There's been a lot...

...of Sturm und Drang in the 2016 presidential race lately. 

On the Republican side, donors are worried about Jeb. Can the former governor of Florida overcome W.'s legacy? Will he ever learn how to answer a tough question? Is Scott Walker leading in the early polls? Is Marco Rubio coming up fast along the rail? Or is Rand Paul? And who will, and won't, be in the first Republican debate in two months?

As for the Democrats, will Hillary's email and Clinton Foundation "scandals" stick? Will she ever meet the press? Will President Obama's approval ratings prove to be a drag on the Democratic ticket? Is Bernie Sanders for real? 

And blah, blah, blah...

But do you know what hasn't changed? The betting and prediction markets. Over there it's the same old, same old: Hillary still beats Jeb in 2016.

P. S. We'll let you know when that changes.

When I hear Gov. Bruce Rauner...

...speak, I have to admit: this guy is smooth.

I have no trouble believing Rauner made almost a billion dollars over the years. He could sell snow to the Eskimos! I mean, the indigenous peoples who have traditionally inhabited the northern circumpolar regions of North America and parts of Greenland and northeast Siberia.

But is Gov. Rauner really, as he seems to say here, the champion of the middle class? The "workin' families"? Does he represent "the people of the state, the taxpayers, the homeowners, the schoolchildren and their parents, small business owners, truck drivers, factory workers, plumbers and carpenters?"

Or does Bruce Rauner have a different constituency?

(By the way, I don't doubt for a minute that Michael Madigan and John Cullerton aren't as pure as the driven snow; in fairness, they and their Democratic colleagues got Illinois into the mess it's in. And only an honest, fair-minded Democrat, a la Jerry Brown in California, can get us out.)

But, as John McCarron writes in the Chicago Tribune, "For fortunate few, status quo in Illinois is just fine" (my emphasis):

At the top is Illinois' relatively low, flat-rate state income tax. A feature locked in by the 1970 constitution, the tax allows our highest-paid corporate executives to pay at the same rate — newly reduced to 3.75 percent — as the workers who scrub their floors and mow their lawns. Can't beat that.

Then there's the way Illinois funds its public schools — with a system that ties available funding to the assessed value of real estate in one's school district. This way, in Winnetka, where the governor raised his kids, the high school district last year was able to spend $21,372 per student. How sweet is that?

Property taxes up there are a backdoor bargain, you see, because most homeowners can deduct them from their federally taxable incomes. The higher your property taxes and the higher your federal tax bracket, the bigger your discount. And you wondered why there's rarely a tax revolt along the North Shore.

Then there's the way Illinois taxes corporations. The corporate income tax used to be levied against company profits using a formula that also considered the value of its property and the number of its in-state employees — the better to gauge a company's use of state services. But in 2001, to make Illinois "more competitive," this was changed so as to tax only those profits gained from sales in Illinois. Our multinational firms cheered (think Caterpillar, Deere, Boeing, etc.) but our state annually loses multimillions.

That "reform" plus other handouts have lowered the share of state income taxes paid by corporations from about 20 percent in 1970 to about 15 percent last year. Actually the majority of Illinois corporations pay no income tax. Nada. Zero. Then again, many are small "Chapter S" corporations whose owners pay tax on their profits as individuals. They also tend to drive really nice, tax-deductible cars.

I actually think Gov. Rauner is a sincere guy who believes what he says. Of course he thinks looking out for the richest one percent is the way to go -- it conforms with his worldview. But when the governor speaks, you have to ask yourself: Is he really looking out for people like me, or as John McCarron writes, the fortunate few?

The situation is "dire," according...

...to a recent article in the New York Times, "Pensions and Politics Fuel Crisis in Illinois." 

That characterization should come as no surprise to anyone who lives around here. From the piece (my emphasis):

The state faces a range of problems. Illinois has one of the worst-funded pension systems in the nation, [estimated to be more than $100 billion short]. Chicago also has a pension crisis, leading Moody’s Investors Service to downgrade its credit rating to junk status on May 12, potentially threatening the city’s ability to borrow.

And the state faces an expected budget deficit of $6 billion, which it needs to address quickly. With just days before a legislative deadline, the new Republican governor, who ran on cutting costs and holding down taxes, is at odds with Democrats who hold a veto-proof supermajority in the legislature.

[Chicago] is facing about $20 billion in unfunded pension liabilities, an additional $550 million yearly pension payment it must start making next year, and a school system that has a $1 billion deficit of its own, underfunded pensions and a new contract for teachers under negotiation.

Hoo boy! We're in trouble. What are we going to do? Some people around here are even using the "B" word -- bankruptcy.

Now while I don't know how this is all going to play out, I do know that California faced a similarly "dire" fiscal crisis just a few years ago. After Jerry Brown was elected governor in 2010, the state took the "unusual" step of cutting spending and raising taxes. 

Could Illinois do the same thing?

First a little perspective: the state of Illinois has the fifth-largest economy in the United States. That's right -- Illinois generates about $720 billion a year in GDP. (That's billion, with a "B.") Every year. That's about the same as the economies of Saudi Arabia or the Netherlands.

As for Chicago, the city alone generates about $570 billion a year in goods and services (again, billion), roughly equivalent to the state of New Jersey or the entire country of Sweden.

So while Illinois' pension shortfall of $100 billion and Chicago's $20 billion are certainly eye-popping numbers, they don't seem so "dire" when you consider the amount of wealth created by the state's and the city's economies.

Does Illinois and the city of Chicago have the ability to pay its bills? Of course! Maybe we all just need to take a deep breath.

It was a year ago today...

...that we moved into our new home. Tempus fugit!

On the other hand, what if...

...Dennis Hastert is found not guilty? He is innocent until proven guilty, right?

From today's Times, "Hastert’s Name Removed by Alma Mater" (my emphasis):

The alma mater of J. Dennis Hastert, the former speaker of the House of Representatives, announced on Sunday that it had scrubbed his name from the school’s public policy center, after his indictment on charges that he lied to the F.B.I. about financial transactions he made to cover up past sexual misconduct.

Wheaton College, the Christian liberal arts school in Illinois where Mr. Hastert graduated in 1964 with a bachelor’s degree in economics, made the decision after his federal indictment on Thursday.

“In light of the charges and allegations that have emerged, the college has redesignated the center as the Wheaton College Center for Economics, Government and Public Policy at this time,” the school said in a news release that was updated on Sunday. The center had been called the J. Dennis Hastert Center for Economics, Government and Public Policy.

“We commit ourselves to pray for all involved, including Speaker Hastert, his family and those who may have been harmed by any inappropriate behavior,” the statement said.

And what if it's all just a big misunderstanding? Again, Mr. Hastert is innocent until proven guilty, right? While I understand it's common practice to put distance between an institution and someone under indictment, what if Mr. Hastert is indeed innocent? Will Wheaton College reinstate his name to the school’s public policy center? How awkward would that be? Why not just wait and see how things play out? The center was established in 2007; what difference does a few more days or weeks mean? Why the rush to judgement?

The Name of the Day...

...belongs to Jonathan Slemrod, the newly-hired* policy director for Senator Marco Rubio's presidential campaign.

* He's so new you can't find a picture of him on the Internet.

Michael Kinsley famously said...

...that "The scandal isn't what's illegal, the scandal is what's legal."

Now, while I don't want to minimize whatever "prior misconduct" it was that led Dennis Hastert to pay an unidentified man $3.5 million, consider this piece in Saturday's Times, "After Speakership, Hastert Amassed His Millions Lobbying Former Colleagues" (my emphasis):

J. Dennis Hastert, the longest-serving Republican House speaker in history, was swept from leadership in 2006 on a wave of Republican revulsion over what critics saw as a legislative favor factory he presided over in Congress. That wave deposited him on K Street, a prime address for the capital’s lobbyists, where his influence and good name kept the favors flowing — including into his bank accounts.

A former wrestling coach and high school teacher, Mr. Hastert did not enter Congress as wealthy as some of his colleagues. Yet he was still able to amass a small fortune with land deals, one aided by an earmark he secured for a highway interchange. 

But it was at his own post-Congress lobbying firm and at the professional services firm Dickstein Shapiro that Mr. Hastert swelled his cash flow, working all sides of issues and glad-handing members of Congress for controversial clients.

With a salary of probably $1 million, compensation for serving on boards of directors, speaker’s fees and a book deal, the money was there to pay in cash what law enforcement officials say Mr. Hastert paid, said former Representative Jack Kingston, a Republican who led the Appropriations Committee.

“Yeah, it’s possible he could amass in a 10-year period a nest egg of $5 to $10 million,” he said. “I’m not saying it’s easy, but it’s not that hard.”

And the moral of the story? If you want to get rich, forget Wall Street; go into public "service" instead.