US Slashes United Nations" Budget By $285 Million Following "Stunning" Jerusalem Rebuke

The United States announced a $285 million cut in the United Nations" "bloated" budget for next year, negotiated by UN Ambassador Nikki Haley. A statement by the United States Mission to the United Nations reads: 

Today, the United Nations agreed on a budget for the 2018-2019 fiscal year. ‎Among a host of other successes, the United States negotiated a reduction of over $285 million off the 2016-2017 final budget. In addition to these significant cost savings, we reduced the UN’s bloated management and support functions, bolstered support for key U.S. priorities throughout the world, and instilled more discipline and accountability throughout the UN system.

Pleased with the cuts, Haley added "you can be sure we’ll continue to look at ways to increase the UN’s efficiency‎ while protecting our interests." 

The move follows a contentious week at the U.N., after 128 nations voted in a "stunning rebuke" of President Trump"s decision to recognize Jerusalem as the capital of Israel. Prior to the vote, Trump threatened to cut foreign financial aid to any countries who opposed the move - first with a tweet by Ambassador Nikki Haley threatening that the US would be "taking names," followed by comments made by Trump to reporters last Tuesday, according to Reuters. 

U.S. President Donald Trump on Wednesday threatened to cut off financial aid to countries that vote in favor of a draft United Nations resolution against his decision to recognize Jerusalem as Israel’s capital.

 

“They take hundreds of millions of dollars and even billions of dollars, and then they vote against us. Well, we’re watching those votes. Let them vote against us. We’ll save a lot. We don’t care,” Trump told reporters at the White House.

Haley also circulated a letter to all UN member states effectively warning them not to vote against Trump"s decision. "As you consider your vote, I want you to know that the President and U.S. take this vote personally," she wrote. "The President will be watching this vote carefully and has requested I report back on those countries who voted against us."

As we now know, this accomplished absolutely nothing: 

The full UN vote - which the US & Israel lost 128-9, with 35 brave abstentions - is here: pic.twitter.com/ZtrztqTgyK

— Glenn Greenwald (@ggreenwald) December 21, 2017

As we wrote last week, The outcome of the vote was hailed as a "victory" by Palestine. “We will continue our efforts in the United Nations and at all international forums to put an end to this occupation and to establish our Palestinian state with east Jerusalem as its capital,” Abbas" spokesman Nabil Abu Rudainah said. Predictably, both Israel and the US were displeased.

The General Assembly vote came days after the U.S. vetoed a similar resolution in the U.N. Security Council. The panel"s other 14 members voted in favor of that measure – a move that Haley called an "insult" to the U.S. Shortly after the Security Council vote, Arab and Muslim leaders at U.N. called for an emergency special session of the General Assembly to discuss the U.S."s Jerusalem decision.

In a defiant speech ahead of the General Assembly vote on Thursday, Riyad Al Maliki, the Palestinian foreign affairs minister, cast the Trump administration’s Jerusalem decision as an affront on regional peace and security that has isolated the U.S. from the international community. “Does the United States not wonder why it stands isolated in this position?” he asked.

Turkey, which has led the Muslim opposition to the US Jerusalem declaration, was among the first to speak at the meeting. Turkish Foreign Minister Mevlut Cavusoglu stressed that only a two-state solution and sticking to the 1967 borders can be a foundation for a lasting peace between Israel and Palestine. The minister said that since Jerusalem is the cradle for the “three monotheistic religions,” all of humanity should come together to preserve the status quo.

“The recent decision of a UN member state to recognize Jerusalem as the capital of Israel violates the international law, including all relevant UN resolutions. This decision is an outrageous assault on all universal values,” Cavusoglu said.

The United States contributes approximately 22 percent of the U.N. budget - or around $3.3 billion, which President Trump asked the State Department to cut by over 50% in March.

U.S. officials in Washington and New York learned during the past week that they will be asked to find ways to cut spending on obligatory and voluntary U.N. programs by 50 to 60 percent from the International Organization Affairs Bureau’s account. State Department officials, for instance, were told that they should try to identify up to $1 billion in cuts in the U.N. peacekeeping budget, according to one source. The United States provides about $2.5 billion per year to fund peacekeepers. -Foreign Policy

U.S. diplomats warned key U.N. members during a March 9 meeting in New York to “expect a big financial restraint” on American spending – which is not surprising following President Trump’s comments from last December: 

The United Nations has such great potential but right now it is just a club for people to get together, talk and have a good time. So sad!

— Donald J. Trump (@realDonaldTrump) December 26, 2016

As to the U.N., things will be different after Jan. 20th.

— Donald J. Trump (@realDonaldTrump) December 23, 2016

Ambassador Haley was clear in her comments after the budget cut, telling the press "We will no longer let the generosity of the American people be taken advantage of or remain unchecked," adding "This historic reduction in spending – in addition to many other moves toward a more efficient and accountable UN – is a big step in the right direction.

What Kentucky’s Retirement Rush Says About The Future of State Pensions

Via The Daily Bell

Just because a Ponzi scheme is run by a government doesn’t mean it won’t collapse.

The situation in Kentucky serves as a dire warning about larger pension systems including Social Security.

What Kentucky is currently facing in like a bank run. When people hear that a bank is failing, they all scramble to get their money out before it goes bust. This snowballs and the bank runs out of cash that much quicker.

Kentuckians are retiring in droves, hoping to get a piece of the pension funds they were promised. Worried that the money might not be there in a few years, they are opting to start collecting now, lest they get nothing. But this is causing a run-on-the-bank effect. The pension system is collapsing that much quicker.

Politicians have long kicked the can down the road. The idea is that there will always be a future generation, unborn children to pay for the promises they make today. There will always be new suckers to pay for their unfunded liabilities.

But the bubble bursts. Unless a population grows exponentially, this cannot work. That is why it is a Ponzi scheme. There’s always a bottom layer that holds up the rest of the pyramid.

Of course, the government of Kentucky has assured potential retirees that they don’t need to panic. The state claims that even if the legislation passes to fix the problem, government employees will have time to retire on the old plans if they choose.

But that hasn’t seemed to ease the high retirement numbers. In past months, between 24-64% more people have retired (depending on the sector) compared to 2016. And with officials floating the idea of raising the retirement age, many have a better safe than sorry attitude.

This also shows that people don’t trust the government assurances. And of course, they shouldn’t. After all, the government also told them not to worry, the pensions they promised were funded. After a history of governments at all levels reneging on their promises, it is better to take the money and run.

And it’s the same old story for how they got into the mess. Spend now, worry about funding it later. There’s never enough money for the government, have you ever noticed that? Companies balance their sheets or go bust. Governments keep chugging along despite breaking promises, overspending, and failing to plan.

PFM mostly blames the approach used to fund the systems, one used by most public pension plans across the country, which based the government’s contributions to the plans on a percentage of a growing payroll. It says that’s like a homeowner basing mortgage payments on a percentage of future income he expects, or hopes, will grow.

Translation: it was a Ponzi scheme. And that same scheme is used by most government retirement plans. The money in these accounts is reinvested. But you don’t control where they are putting the money. Turns out Kentucky made some bad decisions on placing retirement money in certain hedge funds that didn’t do so hot after the 2008 recession.

Also, in the 1990s when the pension plans were fully funded, the General Assembly approved benefit increases without funding them — including an expensive cost of living benefit increase for Kentucky Retirement System members in place between 1996 and 2012.

The bottom line is that you never want to be dependent on the government, or even a private company for your pension. The only way to truly safeguard your retirement is to take it into your own hands.

Maybe some of your retirement goes into a hedge fund, but certainly not all of it. But a better plan is to do the research for what kinds of stocks and investments make sense. Spread the risk across different sectors, and maybe even different country’s stock markets. If you can’t do the research for proper investments, at least do the research to find out who the best person or organization is to inform you.

Your plan may be in part a company pension or retirement plan. But it should not stop there. It is always better to diversify savings (foreign accounts, cash, precious metals) and diversify investments (property, foreign and domestic stocks). Then you can also spend what you can afford to lose on riskier, but potentially high yielding, speculations (cryptocurrency, startups).

But you know the old saying about doing the same thing over and over and expecting different results. With their track record, it’s time to stop putting trust in government to take care of your finances.

How The Elite Dominate The World – Part 5: The Endgame Is Complete And Utter Global Domination

Authored by Michael Snyder via The Economic Collapse blog,

Do you want your children and grandchildren to grow up in a global socialist “utopia” in which everything about their lives is micromanaged by bureaucrats working for a worldwide system of government instituted by the elite?  To many of you this may sound like something out of a futuristic science fiction novel, but the truth is that this is exactly where the elite want to take us.  This is their endgame.

Their agenda has been quietly moving forward for decades, and if we don’t take a stand now, future generations of Americans could very well end up living in a dystopian nightmare with none of the liberties or freedoms that we enjoy today.

Bill Clinton’s mentor at Georgetown University, Dr. Carroll Quigley, wrote about this network of elitists in a book entitled Tragedy and Hope…

In fact, this network, which we may identify as the Round Table Groups, has no aversion to cooperating with the Communists, or any other groups, and frequently does so. I know of the operations of this network because I have studied it for twenty years and was permitted for two years, in the early 1960’s, to examine its papers and secret records. I have no aversion to it or to most of its aims and have, for much of my life, been close to it and to many of its instruments…my chief difference of opinion is that it wishes to remain unknown, and I believe its role in history is significant enough to be known…because the American branch of this organisation (sometimes called the “Eastern Establishment”) has played a very significant role in the history of the United States in the last generation.

In other parts in this series, I have discussed the tools that the elite are using to achieve their goals.  In part I, I talked about how debt is used as a tool of enslavement, and in part II I explained how central banking is a system of financial control that literally dominates the entire planet (Part III and Part IV here)  Professor Quigley also mentioned this system of financial control in his book…

“The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.”

Today, a system of interlocking global treaties is slowly but surely merging us into a global economic system.  The World Trade Organization was formed on January 1, 1995, and 164 nations now belong to it.  And every time you hear of a new “free trade agreement” being signed, that is another step toward a one world economy.

Of course economics is just one element of their overall plan.  Ultimately the goal is to erode national sovereignty almost completely and to merge the nations of the world into a single unified system of global governance.

The United Nations is the apex of this planned structure, and the globalists are always looking for ways to transfer more power to this institution.  For example, that is what the Paris Climate Accord was all about.  Since the climate affects everyone, it gives the globalists a perfect excuse to argue that the world needs to “work together”.  The following comes from the official UN website…

To address climate change, countries adopted the Paris Agreement at the COP21 in Paris on 12 December 2015. The Agreement entered into force less than a year later. In the agreement, all countries agreed to work to limit global temperature rise to well below 2 degrees Celsius, and given the grave risks, to strive for 1.5 degrees Celsius.

Implementation of the Paris Agreement is essential for the achievement of the Sustainable Development Goals, and provides a roadmap for climate actions that will reduce emissions and build climate resilience.

“Protecting the environment” sounds like a reasonable goal, right?

Well, when you click on the link for the “Sustainable Development Goals”, it sends you to a website where you can read about the 17 pillars of the plan to “end poverty, protect the planet, and ensure prosperity for all” that were agreed to by all of the members of the UN in September 2015.

This plan is also known as “Agenda 2030”, and when you dig into the details of this plan you quickly realize that it is literally a blueprint for global government.

Sadly, most Americans don’t realize this, and neither do they understand that this has been the goal of the elite for a very long time.  For instance, during an address to the General Assembly of the United Nations in 1992, President George H.W. Bush made the following statement…

It is the sacred principles enshrined in the United Nations charter to which the American people will henceforth pledge their allegiance.

Say what?

Once you start looking into these things, you will see that the elite are very openly telling us what they intend to do.

One of my favorite examples of this phenomenon is a quote from David Rockefeller’s book entitled Memoirs…

Some even believe we are a part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty and I am proud of it.

As David Rockefeller openly admitted, they are “internationalists” that are intent on establishing a one world system.

Candidates for Congress are not supposed to talk about this stuff, but if I am elected I am promising to fight the globalists on every front.

We are literally in a battle for the future of our children and our grandchildren.  If the globalists have their way, American sovereignty will continue to erode and the United States will slowly but surely be merged into a one world system.

But that isn’t going to happen on our watch.  Those of us that love liberty and freedom are going to take this country back, and we will never stop fighting the insidious agenda of the globalists.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Kentucky Teachers "Outraged" At Thought Of Accepting Same Retirement Plans As Private Sector Workers

Last week we noted that, after months of planning and cogitating over how to address the failing public pension systems in their state which are somewhere between $40 and $80 billion under water, Kentucky"s Governor Matt Bevin and the leaders of the General Assembly’s Republican majorities released their highly-anticipated "plan" which turned out to be nothing more than the same old "kick the can down the road" approach to "pension reform" that has perpetuated the pension ponzi in this country for decades while doing absolutely nothing to address the actual crisis.

Here is a summary of the "plan" courtesy of the Courier-Journal...notice that aside from putting new teachers into a "401(k)-style" defined contribution plan, the Republican proposal does pretty much nothing else except demand that more taxpayer dollars be diverted to service failing pension plans.

 

Here are highlights of the multi-point proposal:

• There is no increase in the full retirement age for current workers

• There will be no reductions in pension checks for retirees, and it protects health care benefits for them.

• Future non-hazardous employees and teachers will be required to enroll in 401(k)-style plans.

• Hazardous duty employees, such as police officers and firefighters, will continue in the same system they are in now.

• The plan would close a loophole to ensure payment of death benefits to families of hazardous employees.

• The plan would stop the defined benefits plans for all legislators, moving them into the same plan as other state employees under the jurisdiction of Kentucky Retirement Systems.

Of course, you can imagine our "surprise" when we learned that Kentucky teachers are apparently outraged that they might be "forced" to live with the cruel and unusual punishment of having to accept the same 401(k)-style retirement plans as pretty much every other private-sector employee in the country...the horror!

In an op-ed published in the Lexington Herald Leader this morning, a trio of public school administrators blasted the notion that they would be required to bear some responsibility for managing their own retirement plans rather than simply sticking their hand out for more taxpayer funded gifts when their public pension ponzis run low on funds.

However, we are seriously concerned that proposals in the current framework would increase the cost of the system, increase financial burdens on our local communities, decrease retirement security for our teachers and staff while moving absolutely all risk to them, and, most troubling, increase the unconscionable student resource inequities among classrooms across the state. It would decrease benefits for retirees, current staff and future hires, and increase revenue only from our employees themselves and from our local communities. We fear it would result in damage to public education on which families depend.

 

The proposed framework would create a defined-contribution plan with no amount of protected benefit whatsoever, which would be expensive in the near-term from a contribution standpoint and could leave employees with absolutely no savings or retirement income if another recession occurred as they neared retirement. This lack of financial security, which virtually no private or public sector employee faces, will decimate staff recruitment; students will suffer from increased class sizes and lack of specialized educators. It is difficult to imagine many of our finest young people choosing to enter a field of work that presented such risks.

 

An essential way to evaluate any reform is for each of us to ask ourselves this: Under the proposed plan, would we proudly encourage our own daughters and sons to earn college degrees and enter the education professions? Or, would we instead tell our own kids that serving their fellow Kentuckians by teaching children to read and write won’t provide a safe, secure future, and urge them to consider other options?

The problem, as we"ve noted numerous times before, is that the aggregate underfunded liability of pensions in states like Kentucky have become so incredibly large that massive increases in annual contributions, courtesy of taxpayers, can"t possibly offset liability growth and annual payouts...a fact that teachers seem all to happy to ignore.

Of course, if teachers are truly just concerned about providing the "best education possible" for public school students...how about a compromise?  We"re almost certain that taxpayers would be more willing to fund your extravagant pensions if you would, in return, be willing to be evaluated, and potentially fired, based on performance metrics assessing the relative improvement of your students and therefore your effectiveness as a teacher...deal?

Kentucky Republicans Cave On Pension Reform; Stick It To Taxpayers With "Kick The Can" Approach Instead

After months of planning and cogitating over how to address the failing public pension systems in their state, which are somewhere between $40 and $80 billion under water, Governor Matt Bevin and the leaders of the General Assembly’s Republican majorities released their plan earlier today and it appears to be nothing more than the same old "kick the can down the road" approach to "pension reform" that has perpetuated the pension ponzi in this country for decades while doing absolutely nothing to address the actual crisis.

Here is a summary of the "plan" courtesy of the Courier-Journal...notice that aside from putting new teachers into a "401(k)-style" defined contribution plan, the Republican proposal does pretty much nothing else except demand that more taxpayer dollars be diverted to service failing pension plans.

Here are highlights of the multi-point proposal:

 

• There is no increase in the full retirement age for current workers

 

• There will be no reductions in pension checks for retirees, and it protects health care benefits for them.

 

• Future non-hazardous employees and teachers will be required to enroll in 401(k)-style plans.

 

• Hazardous duty employees, such as police officers and firefighters, will continue in the same system they are in now.

 

• The plan would close a loophole to ensure payment of death benefits to families of hazardous employees.

 

• The plan would stop the defined benefits plans for all legislators, moving them into the same plan as other state employees under the jurisdiction of Kentucky Retirement Systems.

Here"s an overview of the 10-point pension plan @GovMattBevin and GOP leaders have developed to try to fix Kentucky"s pension crisis. pic.twitter.com/tcXar5yyd7

— Morgan Watkins (@morganwatkins26) October 18, 2017

Not surprisingly, Governor Bevin, who as a politician is worried not so much about the long-term solvency of his state"s pensions as he is about getting through the next election cycle, said the plan "will be a model for this nation" as it "keeps the promise" to public workers and delivers on his promise to "do what is legally and morally right."

In reality, of course, Bevin"s plan does nothing to "keep any promise" and simply delays the inevitable collapse of a ponzi scheme that will eventually buckle from a wave of retiring baby boomers who have been sold a lie for decades.

Just as quick reminder to Bevin, below is a recap of the changes that his own pension consultants told Kentucky"s Public Pension Oversight Board would be required to save the pensions in his state (courtesy of the Lexington Herald Leader)...suggestions that he seemingly dismissed in their entirety...

An independent consultant recommended sweeping changes Monday to the pension systems that cover most of Kentucky’s public workers, creating the possibility that lawmakers will cut payments to existing retirees and force most current and future hires into 401(k)-style retirement plans.

 

If the legislature accepts the recommendations, it would effectively end the promise of a pension check for most of Kentucky’s future state and local government workers and freeze the pension benefits of most current state and local workers. All of those workers would then be shifted to a 401(k)-style investment plan that offers defined employer contributions rather than a defined retirement benefit.

 

PFM also recommended increasing the retirement age to 65 for most workers.

 

The 401 (k)-style plans would require a mandatory employee contribution of 3 percent of their salary and a guaranteed employer contribution of 2 percent of their salary. The state also would provide a 50 percent match on the next 6 percent of income contributed by the employee, bringing the state’s maximum contribution to 5 percent. The maximum total contribution from the employer and the employee would be 14 percent.

 

For those already retired, the consultant recommended taking away all cost of living benefits that state and local government retirees received between 1996 and 2012, a move that could significantly reduce the monthly checks that many retirees receive. For example, a government worker who retired in 2001 or before could see their benefit rolled back by 25 percent or more, PFM calculated.

 

The consultant also recommended eliminating the use of unused sick days and compensatory leave to increase pension benefits.

 

All of which just reminds us once again of how we once summed up public pensions in this country:

Defined Benefit Pension Plans are, in many cases, a ponzi scheme.  Current assets are used to pay current claims in full despite insufficient funding to pay future liabilities... classic Ponzi.  But unlike wall street and corporate ponzi schemes no one goes to jail here because the establishment is complicit.  Everyone from government officials to union bosses are incentivized to maintain the status quo...public employees get to sleep better at night thinking they have a "retirement plan," public legislators get to be re-elected by union membership while pretending their states are solvent and union bosses get to keep their jobs while hiding the truth from employees.  

North Korea Says "Trump Declared War", Threatens To Shoot Down US Jets

Having raged at President Trump"s "suicide mission" on Saturday, North Korea"s foreign minister Ri Yong Ho called for an impromptu press conference this morning following President Trump"s extended travel ban, in which the diplomat said that Trump’s recent tweet that DPRK"s leadership would not be around much longer amounted to "a declaration of war" and added that North Korea has "every right to take countermeasures against the United States,  including to shoot down American jets outside the DPRK"s airspace" as part of its right to self-defense under the United Nations charter.

“The UN Charter acknowledges member states’ right of self-defense,” Ri said outside a hotel near the UN headquarters on Monday. “As the United States has declared a war, even though its strategic bombers don’t cross our border, we will come to own all rights to respond for self-defense including shooting down its planes at any time."

“The whole world should clearly remember it was the U.S. who first declared war on our country,” Ri added as he was leaving the United Nations after a week of General Assembly meetings in New York.

“Since the United States declared war on our country, we will have every right to make countermeasures, including the right to shoot down United States strategic bombers even when they are not inside the airspace border of our country.”

Referring to Mr. Trump’s assertion that the North Korean leadership may not “be around much longer,” Mr. Ri said that the question of “who would be around much longer will be answered” by North Korea.

As shown in the following clips, Ri did not hold back:

Part 1 of #NorthKorea Foreign Minister speaking to press pic.twitter.com/cWi4LvZ5lF

— Minyoung Park (@minyoungpark) September 25, 2017

And again:

Part 2 of #NorthKorea Foreign Minister speaking to press pic.twitter.com/7GxR4u0jTv

— Minyoung Park (@minyoungpark) September 25, 2017

His key soundbites below:

"The UN Charter acknowledges member states’ right of self-defense. As the United States has declared a war, even though its strategic bombers don’t cross our border, we will come to own all rights to respond for self-defense including shooting down its planes at any time."

"All options are on the table for North Korean response."

"The whole world should clearly remember it was the US who first declared war on our country."

On Saturday, Ri delivered a speech at the UN General Assembly in which he stressed that North Korea would inevitably target the US mainland with missiles as Trump called Pyongyang"s leader a "rocket man" on a suicide mission.

The threat to shoot down US bombers comes as the Pentagon reported on Saturday that several B-1B bombers flew in the international airspace just off the North Korean eastern coast. Chief Pentagon spokeswoman Dana White said the move was made to showcase US military options available to Donald Trump.

The reaction to this quasi declaration of war was fast and furious:

Stocks are sinking as bonds are bid.

Illinois Had The Worst Personal Income Growth In The U.S. Over The Past Decade

Submitted by Austin Berg, of IllinoisPolicy.org

Illinois’ jobs growth was worse than every neighboring state, and half the neighboring state average from June 2016 to June 2017, according to a new report. Data released July 27 by the Illinois Department of Employment Security, or IDES, reveals Illinois’ jobs growth from June 2016 to June 2017 was 0.9 percent, compared with a national average of 1.5 percent.

The greater Chicago area fared far better than the rest of Illinois with 1.2 percent jobs growth, but still lagged behind the national average. The rest of the state saw just 0.2 percent jobs growth.

The new IDES release also contained data by metropolitan statistical area, or MSA. Of Illinois’ 14 MSAs, eight saw jobs growth of less than 1 percent. Only five of Illinois’ MSAs saw jobs growth higher than the national average: Springfield, Kankakee, Lake County-Kenosha County, Bloomington and Carbondale-Marion.

The Decatur MSA experienced no jobs growth over the year. Rockford and Danville each lost 200 jobs over the year, on net.

The IDES data underscore a lack of economic reforms in the budget passed by state lawmakers earlier this month, which included the largest permanent income tax hike in state history.

Take Decatur, for example. Moody’s Analytics revealed earlier this year that the former manufacturing titan was one of four Illinois metro areas where the recession recovery was at risk of “coming undone.” Researchers also included Danville on that list.

Decatur residents are in dire need of healthier incomes. Even the hope of decent jobs growth would be a vast improvement.

Instead, the tax hike will force the average Decatur resident to send $580 more each year to state government, according to the Decatur Herald & Review. That’s money that could have been spent locally at struggling small businesses, put toward college savings or spent on household essentials. Instead, it will vanish into Springfield’s sinkhole of debt.

Illinois’ sickly economy doesn’t just show itself in poor jobs numbers, but in paychecks as well. The Land of Lincoln is home to the worst personal income growth in the United States over the Great Recession era.

Illinois’ lawmakers have failed to pass the pro-growth reforms from which neighboring states are reaping benefits. Take property taxes, which are higher in Illinois than in every state with no income tax at all.

Neighboring Wisconsin’s property taxes as a percentage of personal income are the lowest the state’s seen since the end of World War II. Illinois property taxes are nearly triple those in neighboring Indiana. But reforms to address the cost-drivers of Illinois property taxes have been stonewalled in the General Assembly.

Illinois is also home to the costliest workers’ compensation system in the region, yet serious efforts at reform have gone untouched by legislative leaders. And as neighboring states such as Missouri are on the path to income tax cuts, Illinois lawmakers passed a 32 percent income tax increase.

Until lawmakers get serious about economic growth, don’t expect Illinois’ jobs trend to diverge from the weak path it’s been treading for years.

Connecticut Gov. Signs Exec. Order Taking Over Spending After State Fails To Pass Budget

With Maine looking like it will be the first state to shut down heading into the new fiscal year on Saturday morning and perhaps beating Illinois to the punch, moments ago Connecticut, as previewed last night, will also enter the new fiscal year without a budget, inviting rating agencies to downgrade it to Illinois" "barely junk" rating or perhaps making CT the first US junk-rated state.

Lawmakers and the governor had been unable to reach an agreement on a two-year budget that will cover a projected $5 billion deficit for months, and not even the threat of the new year prompted them to move as we expected.

Meanwhile, Governor Malloy signed an executive order taking over the state"s spending authority which will cut most services but at least keeps the government open. From Reuters:

• CONNECTICUT GOVERNOR SIGNS EXECUTIVE ORDER TO TAKE CONTROL OF STATE SPENDING AFTER FAILURE TO PASS FY 2018/19 BIENNIAL BUDGET


• CONNECTICUT EMERGENCY SPENDING PLAN KEEPS STATE GOVERNMENT OPEN BUT CUTS SERVICES

As a result of the failure to pass a budget, AP reports that nonprofit social service agencies that rely on state funds are preparing for deep cuts. Democratic Gov. Dannel P. Malloy, who wanted the General Assembly to at least pass a proposed three-month mini-budget, is expected to reluctantly sign an executive order that maintains only essential state services.

Connecticut’s General Assembly failed to pass a version of the state budget on Friday, forcing Democratic Gov. Dannel P. Malloy, who wanted the General Assembly to at least pass a proposed three-month mini-budget, to sign an executive order to take control of state spending, according to the Associated Press.

.@GovMalloyOffice signed executive order today to keep government running pic.twitter.com/gE9onMJrKW

— ctnewsjunkie (@ctnewsjunkie) June 30, 2017

Gian-Carl Casa, president and CEO of Connecticut Community Nonprofit Alliance, says agencies that help people struggling with mental illness to domestic violence are planning to lay-off staff and close programs.

The failure is the latest blemish on Malloy"s record. The two-term governor has said he will not seek a third term when is current one is up at the end of 2018.

Illinois' Economic Growth Is Worse Than During The Great Depression

Authored by Michael Lucci via IllinoisPolicy.org,

Illinois’ total state economic activity has increased by only 4 percent since 2007, which is lower than the U.S.’ 10 percent GDP growth during the worst decade of the Great Depression.

There are fewer Illinoisans working today than there were 10 years ago. Millions of Illinoisans are feeling the brunt of the state’s economic pain and financial meltdown in the form of joblessness and hopelessness. Too many families are dealing with unemployment and underemployment, and too few are able to find their dream jobs in the Land of Lincoln. That’s because Illinois has the Great Depression economy of the Midwest.

In fact, Illinois’ economic growth is worse than during the worst years of America’s Great Depression. Illinois’ gross state product, which measures total economic activity, has increased by barely more than 4 percent over the past decade. In comparison, the U.S. gross domestic product during America’s Great Depression increased by nearly 10 percent during the worst decade of the Great Depression, from 1930-1939.

America’s Great Depression started off worse from 1930-1932, but the recovery came on stronger. By contrast, Illinois did not have as steep of a fall during the first years of the Great Recession, but Illinois’ recovery from the Great Recession has been abysmal.

Illinois suffers from depressed economic growth, and state policymakers have repeatedly chosen the path that prevents prosperity. Illinois lawmakers hiked state personal income taxes by 67 percent in 2011. While those income tax rate increases partially sunsetted in 2015, local property and sales taxes have also risen. In the face of economic calamity, Illinois has tried to tax its way back to prosperity.

Taxes keep going up because the state has failed to address its deepest problems –gargantuan pension and retiree health care debts and uncontrolled spending on government payrolls. Illinois’ debts are spiraling out of control, its bonds are headed for junk status, and politicians have responded by repeatedly raising taxes.

The debts need to be brought under control because good job opportunities, economic growth and income-earning power are fleeing the state. That’s why Illinois has the worst personal income growth in the entire country – tied only with Nevada – over the Great Recession era. Personal income has grown by only 0.8 percent per year in Illinois from the end of 2007 through 2016.

Illinois’ governing class has failed to make the state sustainable for future generations. Illinoisans are fleeing the state, and millennials – made up of college students and young working adults – are getting out fastest.

Illinois now loses, on net, one person every 4.6 minutes to other states. As a result, Illinois has been shrinking since July 2013, according to the U.S. Census Bureau. Illinois’ population is down by 78,000 over the last three years due to massive out-migration. In contrast, all states around Illinois are growing.

Illinois’ problems have been caused by political failure to embrace reforms that would bolster economic growth and bring debts under control. The state’s political leadership has racked up hundreds of billions of dollars in debts that likely can never be repaid, yet the General Assembly refuses to change course. Taxes have consistently gone up, debts are spiraling out of control, and yet the Illinois legislature hasn’t changed anything of substance.

More taxation is not the answer, and Illinoisans have had enough. Sixty-four percent of Illinoisans oppose another income tax increase as part of a budget deal, according to a May poll commissioned by the Illinois Policy Institute. More taxes would simply sink into a black hole of debt that politicians have shown no interest in fixing.

Illinois needs to choose a course of reform or accept the inevitability of state and municipal bankruptcy. The state is bleeding red ink, and will continue to do so until lawmakers bring debts under control. The state’s economy is struggling under the current burden of debt, taxation and regulation; more of the same will inevitably fail.

It’s time to change course, or Illinoisans will continue to change their residence to other states. Until the state adopts meaningful reform, Great Depression economic growth will be the norm in the Land of Lincoln.

Would Congress Authorize Bankruptcy For Illinois And Other States? Yes, Inevitably

Authored by Mark Glennon via WirePoints.com,

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. -Arthur Schopenhauer.

For Illinois or another state to formally go bankrupt, the United States Congress would have to pass legislation.

Would they? I think so.

In fact, bipartisan support is reasonably foreseeable and, ultimately, that legislation is unavoidable, which will trump any debate.

The legal question whether Congress could extend bankruptcy to states was addressed in my earlier article so I won’t rehash that here, except to say I think David Skeel is right. He’s a law professor at the University of Pennsylvania who also serves on Puerto Rico’s oversight board in its bankruptcy-like proceeding authorized by Congress under PROMESA. He wrote wrote firmly that the “constitutionality of bankruptcy-for-states is beyond serious dispute.”

In Congress, reasons will vary for initial political hostility to bankruptcy-for-states.

Some conservatives view state bankruptcy as a form of bailout and will be particularly averse to helping Illinois, which they understandably think deserves its fate. Others may view it as federal intrusion on state sovereignty, which is also what the constitutional objection is about.

But bankruptcy is really the anti-bailout alternative, and turning Illinois around is important to the national economy. We are now a drag on the national economy despite assets that should make us a powerhouse of jobs and production. Illinois GDP has lagged the nation’s significantly for ten years. A federal bailout is happening automatically, at least in a small sense, in the form of food stamps, housing assistance, Medicaid and similar programs. A fresh start for Illinois would reduce its federal tab for those costs and grow Illinois’ tax base for federal revenue.

Respecting state sovereignty, remember Congress would only be offering states the option of using bankruptcy, just as it has already done for municipalities; nothing would be forced on states.

The left will fear the power of bankruptcy to reduce pension payments, but it’s essential to remember the Bankruptcy Code would not be expanded “as is” to states. Changes would be made on which all sides should find common ground.

One such change should allow for progressivity or means testing in some form for any pension cuts. That is, the fat cats should be reduced proportionately more than smaller pensioners who truly need their annuity. The Bankruptcy Code currently treats all unsecured creditors uniformly, including unfunded pension liabilities.

Another possible change that progressives might like is statutory recognition of the concept of “service insolvency.” That’s the idea that failing to provide basic services should count in the initial determination whether a government qualifies for bankruptcy.

The left wouldn’t like how collective bargaining agreements can be terminated along with all other contracts bankrupt parties don’t like. But remember that state policy on collective bargaining and other labor matters is not dictated by bankruptcy. A bankrupt government can opt to keep or renegotiate whatever labor contracts it has.

The municipal bond industry will object fiercely since unsecured debt could be reduced. They’ve already focused on the issue, having earlier sponsored a national ad campaign opposing PROMESA, fearing it would set a precedent for states.

But progressives and free marketeers alike should shed no tears for existing bondholders. They took the risk that bankruptcy law could be changed to impact them.

All will fear higher future borrowing costs. That’s legitimate but finite. Once a bankruptcy proceeding is underway, new lenders get special protection to assure normal operation and, assuming a successful bankruptcy, a clean balance sheet and better credit ratings result. The key will be to line up support for federal legislation as best as possible behind the scenes and move very quickly once it’s proposed.

Won’t all states suffer higher borrowing costs because of the additional risk? In the very long run they will be forced to borrow less to assure the markets of no risk of getting near bankruptcy. Is that such a bad result?

Stop here and assume everything I’ve said so far is wrong. Assume still further reasons why bankruptcy is a bad option — it will be fraught with unknowns and is inherently unfair to those to whom promises were made, which is true.

None of that will matter because it will become evident there’s no alternative. This isn’t about whether bankruptcy is a good option. It’s about whether it’s the only option.

Look no further than pensions to see why. The Illinois Supreme Court has made crystal clear that, under the Illinois Constitution, pension promises can’t be cut for services already rendered, which are Illinois’ $130 billion liability (using silly, official numbers). That leaves only two means to do that — bankruptcy or a state constitutional amendment deleting the pension protection clause. But the amendment might not work anyway because of issues under the United States Constitution, and it would take years to put through even if the General Assembly acted to put it to a public vote, which it has shown no interest in doing.

And the unfunded pension obligations are insurmountable in themselves. That’s why no serious proposal by anybody in the current budget debate has pretended to address those liabilities. They all propose continued annual contributions to the pensions that underfund them, growing the pension debt each year.

Meanwhile, despite that underfunding, Illinois’ death spiral worsens. The tax base shrinks, state revenue drops, people and employers flee and services are cut.

Bankruptcy for Puerto Rico was initially scorned, but PROMESA ended up with bipartisan support, passing 297-127 in the House and 68-30 in the Senate.

One part of their experience is worth particular note. Lawsuits by creditors were stayed — basically, put on hold — under PROMESA. That stay expired on May 1 and a torrent of lawsuits began on May 2, forcing Puerto Rico to file its bankruptcy-like proceeding the very next day. It’s difficult to see how Illinois can avoid a similar wave of lawsuits at some point, and only an organized insolvency proceeding — bankruptcy — can fairly manage and prioritize an overwhelming number of claims.

The sooner we pass through the stages of ridicule and violent opposition, as Schopenhauer called them in that quote above, the less painful this will be for everybody.

Chicago Population Shrinks Most Of Any City In US

Authored by Mike Shedlock via MishTalk.com,

Illinoisans continue their exodus, with Chicago having the dubious distinction of the highest population loss in the nation.

High taxes are the number one reason people and businesses leave the state.

What follows is a guest post by Michael Lucci, Vice President of Policy, Illinois Policy Institute.

CHICAGO ONLY MAJOR U.S. CITY TO LOSE POPULATION FROM 2015 TO 2016

The majority of major cities in Illinois are shrinking as the Land of Lincoln depopulates due to massive out-migration to other states.

But while most of Illinois’ cities and towns are continuing to shrink, the majority of cities and towns in Illinois’ bordering states are growing, according to data from the U.S. Census Bureau.
When Illinoisans are polled on why they are leaving, taxes are the No. 1 reason they cite. Yet Illinois politicians continue to raise taxes, showing that political leaders have not yet heard the message of the state’s residents.

Chicago shrank more than any other U.S. city, but Berwyn, Cicero and Peoria are shrinking faster on a per capita basis

Chicago’s population declined by 8,638 people from July 2015 to July 2016, a larger loss than any other major American city. Illinois has 29 cities with 50,000 people or more, and 21 of those cities also shrank in total size.

However, on a per capita basis, Decatur is shrinking more than any other city in Illinois. Decatur’s population shrank by 8.5 people per 1,000 residents from July 2015 to July 2016. That means that for every 1,000 people in Decatur in 2015, there were 8.5 fewer people in Decatur in 2016.

On a per capita basis, Decatur’s loss was followed by Berwyn, Cicero, Peoria and Oak Park, all of which shrank by more than seven people per 1,000 residents.

Eight of these larger Illinois cities had population growth year over year. Champaign is the only Illinois city that had more than 1 percent population growth, fueled almost entirely by the arrival of international students at the University of Illinois.

Most of these cities are shrinking because there are so many people leaving for other parts of the country. Those losses to other parts of the country outweigh the normal population gains experienced across the state from having more births than deaths, and having a small inflow of international immigrants.

Illinois’ Neighbors are Watching Most of their Biggest Cities Grow

The story is different in neighboring states, where most cities with more than 50,000 people are growing. Illinois’ border states have 58 cities with more than 50,000 people, and 38 of them are growing. That means that 65 percent of such cities in neighboring states are growing.

In Illinois, only eight of 29 cities with populations of 50,000 or more are growing, which is only 28 percent of Illinois cities with more than 50,000 people.

A large part of the reason Illinois’ border states have growing cities and Illinois has shrinking cities is because Illinois is losing the border wars with all of its neighbors. Illinoisans are flooding into bordering states faster than ever before. Over the last 10 years, Illinois has experienced large net migration losses to nearly all of its bordering states, and those losses have accelerated in recent years. (The exception to this 10-year trend is Michigan, which shares a lake border with Illinois and to which Illinois had net losses of residents over only the two most recent years of data.)

Higher Taxes Will Push More Residents Out of State

The Census Bureau released its out-migration data the same week the Illinois Senate passed a massive tax hike bill.

This is a significant development in a state where residents are fed up with the high tax burden, and this frustration is pushing more and more people to leave. According to a Paul Simon Public Policy Institute poll released in October 2016, 47 percent of Illinoisans surveyed said they want to leave the state. And taxes were the most commonly cited reason people gave for their desire to move.

And according to a recent poll commissioned by the Illinois Policy Institute, fewer than 1 in 3 likely Illinois voters support raising taxes to balance the state’s books. Yet the General Assembly continues to insist on tax hikes as the way to close the budget deficit.

Illinoisans are taxed enough already, and the state will continue to lose residents until it reins in taxes and adopts policies to support more jobs growth.

The General Assembly has run a losing strategy for years: raising taxes and failing to reform spending drivers. This has not brought prosperity or opportunity to the state, and will not do so over the longer term, either.
Illinois will not become sustainable again until the state implements reforms so that the government, its bureaucracies and special interests serve the people rather than the other way around.

Until Illinois is fixed, Illinoisans will continue to vote with their feet against staying in the Land of Lincoln.

Michael Lucci
Vice President of Policy

* *  *

Those who leave are generally better educated and have higher wages than those who stay. Those who cannot find another job elsewhere have no choice but to stay.

Five Desperately Needed Reforms

1. Municipal bankruptcy legislation


2. Pension reform


3. Right-to-Work legislation


4. End of prevailing wage laws


5. Workers’ compensation reform

Number one on my list of Illinois reforms is bankruptcy legislation. It is the only hope for numerous Illinois cities whose hands are also tied by union-sponsored prevailing wage laws.

For further discussion, including pension analysis,  please see Puerto Rico Placed in Bankruptcy Protection: Illinois Needs Similar Deal.

Connecticut State Capital Prepares For Bankruptcy Amid Collapse In Hedge Fund Revenue

The state of Connecticut has been hit hard by the double whammy of a deteriorating local economy, coupled with a plunge in hedge fund profits - as well as hedge fund managers permanently relocating to Florida - leading to a collapse in tax revenues. According to the the latest Connecticut budget released last week, the state is reeling from the consequences of sliding tax revenue from the super-rich, i.e. the state"s hedge fund managers. The latest figures showed that tax revenue from the state’s top 100 highest-paying taxpayers declined 45% from 2015 to 2016. The drop adds up to a $200 million revenue loss for Connecticut.

In a dramatic, if of questionable credibility, soundbite Department of Revenue Services Commissioner Kevin Sullivan says these wealthy people are “dramatically less wealthy than they were before.” He was referring to annual income, not actual asset holdings, because judging by the all time high in the S&P, the local financial elite have never had a higher net worth.

“When you look at the top 75, top 50 ... this is a group of wealthy people who are dramatically less wealthy than they were before,” said Kevin Sullivan, commissioner of the Connecticut Department of Revenue Services. “These folks, for a number of reasons, are either not realizing as much income or don’t have as much income.”

Just don"t expect tears from the general public. Sullivan also noted how several international hedge funds have recently failed, resulting in “significant retrenchment” from investors. That drop in tolerance for risk brings smaller margins and ultimately less personal income for the state to tax, he added. It"s fascinating how the Fed"s central planning, superficially meant to restore "confidence" in a rigged, manipulated market is having such proound and adverse 2nd and 3rd order effects on state budgets.

Sullivan also acknowledged part of revenue decline can also be attributed to “a handful” of wealthy individuals who moved to more tax-friendly states — an issue frequently raised by legislative Republicans, who argue Connecticut’s tax policies encourage the state’s super-rich to move out.

Of course, for tax purposes it"s the actual income that matters, and as a result the steep decline has exacerbated Connecticut’s budget woes. The projected deficit for the new fiscal year beginning July 1 has now jumped from about $1.7 billion to $2.3 billion, while the deficit predicted for the second year of the state’s two-year budget is now about $2.7 billion.

According to AP, lawmakers and the governor have already discussed the possibility of making deep cuts throughout state government, including to state colleges and universities and social services. Meanwhile, there’s a threat of about 4,000 layoffs if a $700 million labor concession deal isn’t reached with state employees. Lawmakers say these latest revenue figures make that agreement even more crucial.

* * *

Meanwhile, in a stark confirmation just how dire the state"s economic and fiscal situation has rapidly become, the Hartford Courant reports that city leaders in the state"s capital have taken a step toward bankruptcy, soliciting proposals from law firms that specialize in Chapter 9. It adds that the city is reviewing several firms and could hire an attorney as early as this week, sources with knowledge of the plans said.

Facing a $65 million deficit next year and a $14 million shortfall this year, Mayor Luke Bronin has hinted for months that Hartford could file for bankruptcy, and said during his budget release in April that he was "not in a position to rule anything out."  Bronin proposed cuts and concessions from the unions, but is still seeking $40 million in additional state aid to close next year"s budget gap. The city resorted to short-term borrowing to cover costs such as payroll payments this year.

The mayor confirmed Tuesday that the city was looking at firms. "We have not engaged bankruptcy counsel, but we have had initial conversations with firms that have experience in Chapter 9 and municipal restructuring," Bronin said. "Given the uncertainty of the state budget process and the depth of the state budget crisis, it shouldn"t surprise anyone that we might engage counsel in the near future."

Some, such as Council President Thomas Clarke II, who was briefed by Bronin on the prospect of hiring a bankruptcy lawyer, called the move premature. "I was told it was possible that a decision would be made before the end of this week," Clarke said Tuesday. "It"s premature. We haven"t exhausted every option and every avenue for us to go down this road."

Maybe not yet, but time is fast running out.  Meanwhile, reminding the state that "we"re all in it together", Bronin stressed that the state must be a partner in pulling Hartford "from the brink of financial ruin", noting that more than half of the city"s properties are tax-exempt and that Hartford has limited options for revenue.

"We"ve made clear for more than a year that Hartford"s fiscal challenge cannot be responsibly solved at the local level alone with the tools that we have," Bronin said, "and we continue to push hard to build a new partnership with the state of Connecticut to put our capital city on a path to solvency, stability and growth."

However, as noted above, the itself has its own problems, with a more than $2 billion budget gap estimated for next year. It is unclear whether there is support in the General Assembly for bailing out Hartford.

* * *

Clarke said that if the city proceeds with legal representation, the council will look to hire its own lawyer. A key question members want answered is whether the mayor must get the council"s approval to file for bankruptcy, the Courant notes. The state statute covering municipal bankruptcy says that a city or town must receive consent from the governor, and that the governor "shall submit a report to the treasurer and the joint standing committee of the general assembly." It doesn"t specify whether a mayor needs the council"s approval.

In other words, if Bronin intends to go through with it, Hartfort may be in bankruptcy within weeks, if not days.

Hartford wouldn"t be the first city in Connecticut to seek Chapter 9 protection. Bridgeport filed for bankruptcy in 1991, but a federal judge dismissed the petition, saying the city was capable of paying its bills. Other cities that have filed include Detroit, Stockton and San Bernardino, Calif., and nearby Central Falls, R.I.