Why Obama Grows Government and Creates Debt

President Obama's historic expansion of government at a time of great recession is attributed to his socialist agenda of "income redistribution."  While Barack Obama did use these words in his campaign exchange with Joe the Plumber, in reality Obama's behavior is better explained as an expression of the political DNA he acquired from Chicago's Political Machine.

Obama comes from Chicago, which under the reign of Mayor Daley I (1955-1976) grew to be the last and greatest big city Political Machine in the US.[i]  Daley I perfected the strategy of filling City departments with political appointees, and giving lucrative City contracts to campaign contributors.  The number of patronage workers in Chicago quadrupled from 3,478 in 1955, when Daley I first took office, to 15,680 in 1970. This enormous increase took place during a time when Chicago lost 10 percent of its population.[ii]

How can one best understand the purpose of the patronage system?   As one Chicago politician phrased it: "The key to it is that the government is used to sustain the government in power by hiring."[iii]  The growth of government in the city of Chicago, the County of Cook (Chicago is wholly contained within Cook County) and the state of Illinois is evidence of the ability of Mayors Daley I, II and the Democratic politicians who have run Illinois to recklessly grow patronage jobs.  

Consider these facts: The state of Illinois has the largest number of government units (divisions of government from the small to large: library districts, townships, cities, villages, sanitary districts, etc) of any state in the US: 6,039.[iv]  California has three times the population of Illinois yet can't compare to the number of government units.  The Chicago City Council has 50 Aldermen, making it the largest municipal legislative body in the US.[v]  

Cook County government has grown with public sector jobs as well.  Cook County has 2,200 government agencies,[vi] more than some states' totals.   The Circuit Court of Cook County is not just the largest County court system in the US it is the largest in the world.[vii]  The Clerk of the Circuit Court controls 4,300 jobs.[viii]  The Cook County jail complex is also the largest in the US, and Chicago refuses to privatize the prison guards, keeping those jobs under political control.  To help pay for the legacy costs of this bloated patronage system, the seven county area of metro Chicago-land now has 1,450 taxing bodies.[ix]   Thanks to these taxing bodies, Chicago now has the highest gasoline price of any city in the United States,[x] and the highest big city sales tax (10.25%) in the nation,[xi] as well as high property taxes, fees, permit costs, etc.

Today the average Cook County household owes the County (as County Treasurer Maria Pappas phrased it) $63,525[xii] to pay their unfunded Lotto-level pensions and benefit plans.  And the figure grows daily.

All of this taxation and borrowing has created these economic effects:

In the one month of July 2011, Illinois lost the most jobs of any state.[xiii]  In August 2011, Illinois and California had the two worst Fitch credit ratings in the US.[xiv] Residents of the state of Illinois now have the highest per capita debt of any large state.[xv] .  In 2009 the City of Chicago had a debt of $23.95 billion while its operating budget of that year was $6.6 billion. [xvi] An annual debt to budget ratio of almost 4 to 1.  These actions and results are now being seen at the national level.

Step One in the growth of the Chicago Machine was patronage job creation.  Step Two was finding a way to pay for it.   Because Mayor Daley I was instrumental in getting Presidents Kennedy and Johnson nominated and elected,[xvii] he was able to bring Federal program dollars to Chicago to supplement the city budget.  When asked about sending program money to Chicago, President John F. Kennedy once quipped,  "That's Mayor Daley's city.  Give him what he wants."[xviii]   Mayor Daley I started the Model Cities Program.[xix]   The raison d'etre of this program was revealed by a 1972 investigation reported by the Chicago Tribune newspaper.  It reported  that half of the Model Cities Program money sent to City Hall was confiscated by Daley I and used to his own ends.[xx]

The first group of people built up by the Machine were the patronage workers.  The second group, those living off of public benefits; the safety-net-dependent segment of the population.  Daley I had the clout[xxi] to create the largest distributive political Machine in the country.   For example, while in 1955 ten percent of Chicago's population lived in public housing, by 1970 that proportion had increased to twenty percent.[xxii]   In the 2000 Census, of the ten poorest census tracts in the US, nine were on the black South Side area of Chicago.   And tragically, this government-dependent group is ruled by two African-American Congressmen: Bobby Rush and Jesse Jackson Jr.   In 2000 Chicago was still the most segregated city in the US; ninety percent of its African-Americans would have to move for it to be fully integrated.[xxiii]

The success of the patronage job system was measured by how many people owe their jobs (and therefore their loyalty) to the Machine.  The same concept is applied to safety net program recipients: success is measured not by how many people leave the welfare rolls but by how many stay on them. This side of Machine-created dependency is why welfare programs don't succeed; they are not designed to.  This is the second aspect of the "distributive" Machine tactic Obama has applied: make as many people as possible dependent upon the Federal government.   

President Obama added 140,000 workers to the Federal payroll in his first 18 months of office.[xxiv]  The number of Americans on food stamps went from 26 million before the recession to 46 million in 2011.[xxv] This is what Obama really meant by "distribute the wealth:" the Federal government uses its power to hire workers and expand a welfare population dependent on the Federal government, thus keeping the government in power.

The Chicago Machine financed its government job expansion with Federal money.  But unlike Daley, Obama can't use Federal program dollars -- those are tapped out,  he can't draw from that well.  He must sell Treasury bonds or print money to expand the Federal government, a practice with long-term national and global financial ramifications.   After 2 ½ yrs of President Obama's tenure, the US has seen its credit rating fall.

In the final analysis, President Obama cannot balance a budget because that would stop the expansion of Federal programs, and therefore require that he acknowledge a limit to his power.  That goes against his core political beliefs and personal identity.  

President Obama's penchant to grow government has its roots not in the writings of Karl Marx but in the government expansion and financing practices of the Chicago Political Machine.   Karl Marx never wrote about growing a patronage army, expanding safety net programs, selling T-bonds, or quantitative easing.   The Chicago Machine has no ideology[xxvi] other than to "do anything to acquire more money and power."[xxvii] 

The only way to understand President Obama's management style is to see that it's the administrative strategy he learned from the Chicago Machine.   Why were these machine tactics never discussed or exposed during his 2008 campaign?   The answer is obvious: nothing from Barack Obama's past that would put him in a bad light was revealed by the media during his campaign.

 


[i] Rakove, 1979, p. 387.

 

[ii] Gibson et al., 2005, Table 14.

[iii] Rakove, 1979, p. 248.

[iv] Nowlan et al., 2010, p. 161.

[v] Rakove, 1975, p. 213.

[vi] Office of the Cook County Treasurer, 6/27/09/. Source: http://www.cookcountytreasurer.com/ddocompliancereports.aspx.  Accessed July 1, 2011.

[vii]  Nowlan et al., 2010, p. 141.

[viii] Rakove, 1979, p. 253.

[ix] Nowlan et al., 2010, p. 163.

[x] Chicago: City of the big gas prices. CNNMONEY, April 27, 2011. Source: http://money.cnn.com/2011/04/27/news/economy/chicago_gas_prices/index.htm. Accessed: Aug. 24, 2011.

[xi] U.S. Sales Tax Rates Hit Record High. William P. Barrett, March 8, 2010. Source: http://www.forbes.com/2010/03/05/sales-tax-rates-record-high-personal-finance-shopping-tax.html. Accessed: Aug. 24, 2011.

[xii] Office of the Cook County Treasurer, 6/27/11/. Source: http://www.cookcountytreasurer.com/ddocompliancereports.aspx.  Accessed July 1, 2011.

[xiii] July Employment Report: Illinois leads the Nation in Jobs lost. Source: http://www.illinoispolicy.org/blog/blog.asp?ArticleSource=4364. Accessed: Aug. 24, 2011.

[xiv] Citing Debt and Benefits, Fitch Lowers Bond Rating for New Jersey. Source: http://www.nytimes.com/2011/08/18/nyregion/fitch-lowers-new-jersey-credit-rating-to-aa-from-aa.html. Accessed: August 24, 2011.

[xv] Moody's puts Illinois in top 5 in debt, pension needs. Kathy Bergen, Chicago Breaking News, June 27, 2011. Source: http://archive.chicagobreakingbusiness.com/2011/01/moodys-puts-illinois-in-top-4-in-debt-pension-needs.html.  Accessed June 30, 2011.

[xvi] Office of the Cook County Treasurer, 6/27/09/. Source: http://www.cookcountytreasurer.com/ddocompliancereports.aspx.  Accessed July 1, 2011. 

[xvii] Ciccone, 1996, p. 74, Cohen et al., p. 310.

[xviii] Rakove, 1979, p. 195.

[xix] Rakove, 1979, p. 160.

[xx] Cohen et al., p. 281, 342, 344.

[xxi] Rakove, 1979, p. 390: "You do what you have the clout to do, to use a Chicago phrase."

[xxii] Cohen et al., 2000, p. 529.

[xxiii] Cohen et al., 2000, p. 11.

[xxiv] Boehner's Comments revive Debate on how to Tally Federal Workers. Ed O'Keefe and Eric Yoder. Washinton Post, Feb. 17, 2011. Source: http://www.washingtonpost.com/wp-dyn/content/article/2011/02/16/AR2011021606846.html.  Accessed July 16, 2011.

[xxv] Hunger at Home: Since Recession 20 Million More Americans on Food Stamps. David Muir, ABC News, Aug. 24, 2011. Source: http://abcnews.go.com/US/hunger-home-recession-14-million-americans-food-stamps/story?id=14373319. Accessed: August 24, 2011.

[xxv] Rakove, 1979, p. 156.

[xxv] Laski, 2009, p. 56. 

REFERENCES 

Ciccone, F. Richard. 1996. "Daley: Power and Presidential Politics." Chicago: Contemporary Books.

Cohen, Adam, and Elizabeth Taylor, 2000.  American Pharoah: Mayor Richard J. Daley, His Battle for Chicago and the Nation. New York: Little Brown, and Co.

Gibson, Campbell, and Kay Jung. 2005. Historical Census Statistics On Population Totals By Race, 1790 to 1990, and By Hispanic Origin, 1970 to 1990, For Large Cities and Other Urban Places in the United States.  Working Paper No. 76. US Census Bureau, Feb. 2005.

Laski, James. 2008. My fall from Grace. Bloomington, IN: Author-House.

Nowlan, James D., Samuel K. Gove, and Richard J. Winkel, Jr. 2010. Illinois Politics: A Citizen's Guide. Urbana and Chicago: U. of Illinois Press.

Rakove, Milton 1976.  Don't Make No Waves, Don't Back No Losers: An Insider's Analysis of the Daley Machine. Bloomington, IN: Indiana U. Press.

Rakove, Milton. 1979. We Don't Want Nobody Nobody Sent. Bloomington, IN: Indiana U. Press.

 


President Obama's historic expansion of government at a time of great recession is attributed to his socialist agenda of "income redistribution."  While Barack Obama did use these words in his campaign exchange with Joe the Plumber, in reality Obama's behavior is better explained as an expression of the political DNA he acquired from Chicago's Political Machine.

Obama comes from Chicago, which under the reign of Mayor Daley I (1955-1976) grew to be the last and greatest big city Political Machine in the US.[i]  Daley I perfected the strategy of filling City departments with political appointees, and giving lucrative City contracts to campaign contributors.  The number of patronage workers in Chicago quadrupled from 3,478 in 1955, when Daley I first took office, to 15,680 in 1970. This enormous increase took place during a time when Chicago lost 10 percent of its population.[ii]

How can one best understand the purpose of the patronage system?   As one Chicago politician phrased it: "The key to it is that the government is used to sustain the government in power by hiring."[iii]  The growth of government in the city of Chicago, the County of Cook (Chicago is wholly contained within Cook County) and the state of Illinois is evidence of the ability of Mayors Daley I, II and the Democratic politicians who have run Illinois to recklessly grow patronage jobs.  

Consider these facts: The state of Illinois has the largest number of government units (divisions of government from the small to large: library districts, townships, cities, villages, sanitary districts, etc) of any state in the US: 6,039.[iv]  California has three times the population of Illinois yet can't compare to the number of government units.  The Chicago City Council has 50 Aldermen, making it the largest municipal legislative body in the US.[v]  

Cook County government has grown with public sector jobs as well.  Cook County has 2,200 government agencies,[vi] more than some states' totals.   The Circuit Court of Cook County is not just the largest County court system in the US it is the largest in the world.[vii]  The Clerk of the Circuit Court controls 4,300 jobs.[viii]  The Cook County jail complex is also the largest in the US, and Chicago refuses to privatize the prison guards, keeping those jobs under political control.  To help pay for the legacy costs of this bloated patronage system, the seven county area of metro Chicago-land now has 1,450 taxing bodies.[ix]   Thanks to these taxing bodies, Chicago now has the highest gasoline price of any city in the United States,[x] and the highest big city sales tax (10.25%) in the nation,[xi] as well as high property taxes, fees, permit costs, etc.

Today the average Cook County household owes the County (as County Treasurer Maria Pappas phrased it) $63,525[xii] to pay their unfunded Lotto-level pensions and benefit plans.  And the figure grows daily.

All of this taxation and borrowing has created these economic effects:

In the one month of July 2011, Illinois lost the most jobs of any state.[xiii]  In August 2011, Illinois and California had the two worst Fitch credit ratings in the US.[xiv] Residents of the state of Illinois now have the highest per capita debt of any large state.[xv] .  In 2009 the City of Chicago had a debt of $23.95 billion while its operating budget of that year was $6.6 billion. [xvi] An annual debt to budget ratio of almost 4 to 1.  These actions and results are now being seen at the national level.

Step One in the growth of the Chicago Machine was patronage job creation.  Step Two was finding a way to pay for it.   Because Mayor Daley I was instrumental in getting Presidents Kennedy and Johnson nominated and elected,[xvii] he was able to bring Federal program dollars to Chicago to supplement the city budget.  When asked about sending program money to Chicago, President John F. Kennedy once quipped,  "That's Mayor Daley's city.  Give him what he wants."[xviii]   Mayor Daley I started the Model Cities Program.[xix]   The raison d'etre of this program was revealed by a 1972 investigation reported by the Chicago Tribune newspaper.  It reported  that half of the Model Cities Program money sent to City Hall was confiscated by Daley I and used to his own ends.[xx]

The first group of people built up by the Machine were the patronage workers.  The second group, those living off of public benefits; the safety-net-dependent segment of the population.  Daley I had the clout[xxi] to create the largest distributive political Machine in the country.   For example, while in 1955 ten percent of Chicago's population lived in public housing, by 1970 that proportion had increased to twenty percent.[xxii]   In the 2000 Census, of the ten poorest census tracts in the US, nine were on the black South Side area of Chicago.   And tragically, this government-dependent group is ruled by two African-American Congressmen: Bobby Rush and Jesse Jackson Jr.   In 2000 Chicago was still the most segregated city in the US; ninety percent of its African-Americans would have to move for it to be fully integrated.[xxiii]

The success of the patronage job system was measured by how many people owe their jobs (and therefore their loyalty) to the Machine.  The same concept is applied to safety net program recipients: success is measured not by how many people leave the welfare rolls but by how many stay on them. This side of Machine-created dependency is why welfare programs don't succeed; they are not designed to.  This is the second aspect of the "distributive" Machine tactic Obama has applied: make as many people as possible dependent upon the Federal government.   

President Obama added 140,000 workers to the Federal payroll in his first 18 months of office.[xxiv]  The number of Americans on food stamps went from 26 million before the recession to 46 million in 2011.[xxv] This is what Obama really meant by "distribute the wealth:" the Federal government uses its power to hire workers and expand a welfare population dependent on the Federal government, thus keeping the government in power.

The Chicago Machine financed its government job expansion with Federal money.  But unlike Daley, Obama can't use Federal program dollars -- those are tapped out,  he can't draw from that well.  He must sell Treasury bonds or print money to expand the Federal government, a practice with long-term national and global financial ramifications.   After 2 ½ yrs of President Obama's tenure, the US has seen its credit rating fall.

In the final analysis, President Obama cannot balance a budget because that would stop the expansion of Federal programs, and therefore require that he acknowledge a limit to his power.  That goes against his core political beliefs and personal identity.  

President Obama's penchant to grow government has its roots not in the writings of Karl Marx but in the government expansion and financing practices of the Chicago Political Machine.   Karl Marx never wrote about growing a patronage army, expanding safety net programs, selling T-bonds, or quantitative easing.   The Chicago Machine has no ideology[xxvi] other than to "do anything to acquire more money and power."[xxvii] 

The only way to understand President Obama's management style is to see that it's the administrative strategy he learned from the Chicago Machine.   Why were these machine tactics never discussed or exposed during his 2008 campaign?   The answer is obvious: nothing from Barack Obama's past that would put him in a bad light was revealed by the media during his campaign.

 


[i] Rakove, 1979, p. 387.

 

[ii] Gibson et al., 2005, Table 14.

[iii] Rakove, 1979, p. 248.

[iv] Nowlan et al., 2010, p. 161.

[v] Rakove, 1975, p. 213.

[vi] Office of the Cook County Treasurer, 6/27/09/. Source: http://www.cookcountytreasurer.com/ddocompliancereports.aspx.  Accessed July 1, 2011.

[vii]  Nowlan et al., 2010, p. 141.

[viii] Rakove, 1979, p. 253.

[ix] Nowlan et al., 2010, p. 163.

[x] Chicago: City of the big gas prices. CNNMONEY, April 27, 2011. Source: http://money.cnn.com/2011/04/27/news/economy/chicago_gas_prices/index.htm. Accessed: Aug. 24, 2011.

[xi] U.S. Sales Tax Rates Hit Record High. William P. Barrett, March 8, 2010. Source: http://www.forbes.com/2010/03/05/sales-tax-rates-record-high-personal-finance-shopping-tax.html. Accessed: Aug. 24, 2011.

[xii] Office of the Cook County Treasurer, 6/27/11/. Source: http://www.cookcountytreasurer.com/ddocompliancereports.aspx.  Accessed July 1, 2011.

[xiii] July Employment Report: Illinois leads the Nation in Jobs lost. Source: http://www.illinoispolicy.org/blog/blog.asp?ArticleSource=4364. Accessed: Aug. 24, 2011.

[xiv] Citing Debt and Benefits, Fitch Lowers Bond Rating for New Jersey. Source: http://www.nytimes.com/2011/08/18/nyregion/fitch-lowers-new-jersey-credit-rating-to-aa-from-aa.html. Accessed: August 24, 2011.

[xv] Moody's puts Illinois in top 5 in debt, pension needs. Kathy Bergen, Chicago Breaking News, June 27, 2011. Source: http://archive.chicagobreakingbusiness.com/2011/01/moodys-puts-illinois-in-top-4-in-debt-pension-needs.html.  Accessed June 30, 2011.

[xvi] Office of the Cook County Treasurer, 6/27/09/. Source: http://www.cookcountytreasurer.com/ddocompliancereports.aspx.  Accessed July 1, 2011. 

[xvii] Ciccone, 1996, p. 74, Cohen et al., p. 310.

[xviii] Rakove, 1979, p. 195.

[xix] Rakove, 1979, p. 160.

[xx] Cohen et al., p. 281, 342, 344.

[xxi] Rakove, 1979, p. 390: "You do what you have the clout to do, to use a Chicago phrase."

[xxii] Cohen et al., 2000, p. 529.

[xxiii] Cohen et al., 2000, p. 11.

[xxiv] Boehner's Comments revive Debate on how to Tally Federal Workers. Ed O'Keefe and Eric Yoder. Washinton Post, Feb. 17, 2011. Source: http://www.washingtonpost.com/wp-dyn/content/article/2011/02/16/AR2011021606846.html.  Accessed July 16, 2011.

[xxv] Hunger at Home: Since Recession 20 Million More Americans on Food Stamps. David Muir, ABC News, Aug. 24, 2011. Source: http://abcnews.go.com/US/hunger-home-recession-14-million-americans-food-stamps/story?id=14373319. Accessed: August 24, 2011.

[xxv] Rakove, 1979, p. 156.

[xxv] Laski, 2009, p. 56. 

REFERENCES 

Ciccone, F. Richard. 1996. "Daley: Power and Presidential Politics." Chicago: Contemporary Books.

Cohen, Adam, and Elizabeth Taylor, 2000.  American Pharoah: Mayor Richard J. Daley, His Battle for Chicago and the Nation. New York: Little Brown, and Co.

Gibson, Campbell, and Kay Jung. 2005. Historical Census Statistics On Population Totals By Race, 1790 to 1990, and By Hispanic Origin, 1970 to 1990, For Large Cities and Other Urban Places in the United States.  Working Paper No. 76. US Census Bureau, Feb. 2005.

Laski, James. 2008. My fall from Grace. Bloomington, IN: Author-House.

Nowlan, James D., Samuel K. Gove, and Richard J. Winkel, Jr. 2010. Illinois Politics: A Citizen's Guide. Urbana and Chicago: U. of Illinois Press.

Rakove, Milton 1976.  Don't Make No Waves, Don't Back No Losers: An Insider's Analysis of the Daley Machine. Bloomington, IN: Indiana U. Press.

Rakove, Milton. 1979. We Don't Want Nobody Nobody Sent. Bloomington, IN: Indiana U. Press.