You will get crumbs and you will shut up about it.
That might as well be the openly stated policy of Illinois’ Democratic establishment toward employers and toward any of the few lawmakers who stick up for employers.
I submit upfront for consideration the real point of this column, which is that you cannot expect to hear much squawking from those who can get only crumbs. That sad state of affairs is illustrated nicely by how the state’s unemployment trust fund is to be restored to solvency, a summation of which follows.
In the end, business groups and Republican lawmakers on their side mostly endorsed the recent legislation for the unemployment fund, but it certainly does not appear they got a fair deal. Instead, they got the best they could probably get – crumbs.
Jim Nowlan recently put it this way: “Republicans are irrelevant in Illinois politics today. Republicans should expect they’re going to be treated like dirt by Democrats.” Jim is a veteran in Illinois politics who has worn almost every hat related thereto. He said that in a different context, but his point applies to pretty much everything else, including matters important to employers, for whom it’s mostly some Republicans who look out.
Under those circumstances, it should come as no surprise that we have not heard much criticism of how the unemployment fund deal came down. Employers have other matters forever pending in the General Assembly, so silence may be prudence.
But criticism is in order, especially from the perspective of those of us who think Illinois employers are already overburdened by Illinois law. Here is the story from that perspective, which is about snow job after snow job receiving little challenge in the media and, ultimately, mostly silence from those who will pay.
The background is actually quite simple, revolving around one question: Who should pay to restore the fund to solvency, employers or the state? The state’s special fund that pays unemployment claims ran dry during the pandemic. The fund had to borrow $4.6 billion to keep up on unemployment claims during the pandemic, and further has to restore the fund to an actuarially sensible balance, which is now agreed to be about $1.7 billion.
Employers, understandably, didn’t think they should have to pay for that through taxes on them, which in normal times is how the fund gets its money. After all, the state was showered with federal pandemic relief that could be used for that purpose and the state claimed to have a budget surplus.
Moreover, it was the state’s own mismanagement of claims that led to the epic fraud that helped deplete the fund. Well over half of the $3.6 billion in unemployment claims paid out from July 2020 through June 2021 went to fraudsters. That was the state’s fault, not employers’. The federal government has issued scathing criticism at Illinois for failing to submit required information on that.
Only 22 state unemployment funds had to borrow anything at all from the federal government. Only three, fiscally profligate California, New York and Connecticut, still haven’t paid up.
In all, it seemed widely apparent that the state, at a minimum, should take responsibility for paying off the federal loan early on.
But it didn’t. Under criticism for that last year, Gov. JB Pritzker claimed federal bailout money couldn’t be used to pay off the federal loan. That was untrue and the first deception on the matter, which we and Capitol News Illinois called out at the time, to no avail.
So the standoff continued, effectively holding employers hostage in negotiations over the past year on who should pay. The state did pay down the federal loan by $2.7 billion in March using federal bailout money, which Pritzker has called “historic.” But by leaving the rest unpaid, the fund faced millions of dollars monthly in interest and penalties payable to the federal government by employers. The only other potential way to help fix the fund would have been a reduction in benefits, which neither side wanted.
The next snow job came in September when Pritzker held a much-ballyhooed press conference announcing that “the state would be making a significant payment toward the remaining balance” of the federal loan — $450 million. That’s how ABC Chicago and some others reported it, but you have to read further to see that it was the fund itself which had to make the payment, which means employers had to pay it through higher taxes.
Pritzker and Democratic lawmakers nevertheless congratulated themselves by saying the fund was able to do so thanks to their prowess in reducing unemployment claims. “This contribution is direct evidence of labor market strength in Illinois,” said Governor JB Pritzker. “With unemployment claims levels continuing to reach historic lows, the State’s Unemployment Trust Fund is able to contribute to the loan repayment and save Illinois taxpayers in interest costs.”
In truth, however, there was nothing special about that drop in unemployment claims. The whole nation has seen it this year. Unemployment rolls have been at their lowest in 52 years. It’s the natural consequence of pandemic unemployment compensation expiring and the return to work after Covid.
Some Republican lawmakers called out that deception but the press ignored it and I regret that we missed it, too.
Then came last month’s announcement, another “historic” one, Pritzker said, of the deal for the state to pay off the remaining balance of the federal loan. We explained then why the deal was political theater that did not solve the entire matter. Restoring the fund to a proper balance was left to employers to fund, and $450 million of state assistance to the fund is merely a loan, which employers will have to repay. The increased burden on employers apparently will come mostly in the form of an increase in the base on which their tax is calculated.
But most of the press gobbled up Democrats’ claim of another “historic” victory. Columnist Rich Miller, ever willing to support Democratic spin, even tried to refute our story, falsely denying our point that more burden will fall on employers. And he used the same meaningless comparison Democrats used of what would happen if nothing were done. There would be a trainwreck for everybody if nothing was done. So what?
Our story was accurate, which was later affirmed by House Minority Leader Tony McCombie. But the story with McCombie’s comments was the exception, with most media just repeating Democrats’ claims of the “historic” deal.
So they went back for another round of the same, successful spin. Last week Pritzker held another press conference upon signing the legislation finalizing the deal.
And it worked again, with much the press simply repeating his press release about the legislation that Pritzker again called “historic.”
Now there is mostly silence on the matter. Those who have little choice but to beg for crumbs in Springfield aren’t likely to say much further, which is why we are happy not being a lobbying organization.