McConnell_Samuelsen_Nespoli

ITCHING TO SCRATCH MITCH: Senate Majority Leader Mitch McConnell opposes a stimulus bill to aid states like New York that have had their economies severely damaged by the coronavirus, saying, 'There's not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.' Those remarks infuriated and mystified labor leaders like Transport Workers Union International President John Samuelsen (center) and Uniformed Sanitationmen's Association head Harry Nespoli. Mr. Samuelsen accused the Kentucky Senator of trying to use a crisis 'to continue his assault on what remains of America's middle class.' 

Mitch McConnell is the consummate inside man, the kind of politician who keeps a low profile because if exposed to public scrutiny, he wouldn't do well in sunlight.

The Senate Majority Leader, who previously attracted his greatest notoriety when it was revealed a decade ago that he had told fellow Republican Senators that their objective would be to make Barack Obama a one-term President, recently went public with his belief that congressional-aid packages should not be devoted to relieving some of the burden shouldered by the state governments that were hardest-hit by the coronavirus.

In an April 22 radio interview with conservative commentator Hugh Hewitt—about the time that Governor Cuomo was talking to President Trump at the White House about including aid to states and localities in the stimulus bill that was heading to passage but was told to wait for the next one—Mr. McConnell stated, "There's not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations."

In case there was any ambiguity about which pensioners he had in mind, the Majority Leader's staff subsequently issued a statement under the heading of "Stopping Blue State Bailouts."

Need for Bailout Begins at Home                                  

The irony of this posturing was that the state where public-employee pensions were most in need of outside intervention was the one where Mr. McConnell makes his Old Kentucky Home.

As Edward Siedle wrote in that self-proclaimed Capitalist Tool, Forbes, "Kentucky already had the worst-funded state pension system—only 16% funded—before the COVID-19 market meltdown."

New York, in contrast, is a paragon of fiscal responsibility when it comes to ensuring that its pension systems are adequately funded. Robert C. Pozen, in the April 25 MarketWatch, while arguing against the Federal Reserve purchasing long-term bonds from "local governments with severely underfunded pension plans," tossed a bouquet New York's way as he criticized New Jersey, as well as Illinois and Kentucky, for substandard ratios of assets to liabilities.

Citing fiscal 2017 numbers, Mr. Pozen, a former president of Fidelity Investments, noted that "obligations to fund pensions and retiree health care ate up less than 20% of municipal revenues for New York City and San Antonio, Tex., compared to more than 60% of municipal revenues for Chicago and Dallas."

Mr. McConnell may have known such facts, but he was assuming his target audience didn't. The national GOP hopes to retain both the presidency and its majority in the Senate—not to mention the Majority Leader's own seat, at a time when his poll numbers are south of 40 percent—by making it a contest of Red vs. Blue, using rhetoric the late Sen. Daniel Patrick Moynihan dubbed "boob bait for Bubba's." 

Mitch's 3-Card-Monte Math

Mr. Cuomo called the suggestion that states in dire financial trouble because of both the costs they incurred treated coronavirus patients, and the damage to their economies of social distancing to limit the disease's spread that has taken by far its greatest toll in New York were a drain on more-fiscally responsible states "one of the saddest, really dumb comments of all time." After Mr. McConnell's comments circulated, the Governor told reporters that in fact Kentucky was near the top of the freeloading class while New York "puts much more money into the Federal pot than it takes out."

The state, he said, contributed $116 million more to Washington, D.C. counting Federal taxes, than it received in aid. Kentucky, on the other hand, extracted $148 million more from the Feds than it put in.

Long Island Congressman Peter King called Mr. McConnell's remarks "shameful and indefensible" in ways that went beyond the balance sheet. Mr. King, whose decision to retire at the end of the year gave him more freedom to speak his mind than his GOP congressional colleagues, tweeted, "To say that it is 'free money' to provide funds for cops, firefighters and health-care workers makes McConnell the Marie Antoinette of the Senate."

Two union leaders who represent the kind of blue-collar workers who provided Donald Trump's margins of victory in the Electoral College in 2016 and figure to again play a pivotal role this year were equally harsh regarding Mush-Mouth Mitch, though without historical references.

Transport Workers Union of America International President John Samuelsen said in an April 28 phone interview that Senator McConnell "perfectly exemplifies the type of individual who never lets a crisis go to waste. This is, unfortunately, like a wet dream for this guy: he's got an opportunity to continue his assault on what remains of America's middle class." 

Helps Rich Get Richer

He was referring to what amounts to the GOP's dirty little secret: that while it postures as the champion of the white working class, Mr. McConnell and Mr. Trump have both made catering to the party's wealthy donors their priority. The Senate Majority Leader's concern about "borrowing money from future generations" didn't stop him from pushing through a huge tax cut in late 2017 whose prime beneficiaries were the richest Americans and large corporations. Those corporations have also been on the receiving end of much of the recent stimulus money—including large sums that were intended to assist small businesses.

And while Mr. McConnell has used his position to ensure that Kentucky got far more in Federal aid than it gave to the national coffers, it's unlikely that when a new stimulus bill gets negotiated, he will be extending himself on behalf of his state's employee pension fund. Mr. Siedle's Forbes piece, under the headline "Kiss Your State Pensions Goodbye," noted that while the Majority Leader was among the Senators who introduced a bill to secure pensions for nearly 90,000 retired coal miners amid coal-company bankruptcy filings, he didn't seem similarly inclined to stand up for his state's public employees, even though there are 514,000 of them.

Mr. Siedle wrote, "Presumably, Kentucky would be the first state to use McConnell's bankruptcy plan to eliminate state worker retirement security...Evidently McConnell finds state workers less deserving than coal miners." Which may explain his low standing in the polls in a traditionally red state that gave signs it was changing when it elected Democrat Andy Beshear Governor by 5,000 votes against incumbent Matt Bevin last November.

Mr. Samuelsen, told just how underfunded Kentucky's pension system was, said, "I'm not surprised by that. With guys like Mitch McConnell, it's hard to believe that blue-collar Americans turned their backs on Democrats in the last election. And in the current election, it's amazing that it's even a contest. The only thing that I can think of is that on bread-and-butter [economic] issues, blue-collar workers may still have a problem with the Democrats. It's hard to believe they could still have faith in the Republicans."

Uniformed Sanitationmen's Association President Harry Nespoli offered a less-pointed analysis, but he was baffled by Mr. McConnell's remarks.

"Was it a political reason, or was he saying it from the heart?" he asked April 29. "The vibe I'm getting is there might be another stimulus for New York."

'This Thing Crippled City'

Mr. Nespoli, who has made weekly trips to the union's lower Manhattan office lately since recovering from the virus he calls "that beast" after contracting it in early spring, continued, "You gotta look at the city and the states that have been crippled by this thing, and help them. The state also took a beating."

New York public-employee pensions are guaranteed under the state constitution. But one reason the city's unions used their pension funds to buy billions in municipal bonds in 1975, when the fiscal crisis had made them untouchable in the financial markets, was the fear that if then-Mayor Abe Beame declared bankruptcy, it could put members' pensions at risk.

If anything, those pensions have become a bigger target in the 45 years since, less for the fiscal cost than because they are a prominent symbol of public-employee power at a time when defined-benefit pensions have become increasingly scarce in the private sector.

In 2010, the cover of Barron's, which by then had been swallowed up by Rupert Murdoch's media octopus, featured a cartoon of a cop and firefighter lounging on beach chairs holding cocktails at an island resort beneath the headline, "Investors, Beware." In smaller type, it stated, "States and cities are going broke. One reason: gold-plated pensions for police, firemen, teachers and bureaucrats."

Can't Take Threat Lightly

The year before, and the year after, then-Mayor Michael Bloomberg sought to abolish or restrict the Variable Supplements Funds for cops and firefighters, aided by another Murdoch outlet, the New York Post, which portrayed the $12,000 annual payments made to retirees as "Christmas bonuses." Trampled in their campaign was the reality that the VSFs—which are derived from pension-fund stock profits though not technically a pension benefit—were created in return for the police and fire unions allowing their systems to invest in the stock market a half-century ago. The 1988 deal that maxed-out the payments at $12,000 wound up producing huge savings for the city during the periods when the stock market boomed.

One retired union leader who remembers those efforts to eliminate or reduce hard-won benefits said in an email following Mr. McConnell's remarks and the MarketWatch article, "At minimum, the anti-pension crowd will try hard to get defined-benefit pensions reduced...Right now, it's only a trial balloon, as there is no provision in federal law for States to declare bankruptcy. Cities can."

Then he asked, "What about in 6 months? Support your union. Support elected officials who support your pension. Oppose those who do not."

Mr. Nespoli seemed optimistic that Senator McConnell's stance would not gain traction, saying, "Cuomo made a very good point that Kentucky takes out more than it puts into the Federal Government. So let's put the bull--- behind. Let's pull together and make it better."     


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