The Chicago mayoral election pits a neoliberal school privatizer against a public school teacher and union organizer.
: Vallas played a key role because, as a CEO of [Chicago Public Schools] at the time, he played a role in really pushing for pension holidays, basically skipping pension payments. Pensions are deferred wages. Basically, when workers negotiate pensions, they agree to accept lower raises or lower wages to have part of their wage going to the pension so the pension fund can invest that and there can be money there to pay for their pensions when they retire.
Vallas also took out $666 million in loans that have been likened to payday loans due to extraordinarily high interest rates. Can you explain what capital appreciation bonds are and why these loans were so harmful to Chicago students? And so that’s the real issue with this: at the end, you basically end up then in the last few years of the bond, the rest of the remaining term of the bond, you then have to make up the payments you skipped on the front end. Those payments are quite large, but they’re even larger because the interest has compounded this whole time.
It’s interesting that Vallas actually entered into his variable rate bonds in 2000. The way to offset the risk of interest rates shooting up, what sort of sold as an insurance policy against rising interest rates by banks, is this thing called an interest rate swap. But what the swap actually is, it’s just a bet on which way interest rates are going to go. I think it was 2002, there was a law that was passed at the state level that permitted interest rate swaps.
And all of these financial missteps generated losses that were ultimately used to justify austerity measures. Can you say a bit about those dynamics?
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