Bruce Rauner and Death of a Salesman’s Campaign

By DOUG IBENDAHL • January 21, 2014

 

There’s a certain long-time best-seller out there which famously claims: “No man can serve two masters . . . Ye cannot serve God and mammon.”

 

Assuming that claim is true, Bruce Rauner strikes me as a guy who got in line for mammon, and then went back for seconds.

 

Full disclaimer here in the interest of not arousing the stable of attorneys Rauner Inc. likely has on retainer. I know absolutely nothing about Mr. Rauner’s religious beliefs and/or lack thereof.

 

No one is saying Rauner is a bad person because he’s rich. On the contrary. America became a superpower because we rightly encourage success. “A rising tide lifts all boats” and all of that. I have an MBA in Finance from the University of Chicago. I get it.

 

But the fatal problem for Rauner’s gubernatorial ambitions is the irreconcilable disconnect between the way he made his money and the main theme of his campaign.

 

Rauner has declared war on the “union bosses” and talks about how public pension liabilities are bankrupting our state. That’s all well and good. Much of what Rauner says isn’t wrong. He is after all just parroting some obvious truths that a lot of people have been saying for many years.

 

But whether it’s realized in March or November, Rauner’s campaign is doomed because in the end there could scarcely be a worse face for pension reform than a guy who has made millions and millions of dollars from the same pension system he now bashes.

 

Rauner’s campaign is absurd at the core. I suspect every serious journalist knows it, but their employers want to shear the sheep, not kill it. It’s not every day a billionaire throws this kind of ad spending around.

 

It’s simply not credible for Rauner to criticize worker payouts when Rauner I would guess has personally made more from the Illinois pension system (via very generous management fees) than any 100 state workers combined. And that’s a conservative guess.

 

If you want to make a fortune managing pension funds, great, have at it. But don’t expect people to take you seriously as a pension reformer. You really can’t do both.

 

Rauner’s response is that his management compensation is deserved because he “did a good job” by delivering above-market returns. I’m skeptical of that claim, but in any case why wouldn’t any pensioner simply say the same thing? How does Rauner respond to the state worker who says, “I deserve my pension because I did wonderful work and provided excellent value while employed by the state?”

 

And while it’s certainly true public pensions are too generous for many, I’m pretty sure we’ll never find a state worker owning several million-dollar-plus homes and two large western ranches like Rauner.

 

Rauner is bad for the GOP because if he’s our standard bearer he’ll make all Republicans look like arrogant hypocrites.

 

The other big problem I have with Rauner is his documented dishonesty. Back in September we proved how Rauner has been dishonest about the extent of his financial contributions to Democrats. In the past Rauner tried to blame his wife, a hard-core Democrat, for some of his contributions. But the reports on file with the Federal Election Commission speak for themselves. There is no ambiguity.

 

If Rauner can’t be honest about even the simple stuff in the public record, how can we ever trust him on the complicated stuff?

 

And then there are the pay-to-play concerns which aren’t going away. A company partially owned by Rauner’s firm GTCR, LLC (Rauner is the “R” in the firm name) had the now-imprisoned Stuart Levine on its payroll for $25,000-a-month when the Teachers Retirement System (“TRS”) awarded a $50 million investment contract to GTCR in May of 2003. Levine was also sitting on the board of TRS at the same time. The fact that Rauner still seems unconcerned about Levine’s obscene conflict of interest at that time is yet another red flag. (Rauner left GTCR in 2012 in advance of his gubernatorial run.)

 

In a curious twist, GTCR’s proposal was tabled by TRS in February of 2003 when the one GTCR representative sent to pitch the board dropped the ball under aggressive questioning by Levine. Three months later, three GTCR representatives, including Rauner, show up at the board meeting and GTCR is awarded the $50 million deal. It’s been reported that Levine was mostly quiet at this second meeting.

 

Rauner now says he’s never met Levine and he “doesn’t know him.”

 

Is this what the Illinois Republican Party needs right now, a Clintonesque standard-bearer? Are we really going to be asked to get-out-the-vote for a guy who wants to quibble over what the meaning of the word “met” is?

 

At a minimum we know that Levine was present as a TRS board member when Rauner made a presentation to that board in May of 2003. That is a fact, and it is undisputed.

 

Just last week Greg Hinz of Crain’s Chicago Business reported that Rauner still refuses to explain “how and why Mr. Levine made $25,000 a month trying to get government business for a company owned in part by Mr. Rauner.”  

 

And serious questions about pay-to-play aren’t limited to Illinois. Rauner contributed a total of $300,000 to Democrat Ed Rendell’s 2002 campaign for governor of Pennsylvania. The contributions came after Rendell travelled to Chicago to personally meet with Rauner in 2001.

 

GTCR was already managing $110 million in pension funds for the State Employee Retirement System. But after Rendell became governor, Pennsylvania doubled its stake in GTCR funds to $226 million which meant at least $4 million more in management fees to Rauner’s firm.

 

Rauner now claims his support for Rendell was entirely based on Rendell being an education reformer.

 

Baloney.

 

Not only has Rendell always been publicly opposed to school choice (vouchers)(also see here), but as governor Rendell even vetoed a bipartisan education bill, solely because one of its provisions might have given a tax break to some charter-school real estate. Rendell’s stance on public education was in fact embodied by a record of throwing more money at the status-quo. Rendell is your quintessential big-city liberal. He’s proud of it and doesn’t try to pretend otherwise.

 

I’m guessing there will be more questions about more deals involving Rauner before this thing is over. Some Republicans may want to slack on the vetting but the Democrats certainly won’t.

 

No amount of money spent on cutesy ads can turn Rauner into a reformer. In fact Rauner reaches a saturation level at some point – if he hasn’t already – where every ad becomes just another reminder that this Chicago billionaire and buddy of Rahm Emanuel is trying to buy-up our Republican Party home like it was just another underpriced distressed asset for the GTCR portfolio.

 

Is Rauner less honest or trustworthy than the three other highly disappointing candidates in the GOP field?

 

Maybe not.

 

But as the newbie on the Republican block who wants to use our ballot line after years of funding liberal Democrats, Rauner should be doing it twice as clean as the other guys.

 

Some polls have Rauner running ahead for the GOP nomination. He’s helped by having three lackluster opponents with little money and even less vision. It’s very sad that with a few million Republicans in Illinois we couldn’t field a decent leader.

 

It remains to be seen whether enough Republicans in this state have the fortitude to look beyond the dollar signs Rauner has put before their eyes.

 

But one thing is for certain, the Democrats won’t be so easily duped by a self-described travelling salesman who decided to run as a Republican this time.

 

Doug Ibendahl is a Chicago Attorney and a former General Counsel of the Illinois Republican Party.

END

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