Ill. Governor Quinn Wants Federal Government to Guarantee $14 Billion in Pension Bonds

Crain's Chicago Business reports:

Local officials have asked President Barack Obama for a few favors since he took office, but now they want a really big one: a federal guarantee of a potential $14-billion Illinois pension obligation bond issue.

According to newly installed state Budget Director David Vaught, Gov. Pat Quinn recently brought up the idea with U.S. Treasury Secretary Timothy Geithner and others at the White House. The governor got a good enough reception that "he intends to extend" his efforts, Mr. Vaught said.

A federally guaranteed bond issue could be an enormous help to Illinois in dealing with a huge fiscal 2011 budget hole that Dan Long, executive director of the Commission on Government Forecasting and Accountability, the Legislature's fiscal research arm, now pegs at $11 billion to $12 billion.

Mr. Vaught said a federal guarantee would cut the interest rate on such a bond to "in the 3% to 4% range" from "5% to 6%." That would make it much more profitable — and less risky — for the state, which would invest the funds in higher-yielding stocks and bonds.

Why should Illinois get special treatment on their debt when other states will not get this deal?? Maybe Illinois taxpayers can't afford the pensions of government workers. You might ask how any of this is constitutional.