Marathon Pundit: Tribune: Chicago on the way to becoming the next Detroit

Wednesday, February 05, 2014

Tribune: Chicago on the way to becoming the next Detroit

Chicago's Grant Park

There's another Detroit emerging--and it just happens to be President Obama's adopted hometown.

From the Chicago Tribune:

Chicago's debt debacle is so egregious that, come 2039, taxpayers still will be paying off Chicago bonds from 1993 — including money spent on public housing torn down more than a decade ago. Were you shocked that, one day before Detroit filed for bankruptcy, Moody's Investors Service whacked Chicago with a triple credit downgrade? Prepare to waste even more taxpayer dollars on swollen interest payouts to buyers of Chicago's bonds.

—Tribune editorial, Nov. 17, 2013

In one paragraph, there you have it: the reckless past and expensive future of bond sales and borrowing by Chicago's City Hall. The result is a potentially ruinous transfer of debt, forcing the children and grandchildren of today's Chicagoans to pay for services their parents and grandparents enjoyed. And now, that debacle intensifies:

By the most recent numbers, Mayor Rahm Emanuel's government owes $13.9 billion in general obligation bond debt, plus $19.5 billion in unfunded pension obligations. Add in Chicago Public Schools and City Hall's other "sister agencies" and you're talking billions more in debts that Chicago taxpayers owe. Yet here we are on a Wednesday when the mayor probably will get approval from a derelict City Council to issue another up-to-$900 million in bonds backed by property taxes — and to double, to $1 billion, the amount of short-term bank money his administration can borrow to raise cash.

Tuesday's Tribune reported that, despite a lack of particulars on the costs or types of projects the bond proceeds would fund, this huge new borrowing package on Monday flew through the council's Finance Committee. Most of the questions from aldermen centered on whether the financial firms executing the deals are employing enough minorities. "These transactions are the largest opportunities for people to make money off the government, and so we want to make sure everybody is included," said Ald. Walter Burnett, 27th. "It's a lot of money. It's enough for everybody."