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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Trade-offs and the Chicago Crime Wave



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Kevin Williamson has a new cover story on crime in Chicago, and specifically on the chaos inadvertently unleashed by the destruction of the city’s ultra-dense high-rise housing projects. It is well worth reading.

On Friday, I had a brief television exchange with a prominent political figure who until recently served as senior strategist for Priorities USA Action, the Super PAC perhaps best known for the Joe Soptic story. We were discussing whether or not President Obama should devote more time and attention to the violence in Chicago. Given the left vs. right format these discussion tend to take, I think it was assumed that I was going to say that gun regulation would do relatively little to stem the tide of violence in Chicago, but I eschewed that point. Rather, I noted a few things: (1) that President Obama has tremendous moral authority in Chicago, where he won the support of an overwhelming majority of voters; (2) that one of the most reliable ways to reduce violent crime is to increase the number of police officers deployed in a city; (3) that the fiscal capacity of many state and local governments had been greatly diminished by the cost of public employee pension liabilities; and (4) that the best thing the president might have done is urge striking teachers not to press for sharp increases in compensation at a time when the Chicago Public Schools. 

Predictably, my interlocutor said that I was “ridiculous” to suggest that there was a connection between pension costs and crime levels. He also said that congressional Republicans were the real problem, presumably because they’ve generally opposed making large, no-strings-attached transfers to state and local governments.

So let’s walk through these ideas. Chicago, like many U.S. cities, contains a number of local authorities with the power to levy taxes. If one of them sharply increases taxes on Chicago residents, it becomes somewhat more difficult for the others to do the same. One can make a reasonable case that when the state of Illinois raised income taxes by 67 percent for individuals and 46 percent for firms in 2011, local taxpayers in Cook County became even less inclined to accept increases in the local retail sales tax and property taxes than they would have been otherwise. This is particularly true if services are curtailed at the same time. When one group of local public employees presses for a substantial increase in compensation — both on a per capita basis, in the form of higher wages for individual teachers (which in turn translate into higher pension payments on retirement), and on an aggregate basis as calls for lower student-teacher ratios lead to more hiring from an already-diluted teacher talent pool — this either means that taxes will have to go up, that growth in the region’s economy will outpace public sector growth, or that some other part of the budget will get squeezed.

This brings us to the gang violence that has left Chicago with a murder rate far higher than that of New York city. Increasing the number of police patrolling Chicago’s most violent neighborhoods is not the kind of thing that can happen overnight. Much would have to be done — from reforming the work rules that govern policing to redeploying personnel from police functions that are less urgent to those than are more so to recruiting new officers into the pipeline who won’t be deployed for some time. Some of this work, e.g., reforming work rules, relying on civilians to take on functions currently handled by police officers who might otherwise be deployed in the fields, etc., might actually save money. But others will cost money that will have to come from some mix of local, state, and federal taxpayers. 

My basic take is that when Chicago needs more public resources, it should focus first on growing the city’s economic pie (relaxing zoning restrictions, easing burdens on small firms, well-targeted infrastructure investments, etc.), second on increasing the efficiency of existing public agencies, and only then on raising taxes. One clear indication that Chicago hasn’t made much progress on this second front is that most public employees would prefer a modest increase in current wages over a substantial increase in pension benefits, yet Chicago and cities like it across the country have taken the opposite tack, presumably because it is cheaper for politicians to make promises that will come due on someone else’s watch. Moreover, local public employee unions have fiercely resisted pension reform measures, as well as reforms of work rules that would generate substantial cost savings. The ultimate impact of these decisions is to limit the city’s fiscal capacity in the face of a serious crime problem.

And while we could federalize Chicago’s fiscal problem, doing so would raise another set of issues. The Illinios pension system is $96.8 billion in the red. If the federal government took on this burden, the Illinois politicians who caused this problem would teach state and local officials around the country a valuable lesson: if you allow your pension problem to become sufficiently dire, you will be bailed out. This, in turn, will encourage still more reckless behavior. Federalizing the financing of local public services is an attractive option to some left-of-center activists because it greatly facilitates making use of debt finance to compensate public employees. The problem, however, is that it is very difficult for national taxpayers and voters to surveil how money that is devoted to local public services is spent. Indeed, it is very difficult for local taxpayers and voters to ensure that money spent on local public services is spent wisely. This isn’t necessarily to say that K-12 education, police, fire, trash collection, etc., shouldn’t be both financed and controlled by the federal government, though I tend to think this would be a really bad idea. But one would actually have to make the case for this new nationalized arrangement, not dismiss the fact that local funds that go towards one local government service put pressure on other local government services, particularly in a bleak economic environment. 

Chicago, incidentally, is barely keeping up with police retirements, let alone increasing the number of police officers; and Mayor Emanuel is desperately trying to strike a deal with the city’s public safety unions to contain the ongoing pension crisis.



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