CHICAGO – On March 24, parents, early childhood workers, elected officials, and community leaders held a press conference outside of Loop Capital Markets on LaSalle Street, to react to a new report by the ReFund America Project at the Roosevelt Institute, “Our Kind of Town: A Financial Plan that Puts Chicago’s Communities First.“
The report pushes back against the austerity agenda being pursued by Mayor Emanuel and the credit rating agencies on Wall Street, which recently downgraded the credit rating of the city and Chicago Public Schools, triggering hundreds of millions in possible taxpayer handouts to banks. It lays out specific immediately actionable and long-term policy proposals for getting Chicago’s finances back on track without unconstitutional grabs at retiree pensions, cuts to vital services, and toxic bank fees and payouts.
Director of the ReFund America Project and Fellow at the Roosevelt Institute Saqib Bhatti explained, “The recent decisions by Moody Investor Services and Fitch Ratings to downgrade the credit ratings of our city and school system are political ploys, designed to push an austerity agenda in Chicago. These downgrades will benefit Wall Street firms, because the City of Chicago and CPS will be forced to take out more expensive finance deals. However, this will come at the expense of community services like education, mental health, and parks programs. The problem with the city budget isn’t that we’re spending too much on workers or public services- it’s that we are hemorrhaging money on predatory financial deals and not bringing in enough revenue from the city’s wealthiest corporations and residents.”
“This is a conversation that we have been trying to have with the mayor for a longtime. Now, so close to a critical election, these bad deals with Wall Street cannot be ignored. We need to ensure that the mayor isn’t making any backroom deals right now that would sign away the city’s right to sue the banks to get our money back from these bad deals under future administrations.” said Alderman Scott Waguespack.
Community members expressed outrage at the city’s pursuit of unconstitutional raids of retiree pension funds, and urged the city to go after toxic swap deals and a litany of progressive revenue solutions that the Emanuel administration has left off the table. Participants argued that instead of forcing Chicago Public Schools to pay $263 million to banks because of toxic swap deals, triggered by Fitch Rating’s recent credit downgrade, Mayor Emanuel should sue the banks over the dubious legality of these deals, and demand hundreds of millions in past swap losses returned to schools and communities.
“While Mayor Emanuel decided to close my neighborhood school, Lafayette Elementary, and 49 other public schools across the city because of a ‘budget crisis,’ rich bankers like Jim Reynolds, CEO of Loop Capital, were publicly supporting the Mayor’s decision, and making millions off the school system through toxic swap deals. It’s ironic that Mayor Emanuel is eager to slash my child’s teacher’s pension- a move that state courts have ruled unconstitutional- yet is unwilling to make a decision with sound legal precedent, and sue banks like Loop Capital and Bank of America to get money back for the schools. We’re tired of the double standard- it’s time for Mayor Emanuel to get tough on bankers, not students and teachers,” said Rousemary Vega, a Humboldt Park resident whose children attended Lafayette before it’s closure in 2013.
Participants laid out how massive campaign contributions have unduly impacted Chicago’s democratic process, resulting in pay-to-play city policies and allowing billionaires like Ken Griffin, CEO of high-speed trading firm Citadel, to buy their way out of paying their fair share of taxes. Griffin, the richest man in Illinois, gave millions in campaign contributions to Emanuel and Republican Governor Bruce Rauner. In 2013, Mayor Emanuel awarded Marriott Hotels a $55 million downtown TIF (Tax Increment Financing program) subsidy shortly after Ken Griffin’s firm invested heavily in Marriott stock. All in all, hedge fund managers and high-speed traders that benefit most from Mayor Emanuel’s refusal to consider a financial transactions tax have donated over $4.5 million to his campaign fund and his super-PAC, Chicago Forward.
Community leaders also spoke out against public-private partnerships that reap profit for big banks, and leave taxpayers footing the bill. In 2014, Mayor Emanuel pushed forward a plan to pay for preschool expansion through borrowing nearly $17 million in ‘social impact bonds’ from Goldman Sachs, Northern Trust, the Pritzker Family Foundation and other investors. Depending on its outcome, the deal could force CPS to ultimately pay up to $30 million back to the banks.
“It didn’t come as a big surprise to me that the mayor is letting Goldman Sachs place a bet on our children. What did surprise me, though, was finding out that Goldman Sachs wasn’t just going to profit from the money THEY invested, they’re also going to profit from taxpayer money-the money I pay in as a working Chicagoan. If someone took a dollar from me to buy a $2 lottery ticket, I’d expect half the payoff if it won. Apparently, Goldman Sachs and the Mayor have a different set of values,” said Celeste Cunine, a childcare provider and member of SEIU Healthcare Illinois Indiana.
Participants also called for a financial transactions tax, or LaSalle Street tax, to make downtown traders pay their share. “Two of the largest financial markets in the world call Chicago home: the Chicago Mercantile Exchange and the Chicago Board of Trade. The reckless speculative trading that goes on there drives prices up on items like food that we all need to survive and contributed to the collapse of the economy and scarcity of resources for our communities. Now the CME and CBOT should be part of the solution. The LaSalle Street Tax, a very small tax on the trading of financial assets such as stocks, bonds, currencies and derivatives could raise between $10 and S12 billion per year for Illinois, and up to $2 billion for Chicago. The influx of revenue would completely change the ability of the state and of Chicago to meet the needs of its citizens,” stated Jan Rodolfo RN, National Nurses United Midwest director.
The corporation that would pay the bulk of a financial transactions tax, the Chicago Mercantile Exchange, consistently posts some of the highest profit margins of any U.S. corporation. Hundreds of trillions of dollars in trades- in 2012, equivalent to 12 times the world’s Gross Domestic Product- pass through the CME every year. A tiny tax on these financial transactions could raise anywhere from $100 million to $2 billion a year for the city to invest in critical infrastructure, education, and public services. After securing office in 2011, Mayor Emanuel helped CME- his second-largest donor- secure over $80 million in tax breaks from the state legislature.
“The mayor has blood on his hands from the people who have died after he closed the clinics. As a result of his actions we have tax-paying Chicagoans who are left homeless and suicidal, people who are tortured everyday because they have nowhere to go. Mayor Emanuel made a cowardly decision when he closed the mental health clinics instead of going after Wall Street. He stepped over the people who needed him to do the right thing,” said N’Dana Carter leader with the Chicago Mental Health Movement.
“We’re here at LaSalle Street because we’re tired of being told we have a ‘budget crisis.’ What we have is a priorities crisis. Because of Fitch Rating’s credit downgrade last week, Chicago Public Schools faces $263 million in penalties from interest rate swap deals with big banks like Loop Capital. But instead of suing the banks to win back $1.2 billion in vital revenue, Mayor Emanuel is forcing us to pay up, and making our school system choose between funding students’ textbooks or retirees’ pensions. Instead of raising revenue by clawing back TIF subsidies to wealthy downtown developers or fighting for a tax on hedge funds and high-speed traders, Mayor Emanuel has laid off city workers and closed mental health clinics. These are a continuation of the same policies working families have faced for decades in our city. The real tough decisions would be to go after his banker buddies, not the city’s most vulnerable,” ended Amisha Patel, executive director of Grassroots Collaborative.
The Our Kind of Town: A Financial Plan that Puts Chicago’s Communities First Report is available online at http://www.refundproject.org/#chicago