Sunday, December 28, 2008
From Wayne Barrett: Mike Bloomberg is the Best Mayor and the Worst
The Transformation of Mike Bloomberg
How the benevolent billionaire with no political debts ended up owning us all
By Wayne Barrett, The Village Voice, November 19, 2008
With additional reporting by Patrick B. Anderson, Ana Barbu, Beethoven Bong, Sara Dover, and Jana Kasperkevic
Mike Bloomberg is the best mayor—in fact, the best state or city chief executive—I've covered in 31 years at the Voice. He's also the worst.
In his first term, he was able to close a gaping budget chasm without crippling city services by imposing the largest and bravest property-tax hike in history—and it sent his approval ratings plunging. When the city boomed again, this Nixon-to-China boldness by a businessman/mayor had forever refuted the knee-jerk right-wing orthodoxy that higher taxes invariably kill growth. His smoking ban proved that a mayor can literally change the air we breathe and was part of a lifesaving public-health commitment that pumped resources into city hospitals that his predecessor had stripped of city funding. While mayors before him had hidden behind the independent Board of Education to diffuse responsibility for the seemingly intractable dysfunction of the schools, Mike Bloomberg put himself in charge and staked his mayoralty on the slow but steady improvement that has occurred with him at the helm. The continuing decline in the murder rate under Bloomberg was a rebuke of the Giuliani years, when New Yorkers were led to believe that a polarized city was the price we had to pay to reduce crime.
As thankful as the city is for all Mayor Mike accomplished after 9/11, that was nearly a full term ago. Now, he's decided he wants a third term, even though he still owes us a second.
Even his strongest allies have a hard time naming a memorable achievement from Bloomberg's second term—beyond his sparking a national gun-control campaign. Instead, he was fixated for most of the last two years by an always-improbable, yet ballyhooed pursuit of the presidency, followed by a largely unnoticed, two-month-long audition for the consolation prize of vice president.
In one of the most sordid performances by a city executive in modern history, Deputy Mayor Kevin Sheekey appeared on NY1 in May to declare that "the person who picks Mayor Bloomberg as their vice-presidential candidate wins the election," partly because Bloomberg would "help finance a campaign" with "between zero and a billion" dollars. This televised and indiscriminate bribe offer generated no takers and, more remarkably, drew not one word of fire from the city media.
Two weeks later, Bloomberg acknowledged that he'd asked a pollster to see what voters thought about extending term limits so he could run again. The day before Joe Biden's selection was formally announced in late August, The New York Times revealed that the mayor had been reaching out to fellow media titans—including Arthur Sulzberger of the Times, the Post's Rupert Murdoch, and the Daily News's Mort Zuckerman—to see if they would support a City Council bill to reverse the two-term limits that voters had approved in two overwhelmingly popular referendums. Two of the newspapers had to distance themselves from their own prior opposition to altering term limits by legislation, as did Bloomberg (he called a previous attempt "an absolute disgrace") and his council consigliere, Christine Quinn (in December, she nixed the possibility of a bill, saying that "the voters have made their will very, very clear").
Last month's 29-to-22 council vote to do Bloomberg's bidding was the most tawdry moment in city politics I've ever seen. More camera crews and reporters attended the vote than any other session in City Council history—some said the passage of the bill was as close as we would get to a mayoral election in 2009.
The mayor justified the bill by saying that it gave voters an additional choice—namely, himself. But unnamed sources had already told the Times that Bloomberg would spend $80 million on his re-election (at least $20 million of it on attacks on anyone daring to oppose him). The $80 million, roughly what Bloomberg spent in a non-competitive race in 2005, is cheap compared to what Sheekey claimed Bloomberg was willing to pay for a vice-presidential run. If Comptroller Bill Thompson or Congressman Anthony Weiner runs against Bloomberg with the support of Barack Obama, Hillary Clinton, and a respectable slice of the party's New York establishment, the mayor might have to double that number.
Bloomberg's threat of using attack ads, coupled with the possibility that Thompson could settle for a safe re-election and the 44-year-old Weiner might decide to wait, could leave us next November with no real choice.
The Bloomberg who came into office as the anti-politician, promising to transform city government, has been transformed himself. Some of us liked him precisely because his wealth insulated him from the kind of horsetrading that diminished his predecessors. But seven years later, Bloomberg has not only proved himself to be a master politician, as hungry for power as anyone we've ever seen, but he's also ended up putting nearly everyone who deals with the city deep into his political debt.
Bloomberg is not, obviously, the first mayor to try to undo term limits as his days dwindle. After 9/11, Rudy Giuliani cajoled the council to re-introduce a bill that the previous January had been bottled up by a 5-to-4 vote in committee, but Councilman Stan Michels, who had introduced the bill, refused. Giuliani then pressed to have his term extended for three months, but he needed the agreement of the three candidates then in the race to replace him—and when one, Democrat Fernando Ferrer, said no, he dropped it. Giuliani's excuse was the 9/11 attacks; Bloomberg and his billionaire backers apparently believe that the end of the credit swap and subprime orgies at Lehman and elsewhere are an even greater cause for emergency mayoral retention than the slaughter of three thousand.
The Times called it "a terrible idea" when Giuliani tried to prolong his stay, noting that neither the city nor the nation had "ever postponed the transfer of power" in the belief that it "could not get along without the current incumbent." But seven years later, it decided, after the next mayor and Sulzberger had reconnoitered, that term limits "would deny New Yorkers—at a time when the city's economy is under great stress—the right to decide for themselves whether an effective and popular mayor should stay in office." Conveniently, the paper saluted Bloomberg, before the mayor publicly announced his new third-term pursuit (as did the Post and the Daily News).
We are all used to editorial boards making endorsements determined by their owners, but this was the first time in memory that these three proud institutions had marched in such lockstep on a policy matter after meetings between a political figure and their three owners. But the editorial pages were hardly the only compromised voices. The New York City Campaign Finance Board (CFB), which the Times has called the "crown jewel of city political life," was compelled by the mayor and Quinn—who, together, appoint its members—to issue the "draft" of an advisory opinion designed to push undecided council members into the "yes" column. The board assured the council that if the extension passed and a member decided to run for re-election, the thousands of dollars that some term-limited members had already spent in seeking higher office would not count against their cap in a new council race. But it wasn't the substance of the ruling that was dismaying—it was the timing of it. According to sources close to the CFB, Bloomberg and Quinn staffers demanded that the board act before the council vote, with Quinn threatening to pass a similar bill—but with detrimental consequences—if the CFB failed to act. Asked twice if Bloomberg aides had lobbied the board to issue this unprecedented opinion in anticipation of a legislative vote, executive director Amy Loprest dodged the question and finally said: "I can't comment on that." Bloomberg even sullied his own charitable generosity, summoning nonprofits he funds to council hearings to pay homage despite their tax-exempt status, as if there is now a turnstile at his supposedly "anonymous" foundation.
Mario Cuomo trudged down to testify for the extension without revealing that the managing partner at his law firm is a director of Bloomberg L.P. and that the company is the law firm's top client. Ed Koch went from hosting his weekly show on Bloomberg Radio to celebrating the prospect of a third Bloomberg administration. Peter Vallone, who insisted when he was speaker that the only way to undo term limits was by referendum, switched sides without mentioning the $1.8 million in fees his family firm collected last year for lobbying City Hall (to say nothing about his son keeping the family seat). Five unions with fresh new contracts, thanks to Mike Bloomberg, rushed to the witness table, some closing their deals right before and some right after their appearance. Time Warner's Richard Parsons did a stint at the hearing and on his own channel (NY1), even while the Bloomberg administration was extending the company's lucrative cable franchise for six months and considering a 10-year renewal.
No one is suggesting that these giants didn't actually believe their arguments for a third term, but the large number of Bloomberg fans who are also Bloomberg beneficiaries makes it harder and harder to distinguish enthusiasm from interest. His control over a vast city budget, hundreds of millions in private donations, and billions in undisclosed personal investments cloud the authenticity of every nice thing said about him. And a day-after-Christmas decision last year by the Bloomberg-appointed Conflicts of Interest Board (COIB) has made his money trail both more expansive and more elusive. At his request, the board decided that he would no longer be restricted to salting away his money in "large, professionally managed mutual and exchange-traded funds." The COIB now allows Bloomberg's influential investment advisor, Steve Rattner, another big third-term booster, to put Bloomberg's estimated $20 billion fortune to work in a wide variety of investments, so long as he and the rest of us never find out precisely what they are.
Supposedly, Bloomberg is only consulted about the broad categories of his investments, and Rattner, whose other top job is advising his lifelong friend Sulzberger, makes the rest of the decisions. Perhaps that's why there was so much press speculation prior to Bloomberg's third-term decision that he might buy the troubled Times, a deal that could have put Rattner at the negotiating table with himself (Bloomberg told Newsweek that Rattner "couldn't represent either" because he's a friend of both). Even Sheekey, who appears to spend much of his fantasy life speculating about what to do with Mike Bloomberg's money, was telling his friends until shortly before the term-limits decision that he thought Bloomberg would go ahead with the Times purchase.
Sulzberger insists that the paper isn't for sale, but with the value of the family's controlling stock plummeting, a generous offer from a white knight like Bloomberg might be too much for some members of the Sulzberger clan to resist, making a third term for Mayor Mike a potential firewall protecting Arthur Sulzberger's ability to continue controlling it.
If Bloomberg is mayor again, it's certainly less likely that he would bid for the Times, whose total market capitalization is a meager $1 billion. With the obvious cost-saving synergy between Bloomberg's information company and the Times, this acquisition has a business logic that transcends politics, even while it might be already influencing it.
There's just as unnerving and confounding a tangle of interests between Bloomberg and Murdoch. In 2007, Bloomberg L.P. decided, apparently after some consideration, not to compete with Murdoch for The Wall Street Journal. Murdoch similarly decided this July not to compete with Bloomberg when he paid $4.5 billion to buy Merrill Lynch's 20 percent interest in Bloomberg L.P. In this walled-off billionaire playground, it's impossible to tell if any of these third-term mogul endorsements spring in part from a business motive.
The colossus we know the most about is Zuckerman. When Bloomberg ran for mayor in 2001 and the Daily News was the only paper to endorse him, he held more than a half-million dollars of stock in Boston Properties, the publicly traded real estate company that Zuckerman controls (Bloomberg may have actually owned more, but, by law, he was required only to disclose dollar amounts up to that ceiling). Bloomberg had to give up those holdings when he took office, prompted by an earlier COIB ruling, and the Bloomberg administration ended up doing its share of deals with Zuckerman's company—like air rights and other approvals on the company's 39-story tower at 250 West 55th Street. At an October 8 investors' conference, Boston's senior vice president Robert Selsam boasted of the company's success with City Planning, recounting how the firm had secured three complicated variances across five zoning districts that allowed it to maximize floors and footage. "The key," said Selsam, "is knowing how to effectively navigate the review and approval processes" of the city. He didn't, however, mention that he might have a bit of an edge at that game.
Zuckerman served as a prime promoter of Bloomberg's presidential candidacy ("He's the most gifted public servant I've ever encountered") before he moved on to become the editorial hammer against anyone who dared oppose a third term (blasting some as "Term Limit Hypocrites" on the same page that called supporters of a similar 2006 bill "shameless"). And the warm embrace between these two raises questions about everything the city does when Zuckerman's interests are involved. Zuckerman tells the Voice that he doesn't think "anything other than the normal process" was done by the city on West 55th Street.
At least Zuckerman doesn't need Bloomberg's cash. Many New Yorkers have an eerie feeling now that Mike's money is literally everywhere and that a city, said to be for sale in the era of the big-time bosses, has actually been bought by a mayor so much bigger than they ever boasted of being. The richest man in New York is also, for the first time, the mayor of the city and one of its grandest philanthropists, making it almost impossible for the rest of us to talk to him without wondering at some level of consciousness: "Can I get a slice of this guy?" His personal and public outlays have flooded the city's bloodstream for years now, and few are so uninterested in a possible transfusion of their own that they will take him on.
The claim that all this was done because of Bloomberg's sudden discovery, apparently in late September, that the city faced a daunting financial crisis is a joke. Had the mayor decided to seek a third term sooner, a referendum could have been put on the ballot to allow voters to have a say about term limits for a third time.
Bloomberg would have us believe that the city requires his mastery of market and municipal economics, though he was one of the few people in town who, by his own account, didn't recognize that the crisis was so severe that the city needed him—until Lehman collapsed, which is when he ostensibly made up his mind to run again. Zuckerman is at a loss to explain why Bloomberg didn't see the crash coming sooner. "I don't know," he says. "I never talk to him about stuff like that." The mayor is such a financial seer that he is still awarding new 8 percent salary increases to supportive unions even while Governor David Paterson (pictured at right, above) is publicly asking the state's unions to re-open their contracts for cost-savings that could prevent mass layoffs. The police union, which used to picket Bloomberg's townhouse and drive him nuts, got such a rich deal recently that the mayor restored four paid days off that state arbitrators had just taken away. Their leader then put in some overtime for the third-term bill.
No one played a larger role in making the term-limit extension happen than public relations giant Howard Rubenstein, (pictured at right) who, usually only an agent for the town's invisible heavy lifters, became a "principal" this time, according to those in the know. Rubenstein, who represents Bloomberg L.P., insists he did his term-limits work as a "volunteer." He got client Murdoch in on the deal and sat Bloomberg and Deputy Mayor Ed Skyler (picture, right) down with Ron Lauder, another client and the billionaire who got the term-limits law passed in the first place, way back in 1993. Lauder, who was already
doing ads opposing an extension, agreed to muzzle himself. Rubenstein also reached out to Zuckerman and Sulzberger, appeared as an unnamed source in the Times story that launched the buildup to the bill, served as the spoon that fed the Post the Lauder story, and put together the press conference that 12 supportive unions held at City Hall. Yet, as intimately involved as he was every step of the way, Rubenstein's chronology of how the mayor made his decision demolishes the notion that the market crash was the cause.
Rubenstein, registered as a city lobbyist with 19 clients, acknowledges that he's been talking to the mayor about a third term for at least many months. "I've been asking again and again, and he never said, 'Absolutely no,' " says Rubenstein, contrasting that with the flat rejection he got from Bloomberg about any possible run for governor. "He'd say, 'Let's see.' He was thinking about it. He was publicly saying he wasn't interested, but I always felt he'd really like to do it." Asked about a paragraph at the bottom of a Times story that claimed that Rubenstein's client and close, personal friend, developer Jerry Speyer, and financier Henry Kravis, who jointly co-chaired the omnipotent Partnership for New York City, had approached Lauder about supporting a one-time extension of term limits for Bloomberg and the council two years ago, Rubenstein says: "It's all true." Not even Rubenstein argues that the pitch Speyer and Kravis made in 2006 was prompted by a prophetic sense of municipal doom.
What kicked the third-term campaign into high gear, Rubenstein concedes, was a shrinking of Bloomberg's options. Asked if the mayor started seriously weighing the idea of another term after the presidential and vice-presidential dreams died, Rubenstein says: "I think you're accurate. He really enjoys the action." Rubenstein says there's "no doubt" that the mayor then began "searching" for a way to stay in play. His friend Zuckerman offered the Times a similar explanation. Most jobs, Zuckerman said, "would never fully engage him." He would "waste away if he were in a state of semi-activity." Asked by the Voice if this psychic need contributed to Bloomberg's decision to run again, Zuckerman seemed at loggerheads with himself, at first saying, "It's not as if he's totally bored" with his other life, and then adding that "he's addicted to the public life of politics." Since Bloomberg did not want to be governor, where there is actually a constitutionally proscribed vacancy in 2010, the only available therapy for his strobe-light addiction became another stint at a familiar and friendly hall, particularly one where he would not also be responsible for the plight of Buffalo. It mattered little that he, more than any mayor, has repeatedly made the case that the state dictates everything the city can or can't do, down to how many cameras it can post at stoplights. The only way he could save the city, his supporters bizarrely argued, was from City Hall, forcing them to toss out the will of 1,173,558 voters in two referendums.
The recorded sequence of events, some of it abetted by Rubenstein, unmistakably shows how Bloomberg's moods and personal needs, rather than Wall Street's spiral, were setting the agenda. The Post, the paper Rubenstein prefers to leak to, reported in April that the mayor was considering another term, sparking adamant denials from City Hall. On June 4, the Post, citing a secret source, reported that Bloomberg had already done a private poll about changing term limits. On June 6, Bloomberg confirmed that a poll had been done and said that there was "still plenty of time" to put an initiative on the 2008 ballot extending term limits, promising reporters to "get back to you in the next few weeks." Instead, he dallied until it was too late to do a referendum this year and got Quinn to defeat a motion for an early 2009 referendum and ram an extension, without a referendum at all, through the council in record two-week time.
Quinn was in such a Bloomberg-induced rush to back the bill that she did it three days before the council hearings began, then skipped the hearings she'd called, only to cite their mere occurrence during the council vote a few days later as proof of how democratic the process had been. It wasn't the economic panic that prompted the term-limits bill; it was the bill that prompted a legislative panic. Never before was the moribund council so apoplectic.
Kathy Wylde, the president of the Partnership, says she learned "in July" that the mayor was "seriously thinking about it," after making inquiries for at least a year. Wylde's board of directors includes virtually everyone whose name has appeared in stories detailing the early lobbying for another term—Speyer, Rattner, Kravis, Rubenstein, Parsons, Murdoch, and even Lauder's nephew, William, who actually runs the cosmetics company (Speyer went to William Lauder's father, Leonard, to put pressure on brother Ron). Bloomberg was once on the Partnership board himself, and its 20-member executive committee voted unanimously to support the extension legislation.
Wylde also lobbied Quinn, who's been a friend since the two worked together in housing organizations more than a decade ago. Wylde introduced Quinn to the Partnership honchos at a luncheon at the Speyer-owned Rockefeller Center shortly after she became speaker in 2006. "The universal opinion of the CEO is that she has a bright political future," Wylde declared from the onset. Wylde got 30 bigwigs to sign a letter backing the bill, 25 of whom are on her board, and an ad featuring it soon appeared in the Times. The fact is that under Wylde and Speyer's leadership, the Partnership is the closest thing we now have in New York to a political club with the clout to make a mayor.
Of course, the Partnership sees itself as a civic association acting on behalf of us all, but Bloomberg has not just been good for business in the broadest sense—he's been especially good for particular businesses, like Jerry Speyer's. Speyer is both an owner of the Yankees and the developer of its new stadium, which is steeped in so many layers of suspect Bloomberg subsidy that both a state assembly and House subcommittee are investigating alleged violations of bonding laws. Speyer was also designated by the city as the developer for the Gotham Center in Queens five years ago and is only now beginning to build a 21-story tower, tenanted entirely by the city health department under a 20-year lease. Speyer started out seeking a city lease for less than half of the building's 600,000 square feet, but when he failed to locate any other tenants, the Bloomberg administration decided to take it all, moving 2,700 employees from 15 different sites to Speyer's building. The city will also spend another $50 million on streetscape and other improvements near the new tower, making it a monument to Bloomberg subsidies, with city-owned land and a $29.6 million starting annual rental stream emanating from City Hall.
In 2006, Speyer also bought Stuyvesant Town and Peter Cooper Village, an 11,000-apartment heaven for middle-class families for decades. The largest and most controversial real estate deal in American history, with a price tag of $5.4 billion, the Speyer purchase was fiercely opposed by tenant organizations, who submitted their own $4.5 billion offer and were seeking tax breaks and other support from the Bloomberg administration. The mayor refused to intervene, calling Speyer a "great landlord" and declaring, "I think the tenants will be well protected." News accounts later contrasted his hands-off policy on the Speyer deal with actions he'd taken in two other similar tenant fights, with the Times even suggesting that Speyer's unique role in the Manhattan elite may have insulated him.
In fact, hundreds of rent-stabilized tenants have been denied renewal, and Speyer is losing most of the legal cases that have been filed challenging the company's maneuvers. A recently uncovered financial document for Speyer states that the company expects to convert 6,397 units to market rents by 2011, yet Bloomberg insisted earlier this year that he stood by his earlier claim that tenants would be protected. What no one seemed to notice was that just days before the acquisition was completed, Merrill Lynch bought 49 percent of Speyer's partner in the deal, money manager BlackRock. The COIB had ruled when Bloomberg took office that he had to recuse himself on Merrill Lynch matters because of its partial ownership of Bloomberg L.P., suggesting that the mayor should have allowed others in his administration to determine the city's role in the sale.
I remember in the early Bloomberg days—seizing any opportunity to observe, with pleasure—that his money had bought us a leader that was finally free of the circle of donors, lobbyists, and powerbrokers that consumed earlier mayors and confounded the public good.
His message, and it once was true, was that he owed nothing to anybody. He began parceling himself out in the 2005 campaign, when he did five contracts with unions that endorsed him and spent more of our money to re-elect himself than his own. And since his re-election was never in doubt, he dipped into his money and ours, it turned out, for vanity: It merely increased his margin of victory. Imagine how many own a piece of him now.
If you believe it's worth all of this to get a savvy hand at the tiller in turbulent times, think back to what the Times wrote in 2001 when they endorsed his opponent: "Even within the annals of businessmen-candidates, he is ill-matched to the job he covets. His company has no stockholders and no unions. It is a brand-new business, its corporate culture and decision-making structure devised to suit his character. . . . Many of Mr. Bloomberg's greatest talents would turn out to be utterly beside the point." When the bursting collective bargaining, pension, and debt costs of the recent Bloomberg boom years are considered, the Times of old might have had a point. As it also had as recently as June 9, when it warned against a term-limits gambit and urged Bloomberg to seek another office: "We are wary of changing the rules just to suit the ambition of a particular politician."
Bloomberg is so set on writing his own story that he decided to produce a memoir, set for release just as he left City Hall. He asked Margaret Carlson, who is on Bloomberg L.P.'s payroll, to collaborate on it. But he recently put it off, the Times said, because he was worried about its "boastful tone" possibly turning off voters. The book might have had other, related problems: A tell-all is fine for someone walking away from the game, but not for someone about to begin a new campaign. The claimed successes might have been an irresistible target for reporters, and the petty side of Mike may have led him to dish on people he now needs to seduce one more time. Obviously, most candidates would think that a bestseller in a campaign year, with a 300,000 initial printing, would be an asset. But not Mike, who isn't ready yet to buy his own history. He's determined, regardless of the moral costs, to make history instead.