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Thread: Illinois’ credit rating downgraded; state drops to worst in the nation

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    Re: Illinois’ credit rating downgraded; state drops to worst in the nation

    Quote Originally Posted by ksu_aviator View Post
    Illinois amendment isn't the problem, bad assumptions are. You can "balance" a budget as long as you assume that tax increases will generate new revenue or the economy will be more robust than normal and in the end you will still run a deficit. So the problem is the way we budget. Rather than setting a dollar amount, Illinois should set a percentage of the revenue to go to each expenditure. That way you never deficit.
    The problem with the amendment is not that it precludes bad assumptions. Its problem is that it contains no enforcement mechanisms. Hence, even if it becomes highly likely that a deficit will occur, there is no mechanism to bring about the necessary adjustments to address that issue. As such, it lacks credibility.

    A more credible approach would entail an open/transparent commitment to balance the budget as a whole within a fixed period of time, provide monthly progress reports to leading creditors and to the general public on the State's website, and the inclusion of an enforcement mechanism to assure that the outcome would be realized. Automatic sequesters, automatic triggers of spending reductions/tax changes, or special budget sessions to address issues should the budget outcomes appear to be going off target are some examples of enforcement machinery.

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    Re: Illinois’ credit rating downgraded; state drops to worst in the nation

    Quote Originally Posted by donsutherland1 View Post
    The problem with the amendment is not that it precludes bad assumptions. Its problem is that it contains no enforcement mechanisms. Hence, even if it becomes highly likely that a deficit will occur, there is no mechanism to bring about the necessary adjustments to address that issue. As such, it lacks credibility.

    A more credible approach would entail an open/transparent commitment to balance the budget as a whole within a fixed period of time, provide monthly progress reports to leading creditors and to the general public on the State's website, and the inclusion of an enforcement mechanism to assure that the outcome would be realized. Automatic sequesters, automatic triggers of spending reductions/tax changes, or special budget sessions to address issues should the budget outcomes appear to be going off target are some examples of enforcement machinery.
    What would a monthly progress report do for you? The reality is, the people of Illinois would see they are behind the budget, opinion polls would show they aren't happy and business would continue on as usual. Maybe some of the representatives lose their jobs, but the new ones won't really change anything and the state will continue down the same path it is on now. While the voting public hates deficits, they hate losing freebies even more.
    You, my brothers and sisters, were called to be free. But do not use your freedom to indulge the flesh; rather, serve one another humbly in love.For the entire law is fulfilled in keeping this one command: “Love your neighbor as yourself.”

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    Re: Illinois’ credit rating downgraded; state drops to worst in the nation

    Quote Originally Posted by ksu_aviator View Post
    What would a monthly progress report do for you? The reality is, the people of Illinois would see they are behind the budget, opinion polls would show they aren't happy and business would continue on as usual. Maybe some of the representatives lose their jobs, but the new ones won't really change anything and the state will continue down the same path it is on now. While the voting public hates deficits, they hate losing freebies even more.
    Providing the reports would create a level of accountability that does not exist in Illinois' currently broken fiscal process. Major creditors and the State's residents would have near real-time information as to how the State was performing. Given its bad performance to date, a dose of transparency might be helpful.

    On your other point, I suspect that public attitudes might begin to change once they have a continuing stream of information against which to evaluate their State's fiscal performance. More importantly, creditors could begin to restrict lending if the State remains on its fiscally unsustainable course.

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    Re: Illinois’ credit rating downgraded; state drops to worst in the nation

    Quote Originally Posted by donsutherland1 View Post
    Providing the reports would create a level of accountability that does not exist in Illinois' currently broken fiscal process. Major creditors and the State's residents would have near real-time information as to how the State was performing. Given its bad performance to date, a dose of transparency might be helpful.

    On your other point, I suspect that public attitudes might begin to change once they have a continuing stream of information against which to evaluate their State's fiscal performance. More importantly, creditors could begin to restrict lending if the State remains on its fiscally unsustainable course.
    Ya...it is hard to get people who have very little that isn't given to them to give up the freebies and go back to work.
    You, my brothers and sisters, were called to be free. But do not use your freedom to indulge the flesh; rather, serve one another humbly in love.For the entire law is fulfilled in keeping this one command: “Love your neighbor as yourself.”

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    Re: Illinois’ credit rating downgraded; state drops to worst in the nation

    Quote Originally Posted by ksu_aviator View Post
    Ya...it is hard to get people who have very little that isn't given to them to give up the freebies and go back to work.
    Currently, full employment is not a realistic proposition.

    The latest BLS data show that for every job opening, there are 3.3 unemployed persons. Not surprisingly, 39.1% of unemployed persons have been unemployed for 27 weeks or longer. Furthermore, there is a structural component to the unemployment. Since 2007, construction and manufacturing have seen their share of employment drop from 15.4% of U.S. jobs to 13.1%. In contrast, education services and health care have seen their share rise from 11.7% to 13.3% of jobs. One cannot seamlessly shift workers from the construction and manufacturing sector to education and health care. A cyclical rebound is not likely to restore either sector to its pre-recession employment levels anytime soon, if at all given factors ranging from the housing bubble that distorted demand for construction and competitiveness gaps that impact parts of the U.S. manufacturing sector. During the past year, for every job created in construction and manufacturing, just over 2 jobs were created in the education and health care sectors. Another area of growth is professional business services. Last year, 472,000 jobs were created in that sector. Barriers to a career shift from construction and manufacturing into professional business services are also formidable.

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