Catalog of Failure: 21 Ways Illinois Progressives Betray the Poor and Middle Class – WP Original
“The chief cause of problems is solutions.”
– Eric Sevareid
By: Mark Glennon*
If Illinois Progressives were true to what they’re supposed be about — helping the little guy — we should all be one. But they’re not. Policies they’ve enacted and now propose are a catalog of unintended consequences, naivete, virtue signaling, willful ignorance and stuff that just doesn’t work.
Before the list, one note: Progressives will react to some of this by saying, “That’s why we want a progressive income tax.” Understood. I’ll address that separately below. And the fact remains that, without implementing a progressive income tax, they nevertheless support this agenda of failure:
• Property taxes. They’ve become the hot button issue in Illinois, and rightly so. They are nothing short of suicidal and confiscatory in many Illinois communities, often exceeding four and five percent. (See our detailed reports on those rates linked here and here.) And they are regressive — maddening for the rich but devastating for the poor — which is explained in detail in a 50 state report by the Institute on Taxation and Economic Policy. But Illinois Progressives have no problem raising them and show no interest in a cap or rollback.
• Chicago’s Affordable Requirements Ordinance. It’s horribly costly for apartment builders and reduces new construction, but affordability results are negligible. Ten percent of units built must meet affordable housing requirements. If, instead, the developer wants to allow for all units to be rented at the market rate, it must pay a fee of up to $175,000 per unit. In its first seven years the ordinance resulted in just 187 new affordable units. Under the tougher penalties now in effect, it has resulted in just 11 new affordable units this year.
• Corporate income tax. “Corporation” is used almost interchangeably with “rich” by Progressives. Taxing them is a good way to soak rich, as they see it. In truth — and this is not theory or opinion — corporations don’t pay any taxes. They collect them. And they don’t collect them progressively. Smarter Progressives have long understood that corporate taxes are ultimately borne by employees, shareholders, customers and suppliers.
• Chicago’s credit check ordinance. It’s intended to help people with bad credit find work more easily, but it has the effect of shifting employment woes to job applicants who are young or black. That’s according to a study by a Harvard prof and the Federal Reserve.
• Free college tuition. It’s been proposed most recently by Illinois Rep. Will Guzzardi, a Chicago Democrat. The problem is that free college actually amounts to a highly regressive giveaway to wealthy families, who are most likely to attend college, and especially likely to attend more expensive schools. As The American Interest wrote, the right name would be The Upper-Middle Class Welfare Act.
• The Chicago Housing Authority. The New Republic, among others who have written about the CHA, put it this way: “The Chicago Housing Authority has been quietly and steadily perpetrating some of the most disturbing institutional mismanagement in a city where jaw-dropping corruption is a spectator sport.” So, the CHA has become very rich, sitting on a surplus of $430 million of federal money unspent. But one thing it was sure to do — maxing out contributions to its pension, which is fully funded.
• Pensions. Spending on social services has been squeezed out chiefly by the continuing appropriation for ever larger, automatic pension contributions. Pensions account for a quarter of state spending. They are riddled with inequity. Senior pensioners at the top do exceptionally well and they include the union brass that rigged the system. On a full-career basis, they get annuities far exceeding the average household income of Illinois taxpayers paying for those pensions.
But it’s a different story for some pensioners. Teachers in Tier 2 (those hired after 2010) must serve at least 26 years in order to “break even” and earn a pension worth more than her own contributions. Only 18.5% reach the full retirement age of 67. They’re forced to pay extra to subsidize older, Tier 1 members who get far more generous benefits.
Chicago’s new proposal for its Municipal pension would worsen that inequality, creating a junior, Tier 3 system.
• The Welcome Home Illinois Loan Program. Launched by Governor Quinn in 2014, it provided $7,500 to first time buyers to help cover the down payment About $80 million was disbursed under the program to over 10,000 home buyers. Credit requirements were relaxed compared to conventional home loans. Results? With home values submerging in most poorer neighborhoods, many program recipients are underwater on their mortgage. It was a sub-sub-prime loan program that subsidized a bad investment for many.
• Chicago’s Homebuyer Assistance Program. It, too, puts credit-challenged people into homes with almost nothing down. In a city with declining population and stagnant or sinking home values (outside of the best areas), home ownership is a mistake.
• FHA program for underwater mortgages. This is a federal program but was widely cheered by Illinois Progressives when it was announced. For whatever reason, it just doesn’t work. RealtyTrac documented the numbers: In the Chicago area, it will give relief to just 1.1 percent of seriously underwater borrowers.
• School choice. Education is often called “the great equalizer,” as it should be. But it’s just not so when there’s no equality of choice — choosing a good school over a bad one. People with money can make that choice, but those with little money are stuck with the public schools they have even when they underperform. Progressives abhor school choice.
• Chicago’s new tax on sewer and water. It’s obviously regressive — a major burden on the poor but trivial for the rich. Progressives complained about that, but their aldermen accepted it in the end because it means new revenue, which they think is paramount.
• Indifference to the result of not increasing the Illinois income tax. Our flat tax is particularly unfair to the poor and middle class, Progressives say. If you accept that, the reverse is also true. It means not raising the income tax is particularly fair. The rollback of our temporary income tax increase meant about $5 billion per year stayed in the pockets of Illinoisans, flatly distributed. Make the case for raising taxes to pay for social services if you want, but you cannot entirely disregard, as Progressives do, the the other half of the equation.
• Punishing corporate wrongdoers by punishing corporations. Individuals who do wrong should be punished, not the corporations through which they acted. Arthur Andersen was the biggest example. The entire firm was destroyed, throwing tens of thousands out of work because of the wrongdoing of a few. Punishing corporations often lets the guilty off easy while other employees and shareholders suffer. Now, Illinois and Chicago Progressives want to ban Wells Fargo from state and city work, hurting not just those employees who are innocent but taxpayers who should have their money invested for the best returns.
• Blank checks for renewable energy programs. It’s not about whether you believe in global warming or the virtues of green energy. It’s about how best to spend money for renewable programs, and transparency about cost. While other states closely examine the multi-billion dollar cost for consumers and where that subsidy should best be spent, Illinois simply doesn’t care. Details are linked here. Once again, energy costs are horribly regressive.
• Excessive power of public unions. Progressives accept the common claim that support for public unions means support for the middle class. But public union members represent just three percent of Illinois’ population. They’ve obviously captured an out sized share of wealth through a spectacularly successful political coup, resulting in the pensions and labor rules that have bankrupted Illinois and many of its municipalities.
• Suckerdom. Progressives are chumps for gimmicks and stunts put up by the politicians they elect. Hat tip to Kristen McQueary for collecting some of these in a wonderful article on the subject. Those they elect will pass a bill out of one chamber but not call it for vote in the other. They know their Progressive supporters can be duped. Examples:
– School funding. Progressives cheer the speeches and hearings from their Springfield representatives on its unfairness, but when a bill got to the House it didn’t even get a hearing.
– Elected school board. Same thing for an elected school board in Chicago. A bill for it passed the House on a 110-4 vote, but it sits dormant in John Cullerton’s Senate.
– The “Millionaire’s Tax.” Knowing its popularity among Progressives, Illinois Democrats put it on the 2014 ballot to drive voter turnout and it got 64% of the vote. Can’t get past the Democratic-controlled House, though. (And it’s a good thing it didn’t because millionaires are already fleeing. Chicago has the fourth highest rate of millionaire flight in the world.)
– Graduated income tax amendment. Legislation that would have put a constitutional amendment on the November ballot for a graduated income tax passed the Senate, but Madigan and friends wouldn’t call it for a vote in the House. “The panacea of all that ails Illinois’ finances — the so-called fair tax — died in Madigan’s supermajority Democratic House,” as McQueary said.
– Minimum wage. Madigan put the advisory question on the ballot to boost voter turnout from Progressives in 2014. Action on it by the Dems who cried for it? Nothing. There’s also the long-debated question about whether the benefit of higher wages is offset by fewer jobs.
• Open borders and sanctuary city status for Chicago. Does anybody really think that 450,000 illegals here in Illinois don’t suppress wages and raise unemployment for the working class? This one shouldn’t require much explanation. The immigrants are hard workers and they come here to work.
• Tax on sugary drinks. Cook County is considering one and some Democrats have been pushing for statewide legislation. The Cook County tax would reportedly be as much as three-quarter of a penny that could add $2 to the cost of a 24-can case of soda pop and an extra dime to the price of a 12-ounce fountain drink sold at a restaurant or bar. That’s serious money for the poor and would fall hard on mom-and-pop restaurants and retailers.
• Head tax. Some Chicago Progressives are now clamoring for reinstatement of one of the most unpopular and foolish taxes ever imposed — a monthly, per-employee head tax. The more you hire the more you pay. It would directly promote unemployment.
• Financial transactions tax. It’s not just that this tax would chase off one of Chicago’s golden geese — the financial sector. It’s also about why that sector alone should be singled out for a massive tax burden. The unstated premise of Progressives is that traders are all evil gazillionaires — Ken Griffins and hedge fund types, as Progressives see them. Lost on Progressives is that on the other side of every winning trade is a loser. That’s why Chicago is so full of former traders.
That list above is particular to Chicago and Illinois. It could be extended to a bigger list of more fundamental issues often debated on a national scale. The entire culture of dependence and complaint-based, identity politics is built on a list of other of Progressive policies. They are deaf to the consequences of their own programs and blinded by their own commandments of political correctness.
Progressives support a graduated income tax, which indeed might correct for some things on the list. It’s the solution to inequality and to our fiscal crisis, many Progressives think. I suspect most Illinoisans would support it in some form but only if drastic reforms come first. Few want to pay more tax into the bottomless, corrupt sinkhole we have now. Those reforms probably would have to include ending the Chicago Machine’s control over the General Assembly, I suspect.
And that’s the problem. Those reforms won’t come. For proof that Illinois wouldn’t put up with a huge tax increase without accompanying reform, look no further than the conduct of the Democrats Progressives elect. Even when they held the governorship and super majorities in both houses of the General Assembly, they would never actually put a progressive tax up for a vote. They know a huge tax increase would be the end of their careers, even if it’s concentrated on the rich.
That dead end won’t stop Progressives from continuing to press an agenda that betrays the poor and middle class.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.