Narrator: Illinois faces a big challenges. Today we're about to hear a truly honest analysis of the problems we face. Equally as important you'll also hear an in-depth discussion of some practical solutions. This is your radio source for stories, the insight and the answers you won't hear anywhere else, not on the media and not coming from Springfield. You're listening to Illinois Rising presented by the Illinois Policy Institute. Now here's your host, AM 560’s Dan Proft.
Dan Proft: Thanks for joining us on this edition of Illinois Rising. Dan Proft here along Jacob Huebert, Senior Attorney at the Liberty Justice Center. Jacob, the city of Chicago has seen property taxes increase substantially, 20%, 30%, 40% with more in the offing because of course of the unfunded pension liabilities and the bankrupt school system and so on and so forth and so you have people wanting to take advantage of the sharing economy by participating in services like Airbnb where they can rent out their home and make a little bit of money and try and defray the costs of having to pay for their homes in Chicago now a third time because of their property tax burden and of course that looks like money to politicians. They want their piece of it and so the City Council in their infinite wisdom passed an ordinance imposing additional taxes on homeowners who participate an Airbnb. a 4% surcharge on short-term rentals on top of Chicago’s 17.4% hotel tax and other associated fees to dampen the enthusiasm for those who would like to participate in that sharing economy.
Jacob Huebert: Yeah, and not just taxes but also regulations, things they have to comply with, rules on whether they can or can't rent out that room in their homes. It’s a huge ordinance that this city has passed on this and not only does it cost you money in taxes, it costs you money and compliance making it a questionable whether this is going to be worthwhile for a lot of people now.
Dan Proft: The ordinance is 58 pages, more than 25,000 words as you said but of course the City Council had to pass that ordinance to find out what was in it. For more on the ordinance from somebody who actually read it, which distinguishes him from the City Council, we're now joined by Shorge Sato who is a Chicago-based attorney and has been looking at this matter with particular interest. Shorge, thanks so much for joining us. Appreciate it.
Shorge Sato: Thank you for having me, Dan.
Dan Proft: And so, you know, give us your interpretation of the ordinance and how it regulates what people do with their private property and their kind of ability to make it make sense to participate in the share economy through Airbnb and services like it.
Shorge Sato: Right. Well, we believe I that, and I’m saying we in terms of Keep Chicago Livable which is a non-profit we formed very recently in response to this Airbnb ordinance, we believe that there’s a fundamental right that all property owners, all Chicagoans, all Americans have a fundamental property right to have guests inside their own home.
Dan Proft: That's a revolutionary statement. That is an incredible statement. You are allowed to have guests in your home. Wow! All right.
Shorge Sato: And the city of Chicago is trying to regulate this and in fact this is, you know, not just a right. It’s an ancient and sacred tradition. It’s hospitality. It’s the definition of it of being able to have a guest inside your own home and what the city of Chicago has done is that it’s noticed this phenomenon of shared hosting sites like Airbnb, VRBO where people are making money on it because they're able to set terms up front about what kind of, you know, compensation for hospitality they would like and then out painting it all with the same brush as people who are running hotels. And I think they're Airbnb, you know, they do blur the lines a little bit but to say that everybody where the guests in their own home and invited guests that they’ve vetted and just because they have some terms that they agreed to upfront and because they met them on internet automatically is some business owner running a hotel is, I think, a bridge too far and infringes on some very fundamental rights of our ability to pursue happiness as well as our freedom of association and speech.
Jacob Huebert: Now there's some people on the other side of this issue. The people who own hotels and motels of course don't like Airbnb and people renting out their rooms because they’d rather make them pay a high rates to stay in their hotels and the city likes it when people do that because they charge, of course, our city has a very high hotel tax and so there's interests aligned against this and opposing those kind of special interests is often difficult because, you know, there's a few big hotel companies and there's just a lot of, you know, people who want to rent out rooms in their homes. It's hard for them to get together and organized but now your organization is going to be a voice for those people it seems like. How did you decide that you were going to go about it that way and how are you going to proceed with this group?
Shorge Sato: Well, this group was actually fairly organic. When the city of Chicago, when Mayor Rahm Emanuel announced that they were going to regulate Airbnb, I think a number of hosts were interested, concerned. I don't think the hosts object to the notion of some regulation but we all wanted to see the detail and there seemed to be, they seem to be very short on the detail and there were some protests and that's sort of where, which is sort of a remarkable thing in the middle of a day to have 200 people, you know, outside of the city hall council room taking their lunch break and then going back to their offices, it’s a remarkable sight. So I met some people through that, I went to those and then when they actually came out with the law, I read it and I was flabbergasted. This is this is a 58 page over 25,000 word ordinance that is a very difficult to understand. It’s actually very poorly organized regardless of the subject. You read this and it's not organized in a way that I think a person of ordinary intelligence could understand and even as an attorney, I was simply thinking, “Well, how can I help other hosts comply with this law?” and as I read through it, I realized that it was almost impossible for me to understand it. I've been an attorney since 2002, real estate attorney. I think of myself as fairly sophisticated in legal matters and yet I couldn't make heads or tails of this law.
Dan Proft: And by comparison the Chicago ordinance governing hotels is two pages and 1,000 words.
Shorge Sato: Exactly. Yeah, and that's sort of the rhetoric was oh, for the hotel industry is that we want to level the playing field. This is not a level playing field. I mean Airbnb hosts are charging or paying the same amount of the hotel operator tax as the hotels and there's an additional 4% surcharge that the city of Chicago decided to impose which, you know, arguably violates the home rule provision, the authority of the home rule authority as well, you know, authority provision in the Illinois constitution.
Dan Proft: Yeah, right.
Shorge Sato: …problem about how they did this. They just, they did an income earnings or occupation tax which the city of Chicago can't do without the enabling legislation from the Illinois general public. I haven't seen a state law that says they can do this. So operator tax is 5%.
Dan Proft: Yeah, and I mean of course the ordinance is meant to be unintelligible. I mean that's the whole point. The law is unknowable so you no longer have the rule of law. That’s the story of the city of Chicago but I wonder this too. Part of the ordinance as I understand it is essentially the city kind of de facto herding homeowners into neighborhood co-ops like I think of, you know, Soviet-style agrarian cops where you have to effectively share the number of days that you can rent out your home because there's limitations by block?
Shorge Sato: There are limitations based on the type of property owned and whether it’s your primary residence so an example is you could do everything you want to try to comply with this law but if you live in a particular kind of building, a two to four dwelling in a building or over five dwelling in a high-rise, you could do everything you can to comply with this law but because of something that your neighbor does, and it doesn't have to be on the same site, it can be on HomeAway, FlipKey, VRBO, maybe you’re on Airbnb and there are max cap limits on the number of units and so there are six units registered and if a seventh person jumps on apparently all seven are illegal at that point and all seven are subject to a $3,000 fine if not more. That's extremely troubling to me. That’s like if you parked on the street legally and because somebody else parks somewhere else, all of a sudden both of you are getting $3,000 parking tickets. That seems crazy to me. And the city had admitted it. They have no idea how this should be enforced. Here's the other thing that really should blow your hair back. So they have this very long, very confusing law but there's a big loophole in it and one of the biggest loop holes is that the Commissioner can make an adjustment if there are certain dwelling caps for instance. The Commissioner to make an adjustment based on number of very big factors that they may consider like the relevant geography, whatever that means, and the law says that the Commissioner must solicit a recommendation from a local alderman.
Dan Proft: Yeah, right. So this is protecting the feudal system and protecting their carve-out discretion, right? I mean this is just like every other rent-seeking, inside-dealing ordinance in the city of Chicago and with the 50 feudal lords and the tiny dancer on top.
Shorge Sato: I've never seen a law that sounded like this. It’s almost they’re admitting that this law is half-baked and they don't understand it and so it's a check back with me but it's not check back with the whole City Council, it’s check back with one alderman. You know, what's the separation of powers here? I mean the legislators passed the law, the executive branch enforces the law. You don't check back with one legislator say is the law being applied correctly? That’s a huge problem in terms of discriminatory enforcement, rent-seeking, pay-to-play, friends of the alderman get to do it but people don't.
Dan Proft: Oh, Shorge, you and your antiquated notions of separation of powers and representative democracy. Come now, come now. Shorge Sato, he's a Chicago-based attorney. The organization Keep Chicago Livable, KeepChicagolivable.com. Shorge, thanks so much for joining us and educating us about this ordinance. Appreciate it.
Shorge Sato: Thank you, Dan.
Narrator: We now return to Illinois Rising, presented by the Illinois Policy Institute. The radio show discussing the honest truth about Illinois policy and politics. Here's AM 560’s Dan Proft.
Dan Proft: Dan Proft. Thanks for joining us on another edition of Illinois Rising. You can hear me Monday to Friday on AM 560, 5:00 to 9:00 each morning with Amy Jacobson on Chicago's morning answer and pleased to be joined today with Jacob, excuse me, by Jacob Huebert who is a staff attorney for the Liberty Justice Center in Chicago, public interest law firm that represents free-loving, freedom-loving people against the excesses of government. Jacob, thanks for joining us. Appreciate it.
Jacob Huebert: Sure, always happy to be here.
Dan Proft: Do you know about this Pokémon Go that the kids are raving about?
Jacob Huebert: Well, I looked at it for a few minutes then deleted it so that the Pokémon people can't spy on me so I have a little sense of it but I haven't used it too much.
Dan Proft: So you deleted it because you were afraid of them mining you for information making, you talk, following you around?
Jacob Huebert: Well, that's one reason and then another reason is of course so I’m not tempted to waste time on it because it seems to be kind of addicting. It seems like it would be fun but I just got rid of it quickly.
Dan Proft: Yeah, I mean, you can't your hourly rate for playing Pokémon Go I suppose. That would be problematic. So I know of this. I get the concept but I don’t understand like back in my day, you know, I sound like an old man because I am, back in my day, you get together, you play a game of Dungeons and Dragons. You know? Even you go to Comic-Con, you go to Dragon-Con, you get together with other dorks who live in their parents’ basements and have limited social skills and you do the role playing game, the dice game, the Magic, the Gathering, you throw some pogs around. Well, what's with the virtual stuff is a baffling to me. It frightens me as an older gentleman.
Jacob Huebert: Well, I don't think it's frightening and I know our guest coming up has some thoughts on why it's actually beneficial and why shouldn’t frighten us but encourage us and so I'm looking forward to talking about that with him.
Dan Proft: Well, Jeffrey Tucker, that is the aforementioned guest, he is the Director of Content for the Foundation for Economic Education, FEE and Liberty.me. You remember FEE, Leonard Read, right? I penciled the seminal essay on free market capitalism but Jeffrey Tucker, Director of Content for FEE and founder of Liberty.me. He wrote this piece that has a very counterintuitive title – “How Pokémon Go Brightened a Dark World”. I'm baffled by that contention so Jeffrey Tucker, thanks for joining us to explain it. We appreciate it.
Jeffrey Tucker: It’s a pleasure to be here. Thank you.
Dan Proft: And so how is Pokémon Go advancing the cause of Western civilization?
Jeffrey Tucker: I’m sure a lot of your listeners right have used it and they know. They understand. You know, it was a wonderful thing. It came out, I guess, just a couple of weeks ago at a very strange time of American political rhetoric, you know, and events so we are hearing nothing in the news that is about racial division, the darkness, the sadness, the decline in the American family living, you know, the politicians were, you know, strutting about, you know, trying to make us feel disgruntled, unhappy, you know, sort of despairing of the future. And then just out of nowhere without any warning this game in a sort of lovely way was released and it went viral. I mean it became the most popular game ever and I couldn't really understand it entirely and so, of course, I had to download it just like everybody else and then I started playing it and it was a revelation because first of all, it gives you an inside into a new world of technology that we've never experienced before, kind of a blending of the physical and digital worlds. It’s almost at the point you can't really tell the transfer and so, you know, it gives you a glimpse into future and the possibility that markets can help us achieve this. And Pokémon Go did something else, It provided a very interesting opportunity for people to meet their neighbors in a way they never had before. And I had read about this and so I tried it myself and immediately started either catching Pokémon in my room and then I went out into the hallway, went out into the garden and sure enough started bumping into other people that were doing the same thing. We laughed together. We talked together.
Dan Proft: Well, see…
Jeffrey Tucker: We met each other. It was beautiful.
Dan Proft: But see on that point, I thought that was a bug, not a feature because as I understand it technology and the advancement of is to help better isolate us from human contact so we don't have to run into other human beings so this seems to be running counter to that.
Jeffrey Tucker: Yeah, well, that’s a line we’ve heard for 20 years. You know, I’ve kind of grown up with the digital revolution and I get weary of people putting it down and thinking they can characterize it as the following thing. I mean essentially digital technology seeks to serve our needs whatever they are and do an ever more perfect job of it. And one of the needs that people have nowadays is a new social opportunities which were sort of lacking and I think it's just a beautiful thing that a game came along to provide those kind of opportunities for us. I went out to the public park, you know, with my new app and sure enough there were lots of people out there doing exactly what I was doing and it was a beautiful thing. I made some new friends and we laughed and talked to each other and we smiled together and found the humanity, you know, in each other.
And I just have to believe that sort of integration, that sort of a social accessibility is important for our lives. I do believe it and I just think it's a lovely thing that technology is helping to achieve.
Jacob Huebert: Yeah, you contrasted the sort of like dark political rhetoric and things going on in politics with the relative brightness of Pokémon Go but would you say Pokémon Go is a distraction from those things or does it actually have the potential to counteract the bad things going on in the world of politics and government.
Jeffrey Tucker: Well, the strange thing is I think Pokémon Go gives us a better picture of reality. The truth about the world is that so long as markets are operating and we have freedom, freedom of association, freedom of to choose, people tend to get along actually. We find value in each other. This is one of the magic of the marketplace. That it sort of illicit from us a desire to find the dignity and recognize the dignity in others and then in us. You know, we developed sort of exchange relationships whether that's friendship or romance or pure commercial exchange, whatever it is, in the real world, people figure out ways to get along with each other. And the contrast with politics is interesting. It’s like, you know, more and more American politics is sort of devolving into these sort of warring tribes. I mean we see it out on the streets, you know, with the protest for and against. And it's a source of division among us, I mean that's really what it sort of seems to be coming down to, you know. You have to choose your team and try to beat the other team.
Jacob Huebert: Yeah, you know, I thought about that recently. I was in a store and I thought if you just looked at our interactions with each other in stores, you would have not the slightest inkling that there's any racial or ethnic divisions in America at all. You would think that everybody loves everybody.
Jeffrey Tucker: Yeah, I'm glad you said that. That is so true and I'm struck by this all the time too. Go to them, if you think America’s divided and, you know, we’re involved in a race war and a class war and all this other nonsense, go to the local mall, you know, check it out, see what's going on in your downtown on a Saturday night. You know the truth is in the commercial marketplace, we all do come together with genuine, you know, affection for each other and discovery of each other's humanity. Commerce is what gives rise to all this stuff and you don't see a division. You see, I don’t want to call it unity, but you see a beautiful sort of cooperation, you know, taking place. It's only when politics intervenes that we start to hate each other's guts and regard each other as a threat rather than, you know, a valuable person.
Dan Proft: All right. We’re talking to Jeffrey Tucker, Director of Content for the Foundation for Economic Education and I want to ask a decorum question though because I understand the spontaneous order argument and it's a good one but also is there something about Pokémon Go that's also illustrating some of the boundaries that have been lost, a crassness of our culture and I just cite the need for the Holocaust Museum in Arlington National Cemetery to ban Pokémon Go probably in response to some people playing Pokémon Go at those institutions.
Jeffrey Tucker: You know, I kind of regret that the Holocaust Museum did that because I tell what. I don’t know if you've ever been there to the Holocaust Museum but it’s a little bit of a forbidding place. I mean it's the kind of place you walk by and thank, “I don’t want to learn about the Holocaust. That’s not a place I want to go.” So for Pokémon Go to have chosen that spot as a gymnasium is actually sort of humanizes the place and gets people a little bit interested in it. My own view of the Holocaust Museum is that if you haven’t visited, you’re really deprived of something extremely important. I think it’s the most libertarian oriented pro-human rights institution in the whole of Washington DC and I'd like to see more people go visited it and if Pokémon Go gets people to that front door, I think that's great. So I wish they hadn't discouraged that actually.
Dan Proft: All right. He is Jeffrey Tucker, Director of Content for the Foundation for Economic Education and the founder of Liberty.me. Jeffrey, we're going to hold you over. We're want to come back and kind of pick up on this discussion of how we interact with one another in the real world versus how we do so when politics interjects itself into our real world and we'll do that right after this.
Narrator: Now more of Illinois Rising, presented by the Illinois Policy Institute. The only show directly addressing the problems and solutions for Illinois. Now, from AM 560, here’s Dan Proft.
Dan Proft: Dan Proft back with Jacob Huebert, Senior Attorney for the Liberty Justice Center on this edition of Illinois Rising and we're also joined again by Jeffrey Tucker who is the Content Director for the Foundation for Economic Education, FEE, and also the founder of Liberty.me and Jeffrey, I wanted to kind of pick up on our discussion. Another piece that you wrote for FEE, for the think tank that you work for about the new revanchism and how we get along, people of different characteristics get along in contrast to how perhaps we’re portrayed as getting along when it becomes the binary choices of Black Lives Matter versus law enforcement and others that are broadcast endlessly on cable news channels. Explain the new revanchism you reference.
Jeffrey Tucker: Yeah, okay. Well, the background here is that for about the last 20 years or so all the amazing things we've seen happen to the world, the digital revolution, the decline in crime, the decline in poverty around the world, you know, just the vast improvements in the standard of living all over the world but the new possibilities of customizing our lives, you know, according to our smartphone apps. The invention of the app economy, beautiful things, navigation tools, health tools, every kind of tool you can imagine. Our lives are much better off. They’ve all come about from the market and not from the ideas of the political class. And you look at what the politicians have done over the last couple of decades, most of their big highfalutin plans have amounted to nothing. I’m a Common core is extremely unpopular. Obamacare has been a disaster, I mean, almost universally as far as I can tell. So, you know, there's a widespread impression that people having that these guys can't really do anything for us that we can't do for ourselves and that technology is a much better source of improving our lives than politics and the purpose of my new revanchism piece was to illustrate that you see within politics a kind of a revenge spirit developing, you know, where they're trying their best to matter in the world and to take back lost territory in every area from communications to transportation to education to security provision and mostly they've lost the sort of a battle for the hearts and minds of the public. You know we've lost confidence in politics and in government in general and all the polls demonstrate this. Now this term…
Jacob Huebert: You do see people, I mean there are people who are flocking to both of the major party political candidates who do seem to buy into this and of course government and politicians are pretty good at propaganda, are pretty good at getting people worked up into a fervor even when there's no good reason for it. Do you think it's different now? Do you think what the market is offering us is just so much more amazing than anything we've ever experienced that it's going to offset that and it's going to, people aren’t going to fall for it again?
Jeffrey Tucker: I do and I think there's a certain illusion. Right now we've got the conventions going on and everybody’s focused on Trump, Clinton, you know, blah, blah, blah. But the truth is that I can't find a single poll that contracts what seems to be an obvious fact that two-thirds of Americans are alarmed by their choices that they were given and are expressing, you know, very little if no confidence at all in either Democrats or Republicans at the center right now. And we've never seen anything like this actually. There’s not on record an election in which the disapproval rating for both these candidates have been so low. I mean usually in the past has been disapproval’s been high for one but approval’s been high for the other and there’s been sort of a seesaw effect. Not both are down and…
Jacob Huebert: Well, despite people’s disgust, we're going to be stuck with one of these presidential candidates in office in January and then they're going to do things so is the disgust going to actually be able to rein these people in or is the fact that politics left in large part to some of the worst people going to, you know, they'll do bad things no matter what?
Jeffrey Tucker: I think this is the way politics looks at the end of the age of statism as far as I’m concerned. I mean this is what you end up with, a politics of revenge and I’m sure you've thought about this and your listeners have too but no matter who gets elected in November you're going to have half the American public in a state of non-stop frenzied opposition to that and that’s extraordinary.
Dan Proft: But one thing on this topic though, I mean remember what people are voting for, even people who didn't vote for either Donald Trump or Hillary Clinton, I mean the insurgency on the left was for somebody who's more of a status than Hillary Clinton as an avowed socialist. So to some extent, yes, they're very unpopular, you're right and maybe this will be of some kind of watershed moment regardless of who’s elected but the concern is you have a majority of the country, an overwhelming majority of the country, voting for paternalism on both sides of the aisle.
Jeffrey Tucker: Well, you know the Sanders thing was a little bit confused. I don't really think his supporters were about socialism actually. Best I can figure out they liked him because he seemed, you know, honest, independent and condemning of a kind of a ruling class racket, you know, and sometimes I think people, you know, on the pundit side of things over think matters a little bit. The average person looks for sort of signaling devices, the travel associations, I really don't think it's - I mean, did Sanders supporters really long for a gigantic state to rule the world. I don’t really think so. I think they looked at him as a kind of humanitarian. You know, it’s a confused look but I don't think that longing for tyranny was actually the basis of his support.
Dan Proft: Well, right but it's, you know, the creeping socialism. I mean and the failure to connect dots so when I say I want free college and I want this and I want that and I want it at somebody else's expense I mean that’s the road to serfdom you're on whether you recognize it or not.
Jeffrey Tucker: That's true and the road to serfdom is always very complex thing and it comes in circuitous ways and it comes in various flavors. It can come in the Sanders flavor, it can come in the Trump flavor. I noticed that the only politician that Trump actually praised in his nomination speech was Sanders.
Dan Proft: Right.
Jeffrey Tucker: They have....
Dan Proft: That’s the concern, yes.
Jeffrey Tucker: It is a concern but, you know, I don't believe that this world is capable of being ruled anymore. I really don't. I mean we've got three hundred million people. You know everybody lives a deeply customized life. We’re all in the habit of being basically dissidents in our lives. We've got ever more choice. There’s very little toleration left for intolerance essentially. Free speech is now something we take for granted. The state of the sort that we built in the 20th century is not a viable project in the 21st century and a digital age.
Dan Proft: All right. He is Jeffrey Tucker, the Director of Content for the Foundation for Economic Education, great think tank, He’s also the founder of Liberty.me. Jeffrey Tucker, thanks so much for joining us. Appreciate it.
Jeffrey Tucker: It’s my pleasure. Thank you.
Narrator: Now more stories, insights and analysis of Illinois policy and politics. This is Illinois Rising presented by the Illinois Policy Institute. Once again your host AM 560’s Dan Proft.
Dan Proft: Dan Proft back with Jacob Huebert, Senior Attorney at the Liberty Justice Center on this edition of Illinois Rising and already were going through the annual ritual like the swallows to Capistrano of Chris Kennedy, two years out from the governor's race contemplating running for governor. Leave the speculation about Lisa Madigan, daddy's little girl running for governor if daddy decides to leave which is unlikely and other potential candidates against Rauner as the battle lines become more sharply drawn between the public sector unions and the politicians they finance and Governor Rauner and his turnaround agenda, reform platform and this talk picked up in intensity because all of the criminal families were represented the Democrat delegation to the DNC in Philadelphia and so this was the talk and their candidate of choice right now which had been rumored about for a while but was more formalized at the convention, Dick Durbin, Senator Dick Durbin running for governor in 2018. That's who the Democrats seem to want against Rauner.
Jacob Huebert: Yeah, that'd be hilarious if I didn't have to keep living in this state.
Dan Proft: Yeah, right.
Jacob Hubert: It's amazing that anyone thinks that that man is competent to do anything after the disaster of his amendment to the Dodd-Frank Act and everything else he’s done in office is just shocking especially given the situation in Illinois where we have these problems that everybody knows we need to fix and which we know that he would offer no solution to or none of these people would offer any solution to.
Dan Proft: Yeah, but he does present a political challenge to Rauner. I mean this is somebody who's won now three statewide elections for Senate, ’96, 2002, 2008, oh, and 2014 and he's been likely challenged if we're being real honest, kind of a failure of the Republican Party to field better candidates against him over the last two decades now and the additional advantage he has is he would not have to give up his Senate seat to run and because he's, you know, in the sunset of his political lordship, if he got elected and the Democrats still controlled the General Assembly then he could do all the bad things the Democrats want done, the tax increases and the pension sweeteners and the extension of what we've been doing for the past 40 years under Madigan’s hegemony and, you know, then walk away. So, you know, it's one of those things where you look at Dick Durbin and you say, you know, “Seriously? We're going to continue doing this” but Illinois seems to sort of have a penchant with the exception of Rauner of continuing to do this.
Jacob Huebert: Yeah, you're kind of making me sick here.
Dan Proft: Yeah, well.
Jacob Huebert: You know at the at the Liberty Justice Center, you know, we strongly believe that the state can be turned around, we can do things differently, things can move in the right direction but if the people of Illinois go for that, I don't know. It might be time to rethink things. If they think that Dick Durbin is the answer to any problem that this state faces, I just don't know where we go from there.
Dan Proft: Would you feel better if it was Valerie Jarrett whose name has also been mentioned. She could run state government the way that she helped run the CTA back in the day.
Jacob Huebert: No, it's all the same. They all offer the same thing which is which is more of the same which is heading us further down the path of more debt, more pension burden that we can't afford, more handouts to public sector unions at everybody else's expense and any of these people is just going to be a disaster.
Dan Proft: Speaking of the public sector unions and the intersection of policy there, we’re coming up to a critical moment in Governor Rauner’s brief tenure and that is the AFSCME contract, the largest public sector union. There is a labor impasse. It’s being litigated right now. AFSCME is preparing its members for the possibility of a strike. This was a topic of conversation at the Democratic convention where the national president of AFSCME said we’ll essentially be there with resources if you guys decide to go out on strike. This comes against the backdrop of Rauner successfully negotiating 18 public sector union contracts with unions representing smaller groups of state workers, wage freezes, all of them. AFSCME wants a 29% wage increase over the life of a four-year contract and thus the impasse and I wonder how you potentially see this playing out once this clears the legal hurdles for the governor to decide whether he wants to lock them out or AFSCME decides they want to vote to go on strike?
Jacob Huebert: Well, I can't imagine that it would be politically beneficial for AFSCME to go on strike given that these are already some of the country's highest paid state workers, given that their colleagues who are in other unions have already settled for better deals and given that everybody else has to pay for this and they don't get to retire at 55 and they don't get a millionaire pension and they don't get the same level of salaries that their public sector counterparts get. So I would think that the people of Illinois would just be ready to say goodbye to these people if they actually go on strike because who wants to pay for that? Who thinks that they should have to work until they're 75 to help somebody else retire at 55 with a higher salary than them?
Dan Proft: And in Illinois which has an unemployment rate 25% higher than the national average, I wonder if there's other people out there looking for employment or enhanced employment who would be willing to take the wage fees, to take the deal that all of these other public-sector unions took, to have a job at the Department of Human Services or IDOT or other state agencies, maybe have less of an entitlement attitude that has been the culture of AFSCME and SEIU and the teachers unions.
Jacob Huebert: I suspect there'll be a lot of people ready to step in and do those jobs and I also suspect that many of those people would do at least as good of a job as the people who are holding those jobs right now.
Dan Proft: Well, we may have a market test coming up.
Narrator: Restoring Illinois to greatness. This is Illinois Rising presented by the Illinois Policy Institute and hosted by AM 560’s Dan Proft.
Dan Proft: Dan Proft back with Jacob Huebert. He is a Senior Attorney at the Liberty Justice Center and one of the cases you're working on right now, Jacob, is this a lawsuit against the city of Chicago as it pertains to their cloud tax, a taxing of streaming services like Netflix and Spotify. Where does that lawsuit stand?
Jacob Huebert: Well, so last year the city of Chicago's Comptroller just issued a ruling saying that we're going to start taxing these services like Netflix and Spotify, online streaming entertainment services, we're going to tax them at 9%. It’s the same tax we’ve already applied to the movie theaters and other amusements in the city, carnivals, whatever. We’re just going to say that that tax now applies to Netflix and Spotify as well. And without passing a new ordinance, the original ordinance doesn't say anything about these services. It talks about things like movies and carnivals, stuff like that, doesn't say anything about these services but the Comptroller declared were just taxing these things now. And so we brought a lawsuit challenging this for a few reasons. One reason is because, of course, if you want to tax something new, you should pass a law to tax that thing instead of just declaring that you're going to tax that thing and another problem is city of Chicago taxes you for your Netflix or Spotify or whatever if you have a billing address in the city of Chicago but it doesn't matter whether you actually ever use these services in Chicago. If you go to college or otherwise live outside the city and never use these services in Chicago, they still claim the right to tax you for them and that's not right either. The city of Chicago, if it passes a law, only has the right to tax things in Chicago and not reach outside. And there's other legal problems with this too and so we filed that lawsuit late last year and just this month the court here in Chicago ruled that this case survives a motion to dismiss. The city moved to dismiss it, said there was no merit to our claims. The court said well actually if you prove the facts that you've alleged here then you have shown that this law is unconstitutional and so that's really encouraging news and of course these things take a long, long time to play out so we won't get a final ruling for many months yet but it's encouraging and of course the court should strike these things down because the city can't just declare something a taxable and the city can't reach outside of its borders to tax people who aren't in the city.
Dan Proft: And it’s interesting. I wonder if this lawsuit if it precedes, and it doesn't look good for the city, if it will prompt them to then try and move an ordinance through and give Chicago residents essentially the opportunity to put pressure on their aldermen to, you know, engage on the topic to try and defeat a formal ordinance.
Jacob Huebert: Yeah, well, they slipped something into an ordinance the kind of makes passing reference to taxing these things and so they've tried to do that and the judge actually said that that overcomes the you-didn't-have-a-law problem which does not make sense to us and we’ll be appealing that part of it but the other aspects they can't fix, they can't fix the problem of reaching outside of their borders, they can't fix the problem of this actually treats online entertainment worse than in-person entertainment which violates federal law so they can’t overcome that in any event. And as for passing a new ordinance that specifically addresses these things or maybe corrects some of these problems, of course, they don't want to do that because if they do absolutely everybody would oppose that tax. Consumers would oppose the tax, the media streaming companies like Netflix Spotify obviously would do it and presumably the movie studios and big music companies would do it too because if Netflix and Spotify become too expensive for people, what are they going to do? They’re going to go pirate those things and nobody will make any money off of it. So absolutely everybody except our political leaders would oppose this thing if it were actually put up for a vote.
Dan Proft: And are you getting support, your legal team getting support from some of the streaming operators like a Netflix?
Jacob Huebert: Well, no, they haven't communicated with us directly or anything but there's every reason to think that they do support it. Of course, this tax Chicago imposed on them is the first of its kind in the nation so I'm sure it's important to them to see this crushed here so it doesn't spread elsewhere.
Dan Proft: But it's actually even more interesting. It’s not, the Liberty Justice Center and your legal team, not representing the big companies like a Netflix, representing ordinary Chicago residents who are being treated unfairly under this non-ordinance.
Jacob Huebert: That's right. Our plaintiffs are people who live in Chicago, who’ve been forced to pay this tax who don't want to have to pay it. That’s who we’re representing here and if we succeed though, of course, it won't just benefit them. It'll benefit everybody in Chicago because this thing will be struck down.
Dan Proft: All right, and we'll be keeping a close eye on the progress of that lawsuit in coming episodes of Illinois Rising.