That is very, very bad. Even the Governor of Illinois, Bruce Rauner, has observed of the "City that Works," "Chicago is in deep, deep yougurt."
Bloomberg Business offers 5 reasons to explain Chicago's worse-than-precarious fiscal position:
- Chicago’s unfunded liability from pension funds is $20B and growing. Every city resident has an obligation of ~$7.4. Morningstar Municipal Credit Research indicated in January 2014 that among the 25 largest U.S. cities and Puerto Rico, Chicago had the highest/capita pension liability.
- On May 8, the Illinois Supreme Court ruled the State of Illinois couldn’t cut pension benefits as part of a solution to restructure the state's retirement system. If the state can't cut pension benefits, it's unlikely that Chicago can.
- Today's fiscal reality has been developing for 10+ years. How? The city's politicians skipped pension payments, increasing the city's bonded debt by 84%. That has added $1.3k more to the debt obligation of every city resident.
- Illinois is the lowest-rated state with unfunded pension obligations that amount to $111B. Last week, Governor Rauner told the City Council the state will not bail out Chicago.
- Despite all of this, the Chicago's Mayor, Rahm Emanuel maintains the Illinois Supreme Court’s rejection of a state pension reform law in May 8 doesn’t apply to the city.
The conclusion? Chicago is in a far more precarious fiscal position than was Detroit when it filed for bankruptcy.
That's very, very bad, indeed. Every resident of Chicago owns $7.4k of that debt. Eventually, the bill will come due and the city's residents will take a haircut on the politicians' ponzy scheme called "restructuring the city's debt."
But, it gets worse.
According to the Heritage Foundation, a child born today starts life with a $41k share of the U.S. debt burden and it is expected to escalate to $142k for that child at age 24.
That's very, very, very bad. And its all the consequence of greedy politicians confiscating the next generation's future to enjoy today what those politicians knew they couldn't afford.
Let the discussion begin...
To read the Bloomberg Business article, click on the following link:
To read the Heritage Foundation report, click on the following link: