Update 9/2/14. Dave McKinney has accepted a job a Reuters, and apparently will cover Illinois issues. This is a tragedy. Political reporters are not financial reporters. They just don’t know what they are talking about, regardless of bias. Can’t one major news agency, aside from The Bond Buyer, please assign somebody to Springfield who understands fiscal issues?

 

By: Mark Glennon*

 

What on earth was Crain’s thinking when it added Dave McKinney as a political columnist? Yesterday, it published a major piece by McKinney, The Illinois Pension Disaster: What Went Wrong. Crain’s says it will be publishing more by him. They’ll have a trifecta. Their two other political columnists, Greg Hinz and Rich Miller, are among the most brazenly partisan in the state. Editorials in Crain’s are often more balanced, but its reporting now will be completely stacked. The Illinois press, especially Crain’s, should try some introspection when it asks, “What went wrong?”

 

The story itself isn’t so bad — as far as it goes and as far as we can tell, that is. We’ll get to that in a minute. But on a piece describing something as obscure and complex as the history of the pension crisis, you need to trust the author to some extent. Dave McKinney won’t cut it.

 

You may remember what The Washington Post called “the monster ethical issue” when McKinney left the Sun-Times last year. He was covering the Pat Quinn-Bruce Rauner race when it became known, to the surprise of most, that his wife is a key Democratic political operative specializing in messaging. She’s extremely effective by all accounts.

 

“Either the Sun-Times should have bumped McKinney from the race early on, or it should have run disclaimers on his stories,” according to the Washington Post. They didn’t.

 

The matter came to a head after a particularly harsh article co-authored by McKinney about then-candidate Rauner supposedly threatening a CEO of a company his firm had invested in. The story was a malicious hit piece, some thought, including me. The timing a few weeks before the election didn’t seem accidental. It was based solely on hearsay, by a guy who would not confirm it, about a woman who changed her story under oath, regarding a threat she never heard herself, in a case that was thrown out for lack of evidence. McKinney resigned. Maybe he was pushed — he said his editors at the Sun-Times “didn’t have his back” anymore. (Kudos, Sun-Times.)

 

Another hint of what to expect from McKinney came last month in Chicago Magazine, where he wrote to grade Rauner on his record honoring campaign promises. Take a guess at the grade. A Democratic strategist wouldn’t t have written the article differently, even McKinney’s wife. Rauner got a C+.

 

Back to his pension story, it’s quite good in many ways and certainly worth reading — new information on the history, interviews with key people and nice graphics. But its primary goal is obviously to deflect blame by emphasizing that both parties caused the crisis. That’s unquestionably true and it’s a message Illinois Democrats surely want to put out. But are there more important elements to what went wrong? Did McKinney allocate blame fairly? Did he ask why both parties blew it? A clever reporter can spin the history in many ways.

 

“[P]erhaps the most enduring culprit is the Edgar ramp,’ conceived in 1994 by Republican Gov. Jim Edgar,” writes McKinney. Edgar indeed is a culprit. He still doesn’t understand the scope of the crisis. But many of us think it’s clear the most “enduring culprit” is that pension benefits are simply too generous, which McKinney barely mentions. McKinney heaps blame on former Governor Thompson, too, some of which is deserved. But come on, he’s been out of office for 24 years and the unfunded liabilities were peanuts then. His primary error was signing off on the minimum 3% COLA, which seemed like a no-brainer coming out of the hyper-inflation 1980s.

 

More importantly, McKinney should have asked why Republicans like Edgar and Thompson never seriously took on pensions. The primary answer is that public unions were too strong then to consider challenging. He might have interviewed former Edgar Chief of Staff Kirk Dillard, who ran against Rauner in last year’s primary, thinking that was still true. As a Rauner supporter, I had a heated exchange with Dillard where he passionately and sincerely argued why Rauner is suicidal for challenging unions. “You don’t know how bad it will be. Busloads of union people will be everywhere and you won’t have a chance” — something to that effect, he said.

 

I won’t try to pick the rest of the article apart, except to point this out, because it’s a whopping error all reporters make, and it should be pounded into readers’ heads: The officially reported numbers McKinney worked off of are bunk. Most conspicuously, the unfunded liability for Illinois pensions is at least 50% higher than McKinney says, just by reason of healthcare costs that were ruled last year to be constitutionally protected along with other pension benefits. The story is mostly about how the politicians didn’t understand the numbers. Most still don’t. Few people do. The press isn’t helping.

 

There’s far more to what went wrong than McKinney covered, but let’s give him a pass on that because his story was already long and maybe he intends to write further.

 

Which brings us to the real point — the full story of what went wrong in the Illinois pension saga. It should include lousy reporting. The Springfield press corps, to a person, didn’t understand it. And how many of Springfield’s regular reporters have been willing to cross their predominantly blue readers and public unions? One, maybe two. Lately, it has improved a bit, and many reporters have long done a great job exposing the red meat stories of pension abuse like spiking and double dipping,

 

The next chapter on pensions will be the hardest for reporters. The fights over pension solutions will become exceptionally complex because of legal issues, variations among municipal pensions, new accounting standards, actuarial changes and more, probably including bankruptcy in some cases. The stories will get horribly technical and the politics will be vicious. The chance for error will increase and the opportunity for distortion by partisan reporters will grow.

 

That’s why Dave McKinney was a bad choice for Crain’s. Let’s hope other publications do better.

 

*Mark Glennon is founder of WirePoints. Opinions expressed are his own.

 

 

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Mike

Dave McKinney’s article does not list one single House Bill number, Senate Bill number, or Public Act number, an act of poor political journalism by Mr. McKinney and Crain’s editors.

Anonymous

66% of corporations pay no state income tax. Corporations pit states against each other for tax breaks in a race to the bottom. All for jobs that never appear. Archer Daniels Midland’s requested tax cut would have allowed ADM to keep the 3% Illinois tax deducted from employee’s payroll for themselves instead of giving the money to the state. We don’t have a pension problem, we have a corporate tax avoidance problem.
Illinois is not broke…WE’RE BEING ROBBED BLIND !!!

mark glennon

No. 100% of corporations pay no tax. They collect them, and they don’t collect them progressively. That’s why progressives with any brains don’t like the corporate income tax.

100% agree. What about Chicago? Should Republicans get the blame there? Cook County? Maybe we blame Republicans there? Chicago Teachers? Blame Republicans. Republicans might have been complicit, but they weren’t the ring leaders.

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