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Rauschenberger: Only 20% of State Legislators Vote to Support IL Manufacturing

On this edition of Against The Current (ATC), Dan Proft sits down with former State Senator and current President and CEO of the Technology and Manufacturing Association (TMAIllinois.org) Steve Rauschenberger. With Governor Rauner set to give his 2016 State Budget Address, Rauschenberger, an Elgin Republican, widely recognized as the preeminent state budget expert during his 15 years in the General Assembly, discusses the future for small to midsize manufacturers in Illinois if they're going to have one, the seismic changes to state government required to balance the books, and how the future of the Illinois Republican Party is woven into both.

Rauschenberger offers a tour de force on 21st century jobs, state government and IL politics in this most informative installment of ATC.

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Dan Proft: Thank you for joining us on another edition of Against The Current. Coming to you from The Sky-Line Club at the top of the Old Republic building in downtown Chicago as per usual. And we're happy to have our guest here this episode, Former State Senator Steve Rauschenberger, Republican from Elgin. Served 15 years... Steve Rauschenberger: 15 years. Dan Proft: ...in the General Assembly. 15 glorious years in the General Assembly. Steve Rauschenberger: 1992 to 2007. Dan Proft: Well, what? 10 years in the glorious majority and four years... Steve Rauschenberger: In misery. Dan Proft: Yeah, right. Now, the President and CEO of the Technology and Manufacturing Association rebranded and represented the old Tooling and Manufacturing Association. But essentially, your charge is a small to mid-size manufactures in Illinois. Steve Rauschenberger: Yes. TMA is a 90-year-old association. Started by six kind of forward-looking small manufacturers who realized nobody was going to train their workforce for tomorrow unless they got together and did it. The argument that training together raises all boats. So TMA has always had a focus on training. We have a full Apprenticeship Program–we graduate apprentices and CNC which is Computer Numerically Controlled manufacturing. Also, tool on die making and also mold-making. The last batch where we do hands-on training. Dan Proft: So it seems to me manufacturing is very much like social services in the state of Illinois which is that everybody's for it and nobody acts in furtherance of it. So–you're right. Everybody is for Social Service, the Provision of Social Services to vulnerable populations and yet, we're one of the worst states in the nation providing the funding and support for those service providers. And everybody in the General Assembly is for manufacturing because we need good manufacturing jobs, this is a manufacturing hub–and you, the TMA, recently released a scorecard of all the members, all 177 members of the General Assembly. And according to the issues that you put on your scorecard, what percentage of state legislators come out with grades that suggest they're actually acting in further in some small to mid-sized manufacturers in Illinois? Steve Rauschenberger: 1 in 5, maybe– Dan Proft: 20%. Steve Rauschenberger: Maybe 20%, 25%. Yeah. Dan Proft: I mean, it's kind of staggering, isn't it? Because–not just because of the rederick that's offered up in support of those small to mid-sized manufacturers. Throughout the state, it's not just in Chicago– [cross-talk 00:02:36] Dan Proft: Right. We're all for good stuff. But what is it that prevents the General Assembly, a body you served on for 15 years as we just mentioned, from doing things in furtherance of the sector, they say, they're supportive of. Steve Rauschenberger: I would guess–I would say it's a matter of a lack of vision and a lack of understanding. When I was down in Springfield, I served 15 years. You saw these little bills come through–there was just one introduced last week which would require employers to notify an employee two weeks in advance and then he changed in a shift. They just said, "You're going to make law about how people are going to reassign shifts in manufacture or any other job in the state of Illinois?" I mean, this idea somehow that little increments don't really affect the whole environment is a big part of the problem. Dan Proft: So you're saying you don't think that state legislators in Springfield can do a better job of running a plastic injection molding plant in Elgin than plastic molding–again, injection management? Steve Rauschenberger: No. I guess I– Dan Proft: I don't think they can't do as good a job. Yeah. It's shocking. Steve Rauschenberger: It's pretty frightening. And the sad part is just incrementally, these guys and ladies pass things that don't make any sense in the long run. Whether you're talking to plastic bag ban in Chicago all the way through the kind of goofy stuff that passes down there. We're not going to get any better here until they get out of the business of micromanaging relationships that people have in their every day life. Dan Proft: Well, so how do you manage? Who's supportive and who isn't? Give me some of the issues that are making Illinois particular unfriendly for those small to mid-sized manufacturers to be here and resulting in businesses leaving or to the extent they expand, they expand elsewhere. And we see that, frankly, not just with small to mid-sized manufacturers, but also with the big boys. Caterpillar closing facilities and ADM divesting from Illinois to other Midwestern states. Steve Rauschenberger: State farm, it's not just manufacturing. Dan Proft: Yeah. Well, sure. Steve Rauschenberger: Big Illinois companies are choosing not to increase workforce here. I mean, we look at things that are employment relationships. In other words–are they passing mandates requiring employers to do things in this state that they don't have to do in other states? We look at things that relate to– [cross-talk 00:04:49] Dan Proft: Give me an example of that. What does a manufacture have to do here–CNC Manufacturing have to do here that they don't have to do in Indiana or Wisconsin or. . . Steve Rauschenberger: Well, just like the requirements for separate expression rooms for pregnant employees. Now, I don't know any employer that doesn't try to make arrangements for pregnant employees particularly when they're expressing milk and they have babies. But the idea that you're going to regulate from Springfield with the one-size-fits-all requirement that there'd be a special room and dictate the size of the room and what's going to be in the room is very unusual. I mean, three or four states in the nation have requirements for rooms to express your milk. I mean, you just–but–nobody–what they would tell you in Springfield, I don't want to vote against that. I mean, so– Dan Proft: I don't want to be anti-woman. Steve Rauschenberger: That's right. We've got this big herd of people that are all worried about the next male piece instead of about what they're doing to the state of Illinois as we slowly circle the drain. We got bad debt in the state of Illinois, we haven’t had a balanced budget in 7 or 8 years, we have no budget at all in the last 14 months or so. We're worse than the nation in dealing with handicapped and mentally ill people in the state of Illinois. Our schools are just run as if nobody was paying attention. Our colleges have some of the highest costs in the nation–so just what is it that they're doing well down in Springfield? Dan Proft: And so what are some of the things, maybe, that Gov. Rauner has proposed? Maybe that some other individual one-off legislators? Some of the legislators in the 20% have proposed that would manifestly improve the business climate in Illinois, again, for that wealth creating sector that we all talk about, manufacturing. [cross-talk 00:06:35] Steve Rauschenberger: Well, at least somebody's talking finally about getting Illinois to average. What Rauner talked about was, "Let's just get our workmen a compensation cost to the average of the nation instead of being the third highest. Let's get our unemployment cost down into the average. Down from 4th or 5th in the–" Those aren’t long-term solutions because you're not going to grow from those. But maybe you can stop some of the bleeding, and suddenly the agenda in Springfield is more–how do we help people find jobs, how do we retain middle class opportunity in this state. But I mean, that's not what they're talking about in Springfield, unfortunately. And as much as Rauner, I think, has offered compromises and suggestions that we can be flexible and how we head in these directions, there's just this decision on the part of Democratic leadership–Mike Madigan the emperor of Illinois, that no step at all–we're going nowhere. I mean, I've got my campaign contributors, I've got my political infrastructure, and we don't need to change anything. Dan Proft: Is it because the small to mid-sized manufacturers don't have the political cloud to impose punishment for those that don't act in support of that industry? Steve Rauschenberger: I think that's part. But the other part is that so many people trust government or they assume, for the most part, government works for their best interest or believe there's nothing they can do about it. Some combination of those things. Dan Proft: Right. Steve Rauschenberger: It takes a long time to foment a revolution in the United States. But I mean, I think we're close in the state of Illinois. I just think–people are worried they're going to change in the next few years or people are leaving in droves. Dan Proft: Let's just still down some of these issues. Because you hear politicians talk about some of these things–from the governor on down workers' comp system that needs to be reformed so we're not hanging the third-highest workers' comp cost in the nation as you just said. But specifically, well, why is that the case in Illinois? What's different about the workers' comp system here as compared to other states? Why is it so much more expensive? Steve Rauschenberger: Well, it's the agreed bill process. I mean, if you want to get into the nitty-gritty, it's the fact that there'd been a requirement for 20 years in Illinois that organized labor sits at the table with the business interest and they hammer out a deal. So that means you get Caterpillar and John Deere and Ford Motor Company across the table from the unions. And the unions, of course, are well-advised by the trial bar, the bar that focuses on workman's compensation. So this is not about the ideal. This is not about injured workers getting the treatment they need. This is about the various interest cutting the best deal they can. I mean, we're not going to get anywhere with an agreed build process. We are to be looking at who has injured workers that get back to work, without bankruptcy, where the families are taken care of, and where things turn out right? We got to be copying those systems instead of incrementally tinkering with the solyndra. I mean, we're taking a bad model and playing around at the edges. Now I realize the governor has no choice but to kind of live in the environment he's in, but what's missing is this horizon vision by the legislators. Let's go look at what states do work comp right. Where are injured workers being taken care of? Dan Proft: Give me an example of that and what that regime is. Steve Rauschenberger: Well, Florida, I think, does a much better job. Florida has a no-fault, I think, where comp system were essentially–if you're injured, you go get treated. Okay? And then afterwards, the major medical and the work comp insurance companies fight out whether it was an on-the-job injury or off-the-job injury. So in their system, every broken ankle is the same. One broken ankle doesn't occasion a quick trip in MRI, a casting, three weeks off work and go back at work on a walking cast which should be major medical. Where the other side would be–the insurance company refuses to pay, the attorney refuses to settle, they go a 27-weeks, it goes to hearing–I mean, the number of bankruptcies coming out of our workman's compensation which essentially benefit the attorneys in the work comp system, not the injured workers. I mean, we have more permanent partial disability come out of the state of Illinois than almost any other state in the country. Dan Proft: Is this where we get the kind of coffee on your lap kind of cases? I mean I've talked to social services provider, $600,000 sprained ankle. Steve Rauschenberger: Yeah. Dan Proft: And so now, just forget the manufacturer. It was like, social service sector where they are not-for-profit, they've got limited budget. You know, $600,000 for their workman's comp cost per sprained ankle because of this rigmarole you're describing. I mean, it effectively puts them on a business, too. Steve Rauschenberger: Yeah. It is much less expensive for everybody to pay for the right medical treatment for an injured worker whether you're injured playing softball on Saturday with a broken ankle or on Tuesday, running your CNC machine–the treatment ought to be the same. The cost of the treatment ought to be the same, but that's not true. Under workman's compensation, hospitals are allowed often to charge usual on customer. Okay. They do lots of–three, four doctors end up on the case, in a workman's comp case. Where in the case of a broken ankle at a softball game, generally, it's the treating physician who determines the case. Dan Proft: So what you're saying is, because I hear this a lot, too, is, well, kind of the while designation of whether the job–whether the injury, I should say, occurred on-the-job or off-the-job, you're saying. Yeah, that's a legitimate issue, but it's not the centerpiece of what's driving cost. It's how–whether you're injured in the softball game or injured operating a machine how it's treated differently. Steve Rauschenberger: Well, look at auto-insurance. You and I, we have a fender-bender. We both go to our insurance companies, As they file with each other, you and I go get our cars fixed. Then state farm meets with all state or whoever our companies are once a month and they reconcile the claims. Okay? We don't have to shut down, get attorneys, go to hearings, and wait 52, 75 weeks for a settlement. I mean, and our cars don't stay broken. Dan Proft: And during that entire time, the worker's off the job. Steve Rauschenberger: Yes. It benefits attorneys when there's not a settlement because the size of the settlement--they work for a percentage of the settlement. So there's this perverse incentives in the system which mean the attorneys operating for the injured workers are not square-up, and there's perverse incentives for the insurance companies as well not to settle. Dan Proft: So you're telling me that those lawyers that advertise on TV that do workers' comp cases on volume, they are being less than forthright? Is that right? Steve Rauschenberger: I think they're being forthright for a perverse system. They're just like Mike Madigan. Mike Madigan is not a felon. I mean, he might be if he didn't make the laws, but since he makes the laws, they're very–but I mean, to say that they're moral, whether Mike Madigan or the work comp attorneys that they're interested in the best interest of the workers, it's wrong. So to put them in a room with 3 or 4 , 5 big businesses only trying to make incremental progress and call that work comp reform is the wrong approach. And we've done it for 20 years. Dan Proft: And on the other side, people don't want to be demigod, not just kind of the room for pregnant women, example, but also, it's the same kind of game. Well, you don't want injured workers to be compensated while they're injured, and be able to provide for their family, and you don't want injured workers to be given the proper medical care–it's the kind of demigod issue. That way, it puts people back in their hind legs. Steve Rauschenberger: Yeah, exactly. So nobody wants to be the guy that stands up or the person that stands up. And I'll tell you that the unions are very active in Springfield. Any Democrat or anybody with union influence in their district– Dan Proft: Or Republican. Steve Rauschenberger: Yeah. Yeah, Republican or Democrat that crosses as ASFCME or SEIU or–those guys, I mean, they're merciless. Dan Proft: And so–okay, so there's worker's comp. Another area that's cost-driver for manufacturing that is markedly different in Illinois as compared to other states, it just kind of is again, perverse incentives, like you're describing for work comp. Steve Rauschenberger: Well, the worst one of all is probably the classification property tax system in Cook County. To think that manufacture–who's going to use less police, less fire, doesn't use the school system requires very little in services pays a 25% to 40% penalty on their property tax in Cook County is a crime. I mean, this is driving jobs out of Cook County. So when it's time to move when you outgrow your facility or you need to downsize your facility, people look at [inaudible], or worse, they look at Indiana or Wisconsin to move their operation. Steve Rauschenberger: I mean, we've always been a strong manufacturing area. We've got great people, we've got great workers, we've got great a reasonable infrastructure still although it's kind of crumbling around their ears. But I mean, to lose these because we have bad public policy occasion by the first Mayor Daley's desire to buy votes with low property taxes. I mean, they thought, in 1970, when they passed the constitution on a lot of classification in Cook Country, they thought their industrial base couldn't leave. Okay? And really, they couldn’t over the next 10 years. But TMA used to have over half of its membership inside the city of Chicago and another 35% of it in Cook County. Today, over 55% of TMA's membership is outside of Cook County. Dan Proft: Is this one of the reasons why South Cook County, for example, is like a demilitarized zone? Steve Rauschenberger: Yes. You got bad tax policy combined with bad policing and corrupt politics–why would anybody make a 20-year investment in those areas? Dan Proft: When you could skip over to northwest Indiana. Steve Rauschenberger: Yeah. Or safe and dependable DuPage or Kane or McHenry or–I mean, counties where there’s still at least a political process left. Dan Proft: And the irony, of course, is in South Cook County. Most of those communities, you get into the south suburbs. Most of those communities are majority-minority communities. Steve Rauschenberger: Yes. Dan Proft: Who gets hurt the most? It's African-Americans and Latinos that live in places like Phoenix and Posen and Alsip and Blue Island, Harvey. Steve Rauschenberger: Yeah. And they're stuck. I can't blame my members, I don't know why anybody would risk the kind of political and financial risk that it would take to locate in southern Cook County. Everybody that I know that's looking and does not look in Cook County. Dan Proft: So what does changing that property tax class system classification look like because I, as a Chicago denizen, I like being subsidized by the business community so I pay a lot of property taxes. I pay high enough property taxes as it is. So, I like them as somebody else paying the fray. I'm just another rent-seeking like everyone else. Steve Rauschenberger: Everybody in the state of Illinois pays too much property taxes. I used to sit next to [inaudible 00:17:10]. She had a house– Dan Proft: From Quincy. Steve Rauschenberger: In Quincy, right. She had a house in Quincy. She showed me pictures once. That house would have paid maybe $7,000/year property taxes in Kane County, and at my recollection is she was paying $1,500 or $1,800 and was astounded her property taxes were high. I mean, everybody's taxes are high even if you don't compare them to somebody else's. What they have to do, I think, in Cook County, is we got to freeze the levy and commercial and industrial property, okay, and over the next 10 years, let residential catch up. Okay? And that means controlling the expenditures and asking Cook County to cut back on patronage. Dan Proft: But the problem is how tough to sell that is because you have people–communities in south Cook for example, but not just south Cook–think Rockford–these places where manufacturing has left where they're paying for their home, not 2 times because of their mortgage and the interest of the mortgage, but 2 ½ to 3 times because of the property taxes. So now you're saying–and you got to level up the residential over the next 10 years or 15 years or 20 years so that you can pay for it four times. Steve Rauschenberger: And you can't do it without going after the corruption in local government in parts of Cook County. I mean, it's really nice to pretend the local government's not a problem in the state of Illinois. The community colleges are nothing but really true blue mission-oriented organizations. But it's simply not true. We pay too high a property taxes in general in the state of Illinois. But in particular, manufacturing does. But I mean, it's okay. We can continue the current tax policies and just watch the productivity and those employment-based leave. And none of these is going to be easy. I've talked into a social service director from my Elgin, my old district. She wants to believe somehow that there's just one more negotiation and it's all going to be okay. And I said, "Karen," I said, "you don't realize. This is Detroit." I mean, there's no fix for this. I mean, you raised the income tax back to–I don't know, 5%, 6%, 7%. It's not enough to fix the problems in the state of Illinois. Dan Proft: Well, I mean, Karen Lewis and others suggest the problem is the flat income tax. It needs to be graduated. Maybe throw on a LaSalle Street tax on financial transactions. . . Steve Rauschenberger: Let's move the exchanges out. I mean, let's get rid of those. Dan Proft: Yeah. Steve Rauschenberger: There's no sense having that productivity in downtown. Dan Proft: And burden. And all the insurance companies and financial services companies along with them, let's get them out of here. Steve Rauschenberger: Yeah. I mean, let's make sure we close the door in any opportunity. I mean, it is a pattern. Watch–you look what Detroit did as it drove population out. Now Illinois, following Michigan, I think, are the only two states in the nation that have lost population since the last census. Dan Proft: But here's the rub: everybody gets mailers in their mailboxes come election time to say their state representative held a line on property taxes. They support a property tax caps, they froze property taxes, now, your property taxes keep going up, but I got my legislator, my state rep and my state senator saying they froze property taxes, they supported the caps, and so they're providing property tax relief. Steve Rauschenberger: I just wish people would look at those mailers the same way they look at the ones for hearing aids, the same way they look at the ones for the stoves made somewhere in Amish country that heat your house without cost–I mean, we all get mail offers and emails that tell us, "Oh, click on here. You happen to win the U.K. lottery." But we don't believe them all. People ought to just look out and take a look at what's happening in their community and vote what they see instead of– Dan Proft: And more like the e-mail you get from the Nigerian prince. And it's got $20,000,000 you need to hold for him and he's going to cut you in on that. I mean, that's kind of what it is. Steve Rauschenberger: Yeah, it is. I mean, we do these mailers–Ken Dunkin goes from being the darling of Mike Madigan to suddenly, he's a felon who's threatening to–I mean, now that's 20 years ago. But I mean, when does a credibility piece kick in where it's like, "I don't believe anything that people put in a mailbox in four colors." I mean, that's what I'm waiting for. Dan Proft: Well, so on property tax caps. Because there has been tax property capital legislation and property tax caps imposed. So why aren't property tax caps property tax caps? Steve Rauschenberger: Because they're built just like our campaign finance law with so many back doors that they don't mean anything. They don't hold the line on anything. The fundamental problem with our property tax or the units of government that are spending it–72% to 75% of everybody's property tax is going to their k-12 school system. I mean, shouldn't we start asking for some accountability? Dan Proft: Yeah, yeah. Steve Rauschenberger: Okay? The numbers back when I was in office were we spend more GNP k-12 than any other country in the world except for Finland or Sweden. We spent twice as much, general–gross national product on k-12 as countries like Japan. Now, there's differences between Japan. It's a homogenous society but racially, they're all the same. There's a lot of differences but we can still I think ask to hold k-12 accountable. Our k-12 system in the state of Illinois, I think, is one of the least accountable systems. We have over 890 school districts administering the students, nobody knows who's making decisions or how, we have professionals paid to work 177-day school years. Our school year is 10 to 15 days shorter than any other developed country in the world. I mean, why? Do the kids need to know less today in the United States then they did…? We have shorter school day of any of the top 20 industrialized nations in the world. Dan Proft: And you're fond to say that we still run school systems the same way we did when Harry Truman was president. Steve Rauschenberger: Yeah. Dan Proft: That was a while ago now. Steve Rauschenberger: Yeah, he would recognize the place except for a few laptop computers and iPads laying around in the place. I mean, we're still teaching Socratic method. What we know about kids. I mean, what we should know from all the brain development is people learn, and kids learn extraordinarily well. Okay. When they're motivated and they want to, I mean, they don't have any trouble picking up the apps on the iPad–stuff that I can't figure out. 8 and 10-year-olds know–I mean, somehow, intuitively. So why haven't we made any progress on how we share curriculum or teach people skills? And turning schools into social service agencies and try to monitoring microaggressions and regulating the bathroom use of transgenders–I mean–I am not surprised that the adults running school districts are a little discombobulated. I mean, they're worried about being sued for not letting Cindy, who used to be Steven, into the right locker room. I mean, I don't know. Dan Proft: Whatever Cindy's self-identifying as today. Steve Rauschenberger: Yeah. And so the federal government's main thrust is to regulate their, I don't know, their moral vision on school districts instead of asking why we don't have better academic achievement. Dan Proft: So worker's comp, property taxes, another cost-driver from manufacturing that could be different than it is without endangering workers or otherwise being unfair to people on the employment side. Steve Rauschenberger: Well, the general tax climate, I guess I would say. This idea that local taxes aren't carefully looked at in the state of Illinois, school districts aren’t reviewed, our schools in Illinois, for the most part, do not teach industrial arts anymore or any kind of practical–I mean, we have to have a major program to reintroduce STEM which is science, technology, and mathematics to schools. I mean– Dan Proft: That's something else that everybody's supportive of, rhetorically. Steve Rauschenberger: Oh, yeah. Rhetorically. Dan Proft: Right. Steve Rauschenberger: Yeah, so we were going to bolt that on to the end after we do transgender studies and. . . Dan Proft: Well, but don't you worry we won't have enough kids on track to be poetry majors at Northwestern? Steve Rauschenberger: Listen. I think there's a shortage of baristas and I think Starbucks knows exactly what they're doing. Dan Proft: Yeah. Steve Rauschenberger: They're getting college graduates baccalaureates and debt to come in and make mocha lattes. Dan Proft: So on the tax structure, generally speaking, you're talking about personal income tax, the corporate tax– Steve Rauschenberger: The biggest single piece of property taxes. If you really take a look at the income tax in the state of Illinois, at the current level, they're not that big a problem. Dan Proft: But you have to look at it in context of the overall tax burden. You can't just say, "Oh, we have a low flat rate compared to everybody else. Yeah." And then we wind up, according to the tax foundation, with the 5th highest overall burden. Steve Rauschenberger: Right. And we have the highest or second to highest sales tax in the country. Our property taxes are 3rd to 5th, depends on whose score you used. So, it's a combination of those taxes that make us less competitive. What people don't realize today is the CAD/CAM, the specifications to make a manufacture part now are shot out on the Internet and received by companies all over the world. So in China, in India, in Mexico, in Indiana, Texas, Ohio–every place. So my members get these designs in diagrams and have to price them out and compete worldwide. Now we've got some advantages if it's an American manufacturer. Our shipping cost might be less. Depending. So all of those tax burdens that Illinois manufactures, Illinois employers–not just manufactures because employers in general pay–then other people don't have to pay end up as part of their price bid. They have to stay in business. Dan Proft: If only we could take a page out of Donald Trump's book and impose tariffs on any company that leaves Illinois to try and sell their goods back into Illinois, then we'd be in business, right? Steve Rauschenberger: Exactly. So if you're a free trader and you believe things ought to go where money is best appreciated, you're going to say goodbye to manufacturing in the state of Illinois slowly. What's amazing to me is one time, TMA had maybe 3,200 members. Today, we have 900 very bright robust manufacturers. They figured out that the space between the elephants–because my guys make a piece that goes to somebody else that makes a part that goes into a trust. Dan Proft: Second and third-tier supplier. Steve Rauschenberger: Right, right. They're supply-chained people. Dan Proft: Yeah. Steve Rauschenberger: So it's down to tenths of a penny. So everything we do in this state of Illinois whether it's bad roads, or bad politics or bad tax policy–in the end, costs them some percentage of the bids they put out. Dan Proft: So are we going to have it where you have a concentration of the small to mid-size manufacturers that are left? It's going to be in the largest contiguous industrial park in the world in Elk Grove Village. But it's going to be surrounding O'Hare because of the logistic advantage that that provides to be close to O'Hare for shipping and so forth. And for travel as well. It's going to be ring suburbs around O'Hare and that's about it. Steve Rauschenberger: Well, you're going to see–continue to see any place on 294. Any place on 355. I mean– Dan Proft: Main quarters. Steve Rauschenberger: Yeah, yeah. Main corridors is still pretty good for manufacturing. And access to jobs. I mean, work force is the biggest single challenge my members face. A bas as tax policy is, it's workforce that's the bigger issue. Dan Proft: So let's talk on the kind of the supply side. The supply of labor. You mentioned not enough apprentice programs in the high school level. Community colleges sort of filling that gap. You're rolling your eyes, maybe not. Steve Rauschenberger: Only if they get a federal grant and somebody begs them, they'll put some classes in that don't lead to a degree or don't lead to a certificate. Dan Proft: So those community colleges. Because, I mean, this is one of the selling points especially for workers who have become obsolete or what they used to do is obsolete. They need to be retrained so they can operate successfully in the new economy, the technology that's in manufacturing. You're saying that community college is as good as they are–open enrollment, lower cost than going to four year-university. Something like that. But they're not where they're need to be. Steve Rauschenberger: They're still in love with the baccalaureate. With two years here and two years at U of I, or three years here and one year at U of I. This idea that baccalaureate degrees are the ultimate expressions of society's investment education. It's a terrible mistake for a lot of people that are technically proficient in good hands-on. Dan Prof: Yeah. Steve Rauschenberger: You know, there are great jobs in manufacturing that pays 75, 85, 95. We have mold makers make $125,000/year that work at TMA. Now, starting wages are $10, $12, $14/hour. You work out well, in the first couple of years, you can be $18 or $20/hour. So it takes a while to get there. You have to learn the skills, but– Dan Proft: But coming out of high school or coming out 20 years old with an associates from Harper or somewhere else where you got a skillset that is applicable in manufacturing, you start to make pretty good money at a pretty young age. Steve Rauschenberger: Right. Or you get out of U of I and you got $65,000 worth of debt and you end up as a copier salesman. On commission, trying to get people buy copiers from you or working as a barista or–I mean, this idea that we don't need people who understand how to work with their hands, that understand how to work spatially with things, is a terrible mistake. Real wealth in the society comes from mining, manufacturing, and agriculture. When you produce something, the rest of it is all trading dollars. I mean, at the grocery's retail–and I was in retail for 20 years, I'm no disrespector of retail, but retail your trading dollars around. I mean, who gets the sofa and who gets the check? You're not creating any wealth. Wealth is created in manufacturing, it's created in extraction, in mining and– [cross-talk 00:31:00] Steve Rauschenberger: Yes. So the reason Illinois has done better than most of the rest of the country over the last 50 years is we still have 4 or 5 of the top 10 manufacturing zip codes in America. But little by little, Springfield's going to choke those right out of Illinois. Dan Proft: So 15 years ago, more than that now, one of my stints in state government was running a grant program that the state provided for small to mid-sized manufacturers to do worker training or retraining. Things like [inaudible 00:31:30]– Steve Rauschenberger: Right. Dan Proft: But also specific machines. They buy piece of equipment– [cross-talk 00:31:35] Dan Proft: . . .plastic injection molding or CNC. Whatever. The digital lathes and stuff as–I mean, this is a long time ago. 15 years in terms of technological innovation is an eternity. Steve Rauschenberger: Right. Dan Proft: And it was amazing to me, as somebody who has no technical proficiency, whatever, I'm one of those poetry majors. All of the cool things that are produced–and it's one of the–all clichés are true–a million ways to make $1M in America, because they're making screws and bolts and ties and machine parts, right? Steve Rauschenberger: Right. Dan Proft: And it was fascinating to me to see all of the cool, interesting things that people manufacture around the state. Because part of the grand process, the application process for me was to go do a psych visit to make sure it's not a P.O. Box and make sure everything's on the up and up, right? Steve Rauschenberger: Right. Dan Proft: And it was such an eye-opening experience to me. I almost wonder if we should pass legislation to mandate that every legislator would have to do what I did–go visit 150 manufactures around the state in the course of a year to understand exactly what they do, how important it is, what the opportunities are, and what the net benefit is not only to that company and to those workers there, but to the community and to the region, to the state. Steve Rauschenberger: Today's manufacture looks today like a clean room did 15 years ago. Dan Proft: Yeah. Steve Rauschenberger: Okay, their epoxy floors, they are spotless, they are full of safety equipment. One person generally runs between two and seven machines. Nobody's standing there, putting parts on and off CNC...you can't afford that in the United States. Dan Proft: You got to use this. Steve Rauschenberger: Exactly. I mean, all of that really low-cost, low-value manufacturing's gone to Mexico or to China. And you know, God bless them. The people still manufacturing in the state of Illinois are brilliant. They are bright. They figured out ways to be add-value and it–something to the process that keeps them competitive even though they pay a higher tax burden, they pay more for employees than other places, and they have infrastructure challenges. Dan Proft: I still am trying to wrap my mind around this. The jobs that pay the kind of money you're talking about, for our kids–I mean kids, young people that are teenagers to early twenties coming out, and manufacturers go to Harper College or COD or wherever and say, "Oh, I got opportunities. I got openings. This is what we do. This is what we pay. This is the trajectory. By the time you're 30, you're going to be doing better than just about all your friends unless they're making apps, unless they can code at over 1871 or something." I mean, it seems to me like both the young people, and maybe because they don't know as much, but the leadership of these institutions and the faculty–just shrug their shoulders and say “we want more Com Majors.” Steve Rauschenberger: Let me go with the path of least resistance. So what we've decided the TMA part of our goal is to begin to target parents, to talk about career paths for their kids because you get a high school kid who is good in Math, who is good with his hands, who likes to be involved in manual arts. But I mean, if his parents think he ought to go onto Harper and then onto Northern Illinois, or think that he ought to go to Northern Illinois University, you're not going to win that battle with $2/hour. So we're starting to figure out how to talk to parents. We've had 20 years of pretending that manufacturing was gone in Illinois. We contacted some of those state reps and state senators when we were doing our scorecard, and some of them said things to us like, "I thought all manufacturing was gone in Illinois. I didn't realize that it's still an important part of what we do here." I mean, there's this, just this– Dan Proft: That’s almost more disturbing than pursuing policies that just–I mean, that's probably the most disturbing reaction I think I could imagine. Steve Rauschenberger: Yeah. Sometimes, they're well-intended people. I mean, I think they value their jobs too much. Maybe we'd all be better off with term limits because if they weren't worried about getting reelected, maybe they'd be thinking about work comp that was good for injured workers instead of work comp that got them contribution. Dan Proft: Or maybe they should be making what? An apprentice is making–maybe they should make it $8/hour to start, too. It's a little bit less attractive to be there unless you're going to do something. Steve Rauschenberger: Well, yeah. But I mean, they'd never stand because we–you have to produce something in manufacturing. At the end of the day, there's got to be a product. There's got to be something you can sell to somebody else. The sad part about politics and higher ed and a lot of the institutions that we've created that we're pouring wealth into is there's no result at the end of the day. They don't want to be measured. I mean, every time there's some kind of standardized test measuring high school graduation accomplishments in the state of Illinois, in three years, they have to redo the test. Because they can't stand the results. It's like clockwork. You go back 20 years–every 4 to 5 years, we have a new standardized test to measure competency of graduation from our system because the test began to show that we're not achieving anything. ACT and SAT have been recalibrated every 5 years because they don't like the results they're getting anymore. So pretending, okay, that you've got an outcome is not the same as manufacturing which is why very few of the legislators that do very well in manufacturing. Because you better have a product that your costumers are willing to accept that meets specification that serves a need. Dan Proft: So let's talk about state government because the 15 years you were in the General Assembly as a state senator, just about everyone can see that the point–this is very much like Scalia. Even people didn't agree with you, I said, "This is the brightest bulb, one of the brightest bulbs. One of the brightest bulbs you had a long time." You were the chairman in the senate finance community so you were like, intimately involved in the budgeting process. As that for the backdrop of 8 months without a budget and really, as you kind of alluded to earlier, 14 years without a truly constitutionally balanced budget. What should people understand about a budget deal, about state finances, about what the fundamental problems are in Springfield when it comes to making ends meet for these programs that people want, where we spend most of our money–K-12 education, Medicaid, pensions, and infrastructure, transportation infrastructure. What should they understand that they don't? Steve Rauschenberger: Well, I think the one thing I tried to communicate when I do Kiwanis or Rotary Club is that there's no linear solutions any longer. You've allowed this system to be corrupted for so long that you can't fix anything easily anymore. Revenue doesn't solve the problem. They prove that with the last general income tax increase where they dumped $2B extra revenue dollars into a system that's– Dan Proft: Annually. Steve Rauschenberger: Annually. The programs that operate in Illinois to deal with things like Medicare and medical treatment of the disabled and–the programs are broken themselves, okay? They're layered with incompetence, there's patronage involved. I mean, you have to programmatically look. We can raise the sums of money necessary to make sure that disabled people get treated right, to make sure that parents with aging out, disabled children who did the right thing 20 years ago and kept their kids at home–now as they get 70 years old and they've got a 190-pound son who needs full-time care. They need to know what happens when I die. What happens when I'm too old to take care of them. And state government answers– "Oh, we don't have an answer." Because ASFCME, hasn't given us one yet. I mean, we owe people a much better job, but you can't fix any of that until you get into to the programmatics. People say in Illinois that we're starving the hospitals. We're not paying enough money to the hospitals. Dan Proft: Searching Medicaid reimbursements. Steve Rauschenberger: Yeah. Medicaid, Medicare, private insurance. But you tell me why then are there 9 hospitals under construction right this minute in the state of Illinois. Why are the bond holders lending money to hospitals to expand infrastructure when we already had too many beds? We built the hospital system in the '70s for 5 and 7-day appendectomy stays, postpartum stays–could be 7 to 10 days. But we don't need that anymore. So we had excess roof line and medical care today. So are they taking roof line out when they had these new hospitals? No. I mean, we are putting too much cash into the system to have to spend it. They're not for profits. So when children's memorial has excess revenue, they can't pay it out to shareholders. They can't buy a shipping company. They can't move it–they have to spend it inside the system or admit they're being overpaid. Dan Proft: And then the answer from the Democrats, like Lisa Madigan, is to impose more– [cross-talk 00:40:32] Dan Proft: Well, in taxes, but also, impose more restrictions with respect to like, charity care. Steve Rauschenberger: Yeah. But it doesn't make any sense. We got to get to the point where we pay the right rates for medical treatment. In the state of Illinois, there hasn't been any work done on the Medicaid rate since 2001 was the last time anybody took a look at Medicaid. Dan Proft: And here's the thing: I mean, it's funny, people–"Medicaid, it's not sexy to talk about. A lot of people don't have any experience with the Medicaid system, fortunately, for them. But it turns out, there's 2 million out of 13 million Illinoisans that are Medicaid eligible. Steve Rauschenberger: Yeah. Dan Proft: So a host of people have real experience with the Medicaid system and it turns out to be the worst quality healthcare that you can get. So all of the people that don't experience don't have to experience the Medicaid system but think that they are being so noble and taking care of their fellow man by supporting ever-expanding sums of money pushed into the Medicaid system. It turns out that they're just perpetuating a system that actually victimizes the people that are trying to help. Steve Rauschenberger: That's what I would tell you. And until you get to the core of how the aging program doesn't work, how the Medicaid program doesn't do the things that's supposed to any more than the work comp system–it takes care of injured workers. These are all about connected insiders and people who benefit from the status quo arguing for their piece of the pie. And until we kind of break that mold, and that's why I was kind of excited when we had an outsider elected as governor thinking, Boy, let's bring some bright people and let's take a look at where Medicaid works. Let's take a look at where work comp works. Let's take a look–I mean, other places are getting it right. State government actually works on about 40 of the 50 states pretty well. It’s just in Illinois were the poster child for state government that is so self-focused on the politics and the fund-raising and the reelection. I mean– Dan Proft: And the distribution of benefits. I mean, Blagojevich, people forget this because they're so focused on–I got this thing that's f’n golden piece of his impeachment. They forgot that one of the other charges for which he was impeached was illegally expanding the Medicaid program to try and make it a middle income family entitlement to curry votes. Right? Steve Rauschenberger: Yeah, buying votes with programs. Dan Proft: So the Medicaid system has been expanded beyond all recognition in terms of the vulnerable populations that was intended to serve the disabled and pregnant women and injured children. And so people are on Medicaid right now, accessing Medicaid, and that's only going to expand under the ObamaCare expansion of Medicaid that were never intended to be served by Medicaid. We can't finance the system now. You have people that are truly in need, that don't get access to health care because we can't finance the system and we don't pay our bills and so hospitals like University of Chicago stopped accepting Medicaid patients. So, I mean– Steve Rauschenberger: What are we doing? Dan Proft: Yeah, yeah, yeah. Steve Rauschenberger: If you got people showing up at 7-eleven to buy milk, okay, and you want to do a program for poor people to help them get milk–is it a good idea to go next door to the 7-eleven, buy a building, put a roof up, hire people to go sell them milk? Okay? No. The smart thing to do is go where they're already going, okay, and figure out a way to get them their milk at the 7-eleven, and the infrastructure you already own. And the medical system, we've encouraged the development of clinics right next to hospitals where we build new roof line, hire new people to take advantage of great rent-seeking–rate disputes where if you're an FQHC in the state of Illinois, you get to pay the usual and customary to see a patient. If you go to the emergency room, you're only getting the Medicaid rate. So we've incentivized hospitals to support the development of a clinic right down the road, doing exactly the same thing in the emergency room. Dan Proft: We started to do a redetermination of Medicaid roles under Quinn, and it was projected by those that began to–the consultant they brought on to do this, as well as the Kaiser Foundation. That if you remove people from the Medicaid roles who are not eligible under the old Medicaid threshold of 185% of poverty level–I think that's what it was–that you could save somewhere between half a billion and $750 million annually. I mean, that's not the whole solution. Steve Rauschenberger: Right. But that's a big piece of it. Dan Proft: That's a big number. But hear again, nobody wants to have the mailer that says, "You're throwing vulnerable people off the Medicaid rolesxs." Steve Rauschenberger: So maybe the mailer is the problem. Maybe we need to tell people– "When you serve in Springfield, you got 10 years." That's it. Steve Rauschenberger: When I ran for office, I thought, that term limits were a bad idea. While I was in office, it seemed like a cheap and easy out in the '90s. Dan Proft: Right. Steve Rauschenberger: But looking at the level of corruption we have in Springfield today, the inability of Republican or Democratic leaders to see beyond the next cycle. Maybe term limits is a dull knife. It's not the right scalpel, but I become a radical. I'm pretty much willing to try anything. Because what's happening now doesn't work. I mean– Dan Proft: Well, maybe, I mean, again, looking at other states, and I know you do a lot of work for national conferences of state legislatures, so you get around the country, and you see, as you said, models of success that should be replicated versus failures that should no longer be perpetuated like here. Maybe it's like Texas where the state legislature meets once every two years. You essentially get a stipend. It's mostly ranchers and businessmen in the General Assembly, not lawyers and insurance salesmen and professional politicians. And boy, it turns out that that generates very different outcomes whether you serve 2 years or 10 years or 15 years. Steve Rauschenberger: And the first step of the reform ought to be the end of legislative pensions. I just had to take it, it’s the wrong- Dan Proft: And insurance. Steve Rauschenberger: Yes. I mean, those are the wrong incentive. They perpetuate employment in the legislature instead of service in the legislature. I stayed, did my 10-year stint, and ran once more for the new cycle when the Democrats won the map, then tried to offer a state-wide alternative to the Republican Party. I was not successful, then left. I mean, that ought to be more the model. It ought not to be 20, 25, 30 years of service, and you certainly can't afford the Speaker of the House for 38 over the last 40 years. I mean, there's proof-positive of some kind of change as important as Mike Madigan. Dan Proft: Yeah, right. I mean, and certainly, Madigan and Cullerton, I think, 30 years, 40 years is enough for probationary period to make an assessment. Steve Rauschenberger: Let's just take a look at the results of Mike Madigan's 38 years or 40 years as Speaker of the House. Where is Illinois today? Where was it when he started as the speaker? Are we better off today? Dan Proft: But now, the problem, one of the problems is despite where we are, you have Republicans in the super minority in both Chambers. Isn't that a commentary? And President Obama recently in town to deliver his no red American no blue America kind of sawing sawdust a bit, bringing us all back to 2004, wasn't that fun. And I had this picture that was tweeted out by Kirk Dillard, former state senator, two-time candidate–Republican candidate for governor, long-time Republican legislator from… Steve Rauschenberger: DuPage. Dan Proft: Yeah. From the leafy suburbs of DuPage. And he tweets out a picture that shows him in front of President Obama's motorcade saying, "The only thing faster than the RTA" –of which he's now the chairman. One sinecure to the next. "The only thing faster is the president's motorcade. It was such a great fun to be able to visit with President Obama" –who he endorsed in 2007 in advance to the Iowa caucus. "so fun to visit with him in the motorcade on the way to his glorious speech before the noblemen and magistrates in Springfield." And isn't that the problem of Springfield from the Republican perspective that you've had Republicans at the leadership level complicit in Blagojevich and Quinn, and frankly, even Thompson and Edgar and George Ryan before them, complicit in these big government gambits that have put us in this position we've described. Steve Rauschenberger: Yeah. I think so. I mean I think it's really clear that particularly, the Republican leadership and some of the Republican donors don't understand that this is not a–it's not a zero-sum game. I mean, you don't have to have the kind of leadership we have in the state of Illinois. I'm just disgusted by the fact that for the last 10 years or so, I don't remember a single earth-shattering public policy alternative offered up by the Republicans down at Springfield. It's not like they said, "You know what? Public schools don't work. We know they don't work. Here's four ways we can make them better." Because they're afraid of a mailer. I mean, they don't do public policy because public policy might put their districts at risk. Well, listen. When you're down to, I don't know. What are they down to? 17 or 18 or 19 state senators? Dan Proft: 20. 20 out of 59. Steve Rauschenberger: Yeah. What have you got to lose? I mean– Dan Proft: Those 20 Republican senators have something to lose. But here's the thing. They don't because you're basically down to base camp Republican… So all those Republican Senators that represent Republican districts with one or two exceptions– Steve Rauschenberger: 70%. Dan Proft: –to exceptions, they're not in seats that are at risk. They're not at targeted seats. Madigan could go all day long, at least right now and into the foreseeable future. In most of those senate seats are Cullerton could and Madigan in the house, most of those rep seats. Steve Rauschenberger: Yeah. Dan Proft: You're not going to take out Jeannie Ives in Wheaton, so– Steve Rauschenberger: Yeah. So why are only just a very few of them, Jeannie Ives is a great example–talking about alternatives to the Mike Madigan house which doesn't permit members introduce bills or having called on the floor for a vote unless Mike Madigan approves the bill individually? Why aren’t they talking about alternatives to a K-12 system that really isn't producing despite the amount of money we're dumping into? Why don't they have a vision on waves to change the Medicaid? Dan Proft: So why don't they? Steve Rauschenberger: Intellectual sloth? Dan Proft: Do you think it's just vacuity? It's not something more pernicious than that? Steve Rauschenberger: I know a lot of them, okay. I don't think– Dan Proft: No, I know. Everybody's a nice guy. Steve Rauschenberger: Yeah. Dan Proft: And a nice gal. Everybody's nice, and then they go to Springfield and do a lot of not nice things. Steve Rauschenberger: Yeah. Well, it's just they have bought in to a system that this is the way it's got to be, that Mike Madigan should control the state of Illinois because he's got the votes. I mean, I had them come out–I had a group of state reps. Great state reps come sit with me out at TMA and we talked for two hours about ways I would've solved the budget if I were in their shoes now. I mean, kind of things to put out there. The Democrats, make the Democrats answer for what we're doing. They're all excited. I mean, they vibrated, they left, and two weeks later, it's over. I mean, it's such a–I mean, I don't know how to–it's Stockholm syndrome. I mean, there's some good people down there who are trapped by a system that they think is valid, but it's not valid. This is worse than what they were doing in Detroit 15 years ago. I mean, the emperor has no clothes. I mean, we are so far past the constitutional requirements that the Illinois Constitution–the legislature should be indicted. Dan Proft: So. [cross-talk 00:51:44] Dan Proft: Under RICO, criminal conspiracy. Steve Rauschenberger: That's right. Dan Proft: So if that's true and we're so far past it, we could have all the good ideas in the world–Rauner's turn-around agenda, your turn-around agenda, some facsimile facsimile of the two, and you can't move without numbers. You got to win elections, you got to have numbers. So what is the way out? Because good ideas doesn't seem to be the problem. It seems to be a lack of testicular virility, to borrow a phrase from our friend in prison in Colorado, or it's a personnel problem, it's a culture problem, it's all of the above. What is the way out? Because it can't–it's not putting together attractive five-point plans. Steve Rauschenberger: No, no, no. They don't need another white paper. I'm afraid Illinois is to the point where we need a Puerto Rico solution. I think– Dan Proft: You mean to become a U.S. territory and not a state anymore? Steve Rauschenberger: No, no, no, no. I mean essentially to file bankruptcy. Dan Proft: Yeah. Steve Rauschenberger: I mean, Puerto Rico is going through a very similar thing with one party controlled down there for 15, 20 years so they promised everybody everything and didn't deliver on anything. And then just kept borrowing money. The city of Chicago schools went to the bond market and paid 8.6%, 8.7% interest rate on a tax-free bond? Dan Proft: Yeah. Steve Rauschenberger: I mean, it is incredible. We are so far past with normal and the other 48 states that it's impossible to even explain to people. So I think receivership, we ought to be asking and requesting in Congress the right to. Because, I mean, Dan Proft: But that’s never going to happen because California, New York, Connecticut will be right behind us. Steve Rauschenberger: Well, maybe that's the reboot it's going to take. You take the blue states where they have spent the future for 25 years, where they had made pension promises that nobody reasonably can ever redeem. I mean, this is not about–can we dedicate an extra $500M or $750M or $1.2B to a pension system. This pension system is so far out of whack, it is unrecoverable. I mean, we are now in the TRS selling assets. Underlying investment assets to fund current retirees. And we've got this whole baby boom just beginning to retire. I mean, duct tape is not going to help anymore. Dan Proft: And did you see? I mean on that $725M CPS borrowed at the Sopranos rates, right? The balloon payment at the end, it's north of–it's $1.5B, roughly, at the end of this. So when are they going to come over that? They run $1B annual budgets deficits. . . Steve Rauschenberger: Already. Yeah. Steve Rauschenberger: Right. In addition to all of the legacy costs. Steve Rauschenberger: Somehow, that Springfield was going to see the wisdom of dumping another $500M that they don't have into CPS and what were they going to take that one from? Dan Proft: So, the answer is to redistribute from wealthy school districts. I mean, which was on the school's piece of it. Steve Rauschenberger: Yeah. Dan Proft: Redistribute from wealthy school districts to so-called "poor school districts." Poor school districts like the city of Chicago that spend more per pupil than Wheaton-Warrenville. So that's the solution. That's what Andy Manar, state senator from Decatur has proposed. And it's got some legs. It's got some support particularly among Democrat supermajorities. Steve Rauschenberger: Yeah. The brilliance of their public policy never ceases to amaze me. I mean, the idea that throwing everybody else into the kettle with CPS is a solution. Instead of dealing fundamentally. But nobody–when was the last time we heard a–they talk about school funding. Ask them to talk about school spending. What do school districts spend money on? Okay. Dan Proft: Isn't that the fundamental problem across all of these big-tickets in state government. Inputs completely disconnected from outputs. Steve Rauschenberger: Exactly. Dan Proft: It's just about what we pour in for those mail pieces and to television commercials and the like. It's not about what the outcomes are. The outcomes are–I don't know what they are. But the important thing is we keep continue pouring more money to schools. And frankly, even Rauner has kind of bought that lie to some extent. Let's push more money into the school systems without structural reforms. Steve Rauschenberger: Yeah. And that was the only thing I've been disappointed by. And maybe there’s some domestic politics that I know his wife is a big believer in K-12. I am, too. I think K-12 is important to America. I think a vigorous, high-quality K-12 system is important in the United States. I just don't think we have one right now. Dan Proft: Now, going back to just the politics of this, the Stockholm Syndrome, just trying to get a handle on this. And this is conversation that happens internally all the time and everybody's beset by it, myself included. But Rahm, is about as popular as the New York Mets in Chicago, right? I mean, his approval rating is approaching Blagojevichian territory. Steve Rauschenberger: Yes. Yeah, yeah. Dan Proft: Two west side Democrat legislators propose a recall bill, and who's on it? Very few Republicans. A few of the new breed, the new freshman Republicans that are conservative join with a couple of Democrat state legislators, not the Black Caucus, the Democrats. "Okay, they're beholding the Mike Madigan. They're beholding John Cullerton, I get it, so they're just going to do what they're told." Again, there is no downside why Christine Radogno in the Senate, why Jim Durkin in the House–the senate and house superminority leaders don't say, "Yup," in mass “We're taking a caucus position, we're going to support this even if it doesn't apply to Rahm, this term, we have recall at the state level for the governor, for state legislators, why wouldn't we have recall for the mayor and for aldermen in the city of Chicago? I mean, after all, the city of Chicago's largely financed by the state. CPS is. Steve Rauschenberger: Yeah. Dan Proft: So why shouldn’t we move in mass and they won't do it? Steve Rauschenberger: Yeah. I haven’t heard a single legislator talk about the new auditor general and his campaign problems. I mean, we have a new auditor general which was the one bastion all during the Blagojevich administration where I could get real data. I mean, the Blagojevich administration wouldn't give me information. His senate president Emil Jones wouldn't enforce my right as the director of appropriations for the Republican to get information about the budget after–trying to remember the name of the budget director– Dan Proft: Bill Holland. Steve Rauschenberger: No, no, no. Whatever. Dan Proft: Oh, oh, oh. Philon Steve Rauschenberger: Yeah. When Philon took over, Philon just shut down information to the minority party, and actually, to most of the Democrats, too. They weren't entitled information about the budget. I mean, it must have been the way they ran things when he was at the park district in Chicago. I mean, that was good enough for them's good enough for us. Dan Proft: Sure. Scaler. Steve Rauschenberger: So the only people we had, we had the auditor general’s office. So now, the auditor general retires after 20 years, pretty distinguish service, pretty square guy–we have a new auditor general, turns out he's got some real irregularities in his political campaign account that he won't answer for. And so, where's Christine Radogno who voted from him? Where's Durkin? Where are Republicans, saying “You know what? You want to be auditor general? You need to come clean on what your campaign finance statements are.” Those are public documents. Dan Proft: Who audits the auditor general. In addition to that, you have only nine. Again, those freshmen conservative and second term conservative legislators vote against him for confirmation. Steve Rauschenberger: Yeah. Dan Proft: It's a legislative move, it's not a governor move. Where's the due diligence in the first place? To know this was a guy who was– a mushroom down in south county for 20 years, spending money, didn't have very many races over the course of those 20 years, and we find out that he's spent $210,000 at a gas station in his district to maintain his car or cars. Steve Rauschenberger: Yeah. Dan Proft: I mean, that's a lot of money on a car. [cross-talk 00:59:33] Steve Rauschenberger: . . .new car every two years. Yeah. Dan Proft: You could buy a Bentley every two years. Steve Rauschenberger: Yeah. Dan Proft: Or just about with that kind of cash. In addition to meals at a restaurant– [cross-talk 00:59:42] Dan Proft: I mean, all of that stuff, and it's just like, "Well?" It's not a story because the Chicago Press corp. which is in the tank for the Chicago Democrat political establishment. They say it's not a story, so it's not a story. I mean, it just seems to me–you could have Madigan to borrow a line from Trump. Dan Proft: You could have Madigan opening fire on Michigan Avenue, and then people would say–well, I mean, if Frank Pearson is not going to write about it, it's not a story. Steve Rauschenberger: Yeah. I don't care whether it's a story or not. The one true source of data that the minority Republicans have had for the last 10 years has been the auditor's office. And so you're going to let this get turned over to a political hack who won't answer for what he publicly disclosed? Whether the Tribune writes about it or not–I mean, there ought to be bills introduced requiring him to disclose and to come forward or to resign. Dan Proft: Here's the thing– Steve Rauschenberger: Mike Madigan killed those bills. Mike Madigan defend his auditor general that he selected. Dan Proft: Not only that. How about this? The money that he spent which was essentially–I mean, I think, arguably, personal use, not reimbursements for legitimate campaign expenses. That's called tax fraud. Because it's personal income–Bill Beavers, a Cook County commissioner, went to prison for that. So why aren't you in addition to introducing Bill saying, "Hey, Zach Fardon, U.S. Attorney for the Northern District, why don't you take a look at this? This is Bill Beavers on steroids. This is Aaron Schock, Mr. Downtown Abbey, on steroids. Why should he get away with this?" Aren’t there legitimate questions that should be asked and answered. Why not have hearings? Why not do everything that you can to put a spotlight on this if for no other reason than to show separation and to show that Republicans are going to police what's happening in the General Assembly and state government, more generally, as well as ideally, maybe someday policing themselves? Steve Rauschenberger: Yeah. Exactly. A few times, I had the opportunity to watch on CSPAN or something questions with the prime minister. Dan Proft: Yeah. Steve Rauschenberger: And you go back to some of the legendary days when Thatcher stood and answer a question. In those days, the minority party in parliament had a shadow minister. Someone who knew each of the programs and government and was prepared to debate them with the majority. I mean, there's no–Madigan's never responsible for answering questions on what he does as prime minister of Illinois. The Republicans are not in a position and make no effort the last 10 years to offer policy alternatives to kind of win elections. The reason that minority parties, they win elections and parliamentary is they have alternatives. The Republicans haven't offered an alternative to the budget mess in Springfield since Blagojevich days. Dan Proft: So is part of it a personnel problem and you need new leadership in the house and the senate? Steve Rauschenberger: I think you need new leadership in the house and the senate. Probably need a lot of new members. Dan Proft: Well, I mean, now, to qualify this, your political judgment only goes so far. You did endorse me when I ran for governor. But four people think you're omniscient and you always exercise good judgment. Steve Rauschenberger: And I ran myself twice unsuccessful. Dan Proft: Right. Steve Rauschenberger: So, yeah. Obviously, I'm never good at this. Dan Proft: And so the last topic before we let you go back to trying to rescue manufacturing in Illinois. The electoral politics and the party. We've talked about the general assembly and the composition of it. You were seen, as I said before, and I mean I mean it genuinely, you were kind of a mentor to me back when I ran my first state-wide campaign, ran Pat O’Malley’s campaign for governor in 2002. And you were kind of like, "Okay. Let's actually understand how state government works." And so you were the guy that everybody went to. What about on the electoral side? What about the Republican Party in its previous, maybe even current iteration prevents talent from bubbling to the top. Prevents us from putting forward better state-wide candidates than we've had for the better part of the last two decades. As well as better legislative candidates. Steve Rauschenberger: Boy, if I had the silver bullet and I knew how to fix, and I would tell you. But what it might–my quick observation would be this: is that when I ran, the money in Chicago, the Republicrats, the Republican kind of sort of financial leadership who are only interested in somebody they knew, okay, never got past the idea that you couldn't just run this as kind of a consensus thing. They didn't realize that public policy made a difference. They always had the next four quarters, the next two quarters, the next two years in their sights. So I think we've lost a lot of emerging leadership out of the Republican Party in Illinois because the leadership and the donor base doesn't understand the difference between Rahm Emanuel and Jeannie Ives. They don't–well, they do. They actually understood–they like Rahm because they see him at the kind of places they have dinner. Where these people that are just talking about issues all the time or care about things that–they're just–they're icky. Dan Proft: Okay. Steve Rauschenberger: So we had this Thompson, groomed leadership that kind of sort of put up with Edgar. And we're a little dismayed by George Ryan, but tolerant. They kind of sort of thought, "Well, we'll see how it works with the Democrats in charge." But there's very little mentoring emerging leadership in the state of Illinois. And we don't have Koch Brothers. We don't have the kind of people who–in Illinois, in my opinion, the donor base that developed a vision and said, "We're going to support people as they make progress." Dan Proft: Do you think that's starting a change with the election of Rauner? I think there's some reason for optimism in that front. With Rauner as well as some of the people who finally said, "Well, this is ridiculous." And maybe, this idea that I support Rahm because I'm afraid of the worst, of what could be worst, just guarantees the worst. Steve Rauschenberger: Yeah. I hope so. And I'd like to believe in that, misleading myself, thinking that Rauner maybe is the beginning of a major change. Or worse though think for a minute. Rauner purchased the Illinois Republican Party for less money than almost anybody could've dreamed of 20 years ago. I mean, he installed the chairman, he whistles the tune, the legislature votes present when he tells them to vote present–I mean, unfortunately, Rauner, because of his background and his skillset is not the kind of leader that's going to rise up bright and fought for the people underneath him. I mean, it's a top-down I write the check, you do what I tell you. The kind of stuff you do when you walk into a screwed-up company and kicked the management out I get. But I'm not sure if it's strong party-building in the long run. I mean, I think the Republican Party’s got to go back to the grassroots, to the faith-based community, to the TMAs of the world, to the small businesses, to the small chambers of Congress talking about what it is we need in leadership and start bringing people out the way Georgia did 20 years ago and flipped that whole state around. All around us. Dan Proft: And tell them, "Oh, by the way, if you want this thing to be flipped around, you can't be an innocent by-stander in the sidelines. I know you're running a business, I know you're beset with kids going to school, and the day-to-day operation of your business. But we need all hands on-deck here." So don't say, "Oh yeah, he's got it." No, no, no. This is not a one-man job or–we need you engaged and involved if we're going to flip this thing around. So you need to tell your employees, "You better vote our collective pocketbook and be a little more activist than they've been." Steve Rauschenberger: Yeah. And they've got to talk to their employees. I mean, it's one of the battles we fight at TMA because there are members are not very political. We have a robust GRC, they contribute because we tell them it's important for them to contribute. We have a modestly little nice pack for a small association. But they don't want to talk to their employees about who to vote for. They don't feel comfortable telling people how to vote. But I mean, if we're going to change– Dan Proft: It’s like the difference between the Black churches and the Catholic church. Steve Rauschenberger: Yeah, yeah. Dan Proft: Maybe we should look at what somebody else has, again, a successful model that activates the people that looked to you for leadership and provide the leadership they're looking for. Steve Rauschenberger: And the part of the message I've been helping the TMA absorb over the last 18 months–this is not going to get better unless we are involved in this game. I mean, hoping that the great base is going to stumble on the solution down in Springfield or that all by himself, Bruce Rauner is going to infuse the General Assembly. So it starts with the scorecard. And we're going to call legislators to account. Suburban legislators have represent manufacturers in good areas–we're going to ask them, "Why is your score 60%?" "Why aren't you 100% pro-business and pro-jobs?" I mean, you want to be pro-middle class? That's about jobs. Okay. It's not about Illinois having the lowest workforce participation we've had in 30 years, you ought to be embarrassed about that. We just need to point out to people that these kind of things that retard job creation that lose us bids that mean that manufacturing doesn't take place here. That companies like State Farm begin to move their processing out of state. We're disinvesting. We're forcing disinvestment in the state of Illinois. Dan Proft: If you were advising Gov. Rauner on this budget impasse right now, what would you say to him regardless of the outcome in March, in November. Say you get out of the superminority house but you’re still in minority or still in the superminorty of the senate. What does victory look like for you short-term? Or should Bruce Rauner think victory looks like for him short-term like this election cycle and any budget deal that's cut. Steve Rauschenberger: Boy, I don't know. I don't. Dan Proft: Because it seems to be a part of the problem is I don't know that anybody says, "This is what victory looks like in this landscape." Steve Rauschenberger: Yeah. I been a little like, flummoxed or confused that even he might believe somehow that rolling the income tax back up solves his budget problem. I mean, his budget problem is so structural and so difficult that I don't know–that's why I don't want to think about a sovereign state filling bankruptcy. I don't want to be part of a state that does file bankruptcy. But I don't see any incremental pathway from where we are today as a guy who did budgets down there for 10 years to a balanced budget. I mean, you cannot account for the pensions, the unfunded debts that we already owe, the unpaid bills, and the trajectory of the programs anywhere under a 10% income tax. And that 10% income tax would have economic reverberations which should probably kill his collection. Dan Proft: So what Rauner's doing right now, basically, is saying, "Look. We'll pay money as we get it in per court decrees, and until Madigan and til, a lesser extent Cullerton, are willing to deal at least on some of the component parts of the turnaround agenda that we just will have no formal budget. Steve Rauschenberger: Yeah. I don't know that I have an alternative form. If he called me down and asked me what to do, I don't know what to tell him right now. I mean, this is not a sustainable system. It wasn't when he walked in the door. It just didn't happen in the 13 months he's been there. This is the outgrowth of the Blagojevich budgets. Okay? Where the General Assembly allowed on a roll-call vote for them to pretend they had $2.2B in revenue from a bond transaction that was a fake. I mean, they kept the lies 25 years arbitrage gains when they did that $10B bond deal and pretended that that was a revenue source and he spent it. And he built the base of his budget–so you got to roll all the way back to what budgets look like in 2001, 2002 and start stuffing in inside your revenue stream. Dan Proft: All right. I hear what you're saying. I should be looking for a bungalow in northwest Indiana. I got it. Steve Rauschenberger: Yeah. Actually, I told my wife, Florida. Dan Proft: He is Steve Rauschenberger, the President and the C.E.O. of the Technology and Manufacturing Association representing small and mid-sized manufacturers in the state of Illinois. Former state senator for 15 years. Been pleased to have Steve Rauschenberger as our guest on this edition of Against The Current. Steve, thanks. Steve Rauschenberger: No, I enjoyed it.

 

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