The Austerity Agenda Was Unopposed in the Chicago Mayoral Election

Rahm Emanuel’s victory shows Chicago’s progressive movement still needs to do more to advance a real alternative to austerity economics.

On Tuesday night, Chicago voters reelected Mayor Rahm Emanuel in a race that was widely perceived as a showdown between the neoliberal and progressive wings of the Democratic Party. However, the election outcome should not be seen as a rejection of a real progressive agenda with alternatives to austerity. Emanuel defeated Jesus “Chuy” Garcia at the ballot box by turning the election into a referendum on Garcia’s financial chops. Even though voters were weary of Emanuel’s “tough medicine” approach to the city’s financial problems, Garcia failed to lay out a fundamentally different view of the problems underpinning the city’s budget and the solutions needed to get the city back on a solid financial footing, and voters opted for the devil they knew over the one they didn’t.

When Moody’s downgrades the credit ratings of a city and its mayor-controlled school and park districts less than six weeks before a mayoral election, as it did with Chicago, it should typically spell disaster for the incumbent. But Emanuel managed to turn it around on Garcia and hammered away at him for not having a concrete plan to fix the city’s financial crisis. It was true—Garcia did not clearly articulate a financial plan to fix the city’s budget and merely hinted that he might have to enact his own set of painful cuts if he were elected. However, this line of attack papered over the fact that the financial problems that the next mayor would have to tackle were inherited from Emanuel.

The Emanuel administration has closed 50 schools and six mental health clinics, slashed the libraries budget, hoarded funds intended for public housing, overseen privatization schemes that increased user costs, and installed red-light and speeding cameras in order to bring in additional revenue. Not only has Emanuel tried to plug budget holes by cutting services working people rely on, but those policies have actually failed to get the city’s finances back on track. After all, the credit rating downgrades came after these policies were enacted. Meanwhile, he has let the city’s corporate elite off the hook by refusing to take actions like cutting tax subsidies to large, profitable companies downtown or filing legal claims against banks that illegally sold predatory financial deals to the city and school district.

Chicagoans’ dissatisfaction with the mayor’s downtown-first approach led to the historic runoff, but Garcia seemed reluctant to put forth proposals that would have forced big downtown corporations to pay their fair share. He held a series of press conferences challenging predatory financial deals and costly gimmicks like toxic interest rate swaps and social impact bonds, and he announced his support for a financial transactions tax on Chicago’s financial exchanges, but these proposals were never part of a coherent strategy to change the terms of the budget conversation in the city.

Garcia’s failure to put forward a strong plan allowed Emanuel to take his greatest weakness—his financial record of making Chicago’s most vulnerable residents pay for tax breaks for his biggest campaign donors and their businesses—and turn it into his greatest strength. Even though Emanuel himself did not put forth any real financial plan either, he was able to slam Garcia for having a weak and insufficient one, and amplified his message with a relentless onslaught of attack ads on TV.

The austerity agenda that marked Emanuel’s first term came to be seen as the only viable framework for fixing the city’s budget woes. Garcia’s plan was not strong and comprehensive enough to pull the public discourse in the other direction, so Emanuel and the monied interests downtown were able to successfully advance a narrative that Chicago had no choice but to enact painful cuts, especially to city workers’ pensions, and that Emanuel was the only candidate willing to make the unpopular decisions necessary to save the city from a Detroit-style bankruptcy. This theoretical framework, pitting teachers against students and city workers against the communities they serve, went large uncontested by Garcia. But under that paradigm, Chicago’s richest 1 percent got a free pass.

Chicagoans need a new paradigm that unites working families across the city behind a financial plan that puts neighborhoods first. This includes taking legal action to recover up to $1.2 billion from toxic swaps. It includes demanding that banks share in the sacrifices that all Chicagoans are being asked to make by reducing fees by 20 percent. It includes hiring in-house investment managers to invest pension fund dollars instead of overpaying private equity firms like Illinois Governor Bruce Rauner’s GTCR Capital and hedge funds like Ken Griffin’s Citadel Investment Group. It includes ending the practice of diverting tax dollars from struggling neighborhoods to subsidize profitable downtown corporations.

The city also needs to work toward longer-term structural solutions to shift the balance of power in Chicago back toward the neighborhoods. This includes enacting a financial transactions tax on speculative trading at the financial exchanges on LaSalle Street and making Chicago’s millionaires pay their fair share by implementing a graduated city income tax. It also means establishing a public bank that is owned by taxpayers, can provide fair banking services to municipalities, and can stimulate local economic development in Chicago’s neighborhoods.

Finally, Chicago also needs to partner with other cities to form a consumers’ union to bargain with Wall Street for substantially lower banking fees. Chicago, Los Angeles, and New York together do nearly $600 billion of business with Wall Street ever year. That is more than the GDP of Sweden. If they flexed their muscles, they could change the landscape of municipal finance.

It says a lot about our national economic discourse that in a historic election that revolved around a major city’s finances, neither candidate even began to challenge the assumptions underlying the austerity paradigm. Of course, candidates for elected office rarely define the political discourse in a vacuum, but rather respond to and try to shape the issues that are percolating. In that sense, it is unfair to simply say that Garcia failed to present a compelling alternative to Emanuel’s austerity agenda. The reality is that while Chicago’s progressive movement has grown more sophisticated and organized over the past four years, it has yet to successfully push back on the prevailing narrative advanced by the mainstream press and Chicago’s political and business elite. That narrative holds that what’s good for downtown is also good for the neighborhoods, and that the city cannot afford to upset the wealthy or they will pack up their bags and move to Indiana (yes, Indiana), taking thousands of jobs with them.

If we want to see real change, then we need to change the budget conversation in Chicago and elsewhere in the country. We should not be talking about what cities should cut to make ends meet, but rather about how cities can raise enough money to pay for the quality services that residents need. Only then can we put cities like Chicago on a path toward long-term fiscal sustainability while also paving the way for shared prosperity in working-class communities.