Economy

Businesses Call Out The Chamber's "Self Serving" Lobby Against Reform

Angela Caputo — Thu, 12 Nov 2009 12:50:40 -0800

Earlier this month, the White House called out some suspect lobbying by the U.S. Chamber of Commerce. Just a year after the national business lobby was more than willing to bend its free-market philosophy to help big business snag its share of the federal bailout, presidential advisor Valerie Jarrett noted their awfully "self-serving" position in favor of protecting big polluters and health insurance companies from government regulation. In fact, the chamber is so bent on weakening climate change and health care reforms that they shelled out $34.7 million on lobbying between July and September alone. Encouragingly, some of the group's most high-profile members -- including Apple, Nike, and Illinois' own Exelon -- have quit the business lobby in protest. As the chamber met for a regional conference on government affairs in downtown Chicago today, more business owners and environmental activists came out to make it clear that they too think the chamber's positions are out of step with its members' priorities.

"We hope that they learn something here in Chicago," Jack Darin of the Illinois Sierra Club said, "that Americans here in Illinois, in the heartland of America, they don't want the status quo, they want change. They want health care, they want workers' rights, and they want clean energy solutions for America." Watch:

Despite the denials made by the corporate lobby (and the Illinois GOP), there's plenty of evidence demonstrating that the Midwest will soon face peril because of its disastrous environmental habits. Even more emerged today. After combing through nearly two-decades worth of government data, Environment Illinois reports that the Prairie State ranks sixth in the nation for its energy-related carbon emissions (the full report is available below). Moreover, the state's pollution output is on the rise -- increasing by 26 percent between 1990 and 2007. Most of that pollution is tied to electricity generation and transportation, which are responsible for 70 percent of the state's emissions combined.

The climate change legislation moving through Congress with the support of Illinois Democrats -- which would encourage the use of renewable energy and force companies to clean up their toxic messes or pay a price -- is certainly a start in reversing the trend. So are the landmark tail-pipe and smokestack pollution standards that are being drafted by the Environment Protection Agency. (Some chamber members have been lobbying heavily against those for some time now.) The fact that heavyweights like Exelon are breaking ranks with the status quo is a sign that they agree reform is imminent. Let's hope the chamber is listening.

In the meantime, check out Environment Illinois' latest report:

Too Much Pollution (IL)

IL-SEN: Giannoulias Draws "Stark Contrast" With Kirk On Economic Policy

Adam Doster — Mon, 26 Oct 2009 12:45:54 -0700

Painting what he described as a "stark contrast" between his platform and the policies endorsed by Republican Senate frontrunner Mark Kirk, State Treasurer Alexi Giannoulias rolled out the first section of a five-part economic plan (titled "Future Works America") before reporters this morning. "Mark Kirk and the failed politics of the past got us into this economic mess," he said. "I have a plan to lead us to a more promising future."

Standing beside a new homeowner in Chicago's North Center neighborhood, Giannoulias called for a one-year extension of the $8,000 first-time homebuyers tax credit (which was included in the stimulus bill Kirk voted against) and a one-year payroll tax holiday on the first $20,000 of income for individuals making less than $75,000. (Th eSenate is expected to pass the homebuyers credit this week, although the extension would only last eight months.) He also wants to create a tax credit for small businesses with less than 50 employees, available for one year to companies that add workers to their payroll. To pay for the mini-recovery package, the treasurer would work to close corporate loopholes that benefit companies who ship jobs overseas. Watch him layout the expected benefits of the plan:

Giannoulias was not very specific about which reforms to the tax code he would target, something the White House is already looking into, but he emphasized that his total package would be short-term and deficit neutral.

As longtime readers might remember, Kirk has repeatedly voted against the first-time tax credit despite the fact that he benefits handsomely from a homeowners property tax credit here in Illinois. Indeed, in 2007, Kirk paid only $785 in property taxes on his Highland Park home. Without the credit, he would have paid $8,385.

Full Disclosure: The SEIU Illinois State Council,which sponsors this website, has endorsed Alexi Giannoulias in the Democratic primary for U.S. Senate.

Another Uptick In The Unemployment Rate

Angela Caputo — Thu, 20 Aug 2009 14:04:54 -0700

When the Bureau of Labor Statistics recently released a rather encouraging jobs report showing that the national unemployment rate actually fell in July -- for the first time in 15 months -- we wondered if Illinois' rate would follow suit. Today the state's latest jobless figures are out and unfortunately, the Prairie State hasn't joined the upswing yet, according to the Illinois Department of Employment Security. The AP reports:

Illinois' jobless rate rose to 10.4 percent in July even though the pace of job losses is slowing.

That's up slightly from 10.3 percent in June [...]

[T]he state lost another 13,000 jobs in July, bringing the number of unemployed statewide to 692,500.

Here's our updated graph showing the national and Illinois rate since the beginning of the year:

As National Unemployment Dips, Will Illinois Follow Suit?

Adam Doster — Fri, 07 Aug 2009 10:09:17 -0700

The Bureau of Labor Statistics released its July jobs data yesterday and the results were pretty encouraging. For the first time in 15 months, the unemployment rate actually fell, from 9.5 to 9.4 percent. Employers only cut 247,000 jobs, about 80,000 less than experts predicted.

What caused the upswing? Some argue that the labor force is shrinking because people have quit looking for jobs in this tough climate and are therefore no longer factored into the Labor Department's jobs report. But Council of Economic Advisers Chair Christina Romer attributes the progress to the stimulus finally kicking into gear. She said in a speech yesterday that the recovery package has been a boon to state and local governments in particular:

But, state and local government spending actually rose at a healthy 2.4% annual rate in the second quarter of 2009. This followed two consecutive quarters of decline, and was the highest growth rate in two years. No one can doubt that the $33 billion of state fiscal relief that has already gone out thanks to the Recovery Act is a key source of this increase.

Will Illinois' unemployment rate, at 10.3 percent in June, follow the national trend? We will find out on August 20, when the July statewide figures are released.

Wind On The Prairie

Angela Caputo — Fri, 17 Jul 2009 14:56:43 -0700

Yesterday, we highlighted a rare bit of good news for Illinois schools: Revenue from large-scale wind projects are providing relief to some downstate school districts who've been struggling to cope with unreliable state funding. For instance, by next year, the Colfax school district will net an additional $1.7 million in new revenue from Horizon Wind Energy's Twin Groves Wind Farm. For a rural district operating on an $8 million annual budget, that is money that will go a long way.

The economic power of the wind industry -- which is anticipated to invest $1.9 billion in Illinois over the next 25 years -- looks equally promising for the state as a whole, according to some new research out of Illinois State University. Economist David Loomis of the school's Center for Renewable Energy examined the economic impact of Illinois' 17 major wind projects (and the 1,118.76 MW of energy they've generated). He found that the farms have succeeded in generating sizable and sustainable revenues, including upwards of $11.4 million in new property taxes each year.

Meanwhile, the Pantagraph explains the direct benefit to workers and rural landowners:

[T]he projects generate ... $4.36 million per year in extra income for landowners leasing their land.

During their construction, wind projects in Illinois created 6,019 full-time construction jobs with a total payroll of more than $306 million. Now operational, they support 292 permanent jobs with a total annual payroll of more than $15 million, the study showed.

Encouragingly, a series of other major wind projects are in the works. But if the Prairie State wants to maintain, let alone advance, its position as the 8th-largest wind-producing state, Loomis warns that elected officials, business, and academics are going to have to lay the framework:

In order for Illinois to take advantage of all the economic benefits from wind energy, more supply-chain manufacturing needs to be established in the state, which can definitely help revitalize Illinois’ manufacturing industry. More wind turbine technician training facilities are needed to prepare the workforce in Illinois. A longer-term property tax law needs to be established so that developers can have more certainty. Wind power development will contribute to preserving the environment and a more secure energy future in Illinois.

You can read the whole report here.

The Revenue Undertow

Adam Doster — Fri, 17 Jul 2009 14:17:32 -0700

It's still too early to tell what the budget deficit will look like when state legislators reconvene this winter to hash out the FY 2011 budget. But there is plenty of evidence to suggest it will be very deep.

The "stop gap" budget approved by the General Assembly this week attempts to plug the deficit by cutting programs, borrowing $3.5 billion, and remaining delinquent on $3.2 billion in back-payments to vendors and providers. But many expect this haphazard plan to come up short, necessitating the need for new revenue (i.e., a tax increase) in the January veto session.

As we've explained before, recessions tend to hit the states later than the nation as a whole. And across the country, tax revenues are plummeting just as demand for government-backed, safety-net services grows. A new report from the Rockefeller Institute of Government examines some gory details from the first three months of 2009:

The 45 states that have reported taxes for April and May have seen revenue declines of about 20%, compared with the same period a year ago, according to the report to be released Friday from the Nelson A. Rockefeller Institute of Government at the State University of New York.

"Such extraordinary weakness in revenues, along with continued if more moderate growth in expenditures, make widespread budget shortfalls highly likely this year," the report said.

Stateline writes that these are the worst figures in the 46 years that quarterly data has been available. And every source of revenue is hobbled: States' collections of corporate income taxes have dropped 18.8 percent in the first quarter compared with a year ago; personal income taxes fell 17.5 percent; and sales taxes declined by 8.3 percent.

It seemse obvious that this is no time to be putting off the tough decisions until the politic climate is right. Unfortunately, that's just what our state legislature did.

Unemployment Jumps As Benefits Fund Drains

Adam Doster — Thu, 16 Jul 2009 11:18:25 -0700

Just last month, we highlighted Illinois' unemployment insurance fund as a bright spot in the state's sea of fiscal darkness. When ProPublica teamed up with American Public Media's Marketplace to study the nation's vast and decentralized unemployment insurance system, they found that Illinois had $500 million dollars in the bank, the 14th highest total in the nation. Illinois had not been forced to borrow any money to keep the fund solvent either, unlike other large states. To be sure, there were problems in the system, particularly that the jobless were routinely denied benefits by employers. But overall, the fund was healthy.

Not anymore. In just the past few months, increased demand has drained the fund, forcing the state to seek federal assistance to pay out benefits. Crain's has the scoop:

The state has drawn about $9 million from a federal credit line to help replenish its unemployment insurance fund and pay out close to $100 million in unemployment claims. The fund had dwindled to about $81.8 million as of July 5 from $1.45 billion at the start of 2009.

“There was no interruption of benefits. The borrowing is a result of the national economic challenge,” says a spokesman for the State of Illinois Department of Employment Security.

The loan was small because the state is still expecting a $200 million federal windfall as a result of the unemployment benefits extension law Gov. Quinn signed two weeks ago. But it came at a bad time. Just this morning, the Illinois Department of Employment Security released the state's June unemployment figures. While the increase wasn't as sharp as in previous months, the state is still shedding jobs, jumping to 10.3 percent from 10.1 percent last month:

As we noted yesterday, these unemployment numbers only tell part of the story, as they do not take into account part-timers who want full-time jobs or the jobless who want work but are not actively seeking employment.

Furthermore, the economy is ravaging certain communities more starkly than others. According to a study released yesterday by the Economic Policy Institute, the unemployment rate for African-Americans (13.5 percent) and Latinos (9.6 percent) in Illinois was decidedly higher than that of whites (7.5 percent) in the first quarter of 2009. In an interview with Chicago Public Radio, the Center for Tax and Budget Accountability's Ralph Martire connects the disparity with the state's education funding system:

MARTIRE: So basically when these children come out of their under-funded schools, they are less competitive than their white peers in a global economy

Read the preceding post for more on that enduring problem.

State Underemployment Rate Soars

Adam Doster — Wed, 15 Jul 2009 09:21:13 -0700

Tomorrow, the Illinois Department of Employment Security will release the state's June unemployment rate and the numbers are anticipated to be ugly. The current national unemployment rate hovers around 9.5 percent, up slightly from May. The situation is worse in the Land of Lincoln, though, where the jobless figure already surpassed 10 percent last month.

But as we pointed out last year, the government's unemployment figures don't tell the full story about the plight of American workers. The Bureau of Labor Statistics, for example, doesn't take into account part-timers who want full-time jobs or the jobless who want work but are not actively seeking employment. By not factoring in this so-called underemployment, they are likely obscuring the depth of the recession.

When those factors were considered last September, Illinois' underemployment rate (which combines the typical unemployment rate with those broader statistics) sat at 11 percent, its highest level in more than 14 years. In the nine month since, underemployment has grown by an additional 5 percentage points, according to a New York Times analysis published today. The Times' David Leonhardt's writes that it might not improve quickly, either:

Various indicators suggest the nation’s economic output could start growing again this summer, which would mean the end of the recession. But the economy will still be weighed down by troubled credit markets and huge household debts. So it may be awhile before growth is fast enough to persuade companies to hire large numbers of workers.

Leonhardt notes that the stimulus bill is helping, particularly by extending jobless benefits and preventing some layoffs by state and local governments. Gov. Pat Quinn's estimates that the capital bill he signed earlier this week will create over 400,000 jobs as well. But these figures underlie how important a sustainable budget solution really is. Social service jobs are just as important as construction jobs. Without more revenue, plenty of jobs in the former sector will be shed, counteracting growth in the latter.

Rep. Bean Considers A Second Stimulus

Adam Doster — Wed, 08 Jul 2009 14:26:34 -0700

The nation's economic climate is still pretty grim. Unemployment, which some predict will exceed 10 percent next year, is rising at a quicker pace than the White House projected in January, weeks before they passed their historic $787 billion stimulus package. And the stimulus package itself -- as expected -- is taking some time to ramp up. So far, only 10 percent of the spending is out the door.

Not surprisingly, that hasn't stopped conservatives from deriding the spending bill as wholly ineffective. On Sunday, Rep. Peter Roskam made such a claim during his appearance on FOX Chicago Sunday. But economists were never concerned that the recovery package was fundamentally flawed. Instead, many feared that after negotiations with "moderates" in the Senate, the bill was too small to dig us out of a huge hole. That worry is leading some policy makers to float the idea of a second Obama stimulus package. One local lawmaker who appears interested is Rep. Melissa Bean, who told Politico today that "the thing we have to consider is the risk to not doing it.”

That risk is great. As Paul Krugman wrote in a column last Thursday, the situation on our hands today may mirror that faced by Franklin Roosevelt, who saw the economy tank after he appeased deficit hawks and slowed government spending in 1937.

Politically, it's a very difficult sell. The administration is moving forward with expensive health care and energy bills. The Democratic Congress, facing unified Republican opposition, was barely able to pass the first stimulus. And it's unclear whether the public has an appetite for more spending, especially before the administration lets the first plan run its full course. Sen. Dick Durbin told Bloomberg, "I’m not sure how you would do it."

But that doesn't mean it's bad policy. A second plan focused in a way that offsets the cutting of state budgets could jumpstart the economy in a shorter timeframe. One idea raised by James Galbraith is to reintroduce general revenue sharing for states and localities, which the Congressional Research Service estimates could have a "significant fiscal stimulus." As this debate unfolds, it's a concept worth watching.

Foreclosure Crisis Hits Suburbs Hard

Adam Doster — Tue, 12 May 2009 09:35:59 -0700

Organizations like the National Training and Information Center have have spent considerable energy over the past 18 months examining the cause of the foreclosure crisis and providing assistance to Chicago residents impacted most acutely. And rightfully so -- in 2008 alone, 20,000 homeowners were foreclosed upon within the city limits, 75 percent of whom took out Adjustable Rate Mortgages (ARMs) or other high-risk loan products to finance their purchase. But in the first few months of 2009, it's Chicago's suburbs that are experiencing a new wave of housing problems. Crain's highlights new data from the Woodstock Institute yesterday:

Foreclosure cases filed in the first quarter jumped between 25% and 70% from the fourth quarter in DuPage, Will, McHenry, Lake and Kane counties, according to new data provided to Crain's by the Woodstock Institute, a Chicago-based housing advocacy group. Meanwhile, foreclosures fell 8% in Chicago, the first quarterly decline in a year.

Across the six-county Chicago metropolitan area, foreclosure filings rose 6% in the first quarter to 17,819, the highest one-quarter total since the housing crisis began in mid-2006.

Suburban growth explains how the number of Illinois households threatened with losing their homes rose 62 percent in February from last year’s levels, even while the crisis in Chicago has plateaued. According to Geoff Smith, Woodstock's vice-president of research, the latest round of forclosures is affecting middle-class neighborhoods where residents are facing job losses and declining savings. In fact, most borrowers qualified for standard-rate mortgages; it's just that they can't keep up with their payments.

Bob Palmer wrote a nice column for us back in January outlining what a comprehensive plan to address homeowners and renters impacted by the foreclosure crisis would look like. But given recent activity in Washington, it may be a while before we see any broad-based relief. Indeed, Sen. Dick Durbin worried out loud last week that the banking industry believes "they will make more money if they force this to an extreme and the government has to step in." He added, "[W]hen I think of what they will leave in their wake, with all of these people and their foreclosed homes, all of these empty homes that become eyesores in neighborhoods, and the declining real estate values of America, it's a heavy price to pay."