The Absurdity of Rahm Emanuel’s Fixation on Chuy Garcia’s Enlace Budget Deficit

The mayor’s hammering away at Garcia over several hundred thousand dollars in deficit at the nonprofit Enlace Chicago is incredibly dishonest.

Micah Uetricht March 31, 2015

(WTTW)

In tonight’s Chica­go may­oral debate at Chicago’s pub­lic tele­vi­sion sta­tion WTTW, Rahm Emanuel and host Phil Ponce (who is also, it turns out, the mayor’s neigh­bor) made much of the deficits total­ing more than $470,000” for two years at the end of Jesus Chuy” Gar­ci­a’s time at the com­mu­ni­ty orga­ni­za­tion Enlace Chica­go, where he worked as exec­u­tive director.

It was probably smart for Rahm Emanuel to hit his challenger with this charge. It made for a good opportunity to score a point against Garcia. The thing is, as the mayor well knows, it’s ludicrous.

First report­ed in the Chica­go Sun-Times by Dan Miho­lapolous, Emanuel and his team clear­ly planned to make it a major talk­ing point, as the may­or brought a copy of the organization’s 990 tax form to hold up for dra­mat­ic effect. Gar­cia didn’t han­dle the ques­tion par­tic­u­lar­ly well — while he empha­sized that the orga­ni­za­tion grew con­sid­er­ably under his watch, he appeared to split hairs, say­ing a deficit is not a debt” — which, while true, requires a lit­tle bit of expla­na­tion that Gar­cia could­n’t give in the mid­dle of a debate.

It was prob­a­bly smart for Rahm Emanuel to hit his chal­lenger with this charge. It made for a good oppor­tu­ni­ty to score a point against Gar­cia, the may­or wav­ing the tax form around while insist­ing that Chuy’s prof­li­gate fis­cal ways at the helm of a non­prof­it will be repli­cat­ed at the city lev­el if he wins the runoff elec­tion. (It prob­a­bly would have been the night’s most mem­o­rable moment if it hadn’t been over­shad­owed by Ponce’s incred­i­bly cal­lous ques­tion about Chuy’s son’s past gang involvement.)

The thing is, as the may­or well knows, it’s ludicrous.

Far be it from me to lec­ture May­or Emanuel about the way finance works — unlike him, I’ve nev­er worked as an invest­ment banker; I’m just a hum­ble mag­a­zine edi­tor. But as he well knows, some­times it’s smart to run a deficit as an orga­ni­za­tion — whether a non­prof­it or a busi­ness — if that orga­ni­za­tion is grow­ing and the deficit is manageable.

If your orga­ni­za­tion is expand­ing, meet­ing and exceed­ing your goals, imple­ment­ing a num­ber of impor­tant pro­grams, all of that — it may actu­al­ly be a good idea to run a deficit. In some moments, you’d prob­a­bly be an irre­spon­si­ble orga­ni­za­tion­al head not to run a deficit, if you found your­self in a sit­u­a­tion where your orga­ni­za­tion could rapid­ly expand its impact or your busi­ness could increase its mar­ket share. One non­prof­it assis­tance web site even has a page devot­ed to the sub­ject of deficits for non­prof­its enti­tled, When is a deficit OK?”

Gar­cia said that dur­ing his time as Enlace’s head, the orga­ni­za­tion expand­ed huge­ly, going from a sin­gle paid employ­ee to over 100 part- and full-timers; by all accounts, the orga­ni­za­tion is now in the black and has a bud­get of sev­er­al mil­lion dol­lars. This is what the much-vaunt­ed job cre­ators” — for-prof­it busi­ness­es — do all the time: run up a man­age­able deficit on the way achiev­ing full fis­cal health. The deficit that Gar­cia ran at Enlace appar­ent­ly has­n’t been too dif­fi­cult for the orga­ni­za­tion to get out of.

But I’m not say­ing any­thing Emanuel and his team don’t already know. Like I said, wav­ing around a 990 and talk­ing about Gar­cia leav­ing a non­prof­it with a deficit makes for an excel­lent, if dis­hon­est, 140 char­ac­ter-sized talk­ing point.

And it’s smart, because when we’re talk­ing about a cou­ple hun­dred thou­sand dol­lars of deficit for an orga­ni­za­tion that was grow­ing, we’re not talk­ing about issues like the explo­sion in the use of bonds to pay for basic city func­tions — an explo­sion that is hand­ing stag­ger­ing amounts of mon­ey over to Emanuel’s old col­leagues on Wall Street and leav­ing future gen­er­a­tions on the hook for enor­mous bills.

In a series on the sub­ject, the Chica­go Tri­bune referred to the city’s use of these bonds as part of a pat­tern of fis­cal reck­less­ness.” The bonds are not debt accrued as part of long-term, infra­struc­ture-build­ing invest­ments in the city, but rather debt tak­en on to accom­plish the city’s most basic func­tions — keep­ing the prover­bial lights on and stick­ing future gen­er­a­tions with the bill plus inter­est. And that debt load, accord­ing to the Tri­bune, isn’t man­age­able — it’s poten­tial­ly crushing.

Per­haps Ponce should have asked Emanuel about such scoop and toss” finan­cial tac­tics. Per­haps Chuy should’ve brought copies of the Tri­bunes Bro­ken Bonds” series to wave around at Rahm — or at least a page from an Eco­nom­ics 101” textbook.

In any case, May­or Emanuel’s fix­a­tion on a two-year deficit at Enlace is absurd, and WTTW host Phil Ponce should have known bet­ter than to join the pile-on. The deficit Gar­cia left at Enlace should be a non-issue in the lead-up to the runoff elec­tion on April 7.

Mic­ah Uet­richt is the deputy edi­tor of Jacobin mag­a­zine and host of its pod­cast The Vast Major­i­ty. He is a con­tribut­ing edi­tor and for­mer asso­ciate edi­tor at In These Times. He is the author of Strike for Amer­i­ca: Chica­go Teach­ers Against Aus­ter­i­ty (Ver­so 2014), coau­thor of Big­ger Than Bernie: How We Go From the Sanders Cam­paign to Demo­c­ra­t­ic Social­ism (Ver­so 2020), and is cur­rent­ly at work on a book on New Left­ists who indus­tri­al­ized.” He pre­vi­ous­ly worked as a labor orga­niz­er. Fol­low him on Twit­ter at @micahuetricht.

Limited Time:

SUBSCRIBE TO IN THESE TIMES MAGAZINE FOR JUST $1 A MONTH