Don Rose. Introduction by b. traven.
Chicago may be this country’s “Second City” but it may also be a microcosm of the three card monte our politicians play with our national debt. In this article Don Rose, our political strategist of Chicago, dissects how Chicago pols keep escalating the city’s debt, even as they pass it along to future generations to pay.
On a national scale both Republicans and Democrats play the same game but the Republicans don’t want to wait for a bond rating downgrade. Instead, they’d prefer to take their pound of flesh immediately by eliminating or reducing government programs that benefit the 99% of the poor and middle class to pay for their wars of choice and tax cuts for the 1%.
One thing is for sure: Even as the rich get richer, the rest of us are witnessing the hollowing out of America. b. traven
Is Chicago on the Road to Detroit?
By Don Rose
Other than a bit of envy of its football and baseball teams, the image Detroit summons up in most Chicagoans is fear. Bankrupt, depopulated, no future. Can we be headed in the same direction?
Of course not. Oh, sure–we forced a couple of hundred thousand African Americans out of town, but we’re still pretty well populated. Besides– Detroit was a single-industry town, dependent on the automotive business, which moved farther out of town and lost market share to the Japanese and Germans (who we thought lost a war to us).
Chicago, on the other hand, had many industries. When we lost steel and meat packing we had finance, among others, to fall back on, and we’re still a transportation center. Thus we did not collapse the way other rust-belt cities, dependent on single industries, did. It made folk like Richard J. Daley look like geniuses.
As it turns out, however, the genius of the first Daley was in the art of fiscal coverup. He had to keep the downtown businesspeople happy by doing all in his power to restrict and suppress the population growth of African Americans–which proved expensive. He carved expressways as barriers, but spent even more to create a dual school system, the cost of which was lied about with the complicity of the town’s top bankers. When Jane Byrne succeeded Daley she found the schools were close to bankruptcy and started a process of borrowing to meet the debt.
Wonderful idea, borrowing. Every mayor since–with the exception of Harold Washington–let us sink further into debt and patched up the books by issuing more and more bonds and skipping pension payments, then doing fancy financial finagling through sophisticated derivatives called swaps. Only Mayor Washington had the courage to recognize reality and save the city from disaster by raising property taxes.
Fast forward past another Daley who kept borrowing and sold off pieces of the city to cover some debt, leading to near disaster when the 2008 recession came along and heavy penalties had to be paid on those swaps.
He was succeeded by Rahm Emanuel, who knows an awful lot about raising money for his own campaigns and helping enrich his friends through various forms of pinstripe patronage, but doesn’t seem to know how to fix the city’s deficits. They have only grown worse, barely mitigated by some regressive “user fee” taxes on telephones, parking and a money-grubbing system of red-light cameras that issues hundred-dollar tickets galore–by most estimates the equivalent of a huge property-tax hike. So he covers more and more of the debt through more and more borrowing–including those deadly swaps–for the city and the school system.
Suddenly last week more chickens came home to roost when Moody’s lowered Chicago’s bond rating to an inch or two above junk, further increasing the ultimate debt. It was the fifth downgrade in Emanuel’s four year term, driving us closer and closer to Detroit.
Don’t you wish he could have done as well for the real Chicago as he has for himself and his campaign donors?
Don Rose is a long-time political strategist (now retired) who is part of the conscience of Chicago.