Respectfully submitted by Lawrence E. Rafferty (rafflaw) Weekend Contributor
I guess you don’t have to be from Chicago or Illinois to know who Rahm Emanuel is. The current Mayor of the City of Chicago, Rahm Emanuel is the former chief of staff to President Obama and a former Congressman. He is also a former investment banker. It has been alleged that this former investment banker has been crying poor since he entered office and proposing that city workers must pay more into their pension funds and get less pay and benefits.
“If you’ve read the financial news out of Chicago the last few weeks, you’ve probably heard that the city faces a major pension shortfall, supposedly because police officers, firefighters, teachers and other public workers are selfishly bleeding the city dry.
You’ve also probably heard that the only way investment banker-turned-mayor Rahm Emanuel can deal with the seemingly dire situation is to slash his public workers’ retirement benefits and to jack up property taxes on those who aren’t politically connected enough to have secured themselves special exemptions.” Pandodaily
I guess the idea that a politician would want to claim that union workers and municipal workers are destroying the city’s finances is not a new claim. It is one of the favorite dog whistles of politicians of various stripes. You recognize the claim. The pensions are in trouble because the workers have demanded too much over the years. That audacious, and false claim has been made repeatedly in recent years. We have discussed the pension shortfalls before.
The most amazing part of this latest claim that pensions are destroying the City of Chicago’s finances is the disclosure that Mayor Emanuel may be hiding a large trove of cash from the public eye. Enough money to pay the yearly pension payment.
“Chicago is the iconic example of all of these trends. A new report being released this morning shows that the supposedly budget-strapped Windy City – which for years has not made its full pension payments – actually has mountains of cash sitting in a slush fund controlled by Mayor Rahm Emanuel. Indeed, as the report documents, the slush fund now receives more money each year than it would cost to adequately finance Chicago’s pension funds. Yet, Emanuel is refusing to use the cash from that slush fund to shore up the pensions. Instead, his new pension “reform” proposal cuts pension benefits, requires higher contributions from public employees and raises property taxes in the name of fiscal responsibility. Yet, the same “reform” proposal will actually quietly increase his already bloated slush fund.
But it gets worse: an investigation by Pando has discovered that Emanuel has been using that same slush fund to enrich some of his biggest campaign contributors.” Pandodaily
That is an amazing claim, but I am not surprised that a politician would hide money to benefit his campaign contributors. However, in light of the latest Supreme Court decision in McCutcheon vs. FEC that removed most of the campaign donation limits, the Supreme Court Majority would be shocked that a politician might be serving his/her campaign contributors at the expense of the citizens!
To be fair to Mayor Emanuel, this secret slush fund was not his idea. It was started years ago, but Mayor Emanuel seems to have welcomed the idea with open arms.
“The new report, from the taxpayer watchdog group Good Jobs First, shows how Chicago’s roughly 150 “tax increment financing” (TIF) districts divert property taxes out of schools and public services and into what is now known as Chicago’s “shadow budget.” That’s a slightly nicer term for what is, in practice, Emanuel’s very own sovereign wealth fund.
Living up to his billing as “Mayor 1%,” Emanuel has used the fund to (among other things) offer up $7 million of taxpayer cash for a new grocery store, $7.5 million for a proposed data center, $29 million for an office high rise and $55 million for a huge new hotel (and that latter project is on top of $75 million more in tax money Emanuel has offered up to build a private university a new basketball stadium). And these are just a few of the corporate subsidy proposals in a $300 million spending spree Emanuel has championed at the very moment he has pled poverty to justify pension cuts, property tax increases and the largest school closure in his city’s history.
Contrary to the story of public employees bleeding taxpayers dry, the Good Jobs First report proves that the slush fund is the root of the city’s true fiscal problem. As the municipal budget figures show, over the last 14 years Chicago refused to make its necessary pension contributions. Yet, at the same time, the city’s TIF-based “shadow budget” skyrocketed. In effect, more and more public revenue that was contractually obligated to pensioners was being diverted by politicians to fund TIF subsidies, many of which go to subsidize wealthy corporations.” Pandodaily
I recommend that you review the “shadow budget” article linked above for a full description of how the funds are channeled into its deep pockets controlled by the Mayor and mostly hidden from voters, and even alderman. Mayor Emanuel has kept the shadow budget hidden from the media and has even claimed that he has diverted some of it towards schools.
“The scheme has gotten so out of control that, according to Good Jobs First, annual TIF revenues now far exceed the annual cost of funding the city’s pension systems. The report shows that in 2013 Chicago’s pension costs were $385 million whereas Emanuel’s slush fund that year received $457 million.
For his part, Emanuel has insisted that roughly a third of TIF funding goes into schools (at his sole discretion, of course). Yet, his slush fund is so opaque there’s little way to verify this claim. Indeed, Chicago’s local public radio station WBEZ recently noted that it “has repeatedly requested a breakdown of all current TIF-funded projects, but [the Emanuel administration] has not yet provided it.” ‘ Pandodaily
Can any so-called public servant be any more arrogant and corrupt than when he cries poor and hides a multi-million dollar slush fund and refuses to disclose how much is in that fund and how he disburse monies from that fund? What do you think should be done to force the Mayor to disclose the shadow budget?
How can any city or state administration be trusted in their claims that the money isn’t available to pay pensions and to keep schools open, when so-called Shadow Budgets are controlled by politicians, corporate and institutional beggars and wealthy contributors?
Mayor Emanuel, while you probably don’t read this blog, I challenge you to show us the money. Show the citizens of Chicago the money. Show the media the money and let them see the books. Just stop showing the money to your corporate sponsors and controllers! Mayor Emanuel, we will be waiting for your response!
The whole world is watching! Well, maybe not the whole world!
Respectfully submitted by Lawrence E. Rafferty (rafflaw)-Weekend Contributor
“The views expressed in this posting are the author’s alone and not those of the blog, the host, or other weekend bloggers. As an open forum, weekend bloggers post independently without pre-approval or review. Content and any displays or art are solely their decision and responsibility.”
Who’s a thief? UPS? I’ve had a better experience with them than the USPS.
I’m neither for nor against USPS or private mail companies. I just want mail to be delivered to all addresses efficiently and economically. I don’t really care how that happens.
Well…. When you make your money by being a thief…. What do you expect…..
Routes would not be discontinued if the government, for example, required service to all addresses in order to issue a license to providers. Just a thought. I haven’t really investigated any plans to privatize USPS.
Were there the same fears when UPS and Fed Ex opened?
Full disclosure – my husband is a small business owner, and we have other business owners in the family. A business or corporation is only as good or evil as the person or people running it. So I don’t have an inherent mistrust of private enterprise. That said, I despise Monsanto.
Do you assume corporate greed and abuse is the natural state of a privately run business? I don’t know about you, but every job I have ever taken, I have done so for the money. If I didn’t get paid, it was for volunteer work. And every person who risks his personal finances to start a business does so because he wants to be financially successful. That is neither wrong nor evil, unless anyone working for career advancement and promotion is evil.
Call abuse when you truly find it, but do not assume that it is everywhere.
Eddie:
So glad you got out of that mess, and congratulations on 30 years sobriety. 🙂
Rafflaw:
The only reason that I could find that the USPS disputed the prepayments it that it claimed that the methodology used to determine the extent of its unfunded liability was flawed. That was the exact reason given to address those figures. If you say it was not flawed, can you give me some proof? If they plugged in completely fraudulent figures they pulled out of a hat, wouldn’t USPS have said so? And it would be easily proven. You also asserted that “It was done with the intention of killing the USPS so that some corporation could privatize it and it would become even more expensive to send mail. Especially to those rural areas where Fed Ex and their ilk do not service.” So it was a concerted attempt to destroy the USPS and replace it with a more expensive method with profit potential.
I have heard many times that private companies could do a better job, cheaper, than the USPS. In fact, the very reason that we have monopoly laws is to protect the consumer by preventing price-fixing and allowing competition. And yet the USPS has a monopoly. Many people complain about the long wait times, employees that can’t be bothered to help them, and expense. I personally use UPS when I can because for my needs they are cheaper, faster, and have a better tracking system. And I live in a rural area. The post office does not deliver to rural areas on dirt roads. I have to use a bank of mail boxes a few miles away, or I could get a post office box. And yet enormous trash trucks have no problem attending to every home in the neighborhood. UPS and Fed Ex come right to my door, but not the post office.
I have never heard anyone proclaim that we should get rid of the USPS so we can charge people lots more money. Maybe there is someone, somewhere on the planet who thinks so, but that is not the repeated criticism of the post office. In general, private business does a better job than government run or managed departments.
A disagreement on statistical analysis seems more likely.
I just want mail to be delivered to every address in the US, timely, efficiently, and cost-effectively. To be honest, I don’t really care how it happens. I just care about the end result. Shouldn’t you? I wouldn’t support anything that prevents mail delivery to rural areas (obviously), or that would increase prices.
I love having a choice in package delivery, and almost always choose UPS over the USPS. Would a choice in letter delivery reverse the Earth’s gravitational pull and end Western civilization as we know it?
Karen,
The methodology was not flawed. It was done with the intention of killing the USPS so that some corporation could privatize it and it would become even more expensive to send mail. Especially to those rural areas where Fed Ex and their ilk do not service.
This would be a grotesque bonanza for UPS and Fed Ex.
If the USPS implodes and private whores gobble it up most routes that are not profitable(except for those lobbied by the hurt(or bribed) politicos involved) will be discontinued.
The USPS really missed the boat back in the nineties when email began to seriously take root. If Yahoo and Google can make money providing email addresses, so too could have the US Postal Service by providing permanent email addresses, in the same way the Social Security Administration provides a social security number, the revenue opportunity of which far exceeding the losses of postage sales. Coupled with other services, the USPS income opportunities are near limitless. But what do you expect? It’s the same bureaucratic mindset that exploits taxpayers to fund waste and corruption, rather than earning its way from the marketplace. The USPS is nearly as obsolete as buggy whips, and should be unless it turns itself around and begins offering products and services that the consumer really needs.
Just get rid of the USPS and outsource it. It will be more efficient and put an end to postal workers killing people.
Any person who thinks for themselves hates any HuffPo link. It’s a left wing rag.
Certainly true forme. I think about and care for others most of my waking hours.
Certainly true for me. I think about and care for others most of my waking hours.
Eddie – your previous employer sounds awful. He either didn’t know how to run a business or was shady.
I must confess I liked to have gagged when I read shady…….lol
If these whores thought they could get away with something that ‘stretched’ the rules they would consider it. If they could con or intimidate others to do it for they were all in.
Sadly most of my career was spent with these two thugs but what makes those years so painful for me is I was their principal gopher. Much of which I often did with enthusiasm and ingenuity
The good news is my despair and consuming depression greatly helped driving me into treatment for my alcoholism and I’ve had no need to cross my fingers or to take a a nip for some thirty years now.
Thanks, Darren! I’ve been caught in the filter a couple of times before, but never knew what was causing the hit. Thanks for letting me know.
Karen S.
You might not be aware of this but the post you made above got picked up by the spam filter. The reason for this is the software only allows two hyperlinks per comment. I dereferenced the hyperlink in one of them so that it would post here for you.
If you have more than two hyperlinks, feel free to add those in an additional comment so we can read those.
Darren
Hi Rafflaw:
I’m still looking into it.
The Postal Oversight Committee told me that the postal retiree health care fund is different than anything in the private sector, in that it gives full boat health insurance for life. So when it is underfunded, its liability would be exponentially greater. So I agree with you that it is different than any private sector company. In fact, the USPS is unique.
Did you happen to look at the projected mail volume on p3 of the USPS annual report I posted above? The worst case scenario projection is extremely dire, indeed, and the figure comes from the USPS itself. If you remove the prepayments, it would still have severe revenue shortages ahead, combined with an increasing number of retirees whose benefits, it obliquely referenced, are underfunded.
I’ve posted the USPS’ own annual report, as well as the Government Accountability Office. And I will look further for more actual studies. Because the USPS protested the methodology. The GAO is SUPPOSED to be a non-partisan Congressional watch dog.
To follow the progression:
CBO report from 1984 on subsidies for the USPS (see p 27 on retiree underfunding)
http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/109xx/doc10975/84doc25c.pdf
CBO report from 1990:
http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/77xx/doc7765/90-cbo-031.pdf
And here is the CBO report on the reform bill from 2011. On p3 it discusses unfunded retiree healthcare liabilities:
cbo.gov/sites/default/files/cbofiles/attachments/s1789a.pdf
So, here’s where I’m at. The Postal Oversight Committee claims that the USPS retirement healthcare fund is severely underfunded. The GAO says it is underfunded. The CBO says it is underfunded. And the USPS says it is underfunded (but they disagree about how much.)
I’m still trying to reach anyone at USPS that actually knows how to explain their position on the methodology. If I’m successful, I’ll let you know.
If the USPS proves right, and the methodology used to determine liability was flawed, then it should be corrected, and the prepayments adjusted.
If the USPS is wrong, and the methodology was valid, then the prepayments should stand. It’s only fair to their employees, and there is a plan in place, committees, and Congressional overview scheduled for 2016 to make adjustments.
I am not buying it Karen. Please look who did those studies that the Republican congress requested. Was it the CBO, the non-partisan arm of Congress? The only reason why they are looking at the reduced services is because of the strain this 75 year prepayment has caused! Please find me one other company or agency that is required to do that. Just one.
Bingo rafflaw. Why is it so difficult for some to not see the forest for the trees?
My last employer was always pleading poor while he was daily rolling over our checking accounts into short term money market and often ‘predatory’ type loans.
I often felt I was competing with myself.
I want to add that the reason that I’m looking into the USPS is that I have concerns about what Rafflaw, Annie, and others have brought up about the pre funding requirement. I’m not dismissing it out of hand but researching as best I can. It’s a sorry state of affairs in journalism when readers need to acquire a journalism degree in their spare time to find out the facts of a story.
I discovered the reason pre funding was put in place. In its own annual report USPS agrees it is in a vulnerable position financially, but disagrees on the methodology used. Although they oppose the pre funding, they do have plans on reducing delivery days to 5, and staff attrition to address dire predictions of declining revenue. And in the Stand article, the postal workers union rep opposed attrition, decreasing delivery days, or consolidating sorting centers.
I think I’ve included links to the sources for both sides of the issue.
Now I need to determine the validity of the USPS assertion that the underfunded liability is not as dire as projected. Because they do admit to being underfunded in that annual report.