Eliot Spitzer, The Other Special Interest Candidate

Although it is repetitive, let me set the stage again. Two groups of people have been getting richer: the executives who sit on each other’s boards and vote each other a rising share of private sector income, and retired public employees whose unions have cut political deals for retroactive pension increases. Everyone else is getting poorer. There is, in other words, the executive/financial class, the political/union class, and the serfs, with just about everyone in younger generations being left to be serfs as Generation Greed sells off the common future.  This is not the result of anything like a free market, but rather is the result of political power and manipulation. The public employee unions and executives negotiate their pay and benefits in secret with their cronies, and then pass the bill on to powerless others who are made worse off, taxpayers/public service recipients and shareholders, with the cost generally deferred to a common future they don’t’ care about.  Here in the U.S. they continue to take more and more, and express outrage at anyone who dares to question their entitlement, even in the wake of a Great Recession that made everyone else much worse off.

Might Eliot Spitzer be the man to put the spotlight on this?  To ask questions, provide truthful information, call for fairness in allocating the losses in the future based on who has taken the lion’s share of the benefits in the sordid past?  To let the serfs, younger generations, and younger and future public employees know exactly what has been done to them, and by (collectively) whom, and to demand fairness for ordinary people?  The powerful interests seem to think so.  Their passionate backing of Scott Stringer for Comptroller seems to have convinced Gatemouth they are right.  Spitzer as the champion of the common person just living their lives, against those inside the room sucking the life out of our common institutions and common future?  When you look back at Spitzer’s tenure as Governor, you see a different reality.  A man whose primary concern is the greater glory of Eliot Spitzer.

Certainly it is a romantic idea.  The Once and Future King, whose dream of a reign of fairness and justice is brought down by sin and lust, because the land and the king are one, but who rises to slay the demons of his own creation to find redemption and give the land a second chance.  The New York Times doesn’t seem to be buying it.  That publication helped to make Eliot Spitzer, and whoever decided to leak the news about the Luv Gov’s personal failings surely enjoyed turning the knife by providing the scoop to the Times, making that publication an instrument of its own hero’s destruction.   Regardless, however, the little people want the flawed hero back, according to one article in the Daily News. “Voters should get past the armchair psychoanalysis and look at his record.”   OK, let’s do so.

http://www.nytimes.com/2008/03/10/nyregion/10cnd-spitzer.html?pagewanted=all

http://www.nydailynews.com/opinion/spitzer-rankles-powerful-new-york-article-1.1395395

As Governor, Spitzer continued to act as a prosecutor.  That is, he continued to act as if the only problem was the individual corruption of individual people, who he could crush because he was more macho than they were.  So in general, rather than  question the policies, values and deals of the Pataki/Bruno/Silver era, with their short term winners as well as long term losers, he decided to try to go after the minor campaign finance sins of Republican State Senate majority leader Joe Bruno.  With an abusive investigation gone out of control.  Long before Client 9, this perceived abuse of power had sent his time as Governor off the rails, and turned many people against him.

As I put it at the time, if Joe Bruno is guilt they are all guilty.  And, as a series of more successful prosecutions since has shown, they are in fact all guilty, a generation of politicians, Republicans and Democrats.  But that isn’t the real problem, or at least not the worst problem.  The problem is the things they do that are perfectly legal, or should I say imperfectly legal, because they ought to be illegal.

When I was a kid, my mother baked a couple of batches of my favorite Christmas cookies.  One was for us, and one was for a party she had planned for her friends several days later.  In addition to telling me not to take any of the second batch, she took the trouble to hide it, but in a place where I happened to come upon it.  Surely I could take one and it wouldn’t be missed, I decided, since there was plenty and no one would be worse off.  Then, a couple of hours later, surely I could take another, and shift the rest of the pile, and it wouldn’t make a difference.  After a few days what had been a pile was a few cookies scattered around the plate, fewer than the number of friends my Mom had invited.  Had I left the pile alone, they probably wouldn’t have eaten half, and I would have had some more, but only later.

I felt very bad about what I had done, and haven’t done anything like it since.  But the majority of those in Generation Greed, and the vast majority of those in positions of power today, have never left the self-absorption and lack of responsibility of childhood behind.  They are perpetual middle schoolers.  So what you have is not a few bad apples who need to be brought down any way possible, a challenge of who is more macho and tough.

You have systemic issues millions of people, tens of millions just in this state if all future residents are included, cheated by deals and priorities with tens of thousands, perhaps hundreds of thousands of beneficiaries.  Beneficiaries who rationalize what has happened, and are outraged to be told of a connection between their privileges and other people’s problems.  They scream that all the cookies are really still there, or that someone else took them, or that they deserve the cookies, or that those telling the truth about the cookies are just envious and would have done the same if given an opportunity.  Calling out large groups of people on systemic issues is not nasty and personal, like the stuff Eliot Spitzer specialized in , but it still makes huge numbers of enemies.  While individual prosecutions of criminals makes you look like a hero on almost everyone’s side.

To see evidence that Spitzer was and is not someone that understood or was willing to face the systemic issues, consider a report on financial regulation from Mayor Bloomberg and Senator Schumer that Governor Spitzer signed off on as a partner just before the financial crisis. “It’s a strange fight to join – for the man who used to be New York’s top Wall Street cop. Governor Eliot Spitzer, along with Mayor Bloomberg and Senator Schumer, announced a plan yesterday to push for the easing of federal accounting rules that govern companies in New York. They’re worried the city is losing ground to London as the world’s chief financial center.”  They wanted, among other things, even weaker regulation of the derivatives that would soon blow up the financial sector.

http://www.wnyc.org/articles/wnyc-news/2007/jan/23/schumer-bloomberg-and-spitzer-push-for-finance-sector-changes/

The report was issued in January 2007.  By March 2007, corrupt and irresponsible mortgage originator New Century Financial was bankrupt, preceded and followed by a large number of similar firms.  The broader financial disaster and Great Recession began on August 9 2007 “with the seizure in the banking system precipitated by BNP Paribas announcing that it was ceasing activity in three hedge funds that specialised in US mortgage debt. This was the moment it became clear that there were tens of trillions of dollars worth of dodgy derivatives swilling round which were worth a lot less than the bankers had previously imagined.”  Most of those had been cooked up under even weaker regulations in London.

http://www.guardian.co.uk/business/2011/aug/07/global-financial-crisis-key-stages

The rest followed, but virtually everything that caused it had happened before this report was issued.  A key concern of the financial community at the time was new laws insulating it from lawsuits.  Why?  Because they knew that based on what they had done, there would be lots of lawsuits otherwise.  They didn’t succeed on that one, despite the efforts of Bloomberg, Spitzer and Schumer, but they did get the bankruptcy laws revised to increase debt servitude before everyone else figured out that they had loaned people more money than they could pay back.  Of course, many people lied about their income to be able to borrow and spend that money.  And the whole debt increase was exactly what has allowed the huge increase in income inequality, as it allowed the business sector to pay people less and yet sell them more.  You don’t confront a social tsunami like this by prosecuting a few individuals, allowing the rationalization of the rest to continue.

Eliot Spitzer was elected Governor at a pivotal time, a time when I might have imagined that things might have been turned around before New York State and the U.S. reached a terrible reckoning like the one New York City went through in the 1970s.  How often do I make political contributions?  It rounds off the zero.  But in 2006 I made a contribution to Tom Suozzi’s campaign for the Democratic nomination for New York State Governor, against the candidate of all the special interests and all the media – Attorney General Eliot Spitzer.  And then made another contribution to newly elected Governor Eliot Spitzer’s Excelsior Fund, which he claimed would be used to counter the propaganda of the special interests as he asked them to make some sacrifices for the benefit of the state.

I had become more hopeful, and the special interests concerned, after Spitzer’s inauguration speech. “Teddy Roosevelt instructed, ‘It is only through labor and painful effort, by grim energy and resolute courage that we move on to better things.’” “What we needed now more than ever is a politics that binds us together, a politics that looks to the future, a politics that asks not what is in it for me, but always what is in it for us.” “Our purpose is not reform merely for the sake of reform, but to restore fairness.” “I don’t believe that you elected me to do what’s easy.  Easy is spending your tax dollars without consequence or sacrifice. Easy is saying yes to supporters and no to opponents. Easy is looking the other way while costs rise, debts mount and families lose ground. Easy is what we’ve had, but easy is not where we need to go.”

http://www.nytimes.com/2007/01/01/nyregion/01cnd-stext.html?pagewanted=all&_r=0

Right.  In fairness Spitzer would go on to challenge one interest in particular that had been asking what is in it for me, not what is in it for us, for a decade or more during the Pataki years–Local 1199 and the Greater New York Hospital Association.  By shining a light on this Spitzer earned the undying enmity of many, but also forced changes.  Since then there has been a substantial restructuring of the health care industry, though one incomplete.  And yet, compared with the pre-Spitzer era there haven’t been as many ads from those groups threatening to kill our babies if we don’t give them more money.  Local 1199 even supported Obamacare, after working behind the scenes to kill health care reform in the Clinton Administration.  And in a huge defeat for the health care lobbyists in New York, the city’s life expectancy would go on to exceed the U.S. average, implying it has been forced to provide health care in exchange for its huge public funding.

But that wasn’t the real Spitzer.  His career and backers would come first.  In his first budget battle he folded like an empty suit.  Rather than confront inequities and fight for the future, he agreed to “spending your tax dollars without consequence or sacrifice” by agreeing to hand out more to everyone without paying for it.  And thus “looking the other way while costs rise, debts mount and families lose ground.”  He would walk out the door after resigning with the state on the brink of a financial disaster to which he had contributed.  One reason why politicians sell the future is because when it arrives the public and media don’t blame the past.  People blamed Governor Patterson, who had to actually deal with what had been done, and not Governor Spitzer or Governor Pataki.  They said Paterson was an awful Governor.  But I knew that bad as he was, Paterson was the best Governor we have had since second term (Mario) Cuomo.

Spitzer had proven himself nasty toward individuals, a macho man with a Napoleon complex, but a paper tiger when confronting broader problems.  If Spitzer had been in charge during the Civil Rights movement, as an analogy, he might have tried to prosecute George Wallace on some charge of minor corruption, but he never would have confronted racism head on.

The worst was yet to come, because Spitzer had the final sign off on the most important decision affecting New York City’s public schools for the next 20 years, the one that in fact brought the era of school reform to an end, and replaced it with an era of cutbacks and rationalizations.  A huge pension deal reducing the retirement age and service time of New York City teachers, repeating (actually exceeding) the Tier I pensions that helped devastate the schools financially after Lindsay singed off on them in the 1960s.  When asked during the 2006 campaign fro Governor about all the retroactive pension deals the state legislature continued to pass in New York, Tom Suozzi had answered plainly that he would “veto every one of them than came across my desk” while the candidate of the special interests, Eliot Spitzer, had waffled.

I begged Spitzer not to sign the 25/55 pension deal, in an email to his Excelsior Fund and in a Room Eight post titled “The Defining Moment of the Spitzer Administration Has Arrived.”  “The most recent deal would allow New York City’s teachers to work five fewer years, retire, and thus get paid to do nothing for five additional years. It has been sent to Governor Spitzer for his signature, after passing the legislature virtually overnight with virtually no dissent, just as everything like it passes. This, and not Joe Bruno’s helicopter rides, is the real moral issue, and the measure of Governor Eliot Spitzer’s values.”  I also said I would demand my contribution to the Excelsior Fund back if he signed off on this deal.  Not that I expected that Spitzer ever read the post or e-mail.

http://www.r8ny.com/blog/larry_littlefield/the_defining_moment_of_the_spitzer_administration_has_arrived.html

According to the Times “the pension plan — part of the merit-pay agreement reached in October by the Bloomberg administration and the teachers’ union — moved through the Legislature last week at an unusually fast pace for a proposal so significant and costly. The Assembly passed it on Monday, 134 to 8. Two days later, the Senate approved it 54 to 0.”  The corrupt actuary and Mayor Bloomberg had said it would “cost nothing” but everyone knew otherwise. “You can’t have a more generous pension system and not have it cost more money,” said Charles Brecher, research director for the Citizens Budget Commission, a nonpartisan group. “It’s taking a pension system that is already pretty generous and making it even more generous.”

http://www.nytimes.com/2008/02/17/nyregion/17pension.html?_r=1&

But Governor Spitzer had other concerns. “Mr. Spitzer is likely to sign it, according to an administration official who did not want to be identified because no final determination had been made.  The Spitzer administration is still vetting the plan to make certain that it does not contain any significant unknown costs for the state, which is facing a budget deficit of at least $4.4 billion.”  If the state government had to pay for it, then it might have affected Spitzer’s career, because he might have had to hand out the losses to go along with the benefits he got credit for.  If not, then it wasn’t’ his problem.

And what has happened since?   This deal multiplied by the 2000 pension deals Stringer had signed off on as a member of the state assembly, to leave the New York City Teacher’s Retirement System one of the least well funded among major U.S. public employee pension funds.  Soaring pension contributions have soaked up all of the huge increase in funding due to the Campaign for Fiscal Equity Lawsuit and the 18.0% increase in property taxes put through by the Bloomberg Administration, and then some.  The city has been left with fewer teachers, increased class sizes, reduced education services, and inadequate starting pay.  With more to come when the latest stock market re-bubble re-collapses and interest rates return to normal, gutting the value of the city’s investments.  And future teachers are stuck with a pension plan that leaves them with much lower take home pay and less in retirement benefits than the Generation Greed teachers had been promised to begin with.

This is social injustice and generational inequity on a huge scale.  I’d like to ask Governor Spitzer why he decided a huge increase in compensation for those cashing in and moving out, at the expense of the city’s children and future employees decades into the future, was the right thing to do.  I’d like someone else to ask him.  No, it isn’t as titillating as Client 9, but aside from his family, it is far more consequential.  And unlike the prostitution bust, this is something he has not felt the need to apologize for.  I’m not sure this child of private school Horace Man, who did quite well in an era (now set to continue indefinitely) when the city’s education system bought off a small number of powerful people with “special deal” schools while all the rest of the children were dumped in the social landfill, even considers this a problem.

And consider the timing.  I’ve called the past 20 years a “white collar riot.”  In a riot, people with a weak moral compass decide that since everyone is doing it is not really wrong (not really true) and they are unlikely to be punished (generally correct).  Lots of state and local governments used the 1990s stock market bubble as an excuse for retroactive pension enhancements and pension underfunding.  Executive pay soared at the same time, due to all the purported (and illusory) “shareholder value” executives claimed they were creating.  Forced to confront his actions and their future consequences for others, Scott Stringer, who voted for these deals, could claim to be just another morally weak and financially ignorant hack who is not personally responsible for the consequences of what everyone did.

But by early 2008 the stock market bubble had already burst eight years earlier.  Pension contributions had already soared, taxes increased, and service cut as a result of the 1995 to 2000 deals, which had been similarly described as “costing nothing” or “saving money.”  Moreover, the mid-2000s re-bubble created by cheap money in response to the deflation of the first bubble was already unraveling.  It was months since the financial crisis had started.  The state was already projecting a big budget deficit. The collapse of Bear Stearns was just a few weeks away.  And there is Eliot Spitzer, with this deal on his desk, by himself, not just one of 2012 scumbag state legislators.  Faced with a choice.  And he signed the deal.

Good for the career, and the possibility of Spitzer (or Bloomberg) being the first Jewish President.  A similar deal will surely tempt Cuomo, the first Italian-American  President. Giuliani and Pataki also signed off on pension deals while fantasizing about higher office.  So, back in the day, did John Lindsay.  The United Federation of Teachers is a powerful interest.  It doesn’t care about the city’s children or even its own younger members, to whom it is an abusive near monopoly.  When voting for the leader of that organization retirees outnumber teachers, and add in the small share of teachers who are grifters, slackers and complainers and you have an overwhelming majority of those who actually bother to vote.  Power is on one side, and fairness the other.

The UFT forgot about that deal the day after it was signed.  And all the pretense of working with the city to improve education immediately evaporated – it had all been a ruse to make a huge score for those cashing and moving out.  Mayor Bloomberg responded in kind, and seems to think that yelling at and humiliating those teachers who are doing their jobs, in effect volunteers given what they can get away with if they chose under their UFT contract, would make up for the financial damage of the pension deal he had gone along with.  Not so.  It’s irrevocable.

And how grateful is the UFT to Eliot Spitzer, who signed off the 25/55 deal? “Michael Mulgrew, president of the United Federation of Teachers, said all options — including tapping its own campaign funds for television ads — were under consideration. ‘We’re going to make sure that we do everything in our power to make sure Scott is the next comptroller,’ he said.”

Gee, after all the unfairness Spitzer went along with, this is what he gets?  Isn’t Mulgrew worried that if he goes after Bloomberg and Spitzer, they will respond by telling the truth about that deal and its consequences, to parents, taxpayers and his own younger members? Nope, no matter how nasty his personal tiff with these men, he knows their ego won’t let them, because they were all in on the deal.  And anyone who does bring it up is shouted down by propaganda, now aided by yet another temporary stock market bubble.  Brilliant.  Machiavelli would be proud.

The news media is unlikely to talk about that deal either, because no matter how consequential, no matter how indicative of moral standing, because these sorts of issues are boring.  And sex sells.  But which incident, the 25/55 deal or the prostitution scandal, was a worse example of screwing the young?  At least Kristen got paid.  I knew Spitzer was screwing the young a few weeks before Client 9 hit the newsapers and he resigned.

Of course after Spitzer did sign the bill, I did write to his Excelsior Fund and demand a return of my contribution.  And I did get it.  But that was after Client 9, when everyone got their money back.

And here we stand dealing with the consequences of the most consequential thing Eliot Spitzer did in his time as a public official, the very sort of deal a City Comptroller ought to confront, and he probably hasn’t even thought about it since the day he signed off.  But I thought about it.  And decided that only after an institutional collapse is there a chance of a turnaround.  Because until then, those with the power to do so and an unchallenged sense of entitlement will keep grabbing cookies, until there are not left on the dish.  Those who try to turn things around by putting in more cookies are bound to be disappointed, just as we were let down by Governor Spitzer.

http://www.r8ny.com/blog/larry_littlefield/preparing_for_institutional_collapse.html

And even if ex-Governor Spitzer did get elected Comptroller, and did set out to speak truth to power and fight for the serfs and the common future, he would be unable to do so.  Perhaps as an attorney, Spitzer is aware of the equity or “clean hands” defense in a lawsuit.  Forget the facts of the issue at hand; the plaintiff has no right to sue because he himself has “unclean hands” in the case.  Just as Mayor Bloomberg lost his moral authority after overturning the will of the voters on term limits, leading to a weak third term, so Spitzer would be easily shouted down by his fellow pols and their backers after proving he was really no different.

“We need to work together and have everyone share in the sacrifices.”  “Client 9!”  “We need to have fairness.”  “Kristen!  Black Socks!”  The only weapon a Comptroller has is the truth, but he or she has to be believed.  Spitzer would not be.  For the special interests, Spitzer would be a walking rationalization, while Stringer and perhaps the next Mayor would at least allow the rest of us the clarity of abandoning any reasonableness and instead screaming “why are you and your unions and contractors doing this to us!”

So what is Eliot Spitzer doing here?  Why is he doing this?  Perhaps because a lifetime of obscure work is not consistent with his sense of self.  Perhaps because he craves the spotlight a bit too much, and in government you have no choice but to pay for the show.  I fear he is an egomanic, one who might do just about anything with the city’s already heavily indebted pension funds to get back in the media and back in the game.  And Spitzer’s audits?  Public sector management is tough enough without grandstanding “gotchas” from publicity seeking comptrollers, but that is what we often get.  Frankly, I don’t ever want to hear about them unless they can say “I found this problem and quietly recommended this solution, but six months later nothing has happened.”  Too often we get deceptive reports that justify future selling and special interest grabbing on the grounds that $billions are really there, hidden, ready for the taking.  Remember Hevesi’s “Two Sets of Books?”  The “urges” I worry about, to use the former Governor’s explanation of the scandal that forced his resignation, is the will to power as described by Nietzsche.

There are no qualified candidates for City Comptroller.  Just some men that Generation Greed can count on to “look the other way while costs rise, debts mount and families lose ground.”  Families who don’t matter, in a common future that does not matter otherwise.

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One thought on “Eliot Spitzer, The Other Special Interest Candidate

  1. larrylittlefield Post author

    Here’s a “Saying the Unsaid” exclusive.” Back when Eliot Spitzer was a candidate or Governor (forget which), Ben Smith of The Politicker/The Daily Politics/Politico/BuzzFeed (forget which) got a chance to interview him for a Podcast. He wrote to some people, including me, asking if they had any questions for Spitzer.

    I included a long series of questions based on the ways in which New York compares with the rest of the country on fiscal choices, and how that had changed. While the questions were specific, their goal was to tease out the values and priorities of the candidate/Governor when hard choices had to be made, relative to my own (clearly stated) values and priorities.

    At the end of list, just as a throw away, I pointed out that New York State’s abortion rate tends to be either first of second in the U.S. depending on the year, and whether that is a good thing or a bad thing and why? Of course Smith didn’t bury the lede with all the more practical questions, which he never got to, instead springing that last question on Spitzer and completely flabbergasting him. It basically went unanswered. Gotcha.

    I assure you the other questions were even harder, and well worth submitting in advance for a reasoned response,though that might have led the interview to be cancelled — as Spitzer flunked those questions as Governor.

    Smith knows a lot more than I do about how to succeed in today’s journalism. So once again, I don’t think anyone is going to ask those sort of questions of Eliot Spitzer or Scott Stringer. The press will just cover the lust and scandal, while the interest groups put out their propaganda. By my standards, there are no qualified media outlets to cover the campaign for New York State Comptroller.

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