Trenches of Democracy

The Federal Reserve just made an aggressive three quarter cut from 3 to 2.25 percent. Everytime Fed. headlines emerge, I always overhear misconceptions about what it is and what it means.

So, putting my minor in economics to use, here’s the short version.

The Fed rate controls the cost of big banks to borrow money, temporarily from the US government (banks do this to lend more money). So when the Fed lowers rates, it makes the US dollar cheaper. A cheaper dollar is good for those in debt, spurring inflation, but it is also worse for investment returns… but you’ll be able to invest more, since the money’s cheaper.

Up Side of a Limp Dollar

A weaker US dollar is good for manufacturing; and generally anybody who wants to export goods to other countries. On the other hand, in return, you won’t be able to get as much for your money. Think about that while you’re looking for cheap stuff at Walmart.

Tags: Fed, Federal Reserve, Intro

Another Chicago Tax… and you can’t move away from this one

Chicago properties will have to pay an additional real estate transfer tax. It amounts to $3 per thousand off of the selling price, and billed to the seller. It’s billed to the seller because, as the Chicago City Council discussed last night, the real estate buyer already pays $7.50 per thousand to the city.

These tax dollars will be directed to the Chicago Transit Authority (CTA).

(source: Gary Washburn, “Alderman agree on transfer tax” Chicago Tribune: 3/13/08… can’t find hyperlink)

Tags: Chicago, CTA, Real Estate Transfer Tax

(Tribune photo / Terry Harris)

The Village Council of Palatine expressed local citizen outrage regarding Cook Counties latest sales-tax increase. The Chicago Tribune reports:

After calling on Cook County Board President Todd Stroger to personally “explain himself” for pushing through a sales tax increase, some angry Palatine Village Council members said they had an even better idea — secede from the county.

Talk of tax revolt was in the air this week as officials, business owners and taxpayers throughout the region voiced outrage. But perhaps nowhere was the outrage more visible than in communities that share a border with lower-tax counties…

Lincoln County?

Frustrations have boiled over into a open discussion about seceding from Cook County.

Several northwest suburban leaders proposed creating a new entity — Lincoln County — in the 1970s, and Palatine Councilman Jack Wagner said it was time to explore that again. “This is getting out of hand,” Wagner said. “We can’t afford it.”

Budgets strained by the recent economic slowdown will be further hurt by the increase, which could cut into sales, some suburban officials said.

“It makes it very difficult for us to generate the revenue we have in the past,” said Schaumburg Village Manager Ken Fritz.Although more recent efforts toward secession have focused on southwest suburbs, for years the movement was pushed by Wendell Jones, former Palatine mayor and state senator. His successor in the statehouse, Republican Sen. Matt Murphy, recently proposed a bill that would make it easier for Illinois townships to vote to split off from counties. (read more…)

However unlikely this action is, it’s clear Cook County government is a bloated burden to all within it’s borders.

Tags: Cook County, Lincoln County, No Cook County Taxes, Palatine, secede

The Chicago Tribune has identified Commissioner Suffredin as the decisive flip vote to enable Cook County president Stroger’s sales-tax increase. Ironically Suffredin’s website quotes him to the contrary; “At this point, I see no need for any increase in taxes. I am opposed to a sales tax because it is regressive and adversely affects the poorest members of the community.” So what happened? The Tribune explains:

$426 million per a year from taxpayers. . . Stroger’s budget includes more than 1,100 new jobs.

This travesty unfolded because Suffredin — who had labor leaders literally hovering behind him during deliberations — cut a deal that gave his decisive vote (and that $426 million) in new revenue to Stroger.(read more)

Tags: Budget, Cook County, Stroger, Suffredin

New Budget in Brief

Next month McHenry County plans to launch an annual “Budget in Brief.” In an effort to make county government more accessible, it’s a short financial document (not to exceed 15 pages) complete with graphs and factoids.

["McHenry County puts an easy-to-read budget" Daily Herald: 2/27/08]

Tags: Budget, McHenry County

Cook County commissioners formally declared dead board President Todd Stoger’s plan to significantly raise the sales tax…

Commissioner Deborah Sims (D-Chicago) absurdly protested, “This country was built on taxes[.]“

Illinois Works

While Illinois’s economy slows, Gov. Blagojevich responded last week with an unprecedented capital spending program, Illinois Works. Blagojevich’s $32 billion dollar budget eclipses the legacy of his big spending predecessor, convicted Gov. George Ryan.

Meanwhile, these grand visions for government spending fall on a backdrop of fiscal chaos. Illinois is already heavily in debt, unable meet it’s present financial commitments. Dennis Byrne of the Chicago Tribune comments:

Gov. Rod Blagojevich did it again last week. The roof is leaking, the electricity has been shut off, they’re coming to repossess the car, and he’s talking about adding a swimming pool and taking a Caribbean cruise.

Illinois is perhaps in the worst financial shape in memory and has the largest budget deficit of any U.S. state. But he’s proposing new programs and bigger giveaways. Blagojevich’s state of the state speech should have been delivered by Mad magazine’s Alfred E. Neuman. What, me worry?

To mask the state’s frightful condition, the governor reverted to the usual political blather that everything he’s doing is about the kids, families and people. The premise being, of course, that if you oppose his headlong dash into the financial bayou, you’re against kids, families and people… (read more)

Comptroller Dan Hynes complains “With the General Revenue Fund cash balance so low, there simply is not enough cash on hand to pay all of the bill presented for payment on any given day… it provides Illinois the dubious opportunity to retain its status as having the worst deficit in the nation for the fourth year in a row. (Tribune)”

Prosperity through Gov’t Spending

Convicted Gov. George Ryan’s massive pork barrel project, Illinois First, cost $12 billion in 1999. Now, Gov. Blagojevich’s Illinois Works program approaches $25 billion. Blagojevich rationalizes “I like the idea of a capital bill of the size and scope I am proposing because first and foremost, it means that we will put more than 700,000 people to work. More than 700,000 jobs. Good jobs. Jobs that pay good wages. Jobs that have good benefits. Jobs that help families. Jobs that help businesses. Jobs that strengthen our economy. . . (budget speech)”

There’s no such thing as a free lunch. The question is, how many jobs will a $25 billion dollar tax bill cost us? Which tax payers will eat this bill? Who will appease the big construction union, Local 150, the International Union of Operating Engineers?

Tags: Blagojevich, Illinois Works