“No-lose socialism” thrives in Illinois while governor clear-cuts state
Illinois now has the highest unemployment rate in the country. We are the only state going into its second year without a budget, and that means more layoffs and hiring freezes looming as more social service agencies and schools are forced to further reduce their workforces, companies are reluctant to hire and businesses would have to be “exuberantly optimistic” to consider locating in Illinois.
In other words, we are dead in the water. Barely able to stay afloat.
Calls for a compromise are not realistic and will never be productive because the cause for the current crisis began with deliberate intent on Jan. 1, 2015, with cuts to corporate and individual income taxes. Yes, there were systemic problems going back years earlier, but we were nowhere near the current crisis.
What pushed Illinois over the brink?
Here’s the double-whammy assessment from the Fiscal Policy Center at Voices for Illinois Children:
The budget shortfall Illinois faces is caused almost entirely by cuts to the income tax rates that went into effect on Jan. 1, 2015. The cut to the corporate income tax rate — from 7 percent to 5.25 percent — is costing the state about $800 million.
The individual income tax rate went from 5 percent to 3.75 percent costing the state about $5 billion.
Gov. Bruce Rauner pushed through those tax cuts. In fact, he campaigned on those tax cuts. The governor wants his “turnaround agenda” before he will discuss raising taxes. His turnaround agenda could be described as “no-lose socialism” for the wealthy.
“No-lose socialism” is the term economist Robert Reich used when writing about the cut-throat American capitalism resulting in escalating income inequality. He cited Yahoo CEO Marissa Mayer. Yahoo stock lost one-third of its value last year and went from $7.5 billion in earnings in 2014 to losing $4.4 billion in 2015. Yet Mayer was awarded $36 million in compensation, and in the event of her termination, she’d receive $54.9 million.
That is not based on performance. Not based on work. Not based on productivity. Not based on justice. Not based on logic.
That’s the state of Illinois’ economy: no logic, no justice.
“No-lose socialism” can be used to describe WalMart. Last year, the corporation had operating income of $24.1 billion, and its 49-year-old CEO C. Douglas McMillon made $19.8 million. Yet many of its full-time employees earn so little they qualify for Food Stamps and other government assistance. That means taxpayers are subsidizing the Walmart CEO’s salary.
Would it be “no-lose socialism” or just immorality to describe Donald Trump’s reaction when he was asked about his glee at the prospect of the housing bubble collapse that wiped out the lifetime savings of thousands of Americans.
“I’m a businessman,” Trump said. “That’s what I’m supposed to do.”
Like Trump, Rauner is a successful cut-throat businessman and he wants to run the state like a cut-throat business. If preschools are forced to close, universities lay off teaching staff, social service agencies cut programs, that’s part of the pain necessary to bring Illinois to its knees until the governor’s “turnaround agenda” is forced down the throats of Democratic lawmakers.
Where is the basis for a compromise?
However, there are many measures Illinois could enact to mend our economy. Unfortunately, House Bill 689 that called for changing our individual tax from a flat tax to a graduated tax rate failed to win support. A flat tax is regressive, hitting those who can least afford it the hardest. Illinois is surrounded by states with graduated taxes including Wisconsin, Ohio, Missouri, Minnesota, Kentucky and Iowa. We need a graduated income tax. Our corporate tax rate is also below surrounding states. Make it comparable to surrounding states.
So what’s really going on? Rauner is smart. He’s a graduate of Dartmouth and Harvard. Why does he continue to insist on his destructive “turnaround agenda”?
Because he believes in “no-lose socialism” for the wealthy.       (Clare Howard)