Could Sen. Mitch McConnell's bankruptcy idea actually save taxpayers?

When Republican Senate Majority Leader Mitch McConnell mentioned that states like Illinois should think of the "B" word — bankruptcy — to dig itself out of the bottomless fiscal pit our politicians have put taxpayers into, the reaction was predictably partisan.

Democrats hated it. But should they?

Or is bankruptcy for Illinois — and for Chicago — the last opportunity for taxpayers to escape the death spiral that our political class got us into?

Illinois politicians have proven again and again, year after year, that they just don't have what's necessary.

They don't have the political will.

All they do is talk of raising taxes, even with millions now out of work due to the coronavirus shutdown.

I asked the respected financial analyst Ted Dabrowski, of wirepoints.org, about bankruptcy for Illinois and Chicago in an interview for an upcoming episode of "The Chicago Way" podcast.

"Without bankruptcy, what happens is that people continue to leave, the debt gets bigger, the taxes get higher and the spiral continues," Dabrowski said. "You're just stuck in a spiral and everything just gets worse.

"We have seen that even in the last decade where we had arguably the best economic growth ever, we saw Chicago's (public worker pension liabilities) get dramatically worse. We saw the state's (pension liabilities) get dramatically worse. And now that we're in the down cycle, it's going to collapse further."

Anyone doubt that? If so, then what color unicorns do you believe in? The pink ones, blue ones or the ones with sparkles?

State and city finances were overwhelmingly negative even before the coronavirus pandemic caused a business shutdown. Now the revenue stream is bone dry. And Illinois did not have a rainy day fund to begin with.

Taxpayers see what is happening. And now they're out of work. For years they've been fleeing the state in droves as part of the Great Illinois Exodus.

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I'm not saying bankruptcy is the only option. I'm willing to entertain other ideas. I love Illinois and Chicago like many of you do and want public retirement pensions to be saved.

But except for childish dreams about unicorns or Gov. J.B. Pritzker's demand for an income tax increase that will drive even more people out of Chicago and Illinois, there isn't much left but political wind.

Pritzker brushed off McConnell's bankruptcy idea. And the guy Pritzker is most jealous of, New York Gov. Andrew Cuomo, said it was "one of the saddest, really dumb comments of all time." They're Democrats.

For states to declare bankruptcy would require changes in federal law. All Chicago, or Harvey or East St. Louis would require is a majority vote of the state legislature.

McConnell was reacting to a ham-handed ask from Illinois Senate Democrats hoping to use the coronavirus pandemic as a shameless excuse for a bailout of decades' worth of their political misdeeds by not funding state worker pension plans.

"I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated," McConnell, the Kentucky Republican, told Hugh Hewitt, the conservative radio host.

"There's not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations."

But, McConnell told Hewitt, "I would certainly be in favor of allowing states to use the bankruptcy route. It saves some cities. And there's no good reason for it not to be available."

Bankruptcy gave Detroit a chance to look forward. It might save Chicago and its taxpayers. Whether bankruptcy could apply to Illinois and its pension problems would require a ton of legal wrangling. But a federal judge would make tough decisions that politicians don't have the guts to make on who gets what.

It wouldn't be easy. Public worker union bosses don't want to take a hit. And big-shot bond investors don't want to take a hit.

Yet what about the rest, the majority of taxpayers who aren't big bond investors who can get the governor on the phone, or public union bosses who elect governors and mayors?

Why should we keep taking the hit, and bleeding, and being forced to leave our homes?

Many see this simply as a McConnell ploy, to throw the Illinois Democratic Party's absurd request for a federal pension bailout back into Illinois Democratic laps.

But crisis means opportunity. Years ago, I took heat for saying on a panel discussion at the City Club of Chicago that bankruptcy was a way out for a Chicago without the political will to survive.

I still think it's worth considering.

And so, I asked Dabrowski to be a guest on "The Chicago Way" to discuss it some more.

The problem of course is politics. The Democrats and some Republicans rely on public worker unions — state and city employees — for votes. The politicians take good care of the public worker unions — I'm not talking about union electricians, carpenters and plumbers, etc. — and the public unions vote the politicians in election time.

Who gets left out? Everybody else.

"This is what's breaking us," Dabrowski said. "I'm not trying to be mean. I'm just trying to be factual. You've got one class of workers in this state with guaranteed long-term contracts, with guaranteed pay and guaranteed pensions, that's a big class.

"And there's a second class that doesn't have any of those protections, the private sector, they've lost their jobs (due to the coronavirus shutdown), we'll be getting to the point where we'll have close to a million job losses soon, losing pay, and yet they're still required, right now to continue to pay for that first class.

"So as long as that system exists, we'll never get out of it."

(COMMENT, BELOW)

John Kass is a columnist for the Chicago Tribune who also hosts a radio show on WLS-AM.