With his decision to pull his request for a $500 million loan from the teachers’ pension fund, Mayor Emanuel has ended his brief but entertaining experiment in financing public education by turning teacher into loan sharks.
And I, for one, am almost starting to miss it.
This is the deal—unveiled on July 1—in which the mayor, having finally got around to depositing the $634 million he owed the teachers’ pension fund, asked the fund to lend $500 million of it right back.
At 7.75 percent interest, of course.
So instead of coming to terms with a portion of our rising debt, we would have been going deeper into debt.
He planned to use the $500 million to help fund the schools.
Basically, he was borrowing from the teachers to pay the teachers. And this is the mayor Chicagoans reelected because he had a grand plan for getting us out of our financial mess.
Heckuva job as usual, Chicago voters.
The mayor was looking to borrow from teachers because the city desperately needs money to pay its basic bills, and he won’t go after the most obvious sources of cash.
For instance, he won’t tax financial transactions because he doesn’t want to offend his wealthy donors.
Also off the table is a tax on marijuana because smoking marijuana is wrong!
Unless, of course, it’s being smoked by Grateful Dead fans.
Or patrons at Lollapaloza.
Or anyone who lives north of Madison.
Back to the mayor’s proposed pension-fund loan . . .
In its brief existence, it had several benefits.
For one, the mayor and his aides felt compelled to be really nice to teachers, perhaps in the hopes of getting the loan without setting aside collateral.
At this moment, I’d like to thank the mayor’s representatives on these talks—Tim Cawley and Carole Brown—for resisting the temptation to fire, lay off, demote, reevaluate, reassign, reclassify, redefine or lower the ratings of any of the pension fund representatives who sat across the bargaining table.
Which is generally how Mayor Emanuel treats teachers around here.
The deal fell apart because the teachers insisted that the mayor fortify the loan with collateral—like leases to Chicago Public Schools property—in case the city didn’t make good on its loan payments.
That demand probably ignited an exchange that went a little like this . . .
Mayor’s negotiators: We’re deeply offended that you would not trust us to make good on our promises.
Teachers’ negotiators: It was trusting you to make good on your promises that got us into this mess in the first place.
So they agreed to disagree, releasing a joint press statement on Friday that said the proposal had been pulled.
In general, I have mixed feelings about all of this.
On one hand, I think there’s something terribly out of whack about a city that can’t afford to pay its teachers to teach but has millions to pay them interest on a loan.
On the other hand, if Mayor Rahm’s going to fund government by constantly borrowing hundreds of millions of dollars—and that seems to be his plan—at least he could throw a bone or two to the locals. Like retired teachers.
Why let Wall Street have all the fun?
I was hoping this would usher in a golden age of lending for everyone—including me.
At the moment, I have my latest property tax bill sitting on my desk, telling me, in so many words: Hey, man, I’m not going to pay myself.
I was thinking that maybe I could lend the money to the mayor, as opposed to paying it.
Then the mayor could pay back my property tax “loan” with interest.
Who knows—if things get any worse, it may come to this.