Friday, August 13, 2004

James E. McGreevey and the Political Closet of the Democratic Party

New Jersey Governor James E. McGreevey holds a press conference to announce his resignation amidst scandals about corruptions. At the same time, he tells us that he is "a gay American" ("New Jersey Governor Resigns Over Gay Affair,", August 12, 2004), making history as the first gay man to exploit coming out as a bid for sympathy to distract our attention from the scandals -- sympathy that he desperately needs to forestall calls for immediate resignation and an interim election:
The timing of the governor's coming out was apparently driven by the potential lawsuit [by Golan Cipel, McGreevey's former aid, alleging sexual harassment], and the timing of his resignation -- Nov. 15 -- was driven by a desire to avoid an interim election. As it stands, the State Senate president, Richard Codey, another Democrat, will inherit the executive office until the end of 2005. While the mechanics of trying to hold gubernatorial primaries and an election this year would be daunting, Mr. McGreevey's strategy doesn't serve New Jersey residents well. The state will be led by an embattled governor mired in personal and legal problems for three months. Then, because of the peculiarities of New Jersey's Constitution, Mr. Codey will simultaneously lead the Senate and the executive branch -- an enormous amount of power for someone whose voter mandate comes only from a State Senate district in Essex County. ("The Governor's Secret," Editorial, New York Times, August 13, 2004)
Judged by the responses of spokespersons of leading GLBT rights organizations, it appears that his maneuver has achieved at least a partial success:
His announcement makes McGreevey the highest ranking politician to identify himself as gay.

"It's obviously an amazing announcement," Michael Adams, Lambda Legal's director of education told

"The very human way in which he made his announcement may help other gay Americans to come out," said Adams.

That sentiment was echoed by Cheryl Jacques, the president of the Human Rights Campaign.

"Coming out is a deeply personal journey and Governor McGreevey today showed enormous courage. We are hopeful that, like millions of other American families, Governor McGreevey and his family will come to a place of understanding."

"The closet is a terrible place to be," said Matt Foreman, the executive director of the National Gay and lesbian Task Force. "Governor McGreevey's announcement today is another poignant reminder of that."

"It takes a great deal of courage to be so honest and straightforward, and we look forward to the day when sexual orientation is not an issue that can be played with in the political arena."

Gay Democrats praised McGreevey's courage.

"He has demonstrated a strong record of support for our community and we are confident that the incoming governor will be as strong," John Marble, the spokesperson for the National Stonewall Democrats told ("New Jersey Governor Resigns Over Gay Affair," August 12, 2004)
Why should GLBT leaders line up behind McGreevey, however? As if McGreevey's coming out were in the general interest of GLBT individuals! Reading about his relation with Golan Cipel, anyone would come to a conclusion that, regardless of sexual orientation of the parties involved, the relation is one of sordid use of political office for patronage:
  • In today's job market, we should all be as marketable as Golan Cipel, the special friend of Gov. James E. McGreevey, who lands jobs as often as the seasons change.

    Job One in 2002 was as McGreevey's $110,000 homeland security advisor. But because the 33-year-old Cipel is a citizen of Israel, federal law-enforcement officials would not share information with him.

    The governor transferred Cipel to Job Two, as a "special counsel," at the same salary.

    When the media continued to question his role, he left state government Aug. 27. He would have had to return to Israel, unless he got a work visa for a job he was uniquely qualified to fill.

    He then got Job Three with MWW Group, a public relations firm in East Rutherford. His job was to oversee relationships with MWW's clients in Israel.

    Among MWW's clients in New Jersey are the New Jersey Lottery; Parsons Infrastructure and Technology Group, the company which operates the auto inspection system, and the Mills Corp., one of six developers to submit plans to redevelop the Meadowlands with a mall and entertainment complex.

    Not everyone in the McGreevey administration was comfortable with Cipel taking Job Three. It was feared it would taint the state's relationship with MWW, with the twisted media reported such items as, "The contract to rebuild the Meadowlands was awarded to the Mills Corp., represented by the MWW Group, the public relations firm which hired Golan Cipel in August."

    On Sept. 12, a group from MWW people met with the governor and staff at a hotel in Woodbridge, and Cipel was a point of discussion. McGreevey aide Jo Astrid Gladding, who attended the meeting, said, "We do not discuss private meetings."

    Cipel remained with MWW until last week, when he accepted Job Four of 2002.

    Cipel was hired by State Street Partners, a lobbying firm in Trenton. The firm was founded by two Republicans, Rocco Iossa and Michael Torpey, the former chief of staff to Gov. Christie Whitman.

    With a new party in power following the November election, it made sense for the firm to add a Democrat. In December, James Kennedy, the Democratic mayor of Rahway, became its third partner. It was a strategic choice. Kennedy was the best man at McGreevey's wedding, and is considered the governor's best friend.

    With Job Four, Cipel becomes the problem of State Street Partners.

    "You can bet the farm this will be a liability (to State Street Partners)," said one of McGreevey's close advisors. The best lobbyists operate under the radar screen. Overnight, Kennedy and State Street Partners became a major blip.

    "We evaluated Cipel on his merits, on his resume," said Iossa. He said Cipel will work with clients in New Jersey and Washington, and the firm is looking to expand its list of international clients.

    "We do not think he will be a liability," said Iossa.

    He will remain a liability to McGreevey, however. He became an issue when McGreevey hired him for a job for which he was ill-suited, and then moved him to an amorphous job, also at $110,000, at a time when the state was having trouble making ends meet. When pressure grew too great, he was hired once, and then once again, by firms with a vested interest in gaining the governor's favor. Some people have all the luck. (Rick Malwitz, "Why Can't the Rest of Us Get Jobs as Easily as Golan Cipel?" Home News Tribune, October 6, 2002)

  • Golan Cipel, identified as the other man, quit his $110,000-a-year state job after questions were raised.
  • Inspired by the period's rapid pace, Mr. McGreevey pledged to make a controversial appointment daily, each one representing a different demographic constituency.

    So he trotted out Golan Cipel, New Jersey's homeland security adviser, an Israeli with minimal qualifications for the job, who didn't even qualify for high security clearance; Roger Chugh, named to the top job in the Department of State, who resigned after being accused of strong-arming fellow Indians for campaign contributions; William D. Watley, who quit last week as commerce secretary after being criticized for lobbying on behalf of development projects undertaken by an affiliate of the church for which he's pastor; and Joseph Santiago, former Newark police director, who was forced out as state police director after alienating everyone and all their dogs.

    And just when things seemed to be stabilizing a bit and Mr. McGreevey was achieving his goal of being on radio and television as much as Oprah, the past two weeks have brought unfortunate developments.

    While casually discussing the longstanding rumor that Machiavelli, who first proposed a Newark Arena during a book tour in 1513, is buried under the goal posts at Giants Stadium, Mr. McGreevey found himself implicated in more messiness. This time it was in a case that led to the indictment of one of his fund-raisers, David D'Amiano, who is accused of soliciting campaign contributions in exchange for government favors.

    FINALLY, Charles Kushner, the governor's top campaign contributor, and the man he unsuccessfully supported to be head of the Port Authority of New York and New Jersey, was charged with hiring a prostitute to try to thwart a federal investigation in a tale with enough familial amity and Machiavellian moxie for a month's worth of intrigue at the Bada Bing. (Peter Applebome, "If New Jersey News Is Bad News, at Least It's Consistently So," New York Times, July 18, 2004, p. 29)
BTW, the governor's love of Israel went far beyond an affair with one Israeli hunk:
"This was the first time ever that a state governor would actively campaign to reverse divestment and to leverage Zionist and rightwing frenzy to announce investing public funds in Israeli bonds. New Jersey Governor, Jim McGreevy, did just that, by announcing to the Zionist rally of many thousands that he was the first governor in New Jersey to invest Public Employees Pension Funds in Israeli bonds" ("Report of the Third North American Conference of the Palestine Solidarity Movement Rutgers University -- New Brunswick, New Jersey, October 10-12, 2003")
Hardly a wise investment, even from a purely capitalistic point of view, setting aside the Israeli occupation: "[B]ased on the findings of a visit by the IMF to Israel in December 2003. . . , [t]he IMF estimates the accumulated GDP loss from the security situation at 6-8% of GDP" ("IMF Sees 2.5% Growth for Israel in 2004; The International Monetary Fund Estimates the Accumulated Loss from the Security Situation at 6-8% of GDP," Globes [online] - Israel's Business Arena, June 06, 2004).

Even while McGreevey was exploiting the New Jersey Public Employees Pension Funds for a political purpose, he was pushing for privatization of pension-fund management at the same time:
  • The McGreevey administration's plan to allow private investment firms to manage New Jersey's multibillion-dollar employee pension funds is beginning to emerge as a sensitive issue in several pivotal legislative elections this fall.

    New Jersey is one of just two states that allow public employees to manage a major pension portfolio, and after the downturn in the stock market three years ago reduced the value of the retirement fund by almost a third, the state treasurer began lobbying to hire outside investment managers and diversify the fund's holdings.

    But the leaders of some state workers' unions say the plan would cost the state millions of dollars to cover the outside fund managers' fees, and warn that investing too heavily in high-risk assets like hedge funds could endanger workers' pensions. With legislative elections just two months away, some Republican candidates are describing the plan as a pay-to-play scheme that would allow Mr. McGreevey and his fellow Democrats to use the lure of lucrative investment contracts to rake in campaign contributions from investment firms.

    Today, just hours after a handful of state workers picketed outside the treasurer's office at the State House, Assemblyman Reed Gusciora, a Democrat from Princeton, joined union leaders in blasting the plan.

    "I'm surprised that the administration has not learned the lesson from the boondoggle privatization schemes of the Whitman administration, which were more interested in political donations than taxpayer savings," Mr. Gusciora said.

    New Jersey's pension funds are now valued at about $60 billion, down from $85 billion in August 2000.

    Although the stock market plunge caused heavy losses for most institutional investors, the state treasurer, John E. McCormac, said New Jersey's pension system, which holds only low-risk securities, had performed worse than similar funds in other states.

    Despite opposition from some union leaders, the state has hired a consulting firm to analyze the portfolio and advise the state on whether, and how, to diversify its holdings. If, as expected, the consultant recommends that the pension system broaden its portfolio, Mr. McCormac said he would have no choice but to contract with outside financial managers because state investment employees are not permitted to buy and sell hedge or venture capital funds.

    But leaders of the union that represents the 60 employees in the Division of Investment, who now manage the pension fund, said the McGreevey administration was painting a misleading picture of the pension fund's performance. Joseph Golowski, a retired state auditor who is now consulting for the union, said the return earned by New Jersey's pension fund had been in the top 10 percent of all retirement systems in the country in recent years. Rae Roeder, the president of Communications Workers of America Local 1033, said the administration's attempt to disband the Division of Investment was politically motivated.

    "It's the last remaining pot of gold in the state," she said.

    Although the administration does not need legislative approval to change its investment regulations, some lawmakers have called for public hearings to establish an oversight body to monitor the way investment contracts are awarded. State Senator Peter Inverso, a Republican from Mercer County who faces a difficult re-election battle in a district heavily populated with state workers, said he would lobby the administration to drop the plan.

    "I am greatly concerned that the pension system and its beneficiaries will fall victim to political contributors who are anxiously lining up for a return on their investment," Mr. Inverso said during a rally last week.

    In New Jersey, where a succession of political corruption scandals has bred deep suspicion of elected officials, that apprehension is one of the major obstacles facing the McGreevey administration's proposal.

    Orin Kramer, whom Mr. McGreevey appointed to head the State Investment Council, said he believed that the administration could win the confidence of the public only if it set up a system that was open and accountable. "The policy will speak for itself," he said.

    In the partisan and highly politicized atmosphere in Trenton, however, Mr. Kramer's credentials have also become a factor in the debate. While Mr. Kramer helped develop public policy in the Carter White House and was chairman of financial regulation commissions during the administrations of Gov. Mario M. Cuomo in New York and Gov. Pete Wilson in California, he is also a major Democratic fund-raiser and was finance chairman of Mr. McGreevey's election campaign in2001. That makes some union officials wary.

    "It just makes no sense to open up the system to even the appearance that campaign donations might be influencing decisions," said Mr. Golowski, the union consultant. "The system we have now was set up 50 years ago because of a scandal, and it has been scandal-free for more than 50 years. In New Jersey, that's fantastic." (David Kocieniewski, "Many Wary of Trenton Plan To Privatize Pension Fund," New York Times, September 4, 2003, p. B5)

  • Seeking support for a plan that would allow private investment managers to run part of New Jersey's $60 billion pension portfolio, the McGreevey administration released a consultant's report today that urges the state to reduce its risk by diversifying its investments.

    New Jersey's employee pension system, the only public retirement fund in the country managed solely by civil servants, lost about a third of its value during the stock market slump of the past three years. Although the losses were comparable to the drop in the market, State Treasurer John E. McCormac has argued that the state can get better returns, and assume lower risks, if it hires professional investment managers to run the fund.

    Despite opposition from state employees' unions, Mr. McCormac hired the consulting firm Independent Fiduciary Services to analyze the system. The firm recommended that the fund, which now invests only in stocks and bonds, begin investing in hedge funds and venture capital. State law does not permit public employees to invest in hedge or venture funds, so such a move would require the state to hire private managers.

    "This report makes it clear that New Jersey should diversify, seek a safer balance and better control of risk," Mr. McCormac said.

    But leaders of the state employees' unions have bitterly opposed the proposal to use private fund managers, saying it would be too costly and open the door to influence peddling.

    New Jersey's pension system was established 50 years ago, after a scandal involving elected officials who had steered consulting contracts to politically connected investors, and union leaders say it has delivered a return on the fund's money. Jim P. Marketti, a union leader, said if the state allowed private fund managers to run the system, elected officials would be able to reap huge amounts of campaign donations. But he worried that public employees might see their retirement security placed at risk. (David Kocieniewski, "Change Urged To Diversify Pension Fund In New Jersey," New York Times, September 19, 2003, p. B5)
By now, the State Investment Council of New Jersey has become set on privatization of pension-fund management, but, ironically, it is McGreevey's own greed that has stalled it: "Under pressure from Gov. James E. McGreevey, the panel in charge of New Jersey's $80 billion investment portfolio yesterday canceled a meeting where it planned to consider a ban on hiring private investment managers who contribute to state political campaigns" (Dunstan McNichol, "Investment Rule Hits a Roadblock: McGreevey Thwarts a Ban on Hiring Managers Who Give to Political Parties," The Star-Ledger, July 16, 2004).

Embodied within McGreevey's career are contradictions of the Democratic Party.

While opposed to gay marriage, McGreevey did sign a domestic partnership legislation into law in January 2004 (Kathy Hennessy/The Associated Press, "Gay Couples Praise N.J.'s Domestic Partner Law, But Want More," May 1, 2004) and pushed through popular progressive tax reforms (Robert S. McIntyre, "The Taxonomist: Jim McGreevey, Working-Class Hero: New Jersey's Governor Stands Alone in the Corporate-tax-reform Hall of Fame," The American Prospect, September 9, 2002). At the same time, his advocacy of Israel and privatization of pension-fund management, as well as his privatization of public political power, has gone further than his Republican opponents'. Interest groups wedded to the Democratic Party, such as the aforementioned GLBT organizations, see men like McGreevey and convince themselves that the glass is at least half full, so they embrace McGreevey's opportunistic coming out and collaborate with him in his charade. If necessary, they would defend worse crimes than his. That's the secret that will stay in the political closet, until we succeed in creating a practical alternative to the Democratic Party.

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