Blagojevich case: Will it seal Illinois' reputation as most corrupt state?

Ousted governor pleaded not guilty to federal charges on Tuesday, as political watchdogs tally cost of state's long history of graft and cronyism.

By , Correspondent

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    Former Illinois Gov. Rod Blagojevich arrives at federal court for his arraignment on federal racketeering and fraud charges in Chicago.
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The arraignment of former Gov. Rod Blagojevich on Tuesday was an all-too-familiar scene for Illinois residents: another state or local public official appearing in court to answer corruption charges.

Like many, Mr. Blagojevich pleaded not guilty, meaning he moves a step closer to trial on 16 federal counts of corruption and conspiracy. And, like three former Illinois governors in the past 35 years, he faces prison time if convicted.

With Illinois' ignominious record (and that's only part of it) comes the bald question: What is it about this state that makes it such a long-standing hotbed of political corruption?

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Lest anyone say its ne'er-do-well reputation is exaggerated, consider this: At least 1,000 Illinois officials and businessmen have been convicted of public corruption since 1970, according to a February report by the University of Illinois at Chicago. By another, more recent estimate, corruption costs taxpayers here $300 million a year.

If Illinois' notoriety adds to a mythical canvas colored by gangsters and back-room deals, the Blagojevich saga has the potential to create a watershed moment for the state. Confronted first with voters' expectations for government transparency promised by favorite son Barack Obama, and now with a state budget crisis and recession, Illinois lawmakers are facing intense public and media scrutiny. Next month, they will be forced to address the most comprehensive political-reform proposal in more than 30 years.

“The impeachment and indictment of Rod Blagojevich, coupled with [the imprisonment of Blagojevich predecessor George Ryan], … has made clear to everyone our system is broken and we’re unable to do what we need to do on a whole range of issues,” says David Morrison, deputy director of the Illinois Campaign for Political Reform, a bipartisan group that promotes transparency in state government. “Politically, we’re just frozen, and we need to change the system to unfreeze the system.”

First corruption trial in 1868

How Illinois got to this moment dates back to 1869 and the state’s first corruption trial, in which four Chicago aldermen were convicted of bribery. The steady influx of immigrants from around the world, matched with aggressive development following the 1871 Chicago fire, helped groom a patronage system that exchanged jobs for political servitude. It is a dynamic that has become the firmament of political life here – and one that many say is gradually suffocating the state economy.

But public anger about graft may rise as people come to see how it affects their pocketbooks. Research into corruption's effect on the Illinois economy has found that state taxpayers shell out a $300 million "corruption tax" each year because of padded salaries and contracts, work paid for services not rendered, ghost payrollers, and revenue lost due to scandal and controversy, according to Dick Simpson, chairman of the political science department at the University of Illinois at Chicago and a former city alderman back in the early 1970s.

“It’s costing it more and we’re getting less. Think of [corruption] as a line item in the budget,” says Dr. Simpson.

Blagojevich’s arrest in December, for instance, lowered Illinois’s credit and bond ratings, resulting in an immediate $20 million increase in the state’s cost to sell $1.4 billion in bonds. Proceeds from the December bond sale were originally intended to cover the state's delinquent bills. To make up the shortfall, Gov. Pat Quinn (D) proposed an increase of nearly 50 percent in state income taxes for individuals, the first such tax hike in 20 years.

“Corruption undermines the willingness of taxpayers to pay higher taxes,” says Simpson. “[The bond issue] is the first time we’ve seen [corruption’s effect] in actual dollars on a single issue.”

At his arraignment Tuesday, Blogojevich did not make a statement before the plea, but he told reporters and spectators when he entered the courthouse that he was "innocent of every single accusation." The former governor is charged with trying to auction off the US Senate seat vacated by President Obama, planning to squeeze money form companies seeking state business, and plotting to use the financial muscle of his office to pressure the Chicago Tribune newspaper to fire editorial writers who had called for his impeachment.

Loose campaign-finance laws

Illinois does not have a system of public financing for elections, and it does not restrict campaign contributions for state and local offices, which makes disclosure laws easy to evade. These factors that contribute to a tradition of corruption, say Illinois political watchdogs.

“All other jurisdictions [in the US] have campaign regulations in some form. We have nothing. You can take as much as you want from whomever wants to give it to you. It creates, not a backdoor for bribery, it’s a front door,” says Mr. Morrison of the Illinois Campaign for Political Reform.

In his tenure as the state’s last Democratic governor before Blagojevich, from 1973-77, Dan Walker issued an executive order banning state employees from contributing to political campaigns, which became one of the state’s first and last political-reform measures.

Reform in Illinois was hard to attain because one-party politics dominated everything – traditionally, the Democrats in Chicago and the Republicans downstate, says Mr. Walker, reached by phone in Baja, Mexico. “If we could have created a Democratic Party that was free of the [political] machine, we could have made tremendous progress in Illinois. If the Democrats cut free and the Republicans cut free, we would have had a genuine two-party system in the state,” he says.

Reform proposals circulate

Proposals on reform – from limiting campaign financing to promoting more transparency – are making the rounds in the state capital, most notably from Governor Quinn’s newly formed Illinois Reform Commission.

Because corruption in Illinois has been so entrenched, it is not expected to dissipate overnight. States and municipalities where immigration and political histories are similar to Illinois', such as New York and Los Angeles, managed to change their operations gradually through a succession of reform mayors and more intensive scrutiny.

Watchdog groups say Chicago’s patronage system remains robust due to Mayor Richard M. Daley, who upon his election in 1989 and continuing today, centralized power from wards to City Hall; expanded the political machine to include ethnic groups, special-interest groups, and global corporations; and is creating a new delivery system of city services via privatization with contractors.

“As long as services are delivered, voters put up with extra cost of corruption,” says Simpson.

Reform commission recommendations – such as caps on campaign donations and new accountability measures – ultimately will go before the legislature for action.

Even some with an interest in reforming Illinois politics, however, say some of the proposals may do more harm than good.

“I look at this and say I’m [as] in favor of honest, good government as the next person, but if [politicians] can figure a way around [reform regulation] in five minutes," why bother to enact the reform? says Ann Lousin, a law professor at John Marshall Law School in Chicago, who helped write campaign-finance reform proposals in the early 1970s when working for the speaker of the Illinois House.

A more realistic solution for a state as corrupt as Illinois, she says, is full disclosure of how much donors give to campaigns. “What’s wrong with that? At least put it right out on the table.”

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