Sunday, June 3, 2007

Our Real Welfare Problem:The New Feudalism

Follow the title link for Chicago Tribune columnist John Kass' take on our subisidies to powerful families and power brokers.

I bet you never thought of the powerful Degnan family members as being welfare recipients, and they sure as hell aren't using a link card to buy day-old bread and cheap processed cheese.

They and others among the Aristocracy of Clout have their own special versions of the link card, and it buys them Dom Perignon and the best fois gras, not to mention land in the path of development and a piece of the action in new casinos being proposed for Chicago, as well as a smorgasboard of other lucrative projects, success guaranteed by the taxpayers of Illinois.

Under the guise of fostering "economic development", we have allowed every semblence of free markets and free enterprise to be destroyed, and replaced with Neo-Feudalism, where our various federal, state, and local authorities work hand-in-hand with major corporations and rich, well-connected families to create an economic system under which "economic development" takes the form of tax-funded enterprises that entail no risk to the rich, well-connected investors, because ithe risks will be born by taxpayers who have no choice in the matter; and where competition is only nominally permitted, because the promoters know perfectly well that a small, privately-funded local enterprise doesn't have an icecube's chance in hell against a tax-funded behemeth that can grab land at will, legally forbid others to compete, pay no taxes, and be insured against all normal business risk by my tax dollars and yours.

In other words, we of the common, unannointed herd will be ground to dust to pay tribute to our annointed owners. Our owners will throw us enough crumbs- a moderate-income housing development here, a public park there, the restoration of a beloved historic building here,or perhaps funding for a sports team for disadvantaged youth- to mollify us so that we will acquisce to the wholesale theft of hundreds of millions, to billions, of tax dollars for the enrichment of big money donors and multinational corporations, to build redundant retail and stadiums, or make gifts worth tens of millions to well-endowed private universities, or whatever other wasteful project they can conceive that will benefit mainly big-bucks political donors and powerful corporations and institutions at a steep net loss, present and future, to the public.

I attended the meeting for the Hollywood/Sheridan TIF the Thursday before last, with the intention of writing about it on this blog. However, as I sat listening to the conventional verbiage about how "TIFs are another tool, and you can use the tool to do good, or do harm" , and how the "economic development" funded by the $75 MM (for starters) TIF would not be possible if left to market forces, I was overwhelmed with a sense of futility. We were told that most of the funds would go to building moderate-income housing for people with incomes of up to $31,000 per year, and I wondered if people in this bracket, which is distinctly not poverty, would need this kind of assistance if rents were not ratcheting up steeply because of tax increases, due mostly to the misallocation of massive amounts of tax monies to Corporate Welfare in the form of TIF developments, as well as tax abatements and direct subsidies.

The meeting was pretty much an essay in foregone conclusions- the plans were in place and would be presented to the Finance Comittee on June 27; and the audience was largely apathetic. There was some dissent with the plan, but most people seemed to feel that it was beside the point to protest. We are going to be robbed of the benefit of future tax revenues to pay for economic development that will most likely, as is the case with most TIFs, result in a net loss of jobs, business, and tax revenues to the city, and there's likely nothing we can do about it. The planners emphasized that "this is supported by legislation", which is true.

The planners that small businesses on Granville, Bryn Mawr, and Argyle St. could get grants of up to $50,000 to improve their facades. At that point, the owner of one of the two liquor stores on Granville that lost their liquor licenses would be eligible for these grants. I recognized the young man asking as one of the owners of one of the two Granville Ave stores. He was told no, as his business had lost its liquor license for repeated violations and problems, and the street had been voted 'dry' by the neighborhood. I remarked that by it's loose, unstructured nature, that the plan amounted to the equivalent of a "blind pool" or "blank check", in which the develoers and planners have an extraordinary amount of discretion and lack of accountability for the allocation of the funds. Someone else in the crowd pointed out that the $75MM to be raised was small relative to the size of the TIF, which stretches from Rosemont on the north to Argyle Ave on the south, and lies between Broadway and Sheridan.

Elsewhere, the Wilson Yards TIF is to be allocated more funds " to offset rising construction costs for the project", according to the news release. Elsewhere, TIF districts are given extensions beyond their 23-year legal lifespan, and more are planned for areas that are not "blighted", but "conservation" areas. What this means is that in not long at all, Chicago will be a veritable quilt of TIF districts, which means that as property taxes inevitably ratchet up over the years, the amount allocated to the city, and to necessary services we all need and amenities available to everyone that make a city a good place to live, will be starved, while individual taxpayers are decimaated and in many cases destroyed, having to sell their homes or are priced out of the rental market.

While the city is doing its best to make the place unaffordable to most residents, the state is busy concocting new schemes to convey our earnings from our pockets to the developers of various schemes that will only aggravate the problems they propose to solve. Gov. Blago is busy spending our money to divert land from food production to fuel production,by way of supporting "green" initiatives, which means that we will pay steeply elevated prices for food as land is diverted from food to ethanol production, and we will subsidize "green" fuel and Illinois farmers in order to keep the cars running at any cost, in addition to the substantial subsidies for roads and highways we already pay. The costs of both our fuel and the ramping up of ethanol production are already cascading through the economy and driving up food prices drastically.

And of course, there is the 2016 Olympics, and if you believe that a)this event will be entirely funded by private corporations at no cost to the taxpayers of Chicago, and b)any economic benefit will accrue to the city at large, or any of its citizens, especially those who live in the Washington Park area whose lives will be disrupted and home sacrificed to this event, then I have a great old St. Louis bridge to sell you, which you can build $2MM townhouses on and make your fortune.

How else will we pay for all of this except by more taxes? And will they be sufficient to cover the rising costs going forward, especially if the economy tanks in tandem with escalating fuel prices and shrinking energy supply?

Toddy Stroger is hinting that Cook County property taxes will be increased for 2006, even though property owners are still reeling from the increase last year. An article in the Chicago Tribune that appeared a couple of months ago speculated that such an increase could be as much as 40%, which almost surely will go to coffers of corporate welfare recipients, and will not offset the losses to the "increment" of TIFs that accrues to the developers of same. While you may feel faint at the thought of yet another massive tax hike, you feel even worse when you pencil it out and realize that it may not come near being enough to cover the costs of all the projects in the works without cutting deeply into essential services such as fire and police protection, essential infrastructure maintenance, and public schools.

At some point, probably not as far off as we think, there will be nothing left to plunder and no money left to fund essential services, let alone the civic amenities that make a city viable, let alone attractive and liveable. At that point, we will have to find another means to drive economic development than by offering corporate welfare, because we simply will be too broke to extend any more "gimmes" to corporations. We will then have to create a favorable business climate amid conditions of catastrophic budget shortfalls, inadequate services, and dangerously decrepit infrastructure, which we will not have the money to expand or repair; and, lastly, death duty taxes for both individuals and businesses. What will we do for economic development then?

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