Chicago has an idea to cover its staggering pension obligations: Sell bonds

Chicago is a beautiful city. No doubt overtaxed, but beautiful.

But there are problems that come with the same political crowd running the place for almost nine decades. Ask Detroit.

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It has to do with debt, spending today and leaving worries about tomorrow to the next team of Democrats, which does the same. And so on. And so on. And so on.

In their efforts to stay in power, the meisters of Chicago have promised city workers of all kinds of very attractive pension plans. And the workers, in turn, return the favor with votes for their benefactors.

One problem: The city under the management of Obama crony Rahm Emanuel does not have the funds to pay these pensions. Currently, they total $28,000,000,000 in four pension funds.

The city is already heavily taxing pretty much everything, except the stunning number of homicides there. And if they could ever catch the perps, they just might try.

So what to do? Renegotiate the pensions? Uh, no. That’s out of the question as Emanuel’s next reelection is scheduled for February.

Here’s an idea: Why not a bond issue, a $10 billion bond scheme? Emanuel and his pol pals could take the money from investors, invest it themselves, make more than they’re paying the bondholders and use the profit to pay the pensions.

It’s so crazy, it’s sure to fail. Others have tried.

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As detailed by the Wall Street Journal, city finance chief Carole Brown will soon decide if she likes the bond idea. If Mayor Emanuel likes it too, then the City Council will like it too. And Chicago will have shouldered the biggest pension obligation bond ever issued by any U.S. city.

Such schemes have blown up in the municipal faces of other cities and contributed to the bankruptcies of places like Detroit and San Bernardino, Calif.

In fact, since the late eighties some 400 governments have issued pension obligation bonds led by — Oh, look! — Illinois that floated a $10 billion bond issue 15 years ago and has talked about another for $107 billion.

But before you take out your checkbook to sign on for a few mill, remember where the name Chicago comes from. It was an Indian word for the smelly wild onion that grew by the river. Seriously.

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Ed Morrissey 12:40 PM | November 21, 2024
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