Rahm Emanuel's Plan to Save U.S. Cities

Margaret Carlson is a Bloomberg View columnist. She was a White House correspondent for Time, a weekly panelist on CNN’s “Capital Gang” and an editor at the New Republic.
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Ever wonder what Chicago Mayor Rahm Emanuel thinks about on his treadmill? Neither did I until today, when he told a group of journalists at the Bloomberg View offices that he came up with a non-break-the-unions plan to keep pension costs from bankrupting cities while working out one morning.

Emanuel and other U.S. mayors are stuck with a decision made in 1983 by a couple of short-term thinkers: President Ronald Reagan and Speaker of the House Tip O'Neill. They had an idea about how to save Social Security, which was then in big trouble.

Here's the good part of what happened in 1983: Republicans and Democrats worked together. (See Chris Matthews'sbook that memorializes it, "Tip and the Gipper: When Politics Worked.")

Here's the bad part: Cites are dying as a result. As part ofthe deal, city workers were allowed to be exempted from Social Security and pushed into pension funds, whose costs are now exploding. Chicago, like all cities, is either going to cut services to keep paying retirees, or go bankrupt.

(After all, Chicago only has so many corners on which to put speed cameras. Besides, Emanuel isn't using revenue from those speed traps to deal with pensions -- yet. He's doing positive things: Save-the-kids stuff.)

But Emanuel has a bipartisan dream to save the city from the constant cycle of kicking the pension crisis down the road every few years: Pay off the legacy pensions, while putting all new city workers back on Social Security. And if Chicago can do so, so can the rest of our vibrant urban centers.

That's a national fix, requiring cooperation from Washington. Yet Emanuel no longer has the muscle in the nation's capital that he enjoyed as White House chief of staff. In the grittier world of Chicago politics, he's got to ask the State of Illinois to help him with his pension costs in the here and now. And the way Washington now works, or doesn't, he's on a political treadmill. This weekend's won't be his last trip to Springfield.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Margaret Carlson at mcarlson3@bloomberg.net