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Shaw's punditry is what's bankrupt... The 'BGA' under Andy Shaw should really be called the 'PAA' -- the 'Plutocratic Apologetics Association'... CTU refutes BGA claim that Chicago needs a 'bankruptcy' to clear off the books (and screw teachers and retirees)...

Andy Shaw's apologetics for corporate "school reform" began long before he retired from his reporting job and became head of the Chicago Better Government Association. As a reporter, Shaw tried to dominate press conferences (yes, they were held back when Paul Vallas, Arne Duncan and Ron Huberman were CEOs) by asking puff ball questions that enabled officials, including Duncan and then "Chief Administrative Officer" David Vitale, to continue repeating the Party Line of corporate school reform. Shaw's proposal that CPS do bankruptcy is just the most bankrupt point in a long bankrupt career as a pundit.Anyone who didn't already know that the smug apologist for Chicago's ruling class and corporate "school reform" -- Andy Shaw -- should have realized it before the Chicago Sun-Times ran an Andy Shaw Op Ed promoting bankruptcy. And the Chicago Teachers Union responded immediately, although the CTU response was forced into a "Letter to the Editor" while Shaw's pontifications got top-of-the-page Opt Ed placement.

Jackson Potter's Letter to the Editor was published at the Sun-Times (and in a shortened form in the print edition, which Substance receives) on July 8, 2015. Although Potter was not given the space that Andy Shaw received, he has a lengthy record going back more than ten years of speaking out at the meetings of the Chicago Board of Education and opposing the expensive and debilitating programs and policies of Chicago and CPS that brought the current situation about.

Since July 2010, Potter has been head of member services at the Chicago Teachers Union.

Against the bankruptcy idea, By Jackson Potter, published as a Letter to the Editor on July 8, 2015.

To the Editor:

In a column this past Sunday, Better Government Association President Andy Shaw makes the claim that bankruptcy is a viable option for the city. That is simply not the case.

Bankruptcy assumes that we have no other options and must choose between paying our debts or providing robust public services. That is a false choice.

The problems we are facing are largely self-inflicted. A function of a state income tax system where the average Illinoisan pays more, as a percentage of their income, than the Bruce Rauners and Ken Griffins of the world (the richest 0.01 percent). Our city is over-dependent on predatory financial deals and has refused to hold banks accountable for misrepresentations and market manipulations that have cost us dearly over the past 15 years.

We have a TIF system that siphons dollars away from taxing bodies into the pockets of wealthy developers and corporations. This is part of a bigger problem whereby two-thirds of Illinois corporations pay zero taxes after we account for the subsidies and tax breaks they receive.

If we seriously considered a La Salle Street tax on the stock market, closed corporate loopholes, made the wealthy pay their fair share and forced the banks to renegotiate toxic deals that they claimed would help, not hurt the city, we would be in a surplus instead of a deficit.

Andy Shaw, Rahm Emanuel and the wealthy would like us to believe that only cuts to our standard of living will suffice in this age of austerity. However, another conversation is possible. Instead of cuts we could be talking about the merits of placing more resources into violence prevention programs and providing a counselor, nurse and social worker to every school, etc. We can only do these things if we restore fairness to our tax and public finance systems.

Lets close the book on this terrible idea of bankruptcy and open a new chapter on tax fairness and corporate accountability to address income inequality, the homicide crisis and unconscionable budget cuts to our city and state governments.

Jackson Pottter, Chicago Teachers Union

Shaw's punditry appeared on July 4, 2015 in the Chicago Sun-Times:

Andy Shaw: Time to consider bankruptcy for Chicago and CPS. WRITTEN BY ANDY SHAW POSTED: 07/04/2015, 04:00PM

Detroit did it in 2013. New York City almost had to in 1975. And now were wondering if Chicago, its school system and a slew of small and mid-size units of government around Illinois could be forced to do it:

Declare bankruptcy.

Government bankruptcy is a mystery to most of us in Illinois because theres been no compelling reason to explore this arcane chapter of the federal bankruptcy code until now.

With Chicago Public Schools and the City of Chicago on major begging, borrowing and belt-tightening sprees to avert imminent financial meltdowns, we need to understand how bankruptcy works, and whether its a viable way to restore solvency.

The State of Illinois is also teetering on the edge of the fiscal cliff, but theres no legal way a state can declare bankruptcy no applicable law on the books so it would presumably take an act of Congress and a favorable Supreme Court ruling, or maybe even a Constitutional amendment, to change that.

As for local government bankruptcy, that could be possible in Illinois under certain circumstances, and the Better Government Associations been looking into it.

Heres a quick primer:

+ State lawmakers havent authorized bankruptcy yet. Municipalities like Chicago, and agencies like CPS, would need permission from the state to go into Chapter 9 federal bankruptcy reorganization, but the General Assembly hasnt approved enabling legislation to allow it.

Theres talk in Springfield about passing a bankruptcy law its supported by Gov. Rauner and opposed by labor and many Democrats so stay tuned because the issues not going away.

+ Even if the state passes a law, no one should rush into court. Bankruptcy is time-consuming, expensive and a last resort when negotiations cant resolve the crisis.

And even if talks break down, governments should stay out of court until theyve hammered out a comprehensive reorganization plan with major stakeholders, which is no slam dunk because it requires a consensus among often-competing factions: Top bureaucrats, employee unions, vendors, bondholders and pensioners.

The goal is to eventually reach a compromise and present it to a court for review and approval.

+ Bankruptcy is a tool, not a solution. A panel of experts at a recent BGA Idea Forum stressed that bankruptcy is simply one way governments can reorganize their debts and obligations. But those who envision deep cuts in salaries and retirement benefits may face pushback in many courtrooms.

And, like it or not, most bankruptcy cases will include tax hike proposals.

+ So whats the goal? Come out of bankruptcy in better shape than before with a blueprint for stabilizing the government unit by improving cash flow, stretching payment schedules, covering essential services, rebuilding credit ratings and facilitating business reinvestment.

+ The stigma of bankruptcy is overblown. It may be a scarlet letter for politicians in the middle of it a big B but its not necessarily a permanent blemish if the reorganization plan is well executed. It would be nice if watchdogs like the BGA didnt have to raise the draconian specter of bankruptcy, but the time for wishing upon that star is long gone.

Were realists, and bankruptcies may be in our future, so we should understand what that could mean for Illinois residents and their local governments.

In this case, ignorance is anything but bliss.

Andy Shaw is President & CEO of the Better Government Association.

Email: ashaw@bettergov.org

Saqib Bhatti of the Roosevelt Institute was one of the many people who testified that the Chicago Board of Education could reduce its exposure to the so-called "toxic swaps" (illegal variable rate bond deals that were entered into from 2003 through 2005 under Arne Duncan on the advice of then-"Chief Administrative Officer" David Vitale) by demanding arbitration, as was done in other cities that had been sold the swaps by the banks based on false claims. What Bhatti and others didn't know but which has lately become clear is that CPS colluded with the banks on the swaps, so that arbitration would not have shown that the banks had ripped off CPS -- but that CPS leaders, and Chicago's mayor, wanted the deals and understood the risks! Substance photo by George N. Schmidt.SAQIB BHATTI refuted the Chicago 'bankruptcy' claims in testimony before the Chicago Board of Education and in a lengthy article in In These Times (below):



Comments:

July 13, 2015 at 8:43 AM

By: Rod Estvan

Chicago Public Schools not the only bankrupt enity

Andy Shaw stepped out too far with his endorsement of Governor Rauner's municipal bankruptcy proposal. The holders of the tax exempt bonds also have something to say in relationship to this proposal and like with the situation in Greece they are not interested in taking such big losses. The Chicago Public Schools and the City of Chicago are but just a few public bodies in Illinois that might qualify for bankruptcy if the proposed legislation passed, there are many more throughout the state.

Moreover, the actual language of an unfilled bill proposed by the Governor that would allow for chapter 9 bankruptcy included an effective ban on collective bargaining rights for all public sector workers. (This draft bill can be seen at https://drive.google.com/file/d/0B4Bi-iePG1O6aDNSZDUxMEdNUmc/view) Mr. Shaw is discussing a proposal that does not exist, Governor Rauner does not support municipal bankruptcy in the abstract, but rather his own union busting proposal that includes a chapter 9 provision.

As to Jackson Potter's rebuttal, it's true what he wrote, but the people of Illinois also explicitly voted against a graduated income tax system by the election of Mr Rauner. They also voted for a freeze of the income tax rate at its current reduced level, they also voted to freeze property taxes by electing Rauner Governor. The agenda Jackson Potter is proposing while I agree with it is also not realizable for the next three and a half years whilst Govenor Rauner rules. By then thousands of CTU members will be unemployed due to spiraling layoffs.

An intermediary solution needs to be sought out by the CTU, one that requires CPS debt consolidation, changes to what is called the pension ramp, and some level of external oversight of CPS either by an ISBE created entity or oversight body. The CTU is preaching to its choir right now and it is unfortunately pointless given the realities of the situation.

Rod Estvan

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