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‘Madigan Tax Increase’ a Big Boost for Rauner for Governor

Russ Stewart 14 July 2017 One Comment
Mike Madigan, like that poetic old gray mare, just ain’t what he used to be. The speaker is no longer the undisputed master of Springfield. He has failed his members; he has failed his party; and he may have insured the 2018 re-election of Illinois Republican governor Bruce Rauner.

By passing a personal and corporate income tax hike, and a $36.1 billion budget, Madigan has done precisely what he has been trying to avoid for more than 700 days – hang the blame on the Democrats. Madigan wanted to get a bi-partisan deal, with Rauner and the Republicans “signing on,” so as to make legislative Democrats immune from attack in 2018. He failed.

And Rauner, by simply being intransigent, proved himself to be the master political strategist. “Just Say No” was his mantra. The last two weeks of political scrimmaging in Springfield was not about “fixing” the state’s fiscal sinkhole.
illionsRather, it was about affixing blame, solidifying each party’s base, and laying the groundwork for the 2018 gubernatorial campaign. To be sure, a budget was passed, with new revenue produced, but the $15 billion in unpaid vendors and the $130 billion in unfunded pensions were not addressed. By next March, the state will again be broke, and unable to pay bills.
Rauner emerged triumphant because he can now trumpet for the next 17 months four magic words: I KEPT MY PROMISE. He pledged in 2014 to oppose any raise in state income taxes, and he vetoed the Madigan/Democratic tax hike recently, which was narrowly overridden. Voters expect politicians to lie in order to get elected, and then “cave” to reality shortly thereafter. Had any Republican other than Rauner been elected governor in 2014, they would have caved long ago, worked out a “grand bargain” with the Democrats, and be on a trajectory to losing in 2018.
Madigan has been in the Illinois House since 1970, when he was 28, and has been speaker for 33 of the past 35 years, since 1982. His longstanding goal is simple: KEEP MY JOB. And that means re-electing Democratic state representatives and maintaining his majority, which is currently 67-51. To persevere, Madigan needs two things: First, money, which means satisfying his base, which consists of public sector unions like SEIU and AFSCME, trade unions, state employees, trial lawyers, tax appeal lawyers, and liberal groups in general, who donate copiously.
And second, no “hard” votes, which means not putting members from suburban and rural districts in jeopardy by having them vote for tax increases. This year, the speaker pandered to his base by opposing the Rauner agenda, which was deemed anti-union, but he forced a “hard” vote, which will cause immense problems in 2018.
Rauner, a billionaire venture capitalist and political rookie, has only been around since 2013, and governor for not quite 3 years, but he thoroughly understands – as does Madigan – this enduring political maxim: Do Not Betray Your Base.
Rauner played hardball by not capitulating to demands of “good government” entities, media and liberals that he be “responsible” and hike taxes, incurring their wrath. But he fully understood that his base, roughly 45 percent of the electorate, voted for him because they expected him to act like a Republican…and he has. Had Rauner caved, his base would have crumbled, discarding him as just another mealy-mouthed, untrustworthy politician. But he didn’t cave, he actually got the state budget slashed by $3 billion, and his base is rock-solid. He starts the 2018 campaign not with lame excuses, but with promises kept.

And Madigan and the Democrats have handed the governor a gilt-gold issue: They are the tax-increasing party, and Rauner’s 2017-18 mantra will be that only he can prevent them from increasing taxes more, which will have to occur to pay state bills and pensions. The last two weeks have been politically transformational, in that all the potential Democratic candidates for governor are locked-in with Madigan and the legislative Democrats, can’t repudiate the tax hike, and definitely can’t criticize Rauner for vetoing it. The Democrats’ whole pretext for slamming the governor has evaporated. They can no longer grouse about “700 days without a budget,” as that will be ancient history by 2018. And they can no longer claim, as J.B. Pritzker did at a recent Thorp Scholastic Academy forum, that he would be “independent” of the speaker. Give Democrats total control of state government, and there is no doubt as to what will happen.

Not a 3.75 to 4.95 percent spike in personal and a 5.25 to 7 percent spike in corporate state taxes, as just occurred, but boosts up to 7.75, 7.73 and 6.05 percent, respectively, as in those glorious states of California, Oregon and New York.

But here is a foretaste of the future: At that school forum, billionaire Pritzker proclaimed that he is in favor of a “progressive” income tax, and that “those who earn more should pay more (in state taxes).” Pritzker also trashed Rauner’s “irresponsibility” in not producing a state budget for 2 years. Back to the drawing board. Gubernatorial contenders Chris Kennedy, Pritzker, Dan Biss, Ameya Pawar, Tio Hardiman, Scott Drury, Bob Daiber and Alex Paterakis have been notably mum of late. In fact, both Biss and Drury voted for the tax hike.

But Democrats need not be overly glum. The era of Reagan is long over. A tax hike, in and of itself, is not perniciously poisonous, simply because so many more Illinoisans in the 2010s have a vested and economic interest in state government or some state program than in the 1980s.

And, more importantly, a lot of people don’t pay any (or minimal amount) state taxes. The new tax will raise $4.76 million, but will cost a family earning $50,000 an additional $287, and a family earning $100,000, an additional $574.

The Rauner-Madigan situation is unique in the annals of recent state history. In 1969, with a Republican legislature, Republican governor Dick Ogilvie rammed through the state’s first income tax. In 1970, Democrats won both the Illinois Senate and House, and Ogilvie lost in 1972. In 1982 and 1986, Governor Jim Thompson promised “no tax hikes,” but after being re-elected, Thompson colluded with Madigan to pass tax hikes in 1983 and 1987. But for the 1986 LaRouche chaos, Big Jim’s 1982 lie was nearly fatal, and he won by 5,074 votes.

In 1990, Jim Edgar and Neil Hartigan both promised not to raise taxes. Edgar won, and then promptly imposed a “temporary surcharge” in 1991, which, of course, soon became permanent. In 1994, Dawn Clark Netsch foolishly hinted that she, as governor, would raise taxes even more. Edgar’s 1990 lie was forgotten, and he buried her. In the 2010 Quinn-Brady race, Pat Quinn, along with the Madigan Democrats, pledged “no tax hike.” As soon as Quinn edged Brady by about 30,000 votes, the lame duck legislature met and raised taxes. Is there a pattern here?

The difference between then and now is about $50 million. That is the amount which Rauner has self-funded his campaign account, and is only half of what he will spend to win in 2018. In 2014, Rauner won 1,823,627 to 1,681,343, a margin of 142,284 votes in a turnout of 3,626,504. Rauner got roughly 50 percent of the vote.

In 2016, Hillary Clinton won Illinois 3,090,729 to 2,146,015, a margin of 944,714 votes, getting 1.409,386 more votes than Quinn, in a turnout of 5.2 million. Unless about one million of those Clinton voters don’t choose to vote in 2018, Rauner is going to lose.

But he has two issues which his $100 million can highlight. The first is the tax hike. The Democrats have a 37-22 Senate supermajority, or 60 percent, and all Democrats were on board to override the governor’s budget veto.

In Madigan’s House, the Democrats 67-51 is shy of a supermajority, but 15 Republicans along with 57 Democrats provided a 72-45 budget approval; six House Democrats defied Madigan. On the override, Madigan got ten Republicans, just enough. A veto-proof House, meaning at least 50 pro-Rauner Republicans, will be the 2018 clarion call.
Among local legislators, west suburban Democrats Marty Moylan and Michelle Mussman voted against the budget, as did Chicago Republican Mike McAuliffe. All represent districts with conservative constituencies which were carried by Rauner in 2014.

The second is a pro-tax vote. Rauner has the money to bombard certain districts with dozens of mailers, tying up Democratic money and resources.

Rauner has been portrayed as heartless and insensitive, but now he has the opportunity to redefine himself based on his character, not his actions (or inaction). Much of the Rauner agenda, including workers’ comp reforms, curbing unions and term-limits fell by the wayside, but it is the Democrats who enter 2018 on the defensive.**
Russ Stewart is a Political Analyst for the Chicago Daily Observer

 

One Comment »

  • Mike Lawrence said:

    Russ,

    I appreciate that you still care about public policy in Illinois and are providing commentary. With all due respect, though, please check the history on the 1990 gubernatorial race. During the campaign, Edgar supported making the 1989 surcharge permanent instead of allowing it to expire in 1991. Hartigan said he would let it expire. That became the main issue in their campaign. You wrote about it extensively at the time. As you may recall, I was Edgar’s press secretary during the campaign. You and I communicated several times about Edgar’s tax stance. So, there was no Edgar “lie.” He leveled with the voters and they elected him, which made it easier for him to persuade the General Assembly to make the tax permanent. I’m sure you remember that even with the action to make the surcharge permanent, Edgar still had to make hundreds of millions of dollars in cuts to overcome the deficit he inherited. His critics called him “Edgar Scissorhands.”

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