By Frum, David
Newsweek , Vol. 161, No. 05
Byline: David Frum
It's in the Midwest. It's called Illinois.
It's official: Illinois is the worst-governed state in the country.
Last week Standard & Poor's downgraded Illinois's credit rating to A-. Only California bears so low a rating, but S&P rates California's future outlook as positive and Illinois's as negative. The Moody's (slightly different) rating system assesses Illinois at the same risk level it gives the African nation of Botswana.
It's not easy to sum up all the aspects of the financial disaster that is Illinois: the fiasco has too many pieces, contributed by too many different politicians.
The state can't pay its bills in the here and now: it started the 2013 fiscal year with almost $8 billion in unpaid bills, equal to almost one quarter of the state's budget.
Illinois depends on federal aid to stagger through the year. In 2011 federal transfers accounted for more than one third of the state's revenue. Now assistance from Washington is dwindling.
The costs of retirement benefits to Illinois's retirees are rising faster than state revenue--meaning that even as the Illinois economy recovers from the recession, the state's income is falling further and further behind its commitments.
Indeed, Illinois faces the worst pension shortfall of any state. The cost of pensions and health benefits to retired state employees has doubled over the past decade, to 15 percent of state spending. As the costs of benefits rise, the state is cutting budgets for schools, Medicaid, and corrections.
The Illinois economy depends on the state's historic role as the great transfer point of American transportation: first rail, then air. But that status is declining. Chicago's O'Hare lost its ranking as the busiest airport in the country to Atlanta in either 1998 or 2005, depending on whether you count by passengers or by takeoffs and landings. Meanwhile, Illinois's budget problems are preventing the state from investing in the infrastructure maintenance and improvements required even to hold on to the traffic it still has.
Some of Illinois's problems are beyond any individual's control. …