Kirk isn’t the only one who’s made the comparison -- The New York Times called Illinois “Greece on Lake Michigan” and CNNMoney.com just published a story titled “Illinois: Our Very Own Greece.”
Illinois is also not the only state that’s been compared to Greece. New Jersey’s own governor, Chris Christie, told the Manhattan Institute that his state is “careening our way toward becoming Greece.” (Maybe that was a tourism plug. New Jersey’s been likened to far uglier places.)
Whoever’s making the link, and for whatever reason, it’s a sensationalistic charge. The only Greece on Lake Michigan is at Halsted and Monroe. Greece’s economy needed a 110 billion euro bailout in April because its debt was bigger than its gross domestic product. It owed more money than everyone in the country was earning. The country’s bond rating was busted down to junk status because Standard & Poor’s feared a default.
“Comparing the Greek debt crisis to state and local governments is not valid and is distracting from the real concerns about budgets,” wrote Judy Wesalo Temel, a principal and director of credit research at the New York investment firm Samson Capital. “Debt service and pension expenditures are relatively small compared to other state expenditures. However, examining state and local retirement plans is valid.”
According to Samson, Illinois’ debt service is 3 percent of its state expenditures, “a fraction of Greece’s.” Our bond rating is A1. While that ties with California as the lowest of any state, it’s a lot better than Greece’s BB+. So Gov. Pat Quinn isn’t ready to accept the title “Zorba the Illinoisan.”
“We understand we have major fiscal challenges,” Quinn said at the National Governors Association meeting in Boston. “Our economy is growing and we want to keep building on that growing economy to get the state budget back in order.”
Greece got into trouble because decades of government overspending finally caught up with it. In exchange for a bailout, the country agreed to cut civil service salaries and government pensions. Illinois got into trouble because of government overspending, and is raising civil service salaries while borrowing more money to fund pensions. While refusing to call Springfield the Athens of the West, Samson Capital did say the state “is now in the spotlight because has done little to solve a significant budget gap and has the worst underfunded pension problem”
Maybe Illinois should try to emulate Greece. We’re not in as big a mess as the Greeks, but at least they’re doing something to get out of theirs.