Ghost in the Machine: The Invisibility of Richard M. Daley’s New Political Base

The announcement that Richard M. Daley would not seek reelection as Chicago’s mayor surprised few people. A Midwestern institution, a Daley has occupied the top seat in city hall for over 50 years, yet the current Daley, not unlike his father Richard J., had begun to look thread worn. The late great Chicago columnist Mike Royko savaged the elder Daley in Boss but also acknowledged that there was something uniquely Chicago about the old man: “Maybe he couldn’t have been a father figure in Berkeley, California; Princeton, New Jersey; or even Skokie, Illinois. But in Chicago there was nothing unusual about a father who worked long hours, meant shut up when he said shut up, and backed it up with a jolt to the head. Daley was as believable a father figure as anybody’s old man.” (1) If Richard J. Daley’s better qualities such as hard work, physical and mental strength, and big “Texas boastful” ambitions reflected many aspects of Chicago (remember Daniel Burnham’s famous proclamation “make no small plans”), he also clearly represented its negatives as well as the aforementioned Royko noted, “in other ways he was this city at its worst – arrogant, crude, conniving, ruthless , suspicious, intolerant.” (2)

In significant ways, the current Daley incarnation differs from his father. Blacks and Latinos (who under the first Daley lacked the demographic and electoral presence to influence elections) have made gains, though as University of Illinois-Chicago political scientist and former alderman Dick Simpson has noted Latinos have enjoyed a gradual increase in terms of contracts and city employment while African Americans have watched their gains remain static, even diminishing in recent years. (3) Additionally, his embrace of the city’s gay community certainly distinguishes him from his father. While Richard M. lacks the same precinct and ward level organization that his father enjoyed, the current Chicago mayor has crafted a new neoliberal alliance that exerts nearly just as much influence as his father’s old ethnic palm greasing. Chicago’s rise as a “global city” has helped Daley secure financing and power, as the city’s public/private partnerships celebrate neoliberal economic policies while obscuring the beneficiaries and policy implications implicit from such an arrangement.

Not Your Father’s Machine

Like his father, Richard M. Daley constructed an economic base among unions, construction interests, and the broader regional business community. Recently, the New York Times spoke to Democratic strategist Kitty Kurth who pointed out Daley’s support among business donors was based on familiarity (“they knew him”) and intimidation (“quite honestly because they were threatened a little bit”). (4) None of this would be out of place with his father, yet new economies, globalization, and the influence of neoliberal public/private partnerships have enabled the younger Daley to craft a new “pinstripe patronage” club.

If one buys Saskia Sassen’s arguments regarding the development of global cities as sites of producer service (accounting, business law services, law firms, finance, etc) agglomerations, (who in turn wield increasing economic, political, and social influence on municipal governments), Daley’s regime recognized early on the power of these economic actors. The “New Daley Machine” depends in part on traditional economic sectors long incorporated under Daley’s father, but in addition, banking, legal, and transnational manufacturers have increasingly joined the party. Moreover, as Dick Simpson, whose been writing about Daley and Chicago politics for decades, argues tourism, conventions, and “major public works … have been taken out of the usual political process and turned over to the private sector and special independent quasi-governmental agencies appointed by the mayor and the governor. Taken together, these trends have meant a lessening of democracy and the centralizing of power in a new machine, which while continuing the old machine perfected under Mayor Richard J. Daley, differs in a number of specific ways.” (5) Simpson further suggested that Chicago’s shift possibly represented developments that were not unique to Chicago by pointing to studies by Timothy Krebs which suggested that “the ‘new economy’ associated with globalization . . . figured heavily in campaign contributions to Mayor James Hahn and city council candidates in the 2001 Los Angeles election.” Krebs claimed that “68% of all itemized contributions” to Hahn came from campaigns, individuals, and corporations associated with the above “new economy” sectors. Simpson points to New York’s Mayor Michael Bloomberg’s financing of his 2001 campaign as another prominent example. (6)

Neoliberalism Neoliberalism Neoliberalism

Writing only three years after Simpson, Jason Hackworth drew similar conclusions to that of Professor Simpson and his co-authors. Hackworth’s book The Neoliberal City: Governance, Ideology, and Development in American Urbanism details many of the developments Simpson points out. For Hackworth and others city governance has been deeply affected by shifts away from more managerial economic systems like Keynesianism toward the deregulated privatization of neoliberal regimes. Urban municipalities bent to such influences to the extent neoliberalism became “naturalized.” For city leaders, good government came to mean how well they “function like the corporate community.” (7) This shift toward neoliberal ideals results in fewer public subsidies and regulation. Public services become privatized, business/real estate development interests promoted. Hackworth suggests that this economic development has not emerged as a response to capital flight so much as a “result of an institutionally regulated (and policed) disciplining of localities.” Finance capital operates under a set of “ideological constraints.” (8)

If the IMF and World Bank police international institutions, determining which countries and their metropolitan regions receive their financial attention, in first world cities, bond rating agencies exert the most direct influence: “Localities can be summarily redlined from credit if bond rating agencies judge them fiscally or economically separate from the governments they evaluate and thus more immune than, say, the IMF to state based political pressure.” (9) The ever present fear of capital flight, whether it be popular discourse or institutionally, find reinforcement internally and externally to the extent that urban governments fail to function autonomously. Increasingly cities took on non-referendum approved debt through revenue bonds . In recent years, these bonds have outnumbered general obligation bonds, which in contrast require approval of local voters. Nationally, this has meant as cities have received fewer federal dollars, dependence on municipal lending increased. However, lending in the neoliberal era fails to resemble that of the past. Changing demographics and the ascendency of wealth generation through finance capital, pension funds, money market funds, and insurance firms account for larger segments of the securities industry. Moreover, if commercial banks provided stable and secure lending/investment in previous decades, direct lending illustrates greater volatility. This leaves “remaining investors (households and funds)” more dependent on “professional assessments” (like bond agencies) whereas commercial banks exerted greater independence. The senior Daley passed away just as these shifts began to develop. His son however, quickly positioned himself to take advantage of the new “corporatist” governing structures. As Simpson points out, Daley adapted well to Chicago’s place as “global city” situated squarely in the center of transnational capital flows. One might even argue, as Professor Simpson does, Daley’s regime has attempted to provide the urban accoutrements that international white collar workers and tourists demand, “The expansion of McCormick Place; the rehabilitation of Navy Pier; the long-awaited opening of Millennium Park; the reconstruction of Soldier Field; the continuation of cultural amenities like the Museum Campus, the Chicago Symphony, Lyric Opera, and art galleries; flower planters and trees along boulevards; and the razing of ugly public housing projects – all of which have occurred under Mayor Daley’s regime – fit the needs and desires of his global economic contributors.”(10) That these improvements also please Chicago’s middle class residents only serves as icing on Daley’s proverbial cake.

The Deification of the New Daley Machine

The September 16, 2010 Economist briefly reviewed the Daley regime. A center left business oriented publication, the Economist often promotes deregulation, public/private partnerships, and lower government expenditures. With this focus in mind, Mayor Daley receives generally positive reviews. Acknowledging his various accomplishments including taking over the city schools (something his father would have NEVER done), beautifying the city through the creation of various green spaces and the monumental Millennium Park, and his metropolitan approach to governance, the British publication chose a rather different aspect of his rule to champion: “His most interesting legacy, however, may be not what he gave to Chicago, but what he sold off. Mr. Daley’s city has become an exemplar of a new strategy: where appropriate, privatize. The mayor hopes to save money by privatizing services, but also has a more lucrative plan: the lease of huge public assets.” (11) The inability of many urban areas to raise taxes has left cities more dependent on revenue streams that arise from user fees, and “about 40% of [Chicago’s] revenue now comes from user fees, an area in which the private sector is expert. Leasing an asset such as a toll road allows a private entity to charge market rates and invest in improvements over time. The government, meanwhile, gets a large sum to invest in other infrastructure or to build reserves.” (12) In 2005 Daley completed a deal that established a 99 year lease for the Chicago Skyway that placed over 1.8 billion in city coffers. Similar deals were struck regarding the city’s parking garages (99 year lease at 563 million, 2006) and parking meters (99 years for 1.15 billion, 2008).

To be fair, the Economist also acknowledged problems. The parking meter agreement drew derision from Chicagoans who resented higher rates. Many meters around the city found themselves inundated with glue from angry residents. Moreover, critics claimed that the deal never endured the proper debate for such an arrangement resulting in the city getting shortchanged by 1 billion dollars. Even worse, Daley dipped into the funds from the parking meter fiasco to pay for operation costs which the Economist noted meant less for future rainy days: “But by 2011 Chicago will have gobbled up nearly 75% of the proceeds from the 75-year lease. Last month Fitch, a ratings agency, downgraded Chicago’s bond rating, in part because the city had used money from the meter-lease to pay for operations.” (13) However, these developments represent only one aspect of Daley’s neoliberal embrace. A more local and tangible example can be found in many of the cities aldermanic wards.

TIF for Tat

Tax incremental financing (TIF) has been an economic tool of development in Illinois for decades. TIFs are created by the City Council. When a TIF is created taxes are capped on the property for a number of years usually between 10 and 20, sometimes more. The revenue that normally would have been created by taxes to fund schools, local infrastructure and the like go into a “district fund controlled by the city, for a specific purpose.” (14) Essentially, a tax revenue limit is set for 10-20 years. All revenue collected from property taxes that exceed this limit are then placed into a TIF fund. The fund’s purposes range from “community infrastructure enhancement, building improvements, residential or business construction, or other public benefits such as parks.” (15) Theoretically, TIFs enable municipalities to channel funding for public works in lower income or struggling communities. However, in Chicago they often seem to fuel real estate speculation and housing that some local communities cannot afford. Alderman and Mayor Daley love TIFs because they provide each with an accessible supply of money.

Supporters argue TIFs ignite economic development which “in turn increases the property tax revenue that feed them.” (16) Chicago’s dependence on TIF financing has only grown under Richard M. By 2006, nearly one third of the city fell under TIF designation, accounting for one third of the entire city’s property tax income, equaling $329.5 million in 2005. (17) Critics contend that lack of oversight plagues TIFs. Residents wanting to see how their local TIF money is spent must go to city hall to request the document. Depaul Professor of Urban Geography Winifred Curran remarked that even when one gains access to TIF reports, the accounting is often “arbitrary”. (18)

Chicago is divided into fifty wards. Each one is overseen by an elected alderman. Alderman essentially create TIFs. Within the Chicago City Council approval is more or less automatic. Many aldermen owe their political careers to Mayor Daley, thus, alderman promote TIFs, both to curry favor with Mr. Daley and to create a pool of money with which they have discretion. A tacit understanding exists between aldermen regarding the passage of TIF zoning in the City Council This understanding amounts to a “I’ll scratch your back if you scratch mine” attitude. Community groups around the city accuse developers of making campaign contributions to alderman, then soon after, are awarded TIF zoning. Daley’s promotion of TIFs stem from a need to gain control over a tax base previously off limits and a desire to develop the city into a middle class paradise. The need or desire to accumulate a “pot of public money” has led the city to fully embrace TIFs along with the sale of public property like the previously discussed Chicago Skyway, a one time lump sum payment that produces city wealth immediately but may cost the city future revenues that have would have been produced from the properties.

Loopholes allow for TIF monies to be spent in contiguous areas not specifically TIF designated, meaning one community TIF district can fund improvements in adjacent neighborhoods. Moreover, though Mayor Daley frequently touts the city’s fairly stable property taxes, in recent years the proliferation of TIFs have driven property taxes assessments up blanketing the city with higher levels of fees and taxation. Such increases began on the city’s north side as one homeowner lamented, “My taxes were at $4000 when I bought my home nine years ago . . . that’s what, a $16000 increase in ten years? This isn’t some abstract . . . debate. This is real.” (19) Andersonville, a trendy North Side neighborhood reported property tax increases of 70%. Local entrepreneurs bemoaned that TIFs were going to destroy their businesses. (20) According to Chicago Reader journalist Ben Jovarsky, TIFs have eaten up $1 billion in property taxes from 2003-6. (21) Additionally, the assessments that have plagued mostly white middle and upper middle class neighborhoods are now set to affect communities like Pilsen (Mexican/Mexican-American) and Bronzeville (African American). Professor Curran concurred, “absolutely . . . that is an urban issue that has to do not just with gentrification . . . in terms of all the TIFs . . . all this money is being siphoned off from the city and you have got to remake it somehow.” (22)

Now there’s an argument that says the Daley way works. Chicago survived deindustrialization as the Daleys helped remake the city into a transnational node in the heart of America. Of course, this view ignores the crucial role Harold Washington played in his brief tenure. Washington’s reforms regarding minority contracting, ethics and dampening the racial unrest plaguing the city, enabled Richard M. Daley to institutionalize his predecessor’s reforms while pursuing his own agenda. However, the neoliberal shift that Hackworth describes and Daley embodies, obscures the disproportionate influence exerted by real estate and development interests. Perhaps if Chicago’s municipal government had a reputation for probity, diminishing the public’s roll might make sense, but it doesn’t. Even the elder Daley suffered bond referendum defeats, yet, his son need not resort to such measures. Financial innovations like revenue bonds and TIFs, allow governments to bypass even the slightest measure of oversight. Since 1971, 21 aldermen have served jail time as result of corruption convictions. This fails to account for numerous others guilty of conflict of interest and ethics violations. Do these conditions merit less supervision? TIFS inevitably drive gentrification which may be a boon to some but a problem for others. Parts of Chicago’s traditionally Mexican neighborhoods endured rapid gentrification due to TIF funded housing. Similar developments unfolded in many of the city’s black communities. Cities need economic development, but municipalities need to control this growth rather than profit from it. With an upcoming mayoral election that appears, for the first time in a long time, to be an open race, it remains doubtful that the new mayor will abandon the same moneyed networks Daley so carefully exploited.

Ryan Reft

Footnotes

(1) Royko, Mike, Boss: Richard J. Daley of Chicago, Penguin: NY, 1976, 7.

(2) Royko, Boss, 5.

(3) Simpson, Dick et al, “The New Daley Machine, 1989- 2004.”

(4) Libit, Daniel, “Running for Mayor without the Machine’s Muscle,” New York Times, Sept 26 2010.

(5) Simpson et all, “The New Daley Machine, 1989- 2004,” 7.

(6) Simpson et all, “The New Daley Machine, 1989- 2004,” 20.

(7) Hackworth, Jason, The Neoliberal City, 10.

(8) Hackworth, Jason, The Neoliberal City, 18.

(9) Hackworth, Jason, The Neoliberal City, 20.

(10) Simpson, Dick et al, “The New Daley Machine, 1989- 2004,” 11.

(11) Economist, “The Big Sell”, Sept 16, 2010

(12) Economist, “The Big Sell,” Sept 16, 2010

(13) Economist, “The Big Sell,” Sept 16, 2010

(14) Chicago Reader, “Those Slippery TIFs,” 9 December 2005.

(15) Nyden, Phil, Emily Edlynn, and Julie Davis, “The Differential Impact of Gentrification on Communities in Chicago,” Loyola University Chicago Center for Urban Research and Learning For the City of Chicago Commission on Human Relations, January 2006, 2.

(16) Chicago Reader, “Those Slippery TIFs”, 9 December 2005.

(17) Nyden, Phil, Emily Edlynn, and Julie Davis, “The Differential Impact of Gentrification on Communities in Chicago,” 2.

(18) Winifred Curran interview with author, 5 April 2007.

(19) Chicago Reader, “The Tax Vortex,” 30 June 2006.

(20) Chicago Reader, “Too Funky for its Own Good,” 14 July 2006.

(21) Chicago Reader, “Million Dollar Lies,” 11 August 2006.

(22) Winifred Curran interview with author, 5 April 2007.

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  1. […] (TIF – see the bottom third of this article about Chicago for more info on TIF financing – Here ). Under TAD, a portion of property tax revenues – the very funding mechanism for most cities’ […]

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