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Snakes on the [Great] Plains
November 21, 2012 4:13 PM   Subscribe

The state of Illinois is facing a $95 billion (and rising) unfunded pension liability. Governor Pat Quinn, in a bold attempt to get Illinoisians excited about pension reform, has unveiled a new mascot: Squeezy the Pension Python [YouTube]
posted by obscurator (46 comments total) 5 users marked this as a favorite

 
apparently Squeezy also claimed the video production budget
posted by ninjew at 4:21 PM on November 21, 2012 [1 favorite]


I will support pension reform the very second we invent the time machine and can go back in time to offer those workers revised contracts before they're spend their entire lives working. Until then, no.
posted by Mitrovarr at 4:22 PM on November 21, 2012 [40 favorites]


Newsflash: the state of Illinois sued by Disney for eleventy billion dollars.
posted by Nomyte at 4:28 PM on November 21, 2012


Newsflash: Taxes on the rich not high enough in Illinois.
posted by DU at 4:30 PM on November 21, 2012 [11 favorites]


the very second we invent the time machine

Once the time machine is invented, hasn't it always been invented?

posted by pompomtom at 4:31 PM on November 21, 2012 [12 favorites]


When I first moved to Illinois from Indiana in 1991, I was very surprised to find the Illinois individual income tax rate was just 3% (compared to 4% in Indiana). How could they make ends meet with such a low tax rate? It was puzzling, but so be it; property taxes and sale taxes were much higher here than I had been used to, so I just assumed it was under control. Bad assumption. Last year, I found out the answer, when Illinois finally woke up from its opium dream ... but unfortunately, because they waited so long, they had to raise the income tax rate not to a livable 4% (which they should have been doing all along, like their neighbor to the east), but instead was raised, overnight, to 5% of net income. Wow. A 67% increase in taxes; and it's still not enough to satisfy "Squeezy," who is a very hungry python. That's the sort of thing that makes you want to check the prices on pitchforks and torches. I believe this horrible situation was the result of many individual bad (but politically expedient) decisions made by the Illinois legislature over the years; if there had been an honest reckoning of pension costs, and an honest evaluation of how much the State needed to contribute (without reneging or deferring or simply ignoring the State's obligations), then we would not be here right now. Sure, they can try to blame the recession, but stocks go up and down all the time. When you are setting up an annuity for retirees, you are supposed to manage that fund very conservatively; something tells me that did not happen here in the great State of Illinois.
posted by JimInLoganSquare at 4:32 PM on November 21, 2012 [7 favorites]


This is Illinois? This guy who made this video is a Democrat?

I obviously woke up on Htrae instead of Earth this morning.
posted by Talez at 4:33 PM on November 21, 2012 [1 favorite]


Talez, believe it. I hate the problem but support the honest effort to fix it (other than the possibly disingenuous attempt to blame "the recession" for problems Illinois created for itself; at least they are not blaming the employees for this). This is the new reality in Illinois. Reality hurts. I suppose we should be happy that the problem is no longer being ignored. If Governor Quinn leaves one legacy for Illinois, hopefully it will be the administration of smelling salts on the pension problem and the delusional politics in the State of Illinois.
posted by JimInLoganSquare at 4:39 PM on November 21, 2012 [2 favorites]


The problem is that these are pension obligations. They are things the state agreed to pay years ago, and the should have been appropriately funded then. If they weren't, they need to be now. Otherwise you're just telling employees, "Hey, thanks for all your hard work for the state, now go fuck yourselves."
posted by TheWhiteSkull at 5:04 PM on November 21, 2012 [19 favorites]


If they weren't, they need to be now.

The problem being that they weren't, and now there is no money with which to fund them. Worse, states can't deficit-spend like the federal government. Unless Obama decides to push for Stimulus 2: The Pensioning, there really isn't an easy answer here.
posted by Holy Zarquon's Singing Fish at 5:08 PM on November 21, 2012 [4 favorites]


When states agreed to these decades ago, they could not have predicted being screwed out of their revenue stream by tax free internet purchases.
posted by sourwookie at 5:11 PM on November 21, 2012 [1 favorite]


so does squeezy the pension python get killed off by wally the swindling weasel? - or does poli the pandering panda rush in to save it?
posted by pyramid termite at 5:13 PM on November 21, 2012 [6 favorites]


The Illinois constitution contains a clause that pensions must be paid out. No clause that they have to be funded, unfortunately. You'd think that would be obvious, but this is the state where former governors "retire" to various, federally funded facilities.

I have an aunt who is retired on the SURS system. Right now she's fortunate that she can pay her doctors' preventive care bills out-of-pocket, and then wait the 18 months for the state to reimburse her. Many doctors she's interacted with won't take SURS retirees because of the huge lag in payment from the state system.

It's a huge mess. And while Quinn seems eager to solve it, the powers that be in the Illinois legislature don't seem to give a fuck.
posted by sbutler at 5:14 PM on November 21, 2012 [2 favorites]


Sourwookie, sales taxes might be part of the problem, but how much? Illinois screwed itself repeatedly by passing the buck and refusing to raise its income tax to a reasonable level. Moreover, I am routinely charged Illinois sales tax on internet purchases, including by Amazon and many others; I think the "tax free internet purchases" are a thing of the past and probably are only a rounding error in the Illinois pension deficits compared to income tax deficits based on decades of undertaxing and over-promising by the Legislature (although I don't have any real numbers to back that up; it's just my hunch).
posted by JimInLoganSquare at 5:15 PM on November 21, 2012 [4 favorites]


They are things the state agreed to pay years ago

I have altered the deal, pray I do not alter it further.

(Why do people keep thinking if Men must turn square corners when they deal with the government that somehow It is very well to say that those who deal with the Government should turn square corners. But there is no reason why the square corners should constitute a one-way street.)
posted by rough ashlar at 5:35 PM on November 21, 2012


"This guy who made this video is a Democrat?"

Not just a Democrat, but the Democrat who abolished the death penalty, raised income tax, and approved civil unions all in one legislative session. (He also stays in Super 8s when he travels and took the governor's name off "Welcome to Illinois" and toll road signs so we don't have to replace them whenever we get a new governor and THIS MAKES ME VERY HAPPY.) Also every year he walks a distance equivalent to crossing the state to encourage exercise. Illinois's a weird state, but he's a particularly weird governor.

While there have been a lot of pension abuses in Illinois that have led us to this crisis, the worst abuses that intensified the crisis into a catastrophe belong, of course, to Rod Blagojevich. Also every time the state legislature talks about raising the personal income tax or the corporate personal property replacement tax or sales tax or ANY tax, all the Fortune 500 companies send letters to the state threatening to leave.

Squeezy's getting a lot of mockery in state government circles.
posted by Eyebrows McGee at 5:54 PM on November 21, 2012 [7 favorites]


This is exactly the kind of thing I worry about when people tell me that I'll be set for life with my state-funded pension. I trust California about as far as I can throw it.
posted by corey flood at 5:55 PM on November 21, 2012


Clearly, we should discontinue allowing use of the word 'pension' except when it's fully paid-for at the time it's earned (and kept in an iron-clad escrow service with strictly-regulated investment options) . Else "pension" and "fraud" are synonymous.

Just one more chapter in the "You Are Being Lied To" book America's been writing for 35 years.
posted by Twang at 6:08 PM on November 21, 2012 [4 favorites]


Illinoisians.

That's a word you only need to say once for it to sound bizarre and meaningless.
posted by yoink at 6:25 PM on November 21, 2012 [1 favorite]


Illinoisians.

That's a word you only need to say once for it to sound bizarre and meaningless.
posted by yoink at 8:25 PM on November 21 [+] [!]


Yoink, with all due respect, do you mind explaining what you mean by this and how it is relevant to or contributes to the discussion at hand?
posted by JimInLoganSquare at 6:29 PM on November 21, 2012 [1 favorite]


Newsflash: the state of Illinois sued by Disney for eleventy billion dollars.

Exactly what I was going to say.
posted by dobbs at 6:30 PM on November 21, 2012


Yoink, with all due respect, do you mind explaining what you mean by this and how it is relevant to or contributes to the discussion at hand?

Well, everyone knows it's Illinoids.
posted by TheWhiteSkull at 6:36 PM on November 21, 2012 [2 favorites]


I had to explain Squeezy in two different meetings this week. No, really.

Still, I like a lot of what Pat Quinn does.
posted by crush-onastick at 6:36 PM on November 21, 2012 [1 favorite]


He's the Govornor of Illinois. Next year he will be in jail.
posted by srboisvert at 6:37 PM on November 21, 2012


He's the Govornor of Illinois. Next year he will be in jail.
posted by srboisvert at 8:37 PM on November 21 [+] [!]


Well, let's hope not; I don't like the idea of doing all this another time, and those pension debts just keep getting deeper and deeper. On the plus side, so far, either Pat's done nothing criminal or he's done a very fine job of covering it up, so we've got that going for us.
posted by JimInLoganSquare at 6:45 PM on November 21, 2012 [1 favorite]


Eyebrows McGee wins the "most insightful comment" award in this thread.

And while the tone of the FPP is mocking ol' Squeezy, it seems evident from the video itself that there's some healthy self-mockery going on there, at least judging from the way Quinn edges away from Kaa's North American cousin beside him.
posted by JHarris at 7:13 PM on November 21, 2012 [1 favorite]


Illinois governors are unfortunately notorious for ending up in a house bigger than the governor's mansion. One could say they are ...gubernotorious.
Really hoping Quinn's got something magical planned, because he just terminated the contract with my union yesterday.
posted by obscurator at 7:14 PM on November 21, 2012 [1 favorite]


I can't believe I'm the only one who is ready to say "Enough is enough! I have had it with this mother-fucking snake on these mother-fucking [Great] Plains!"

It's like I don't know you people. Well technically, I don't. But I usually feel like I do.
posted by illovich at 7:48 PM on November 21, 2012 [3 favorites]


Well, everyone knows it's Illinoids.
posted by TheWhiteSkull at 3:36 PM on November 21 [+] [!]


Illinoiseaux.
posted by Sebmojo at 8:03 PM on November 21, 2012 [2 favorites]


Yoink, with all due respect, do you mind explaining what you mean by this and how it is relevant to or contributes to the discussion at hand?
posted by JimInLoganSquare at 3:29 PM on November 21 [1 favorite +] [!]


You realise he was riffing on 'say RAND_WORD 20 times and it becomes a meaningless collection of syllables'?

It was an amusing offhand observation.

I'm sure he is as concerned about the pension problems of the Illinodlians as the next person.
posted by Sebmojo at 8:08 PM on November 21, 2012 [3 favorites]


Yoink, with all due respect, do you mind explaining what you mean by this and how it is relevant to or contributes to the discussion at hand?
posted by JimInLoganSquare at 3:29 PM on November 21 [1 favorite +] [!]

You realise he was riffing on 'say RAND_WORD 20 times and it becomes a meaningless collection of syllables'?

It was an amusing offhand observation.

I'm sure he is as concerned about the pension problems of the Illinodlians as the next person.


Yes, thank you; I was specifically calling him out for doing that. I am familiar with that amusing trope; first picked up on it perhaps 40 years ago, maybe from George Carlin. Funny ha-ha; yes; stoner mind fucks, etc.

This is a serious discussion about the financial future of millions of people. Twelve million residents of Illinois are facing a fiscal disaster. It's just not a thread where I think offhand jokes fit in very well.
posted by JimInLoganSquare at 8:34 PM on November 21, 2012


Finally! A replacement for the Chief!
posted by erniepan at 8:40 PM on November 21, 2012 [3 favorites]


When states agreed to these decades ago, they could not have predicted being screwed out of their revenue stream by tax free internet purchases.

Oh, come on. Unless you have some actual numbers to back this up, I am going to assume it's total bullshit.
posted by adamdschneider at 9:35 PM on November 21, 2012


I may as well say it. Isn't an unfunded pension basically theft? You promise to take money from future generations, against their will?

And while I'm at it, isn't the entire economy based on craziness like this? Large corporations rely on regulatory capture, governments write taxes and debt at whim, and until 2008 every home owner relied on money magically disappearing from society in general and reappearing as increased house values.

We're all doing it. We've been doing it forever. When we benefit, it's our God-given right. When we are the ones paying, suddenly the system is horribly unfair. But it's always somebody else's fault.
posted by EnterTheStory at 10:38 PM on November 21, 2012 [2 favorites]


When I first moved to Illinois from Indiana in 1991, I was very surprised to find the Illinois individual income tax rate was just 3% (compared to 4% in Indiana). How could they make ends meet with such a low tax rate?

Seven states have zero income tax. Some of those more than make up for it with sales tax and property tax, some don't.

Florida has no income tax, and also no personal property tax on cars. I was dumbfounded when I first encountered that when moving to Missouri. "What do you mean, property tax? I live in an apartment."
posted by Foosnark at 11:06 PM on November 21, 2012


And so now this smiling fool comes on with a cartoon snake...

This is as stupid as Gerald Ford, his WIN buttons -- anyone else in here old enough to remember that crap? Hello? Hello? Okay -- Ford had WIN buttons made up -- Whip Inflation Now -- as if it was some magical thing, put on a button and hey, we're all in it together, we've all got our button, we're good to go! Oh boy, I'm all happy now, I'm so glad he's got it under control. The idiot. What a dope!

From what I'm reading in this thread, this man is at least facing it, cartoon snakes or not, which no one else had done. But ... I'm having a hard time chuckling over this cartoon. Here's why:

My brother-in-law was a teacher for decades. First high school, then as he racked up his masters, then PhD, he taught college. Then taught and ran his department. He taught computer courses also, and he set up a lot of the distance classes in his school. He's a great person, remarkably bright, and very wise with his money.

Fred could have used his intelligence in any number of ways, but his father loved music, his father died when Fred was young, Fred dedicated his life to music. He teaches, writes, plays. All of it. He chose to give his gifts to life in this way.

Fred didn't make the money he could have made, of course, but one thing you know is that teaching is a solid life, and a life that will pay you back after you give to it your life. He just retired, maybe three years ago, after decades of service.

Fred was paid not only in dollars per year but in his pension, of course. He worked for it, year after year. It was part of his compensation. It *is* part of his compensation.

He and I were out to breakfast, when I was up there in June, he tells me about this mess -- I had no idea. He is, to say the least, concerned. This is real. Yet there are people who are oh so caviler about it all, even speaking to Fred about it -- it's not their tit caught in the wringer.

It is so easy for others to say "Well, they're just going to have to take a beating." Repugnant. Why should he take a beating? He gave, he did his part, he took care of his side of the agreement.

Cut your stupid cops everywhere, would be my first choice. Jesus christ. Every time I go to Illinois, from Texas, I drive Texas, Arkansas, Missouri, then Illinois. Guess which state has the most cops. Guess which state has the most horses-ass cops. Illinois, by far. (I wonder if the cops pension is being affected; I hope not. I surely don't like Illinois cops but that's not the individuals fault, mostly, it's just what it is there.)

And I bet there's billions and billions for "Homeland Security" so citizens can be treated like scum in airports, and, soon, rail stations, and anywhere else. Cut this crap out, and pay your obligations.

Roads. Roads in Illinois are pristine, at least compared to any in the southwest, and California, and anywhere in between. Well done, boys. Now let it go, like everyone else does, and pay your damn obligations.
posted by dancestoblue at 12:24 AM on November 22, 2012 [1 favorite]


Interesting. I assumed pensions were safe until the demographics shifted: that is, until enough of the baby-boomer bulge die for their increased voting rate to be cancelled out by their smaller numbers and younger active taxpayers in the later bulges could force through cuts in pensions and their tax bills.

I think final salary schemes should be illegal. And no, I don't have a good answer for Fred.
posted by alasdair at 4:52 AM on November 22, 2012


Roads. Roads in Illinois are pristine, at least compared to any in the southwest, and California, and anywhere in between.

Clearly you have never been to Wisconsin. You can tell when you've crossed from Wisconsin into Illinois because the bumpiness of the road increases markedly.
posted by hoyland at 5:19 AM on November 22, 2012 [3 favorites]


It wasn't squeezy the adorable strangling phyton, it was Financio the despicable Market Fairy Tale wizard! So no more Bullshitio, Wall Street & Banks will have to renounce a few thousand cars, luxury yatchs, unhabited villas and rented apartements, or face a WitchHunt with a cause.
posted by elpapacito at 5:49 AM on November 22, 2012


Part of the problem of having politicians make these budgetary decisions and promises is that you are essentially buying votes from the public service sector of the economy. Once a group of politicos recognize that this group is a large voting bloc (ie: teachers, firefighters, police, etc.), said politicians will start offering up the moon and stars for their votes.

So when the question of salary and benefits comes up every few years, what politician is going to say: "we're cutting your wages/benefits" or "we don't have the money"? Exactly - none. Instead, the politicians will kick the can down the road to the next guy/next election cycle and "deal" with it at that point in time...by kicking the can a bit further down the line. Float a few bonds, lease a bit of the transportation infrastructure and bam - you don't have to deal with the big fat hairy monster in the room which is that massive obligation you made, but don't have the cash to back.

I'm not advocating an anti-union stance, I'm merely stating how Illinois and many other states got into this big hole: nobody was an adult and said, "um, guys, we really need to rethink how the heck we're going to pay for this stuff in a few years".
posted by tgrundke at 5:53 AM on November 22, 2012 [1 favorite]


Time to extend the Pension Benefit Guaranty Corporation's coverage to non-private pension plans? Is that even on the table in Washington?
posted by mrhappy at 8:56 AM on November 22, 2012


This is a serious discussion about the financial future of millions of people. Twelve million residents of Illinois are facing a fiscal disaster. It's just not a thread where I think offhand jokes fit in very well.

A lot of people here make jokes in threads like this in the sense that they're laughing so that they don't cry. I don't think yoink meant anything untoward.
posted by JHarris at 10:52 AM on November 22, 2012


Do you know why they say there is a $95B "liability?"

To scare you into destroying the social net. Illinois does not owe $95 billion. They want you to think that, but they don't. They, in fact, do not know what they owe, because they don't know the lifespan of every retired person in Illinois. They are comparing a long term liability against a short term income stream.

And there would be nothing stupider than to try to bank every dollar needed for this theoretical retirement plan. Invest would be nice, because the profits would probably fund the entire state.

It is an issue. It's not a small one. But what Illinois needs is not, and has never been, $95B.

Lets say you buy a house of $250K. Does this mean you need to spend $250k this year? No. You spend that, plus interest, over the life of the loan. You pay far less per year. So, if you want to compare the total cost of the house, you need to compare it to the total income you have over that 30 years. Not to your annual income.

And that's what they're doing here. Illinois may in fact owe $95b, but they owe it over 50 years. Illinois currently has a $30B annual income. So, Illinois owes $95B over the same term that, assuming no inflation, would have Illinois earning 1.5 *TRILLION*.

So.

Illinois pensions need work. But, exactly like social security, they need a tiny amount of work - some 200 million over actual annual expenditures, to be completely fixed.

Some $30 billion of this is losses in the investment fund for pensions in 2008-9. So, the talk upthread about how this didn't affect the problem is nonsense. This is starting to recover.

But really, this is a fixable problem. The funds have over $60B in capital right now. What we need to do is to make sure that we pay in, every year, more than we pay out minus investment returns. If the fund make 5 billion, spends 6 and we put in 1.5B, then it never goes insolvent.

And that's what counts, right? Unless you have a different agenda. Say, destroying another part of the social net. Say, screwing over people who you made a deal with and who kept up their part of the bargain.

Seriously. This is an easy problem compared to health care.

So why OMG $95B cut all the retirements!!!!!

I do not get people. "That guy has a retirement and I don't!!!" So you say, "Well, fuck them, lets get that money back!" You should be saying "Lets make sure we all can all retire safely."
posted by eriko at 12:13 PM on November 22, 2012 [8 favorites]


Well, the mortgage analogy only goes so far. With the pension system it's more analogous to someone who takes out an interest only mortgage: you have the money to make the payments today, but you're really, really hoping that your income increases substantially to cover the payments in the future when the rates adjust upward and your payment goes from $1,000/month to $1,500/month.

Not properly funding the pension plans is the problem. Voters have given themselves really great benefit packages. Good for them for negotiating a great deal. Bad for everyone for not admitting that unless properly funded the money may not be there to collect once everyone starts retiring. Eriko is right - you don't need to pay out everything all at once to everyone, but you sure need to make certain that the cash flow will be there:

Per the Chicago Tribune:

Illinois' funded ratio for pensions, already the lowest
among states, fell to 39 percent when fiscal 2012 ended on June
30 from 43.3 percent, the commission reported. A funded level of
80 percent is considered healthy.

The biggest factor contributing to unfunded liabilities from
fiscal 1996 to 2012 has been employer contributions, followed by
investment returns, while benefit increases had a smaller
impact, according to the report.

The state has skipped or skimped on pension payments over
the years, while also turning to the sale of pension bonds to
raise money for the payments.


Further, this is the problem with deficit spending and then kicking the can perpetually instead of paying down the accumulated debt: your debt burden ends up chewing up cash flow that otherwise be spent. Per NPR, from 2010:

This January, Illinois issued $3.5 billion in pension obligation bonds to make this year's payment toward the state's pension funds. The state must begin repaying that debt next year, when the first payment will be $800 million. That leaves the state with $800 million less for schools, roads, heath care and other needs, and it will still have to make next year's payment to the pension funds, which will rise to over $4 billion.

I don't recall where I saw the statistic, but something like 12-15% of the Illinois budget goes to defined benefit/retirement plans for state employees. That's a big chunk out of a $24 billion budget. States individually got themselves into this mess by voting themselves these kinds of perks without tying these agreements to revenue targets/requirements. After years of kicking the can, the burden has grown to the point where politicians need to make the unpopular decisions to either raise revenue or cut benefits.
posted by tgrundke at 7:11 PM on November 22, 2012 [1 favorite]


Maybe I'm just very slow tonight, but ... what is Quinn proposing to do about the pension problem? As far as I could make out, the video was all description: Quinn tells us about what pensions are, why Illinois has pensions for government employees like teachers and firefighters, and why there is a budget problem. I didn't see anything prescriptive in the video. Nothing like, "We need to cut pensions by x%," or "We need to raise taxes by y%." Did I miss something?

Also, I thought we were Illinesians ...
posted by Jonathan Livengood at 9:54 PM on November 22, 2012


When states agreed to these decades ago, they could not have predicted being screwed out of their revenue stream by tax free internet purchases.

Oh, come on. Unless you have some actual numbers to back this up, I am going to assume it's total bullshit.


While not the primary cause, it does figure in. A quick search shows most states estimate a few hundred million to over a billion in lost revenue. It's hard to pin down the figures, but states for sure are feeling it.
posted by sourwookie at 12:07 PM on November 25, 2012


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