicago and Chicago Public Schools.

The Land of Lincoln is not even treading water on its debt service; that’s why the debt goes up each year. The state is drowning in red ink.

Moody’s also points out that Illinois lawmakers are using questionable math about tax collections. That’s because Illinois is already experiencing massive out-migration and weak economic growth, which are affecting current tax collections. From Moody’s note:

“The state’s baseline tax collections declined in fiscal 2017, suggesting that any tax increase may yield less revenue than anticipated in coming months.”

In other words, Illinois lawmakers are coming for taxpayers’ pocketbooks again, and this tax hike merely draws out the timeline when policymakers will get to work solving Illinois’ real crisis. Illinois is in a long-term debt crisis, yet state politicians are raising taxes to solve a short-term cash flow problem. The tax-hikers are voting to relieve the political pressure they feel, not the financial pressure that taxpayers feel, nor the state’s mounting debt crisis.

Illinois’ 2017 tax hike will end the same way as the 2011 tax hike – as a costly mistake. Residents will continue to pour out of the Land of Lincoln, and the state’s debts will spiral out of control. If the House overrides Rauner’s veto, 2017 may be seen as the year Illinois passed up its last opportunity to avoid a financial meltdown.

Michael Lucci

Vice President of Policy
P.S. Contact your state representative now and tell him or her to support Gov. Rauner’s veto and work toward a balanced budget that addresses Illinois’ debt crisis.

Source: Will County News

Declaring independence from government overreach

Declaring independence from government overreach

As Independence Day comes around again we should spend a few moments between barbecue and fireworks to think about the meaning of independence. The colonists who rebelled against the British Crown were, among other things, unhappy about taxation. Yet, as economist Gary North points out, the total burden of British imperial taxation was about one-to-two percent of national income.

Some 241 years later, Washington claims more of our money as its own than King George could have ever imagined. What do we get in this bargain? We get a federal government larger and more oppressive than before 1776, a government that increasingly views us as the enemy.

Think about NSA surveillance. As we have learned from brave whistleblowers like William Binney and Edward Snowden, the US intelligence community is not protecting us from foreigners who seek to destroy our way of life. The U.S. intelligence community is itself destroying our way of life. Literally every one of our electronic communications is captured and stored in vast computer networks. Perhaps they will be used against “dissidents” in the future who question government tyranny.

We have no privacy in our computers or our phones. If the government wants to see what we are doing at any time, it simply switches on our phone camera or computer camera – or our “smart” television. Yet today we continue to hear, “I’ve got nothing to hide.”

In a recent interview on our Liberty Report, Edward Snowden made the excellent point that, “saying that you don’t care about privacy because you have nothing to hide is no different than saying you don’t care about freedom of speech because you have nothing to say.”

Think about the TSA. The freedom to travel is fundamental, and our Fourth Amendment protection against unreasonable searches and seizures is the law of the land. But if you dare to exercise that right by purchasing an air ticket, you are treated like a Guantanamo Bay detainee. Don’t dare question as the TSA agents commit acts that would be crimes were they done by anyone else. Yet so many Americans still believe this is what it takes to be “safe.”

Think about the military industrial complex. The U.S. government spends more on its military empire than much of the rest of the world combined. Our so-called mortal enemy Russia spends ten cents to every dollar we spend on weapons of war. Yet we are told we must spend more! Imagine the amazing peaceful scientific discoveries that might be made were so many researchers and scientists not on the government payroll designing new ways to end life on earth.

Think about the Fed. Since the creation of the Federal Reserve in 1913 the U.S. dollar has lost some 98 percent of its value. Is the destruction of our currency not a cruel form of tyranny, hitting hardest those who can least afford it?

I think it’s time for us to declare our independence from an oppressive government that seeks to control our money and our lives in ways unimaginable to those who rebelled against the British Crown in 1776. Our revolution is peaceful, and it concentrates on winning hearts and minds one at a time. But it marches on. We must reclaim the spirit of independence every day and every night and intensify the struggle against those who seek to impose tyranny upon us.

Source: Will County News