Quick Hit Matthew Blake Friday April 27th, 2012, 3:28pm

Obama, Quinn Taken To Task By Economists

Progressive economists slammed President Barack Obama and Gov. Pat Quinn today for not doing enough about a prolonged recession and unemployment crisis. Also, Quinn came under attack for not doing enough to increase the state tax base before issuing landmark proposed cuts to Medicaid and public employee pensions.

“It’s kind of hard for a voter to know what the difference is between a Democratic and Republican plan for lowering employment,” contended Josh Bivens, acting director of research and policy at the Washington, D.C. Economic Policy Institute.

Bivens spoke at a symposium organized by the Center for Tax and Budget Accountability, or CTBA, a Chicago group maybe best associated with its tax increase advocacy.

Ralph Martire, executive director for CTBA, acknowledged that Quinn and the General Assembly increased the personal and corporate income tax rate in January 2011, which is set to expire in 2014. But Martire says that Illinois is still 40th among states in its overall tax burden.

Martire wants Illinois to have a graduated, instead of a flat, income tax and also to impose a sales tax on a much broader range of services – from parking garages to massages.

Martire contends that Illinois residents mistakenly think they pay too much in taxes, because they do, indeed, pay high property taxes imposed by local governments. “Because the state does not pay for what it should, it kicks down to local government,” Martire argued.

The CTBA point of view contrasts to that of another Chicago policy group – the Chicago Civic Federation – which asserts that state government must first address spiraling pension and Medicaid costs, instead of broadening the tax base.

This is not an armchair debate.

The Civic Federation's January report on state government finances has carried the day in Springfield. Quinn held up the Civic Federation report in his February budget talk, and the governor is going by that group’s playbook on pensions and Medicaid.

It bears watching if the General Assembly takes up any CTBA ideas in the budget they draft this spring from Quinn’s budget proposal.

State lawmakers at the fiscal symposium like Rep. John Bradley (D-Marion), chairman of the House Finance and Revenue Committee, said they were open to a graduated income tax, but noted that it would require a constitutional amendment.

Bradley pointed out that the state implemented something of a variation of the graduated tax, when the General Assembly passed and the governor signed an expansion of the state earned income tax credit for working class families in January.

The symposium also included a downbeat assessment of the national economy. Bivens noted the unemployment rate dropped to 8.2 percent in March, but that “unemployment is still the highest its been in a quarter of a century.”

More important, the rate has dropped artificially: Bivens said that two-thirds of the drop this year is caused by people giving up their job search – people that the unemployment rate does not account for.

Bivens notes that the country is “ten million jobs short just to get back to where we were in December 2007,” prior to the housing bubble-induced recession.

“And December 2007 really wasn’t economic nirvana for lots of American families,” Bivens said. American family income stagnated between 1999 and 2007, Bivens noted.


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