Friday, December 18, 2015

Governor Rauner: the rent-seeker you can have a beer with

Illinois' new governor, like much of his party, has recently been blaming Democrats for mishandling the state finances. Republican state representatives concur that "it's up to the Governor to bring spending back in line with revenues," that it's "Chicago Democratic leaders who have held up the budget process." Adding a personal flourish to the the message, representative David Leitch condemns "the ineptitude of the entrenched super-majority." Representative Ron Sandack states proudly that the Republican Party will "stand together" in the face of these troublemakers.
 
The corporate press is not so convinced that the blame lies solely with Democrats (which I guess should tell you something) but cannot bring themselves to squarely face the real underlying problems either. To blame Rauner and his allies would feel unbalanced, maybe bordering on psychotic. Crain's Chicago Business' Rich Miller complained that while "Rauner won't even talk about crafting a state budget until his nonbudget demands are met," on balance his opponents "refuse to see the damage they've done to this economy with their decidedly not pro-business laws" which protect the working people of the state. A profile bythe New York Times hailed as a devastating undressing of the oligarchy included the received wisdom that Illinois is broke due not only to elite negligence, but the will-to-power of teachers and firefighters. "Public employee unions, assured that the state’s Constitution made their retirement benefits untouchable, focused on lobbying for other spending. By last year, the state owed billions more in unpaid bills."

One error in this view is the assumption that the failure of the pension fund, and therefore much of the budget impasse, was a result in any way of worker lobbying. As I've discussed elsewhere, the focus on employee pensions is partially a distraction from the failure of the banks and their allies to make good on promises. The pensions shortfall began immediately after they were privatized by a Republican governor in 1982 with a promise of higher returns. When the privatized pension fund failed to live up to its promised amount, as predicted by Governor Thompson's own commission, the banks got a bailout, but the state government refused to fix the Goldman Sachs-created gap in the pension fund stocks.

A second error is the word "untouchable." The pension funds are anything but. They not only provide a reliable source of money to the market itself, but are a source of fees for the firms that "manage" them. Those firms are connected both to the mayor of Chicago and Rauner himself. In addition to facing the people with outright personal histories with these companies, employees and the people of Illinois are now up against what the conservative Illinois Review has noted are "Chicago's wealthiest families - the Crowns, the Pritzkers, etc." who have taken to lobbying to cut pensions because they "mean business."

The solution that Rahm Emanuel and the Republicans and the corporate media are holding out for is for the people of Illinois to plug this hole with cuts to essential services and wage penalties. 

What's truly unfair about this, besides the cuts themselves, and besides that the entire mess can be laid at their own feet and can possibly be solved with a moderate adjustment to the payment plan, is that the governor himself along with other economic winners use a tax shelter in Montana to avoid plugging the hole with their own money.

In 2014, the Chicago Tribune reported Rauner's "strong interest in open land conservation" that led him to win a spot on the Montana Land Reliance, a trust that his campaign was quick to note produces beer. Another sitting trustee is Hamilton E. “Tony” James, the CEO of Blackstone which "manages" the "untouchable" pensions. Conservation is not the only benefit of being a trustee, according to a publication by Montana State University. The other benefit is that "the donor of a conservation easement in perpetuity may also be eligible for certain tax benefits...The gift of a perpetual conservation easement to a qualified receiver can qualify as a charitable deduction for federal income tax, state income tax, inheritance and estate taxes. Term easements are not tax-deductible. To qualify for tax benefits, an easement must be for “conservation purposes” outlined in the Tax Treatment Extension Act of 1980 (Public Law 96-541)."

The majority of pollution in Illinois comes from the energy and transportation sectors. Despite protests, not only will Illinois coal mining surge to an "estimated 60 million tons being mined next year, up from 50 million this year," but Rauner has teamed up with a man the Illinois government website has labeled an "avid conservationist," Wayne Rosenthal. The Huffington Post's Illinois environmental writer has a different take. Rosenthal's environmentalism in practice includes "being an enthusiastic supporter of fracking" while receiving "at least $20,000 in campaign contributions from corporate interests he would be charged with regulating."

Governor Rauner and his friends are clearly dodging taxes which used to get you in trouble in Chicago. But I suppose we first have to slay the terrible beast of the legal protection of the people in Illinois before we sort out a problem like that.

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