By: Mark Glennon*
Do Chicago journalists need to make stuff up to do a juicy story about political criminality, greed, and conflicts of interest? At NBC-5, apparently so.
Let’s start with a few whoppers by its reporter, Mark Anderson, in an article last week. The story was about supposed violations by some investment managers of pay-to-play rules because of campaign contributions allegedly made to Rahm Emanuel and Bruce Rauner:
• Rahm, says Mr. Anderson, “breaks the law by financing his re-election campaign with contributions from firms” doing business with the city.
Fact: Nonsense. There’s nothing in the story about anything even potentially criminal by Rahm. The rules at issue in the story are applicable to campaign contributions by fund managers, violations of which can result in fund managers being barred from doing work with the government for a period of time thereafter. There’s no criminal penalty imposed on candidates and, as discussed below, it’s doubtful the managers violated any rule, either.
• Rauner, says Mr. Anderson, “wants to cut off promised benefits for current retirees and let them take their own chances for the future.”
Fact: To the contrary, and much to the disappointment of those of us who think some earned benefits will have to be cut, Rauner has said repeatedly and consistently that he wants no reduction for current retirees or benefits already earned by current workers.
• Rauner’s “only solution” for pensions, according to Anderson, “lies in turning over the dollars in the state’s funds to investment managers just like he was, as soon as possible, to make even more millions in profit.”
Fact: Just the opposite. By shifting from defined benefit plans that we have now into 401(k)-type plans, investment managers like Rauner was would gradually see their primary source of funding dry up. Private equity firms like GTCR, Rauner’s old firm, get most of the money they invest from pensions. They get none from 401(k)s or anything similar. Mr. Anderson slams Rauner for a huge conflict of interest. Truth is, when private equity managers advocate ending defined benefit pensions they advocate against their industry’s interest.
Beyond those obvious errors, the underlying story was muckrake. It started at NBC-5 with a piece a week earlier by reporter Erin Carlson, who based her’s entirely on a story written by a journalist named David Sirota. Most of the campaign contributions Sirota discussed weren’t made by people at firms that had any direct relationship with the government whose money they ended up getting. Instead, their firms received money from “funds of funds,” which are intermediaries governments and their pensions invest in, which then re-invest in many other firms. Being one-step removed, there’s no clear violation of any rule, and there’s a question whether managers in the underlying funds even know what government pensions are funding them.
Perhaps that’s why there’s no clear rule against what happened. I’m no expert on that, but I know who isn’t — Erin Carlson, and she didn’t rely on anybody who is. Most readers probably assume a reporter knows their subject or did some homework when they start an article with talk about possible criminal activity. Well, Ms. Carlson spent most of her career as a gossip columnist and self-described “reality TV historian” before NBC-5 decided she was qualified to cover matters of state. She’s spent her time on topics like Kim Kardashian complains about Kris Humphries’ obnoxious barking habit. For a good laugh on some of her other gems, see our earlier article linked here.
I’m also sure that the author from whom Ms. Carlson cut and pasted, David Sirota, does not report facts honestly. He’s notorious for inflammatory articles based on errors and exaggerations. For an illustration, see this article where a Reuters columnist dissects a piece by Sirota about Chicago’s TIFs.
And finally, today, NBC-5 has a story acknowledging that Rauner wants to leave alone pension benefits already earned. But instead of admitting they had that wrong in the first article, they mock him for changing his position after the election, saying his position is “clashing” with “ambitious election season statements.”
Baloney. Rauner consistently said before the election that he wanted to leave already earned benefits alone, and that was widely reported before the election. A quick look for a few places saying so turns up Crain’s, ABC affiliates, CBS affiliates, and Reboot. Rauner said it in at least two debates, and he said anything that doesn’t is unconstitutional.
NBC-5 knows exactly what it is doing. It’s using a model championed at the national level by FOX and MSNBC. It’s a model based on distorting and fabricating news.
*Mark Glennon is founder of WirePoints