In the genteel environs of the Commercial Club of Chicago, a bastion of the business establishment since 1877, the luncheon declaration was a jarring call to arms.
“You ought to be pissed off!” said W. James Farrell, club chairman and retired chairman and chief executive of Illinois Tool Works Inc., deliberately channeling the television anchor Howard (“I’m as mad as hell, and I’m not going to take this anymore”) Beale in the film “Network.”
Mr. Farrell’s audience at the Chicago Club on Jan. 12 was a business elite present and past — indeed, some from so far back that they resembled a Madame Tussaud’s of the pinstriped class. The topic was “Illinois State Finance: A Study in Failure.” The message was grim, the details troubling and the battle plan problematic.
The state’s budget pickle is neither new nor very debatable. It dates to the 1970s and responsibility is bipartisan. Every year since the 1970s and under every governor, say several former state budget experts, Illinois put hundreds of millions of dollars less than needed into the pension system, except for a pension bond in 2004.
The shortfall is a combination of the unfinanced pension liability from past years and normal annual costs of pensions earned each year in the state’s five pension systems.
The annual, so-called embedded deficit grows to the sky as the state spends about $3 for every $2 of revenue and is averse to meaningful budget cuts and dealing with the politically risky pension issue. It fails to make the proper payments into the pension fund and the debt and interest compound and the state has to borrow more.
From 1995 to 2003 the liability more than doubled, to $43 billion, mostly as a result of purposeful under-funding, but also because of unfunded benefits adopted by statute as well as investment losses.
This year, the unfunded pension liability will be in the range of $79 billion. So the Illinois bond rating is A1 — only California’s is worse. Extreme measures are needed, like selling state assets and hiking employee contributions.
Since the public tunes out, what do you do? One could go the Domino’s Pizza route and run a commercial admitting a total screw-up. Instead of admitting your crust is like cardboard, have past governors and Springfield pooh-bahs, like House Speaker Michael Madigan, admitting fiscal malfeasance: “Sorry for bankrupting you, suckers.”
One might heed the suggestion of a successful Hollywood producer friend, who believes people are basically selfish and apathetic and must be jarred awake by cold, harsh terms. So public service announcements might depict the lives of citizens and their children “in the most Dickensian manner — ‘This is what your life will be like if x happens.’ ”
Laurie Glenn, a Chicago publicist who specializes in public policy, finds inspiration in citizen anger over privatization of Chicago parking meters. “Take three issues of concern to people — safety, education and health care — and identify the most crushing losses that will take place unless the state does something. Create fear. Sorry, that sounds brutal — but unless people are afraid of real loss it is hard to get them to care.”
For its part, the Commercial Club does not preclude the notion of urging tax hikes and wants to raise several million dollars for a campaign that would include key members talking to groups around the state. Be cautious, guys.
The image of business, and its frequent handmaidens, lawyers and accountants, isn’t too positive these days. Let’s not forget the subprime mortgage debacle, predatory lending, federal bailouts, suspect bonuses and unregulated trading in convoluted instruments.
Then there’s the irony of business bashing unions for hefty pensions. Each group shares benefit assurance, and a sense of entitlement, which are fast-fleeing for most of us.
By and large, both groups have railed against President Obama’s proposed taxes on “Cadillac” health care plans. They are all relics of an eroding compensation structure that pays little heed to actual performance, underscored by Morgan Stanley on Wednesday announcing companywide salary and benefit increases despite losing nearly $1 billion last year.
At a minimum, the mostly white-male club needs a charismatic spokesman and to reach out to independents, the poor and others. Focus less on a media campaign than on devising a solution among a wide range of stakeholders. This must be collaborative, have a structure of shared sacrifice and gin up a new trust in government to effectively deliver services.
Otherwise, they’d be just as well taking the money and donating to relief efforts in Haiti.
by JAMES WARREN | Jan 23, 2010
In the genteel environs of the Commercial Club of Chicago, a bastion of the business establishment since 1877, the luncheon declaration was a jarring call to arms.
“You ought to be pissed off!” said W. James Farrell, club chairman and retired chairman and chief executive of Illinois Tool Works Inc., deliberately channeling the television anchor Howard (“I’m as mad as hell, and I’m not going to take this anymore”) Beale in the film “Network.”
Mr. Farrell’s audience at the Chicago Club on Jan. 12 was a business elite present and past — indeed, some from so far back that they resembled a Madame Tussaud’s of the pinstriped class. The topic was “Illinois State Finance: A Study in Failure.” The message was grim, the details troubling and the battle plan problematic.
The state’s budget pickle is neither new nor very debatable. It dates to the 1970s and responsibility is bipartisan. Every year since the 1970s and under every governor, say several former state budget experts, Illinois put hundreds of millions of dollars less than needed into the pension system, except for a pension bond in 2004.
The shortfall is a combination of the unfinanced pension liability from past years and normal annual costs of pensions earned each year in the state’s five pension systems.
The annual, so-called embedded deficit grows to the sky as the state spends about $3 for every $2 of revenue and is averse to meaningful budget cuts and dealing with the politically risky pension issue. It fails to make the proper payments into the pension fund and the debt and interest compound and the state has to borrow more.
From 1995 to 2003 the liability more than doubled, to $43 billion, mostly as a result of purposeful under-funding, but also because of unfunded benefits adopted by statute as well as investment losses.
This year, the unfunded pension liability will be in the range of $79 billion. So the Illinois bond rating is A1 — only California’s is worse. Extreme measures are needed, like selling state assets and hiking employee contributions.
Since the public tunes out, what do you do? One could go the Domino’s Pizza route and run a commercial admitting a total screw-up. Instead of admitting your crust is like cardboard, have past governors and Springfield pooh-bahs, like House Speaker Michael Madigan, admitting fiscal malfeasance: “Sorry for bankrupting you, suckers.”
One might heed the suggestion of a successful Hollywood producer friend, who believes people are basically selfish and apathetic and must be jarred awake by cold, harsh terms. So public service announcements might depict the lives of citizens and their children “in the most Dickensian manner — ‘This is what your life will be like if x happens.’ ”
Laurie Glenn, a Chicago publicist who specializes in public policy, finds inspiration in citizen anger over privatization of Chicago parking meters. “Take three issues of concern to people — safety, education and health care — and identify the most crushing losses that will take place unless the state does something. Create fear. Sorry, that sounds brutal — but unless people are afraid of real loss it is hard to get them to care.”
For its part, the Commercial Club does not preclude the notion of urging tax hikes and wants to raise several million dollars for a campaign that would include key members talking to groups around the state. Be cautious, guys.
The image of business, and its frequent handmaidens, lawyers and accountants, isn’t too positive these days. Let’s not forget the subprime mortgage debacle, predatory lending, federal bailouts, suspect bonuses and unregulated trading in convoluted instruments.
Then there’s the irony of business bashing unions for hefty pensions. Each group shares benefit assurance, and a sense of entitlement, which are fast-fleeing for most of us.
By and large, both groups have railed against President Obama’s proposed taxes on “Cadillac” health care plans. They are all relics of an eroding compensation structure that pays little heed to actual performance, underscored by Morgan Stanley on Wednesday announcing companywide salary and benefit increases despite losing nearly $1 billion last year.
At a minimum, the mostly white-male club needs a charismatic spokesman and to reach out to independents, the poor and others. Focus less on a media campaign than on devising a solution among a wide range of stakeholders. This must be collaborative, have a structure of shared sacrifice and gin up a new trust in government to effectively deliver services.
Otherwise, they’d be just as well taking the money and donating to relief efforts in Haiti.