Two Illinois Victories

Last month (in this post) I blogged about Doug Henwood’s great interview with Jane McAlevey and her comments about billionaire Illinois governor Bruce Rauner and his relentless campaign against labor.  Since then, Rauner has been handed some stinging defeats, which is great news.

First, the Illinois Supreme Court ruled unanimously that the state’s 2013 pension overhaul (under the previous, Democratic Governor Pat Quinn) is unconstitutional. From the NYT piece (Illinois Supreme Court Rejects Lawmakers’ Pension Overhaul):

All seven members of the state’s highest court found that a pension overhaul lawmakers had agreed to almost a year and a half ago violated the Illinois Constitution. The changes would have curtailed future cost-of-living adjustments for workers, raised the age of retirement for some and put a cap on pensions for those with the highest salaries. But under the state Constitution, benefits promised as part of a pension system for public workers “shall not be diminished or impaired.”

“Crisis is not an excuse to abandon the rule of law,” Justice Lloyd A. Karmeier wrote in an opinion. “It is a summons to defend it.”

So even in our plutocracy, if the state constitution says, clear as day, that you can’t do something, then you can’t do it. Here’s the article on this from the Tribune: Illinois Supreme Court rules landmark pension law unconstitutional.

Our friends at the Chicago Political Economy Group (CPEG) rightly view this as an opportunity to push for the “Lasalle Tax,” a Chicagoans call the transaction tax, aka Tobin tax, applied to Chicago trading. Here’s CPEG’s Ron Baiman (via the CPEG email list):

As many predicted, see:  http://www.cpegonline.org/2014/01/16/illinoiss-new-class-based-pension-math/ [posted at the D&S blog here –CS]

I don’t think there is any viable solution left that could raise the multi-billions needed to dig the state and city out of their financial holes other than a LaSalle Street tax  (see: http://www.cpegonline.org/2015/03/22/restoring-chicagos-fiscal-and-economic-health-a-cpeg-report-on-options-for-the-citys-next-mayor/ ).  Again, the link above explains in great detail why an LST would not cause the traders or exchanges (or their switches) to move out of state and would be perfectly legal (New York State already has a local  FTT – though it unfortunately gets rebated back). The LST would be the least painful, most practical, most politically popular, and fairest and most beneficial in terms of economic justice and restructuring the overall economy, of any option that I think of.

The other great defeat for Rauner’s anti-labor agenda was that right-to-work, which Rauner was trying to impose on public workers at the county level, was rejected by the Illinois house.  From the Sun-Times:  Right-to-work goes down in flames in Illinois House with zero yes votes.

 

 

 

3 thoughts on “Two Illinois Victories”

  1. It would certainly “restructure the economy”, but not by handing politicians even more cash to blow like these “progressives” imagine.

    LaSalle Street doesn’t really exist any more. You have two exchanges only here because of history, which stopped hiring here and have sent new jobs elsewhere. The big banks also left, with just a couple retail branches staffed by a few tellers.

    Go ahead and push what remains of the financial industry out to a functional state, but don’t expect a windfall to keep the freebies flowing.

  2. Hi Tim B.,

    You don’t know what you are talking about. The Chicago Board Options Exchange and the Chicago Mercantile Exchange are two of the biggest financial markets in the world, trading over $800 trillion between them a year. So it would come as a surprise to the people who run and trade on those exchanges that “LaSalle St. doesn’t really exist anymore.” (Remember, “La Salle St.” is a figure of speech, like “Wall St.”–the big banks aren’t on Wall St. the street in NYC anymore, but that doesn’t mean NYC isn’t a huge financial center.)

    The proposed transaction tax would tax exchange of classes of products (e.g., types of options and futures) that are traded *only* in the Chicago-based exchanges, and the tax is paid not by the exchanges themselves but by the traders. So as this Q&A from CPEG’s Bill Barclay explains (http://www.cpegonline.org/wp-content/uploads/2015/03/LST-for-IL-QandA.pdf), there is little chance that the exchanges (who aren’t paying the tax) and the traders (who have no where else to go) would leave Illinois.

    The “keep the freebies flowing” remark is just knee-jerk right-wing ideology. Do you oppose all taxes, or just ones that fall on people who are making lots of money? Sales taxes are regressive (hit the poor the hardest), but even then, most people don’t think of the resulting revenues as being “freebies”. The government needs funds to provide essential public services. Taxes on financial transactions are like sales taxes, and operate in “the United Kingdom, Switzerland, Hong Kong, Brazil, France, Singapore and other countries,” to quote Bill Barclay’s Q&A. Maybe Illinois would be more of a “functional state,” as you put it, if its government had the funds to support essential services like schools and pensions.

    Chris Sturr

  3. LaSalle Street used to mean a whole financial industry, but all the banks and most supporting tech companies left. The volume went to fully electronic exchanges without the Chicago overhead.

    I’ve traded before, and the huge nominal face values you quote never change hands, so there aren’t any billions and trillions to grab. The spread on most contracts is $5-25, which is what traders are trying to make, and most trades are scratched (break even).

    A typical day might be trading 1000 contracts for a $600 profit, and paying $250 in fees. A $1000 tax means that volume goes to ICE contracts in Atlanta, and the Merc leaves for Texas.

    There’s no pool of billions laying around for you to take unnoticed…life doesn’t work that way.

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