Northwest Herald: Pension reform, stimulus spur legislative discussion

August 14, 2010 By CHRIS FREEMAN

WOODSTOCK – More than 150 businesspeople and community leaders turned out Friday morning at Woodstock North High School to hear legislative views on the state of the economy.

What they got was a riled-up revival, courtesy of state Sen. Dan Duffy (R-Barrington) and U.S. Rep. Don Manzullo (R-Egan).

“My focus has always been to encourage job growth, fight corruption and lower taxes,” Duffy said at the annual McHenry County Economic Development Corp.’s legislative breakfast. “Even after everything that’s going with the [former Gov. Rod] Blagojevich trial, northing has changed. We need to continue the fight. We need to continue speaking out.”

“We cannot restore the economy by simply throwing money at it and printing money that doesn’t exist,” Manzullo said to a round of applause. “Get off the backs of American manufacturers and small businesses and let them create the jobs.”

Duffy and Manzullo were joined by state Sen. Pamela Althoff (R-McHenry), state Rep. Mark Beaubien (R-Wauconda), and U.S. Rep. Melissa Bean (D-Barrington). Each got a chance to make opening remarks before answering a pair of questions submitted ahead of time by EDC members.

The primary focus on the state level was pension reform and spending. Beaubien and Duffy took turns calling for immediate reform, with Althoff adding that there’s “no doubt the state’s current pension system needs to be revised.”

Duffy said the reforms needed to include raising the retirement age, capping pensions at $100,000, and removing the ability for one person to have more than one state pension – an idea that got strong applause from the crowd.

Beaubien cautioned that stopping new employees from entering the pension system could leave current pensioners woefully underfunded. He said that although the state can’t go bankrupt by statute, the pension system could, suggesting that could be an option for reform.

At the federal level, the focus was on spending and on Fannie Mae and Freddie Mac.

Bean touted the benefits of the stimulus package passed last year – helping improve GDP since the depths of the recession and coinciding with a turnaround in the jobs market. Manzullo, meanwhile, railed on the passage of a manufacturing tax to help pay for the recently passed $26 billion jobs bill to provide additional Medicaid funding to states.

“That $9 billion is an increase on taxes for Caterpillar, John Deere, Illinois Tool Works and other Illinois manufacturers,” Manzullo said. “They all ran in to our office and said, ‘What’s going on?’ We have to grow our way our, we have to manufacture our way out of the recession.”

Asked why Fannie and Freddie were not part of the financial reform package passed by Congress, Bean said the mortgage lenders were not part of the original problem. Because the lenders bought subprime mortgages after they were sold, she said, they became storage units for the bad mortgages that companies such as Countrywide wrote in the first place.

As Bean extended her time to detail the mortgage, credit, and derivative reforms in the bill that were designed to prevent problems such as subprime lending to arise in the first place, the crowd became restless.

“These are some very complex issues,” she said. “It’s not that simple.”

“It is that simple,” Manzullo followed, again to large applause. “There was pressure on Fannie and Freddie not only to guarantee the subprime and alt-A loans, but to buy up the crap.

“The problem is Fannie Mae and Freddie Mac; the problem is not Charie Zanck’s bank [American Community Bank and Trust in Woodstock].”