Each political party usually possesses its own crank or crackpot.
In Illinois, the Democrats had, until recently, Gov. Rod Blagojevich. And the Republicans apparently now have gubernatorial wannabe Dan Proft.
On Wednesday, Fitch Ratings downgraded the rating on $19.1 billion general obligation bonds of the State of Illinois to 'A' from 'AA-'.
The reason, according to MarketWatch: "Analysts cited the failure of the state to enact a budget that addresses its spending needs and structural deficit."
Cue the crackpot.
In reaction to the Fitch move, GOP gubernatorial candidate Dan Proft issued a flame-throwing press release laying the downgrade at the feet of state lawmakers and proposing as punishment that lawmakers be paid in state bonds. But that, in effect, would raise their income.
"Rather than advancing system change ideas, if the Springfield political class believes increasing Illinois' bond debt is sound fiscal policy, then I propose that state legislators be compensated in state bonds," Proft said.
However, as the public relations consultant cum candidate himself explains-- without noting the paradox of his presumed punitive proposal:
"Instead of pursuing a fiscally-responsible, conservative reform agenda, the Springfield political class decided to pile another back-door tax increase on Illinois taxpayers who will now be forced to finance higher interest payments on the state's outstanding debt."
Hmm. Higher interest payments on bonds. More money for bond holders. Duh.
Like most of Proft's public policy pronouncements, this one is nonsense. It is designed only to colorfully illustrate some ideological or political or policy point. But it also exposes Proft's feeblest of holds on the fundamentals of public policy governance in general and public finance in particular.
If Illinois were to compensate lawmakers with state bonds in the bizzaro world of a Governor Proft, even the most chuckle-headed legislator would agree. That's because the bonds would be a boon to their income due to the higher interest rate. Anyone who holds high-interest Illinois bonds would earn more money tomorrow than yesterday.
Apparently stung by the exposure of his own unique chuckle-headedness by that observation regarding his bonds-for-compensation idea, Proft continued to dig a deeper hole -- and wiped away any doubt that the GOP crackpot mantle had found its home.
"Does [David] Ormsby think, in our current fiscal and economic climate, that a politician would accept as payment a bond that pays a high rate of interest, but also has a high probability of default? Do the people who issue these bonds truly believe that they will be redeemed at full value? If so, let's put it to the test."
Let's.
Fitch Ratings itself is unaware of any state that has permanently defaulted on its general obligation bonds or tax-backed debt since the Civil War -- or of any extended default on a local general obligation bonds since the Great Depression.
In fact, on January 8, 2009, Wall Street Journal reporter Brett Arends noted in a report, "Among states, only Mississippi really defaulted -- and that was long before the Civil War [1838]. During the depression, Arkansas renegotiated some highway bonds."
No state default in 171 years.
Proft's nonsense idea fails his own test -- a pretty mean feat.
However, Proft's punitive paradox may be just enough of an incentive to energize overwhelming bi-partisanship behind the former Cicero spokesman's Quixotic gubernatorial campaign. Heck, they're thinking, "we might get a raise out of this guy."
And perhaps Proft will be successful. After all, the Illinois governor's office has been a welcoming place for crackpots.