But... we bailed out the banks, didn’t we? And AIG? And GM? Aren’t Illinois and Chicago that important – and deserving? Maybe. And, then again, maybe not. Who can say what a federal bailout would look like. Citizens in states that don’t have a problem could be forgiven for expecting retirees in broke states to take a haircut. (One that leaves the scalp showing through.) Debate over the terms of any bailout would be ugly. People who face a cut in their pensions would insist that they were promised the money. That a contract is a contract. To which that carpenter in Tennessee might answer, “But that contract wasn’t with me .” And then there is the small matter of finding the money. The federal government is already more than $20 trillion in debt and running very large deficits during a time of full employment. Bailouts do cost money and it has to come from somewhere. Would the country be obliged to add another few trillion to the national debt to accomplish the bailout? These are hard questions... So hard that Rahm Emanuel threw up his hands and walked away. Good luck to whoever comes next. Maybe he will get that statue. Geoffrey Norman is the author of 12 books of fiction and non-fiction and many articles for periodicals including the Wall Street Journal, Sports Illustrated, National Geographic, Esquire, Men’s Journa l , the Weekly Standard , and others.
As former New York Mayor Michael Bloomberg, who knows a thing or two about money and municipal finance, once said, “If somebody offers you a guaranteed 7% on your money for the rest of your life, you take it and just make sure the guy’s name is not Madoff.” Assume, then, that going more deeply into debt will not result in Chicago becoming debt-free. Assume, also, that it is merely a “walking point” and that many other jurisdictions will soon hit the pension wall. What then? Can Chicago go broke? Well, Detroit did. So what happens if Illinois goes down along with Chicago? And then Connecticut and New Jersey follow? And then the great state of California sinks under accumulated but unplayable obligations... markers that even Facebook and Google can’t cover. The cry will rise for a bailout. The governors and mayors will not be asking, either. They will be demanding. The country simply cannot afford to let more of its states go down. It will be painted as a matter of national security, even survival. But there will be plenty of people – voters, it should be remembered – in places like Tennessee and South Dakota and Florida who will wonder why they should be on the hook for promises made by politicians in states like Illinois that pay 63,000 civil-service employees’ salaries of more than $100,000 each. There are carpenters in Chattanooga who make half of that and whose retirement is their own responsibility. People who could be forgiven for thinking, “Let ‘em die.”
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November 2018
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