by Don Washington on 2011/12/06
I’ve spent months wondering when our media friends will get to the actual issues behind the possible departure of CME Group, the CBOE and/or Sears Holding Company. But I can see that waiting for this to happen is like expecting frogs to fall out of the sky or some guy to walk across Lake Michigan and make fishes and loaves or something …so here we go a-frick-frackin’-gain. Why aren’t we asking how past corporate welfare has transformed Illinois’ into the fiscal equivalent of a capsizing boat in the Arctic? Why hasn’t anyone asked what kind of return on investment are we getting from prior corporate welfare handouts? Clearly more jobs, a thriving economy and a fiscally sound state are not in the cards.
Shouldn’t someone be asking how giving CME money we can’t find for schools when the state’s experiencing an apocalyptic economic implosion is a good thing? I want to know; given CME’s record profits what is the appropriate role they should be playing in fixing the mess their activities as the world’s largest derivative trader has brought to the state/country/world? You know, what is their share of that shared sacrifice thing we keep hearing so much about? Has anyone tallied up a penalty we should charge them for leaving the state since doing so is breaking the social contract inherent in giving them public resources?
You are probably wondering why I’m not droning on and on about how many “jobs” their departure will cost the state of Illinois, the percentage of taxes they are paying and/or the political monkey dance going on all around their threats to pack up and desert the state. This is because unlike the combined press corps that is the Sun-Times, Tribune and even the vaunted News Cooperative I’ve not been driven to the turf by an angry linebacker. The kids call the idiot coverage we’re presently getting an epic fail. Our resident crack corps of media stenographers has got to do a better job because both we and democracy need them to do a better job. So let’s see how many of these questions we can answer because I’m pretty sure you are not going to like the answers that we have.
The state of Illinois gives away a base amount $500 million dollars a year in corporate welfare annually. This is just in tax payer handouts that are simply law and are instantly available. I am not counting additional boons like the ones sought by the CME Group right now. An example of this irresponsible larceny is the “single sales factor” tax break which costs Illinois about $100 million in revenue and shifts the cost of funding public services away from manufacturers and onto every other Illinois business. The idea was it was supposed to cause manufacturing jobs to flock to Illinois or at least not leave. A cost benefit analysis of this tax break reveals we just gave a bunch of criminals a pile of money in return for magic beans.
Two things you need to get clear on. One, no amount of service and pension cuts, short of virtually eliminating both is going to close this kind of fiscal abyss. Two, we got into this jam by doling out too much corporate welfare as one giant corporation after another have raided the public coffers for tax breaks before eventually abandoning the state. As public policy this is like strapping a five hundred pound weight to your back and trying to swim across the Mississippi river. This is not a return on investment it’s an investment pissing on you and telling you that it’s raining. Now that you’ve begun to reason clearly about how the money we’ve already given CME Group and other corporate powers has not created jobs, state budget surpluses or better public services what exactly has been going on? Well we’ve been transferring public money to the CME from city TIF funds to state tax credits, breaks and incentives. The CME Group controls 98% of the U.S. futures market. It is the heart of the beast; posting record profits and by record I mean so large that we are talking about in the history of their enterprises and handling over $620 trillion, with a “t” in assets.
Wrap your mind around these three uncontestable facts. Economic inequality in America is accelerating and the CME Group and CBOE via the trading of derivatives and other financial products is at the heart of this situation. Large chunks of that concentrated wealth is ploughed into speculation which is a major contributor to the economic destruction we are currently experiencing as not so much a state but as a planet. The damage to CME Group and the CBOE have made possible to society at large is not in doubt. What they plan to do to offset the chaos they facilitate is never asked. I’m asking and their answer is we want more of your damn money to make some more damn money for us and our shareholders. Here, have some frick-frackin’ charity and shut up.
If this sounds harsh that’s because I’m listening to Terry Duffy and Craig Donohue and I take them at their word. Given what the CME Group does in the world, take the MF Global collapse for example. Even AFTER being at ground zero of the financial collapse they are still operating like a band of angry raccoons who got loose in your attic. I’d rather give a toddler a hand grenade than hand them bus fare money. Historically these people are pirates in silk suits. Everywhere they go they take more money out of the public coffers than they put in and even if that weren’t the case and it is, for what they get from the system our roads, laws, police protection, courts, educated workforce and pension dollars that they gamble with they should be putting more in the kitty not taking anything else out.
Since their formation CME Group and Sears Holding Company have had their claws out for cash from the state. I, like many people, are digging into the tax code to get some idea of how much money they’ve walked off with over the history of their existence here in Illinois. A conservative estimate ranges into the billions of dollars… I mean we are talking about entities that snatch a few hundred million here and there every few years. Hell, the CME Group still hasn’t used some of it 2008 taxpayer funded welfare and Sears has been dipping into the public coffers and playing the: “Don’t tax us or we’ll move game” for decades. Remember, before they went to Hoffman Estates they used to be in downtown Chicago.
This is the part where their defenders say that they will take the taxes we do collect from them directly and their workers via income taxes out of state and then we’ll get nothing… and the next state will get less. But that’s the crux of the problem. The CME Group and other corporate powers are already paying less than they should for the services they receive from whatever state they live in because the CME Group has more power than the state in which it resides and feeds on. Think about that? They deal with other states as an equal and possibly treat the federal government the same way. So what can we do? We can keep giving them services, at deep discount, while cutting public services and shifting the tax burden further on to people in a way that increases economic inequality or they can leave and start doing the same thing to some other state.
Gee, that’s a bleak set of choices and like so much binary thinking it could be a false set of choices. Taxes are what we pay for the society we want to live in. They are part of the social contract. Society does you a solid and you do something in return. We pay taxes and society gives us schools. We get an earned income tax credit because we’re poor as field mice and people hope the cash will keep us off the welfare lists ad that we’ll spend the cash in the economy. Corporations get tax breaks because they’re supposed to hire people, buy goods and services from the local economy and become so profitable that the taxes we gather from them meet the state’s needs. If you’ve noticed that’s not happening then you might ask; why can’t we present them with a penalty for leaving? If they want to go we should let them but we should get something back on our investment. What would the State of Illinois do with tens of billions of dollars? I don’t know either but it would be great to find out. So don’t worry about what happens if they leave, wonder why we’re making it so easy to be extorted by these corporate criminals.