Chicago Columnist Illinois Leader Political Analyst Entrepreneur Business Advisor Chicago Illinois Review

SEIFFE:  How Much Is Too Much?

Wednesday, November 21, 2007

By Ralf Seiffe

Word is the Governor has called a special session of the General Assembly to discuss the transit mess in Northeastern Illinois.  Reports say he will propose re-shuffling existing taxes, stage a raid on the motor fuel trust fund and seize the commissions retailers earn for acting as collectors for state government.  Like any number of other special sessions, the General Assembly probably won’t be moved.  The legislators seem more interested in raising sales taxes to reward and validate the enlightened managers who run the CTA with higher subsidies. 

Whatever happens in this particular debate, it’s one more example of government always coercing more to favor one of the state’s innumerable special interests.  Instead of debating more subsidies and raising taxes to fund them, perhaps the real question Illinois’ politicians should be asking is “how much is too much?” 

Think about this: the public pays more than half of the true cost of every trip a CTA rider takes.  That changes everything because it means the CTA’s management--such as it is--must recognize that its primary customer is not the rider but the several governments which subsidize its operations.  That’s probably a situation they prefer because it’s easier to please two or three powerful politicians than to make the busses run on time and or the trains travel at their design speeds. 

What’s more, if the politicians succeed in raising taxes on 100% of the folks in Northeast Illinois to benefit the 5% who “ride the rails’ we approach economic distortions that begin to make the riders irrelevant.  When the government pays 65% or 70% of the transit system’s operating costs, riders become a minority source of revenues and the economic signals they send become negligible.  If, for example, 20% of the customers quit shopping at Wal-Mart, management would bring all resources at its disposal to reverse that decline.  At the CTA however, losing 20% of the riders because the service stinks reduces fare box revenues by only 6%.  That’s well within the growth of government generally and easily covered up in next year’s funding request in Springfield. 

The same sort of problem is occurring at many other state and local government agencies that rely on significant public support.  As their subsidies become a larger proportion of revenues, agencies naturally respond by favoring government and ignoring the customers.  The county hospital provides an excellent example.  One can argue the county hospital exists primarily to employ the politically connected while the medical services it provides are less important.  That’s why political, not medical, professionals control the place.  One prospective customer, the county hospital’s very namesake, clearly understood the danger this dynamic imposes on patients so he went elsewhere for his own hospitalization.  Similarly, the Forest Preserves employ lots of municipal workers but they seem unable to keep the preserves clear of brush so regular folks can use them for pursuits more savory than dumping murder victims. Yet, on Election Day, hundreds of Forest Preserve workers who can’t spell Winnetka invade New Trier and Wheeling to make sure everybody in the nursing homes votes. 

These examples are why many feel a growing disconnect from government.  We’ve been able to swallow municipal corruption since the days of Bathhouse John Coughlin and Hinky Dink Kenna because they brought us a city and state “that works.”  Now, however, the government has grown so big and so intrusive that it has become its own special interest and the politicians who control it have come to believe that taxpayers exist only to pay for it. 

More subsidies change the basic incentive for municipal enterprises from serving people to serving government and the inevitable result is diminishing services and higher costs.  That’s what’s driving the growth of government as much as three times faster than the underlying economy.  The irony is that the greater the subsidy, the less likely the original mission will be accomplished. 

Conservatives try to slim government by targeting programs that could be eliminated.  This is a flawed strategy for two reasons; there’s a constituency that will vigorously defend whatever benefits are being subsidized and there are government workers who will also fight to keep their positions.  Indeed, Ronald Reagan defined immortality as a government program. The second reason is that the raiding of trust funds and shuffling of sales taxes and phony accounting are simply eye-glazing for all but the most inquisitive political junkies. 

The political interests that exist in Illinois are so impacted that fighting them is less appealing than house-to-house warfare in Baghdad.  On the other hand, almost anyone can understand “how much is too much?”  When one adds up the income tax, sales taxes property taxes, fuel taxes, taxes passed through by businesses, fees, licenses, predatory fines and the money the legislature spends but expects our children to pay, the amount is staggering.  I’ll bet that if every voter, not employed by government, knew how much Illinois really costs, Illinois would turn red. 

That’s why I have come to believe the only way to make any headway towards a smaller government is to ask every politician “how much is too much?”   Next time you see one, ask ‘em! 

© 2007 Ralf Seiffe

Ralf Seiffe advises business start-ups and product launches from Chicago, Illinois and is a political analyst and columnist for the Illinois Leader and Illinois Review.

Webmaster Contact:  Alynn Patzer alynn11111@aol.com