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Opinion
Brian Chappatta

Rahm Emanuel Shouldn’t Gamble on Chicago’s Pensions

Selling debt is a short-term fix that could exacerbate a challenging long-term problem.

Rahm Emanuel doesn’t need to go high-roller.

Rahm Emanuel doesn’t need to go high-roller.

Photographer: Scott Olson/Getty Images

Mayor Rahm Emanuel of Chicago, a former investment banker, should understand why issuing debt to fund pensions is a risky idea. 

Emanuel, who is leaving office in May, told city council members on Wednesday that he would set in motion a plan for Chicago to sell what he branded as “fund stabilization bonds.” Officials have floated the prospect of an offering as large as $10 billion, which would be the largest-ever for a locality. Even that wouldn’t even completely solve the problem: Chicago’s four pension systems are underfunded by a combined $28 billion. Even with the sale, the funding status of the systems would rise to just 50 percent, still well below what any observer would consider healthy.