J.B. Pritzker’s campaign on verge of implosion
ANALYSIS & OPINION BY RUSS STEWART
Rich guys make poor politicians. That is because the methodology by which they acquire, grow and perpetuate their wealth – the when, why and how – is inevitably and invariably exposed during a competitive political campaign. And implosion rapidly follows.
Wealth-building usually, but not always, requires decades of cutting corners, buying clout through campaign donations, firing people, minimizing or not paying taxes, living by a double standard, and doing tax-deductible "good works." Some rich people get it into their head that they are doing "the people" a huge favor by running for office in order to "serve" them. Not true. They run for office in order to serve their ego, are bored, or have an ideological agenda.
And, invariably, some enterprising television or print journalist, or the "opposition research" department of their opponent’s campaign, uncovers their proverbial dirty laundry. In the Internet age, a paper trail can always be uncovered and followed, and documents accessed.
The 2017 top Illinois candidate for "Imploder of the Year" is unquestionably J.B. Pritzker, the billionaire who is seeking the Democratic nomination for governor. He is self-funding his campaign, and has already pumped $7 million into television commercials portraying himself as a "visionary." His numerous corporations and trusts spew tax-deductible money into not-for-profits, which are essentially social service agencies, like those not getting paid as vendors by the state, which the ads claim "creates jobs."
According to Webster’s Dictionary, however, a visionary is somebody whose "ideas or plans are impractical, too idealistic, or fantastic . . . a dreamer . . . imaginary . . . not capable of being put in effect." That sounds just like Springfield today. Maybe Pritzker should find an advertising agency that can concoct a better adjective or noun . . . or just change his motto to "More Of The Same."
Pritzker’s family founded the Hyatt Hotel chain, and J.B. inherited a couple billion, but then grew it to his current net worth of $5 to 7 billion as a venture capitalist. In that capacity, he loaned money to business entrepreneurs at hefty interest rates, and later scored a big payday.
Incumbent governor Bruce Rauner is also a venture capitalist, grew his business from scratch, and is now a billionaire. Republican Rauner spent about $75 million of his wealth to get elected in 2014, put another $50 million into his 2018 re-election campaign, and will spend over $100 million during the 2017-18 cycle. Democrats are salivating over Pritzker because he can self-fund at a $200 million level, and they want a piece of it.
But what Pritzker can’t do is pay property taxes like every one else in Chicago without any clout. He wants and expects a break, and he got one. According to public records as reported by Tim Novak of the Chicago Sun-Times recently, Pritzker and family live in a palatial 12,500-square foot mansion on the Gold Coast owned by a limited liability corporation managed by his brother-in-law, which paid $14.5 million to buy it in 2006, and then made $11 to 25 million in upgrades. The Limited Liability Company, owned by a trust for Pritzker, then hired a law firm and got Assessor Joseph Berrios’s office to reduce the assessed valuation to $12.1 million, saving about $43,000 in property taxes.
When the adjacent 6,387-square foot mansion became available, Pritzker’s LLC promptly bought it for $3.7 million, which for Pritzker is pocket change. All the toilets and sinks where disconnected, causing the home to "fall into disrepair" and "be inhabitable"; a tax appeal was filed, and Berrios’ office slashed the assessed valuation from $6.25 million to $1.1 million in 2015. Taxes were only $19,719 in 2015, an 83 percent reduction, and the LLC got refund checks totaling $132,747. Overall, the LLC saved about $230,000 in property taxes on both properties.
Call it the Pritzker Principle, which many Chicagoan fully understand: They pay $70,000 to $10,000 in property taxes annually on houses worth less than $400,000, and were socked with an increase to pay the Chicago Public Schools. They would like to disconnect their commodes, build an outhouse and use their garden hose in lieu of a kitchen sink if they could get an 83 percent tax break. But, in Chicago politics, clout is clout, however absurd.
So forget that "visionary" stuff. J.B. Pritzker has proven himself to be "creative," knows all the angles, can cut corners, knows how to avoid paying taxes, and has not uttered a peep about how much he would raise the state income tax to cover the budget deficit, the vendor non-payments, and the pension shortfall, amounting to over $111 billion. Pritzker and Speaker Mike Madigan will work together fine; Springfield gridlock will be gone. J.B. will provide the bucks, Madigan will issue the orders, Democrats will run everything . . . and when they’re done, and Illinois will be sort of "uninhabitable."
"Rauner will win" re-election in 2018, predicted Alderman Nick Sposato, the 38th Ward Democratic committeeman, who is no fan of Madigan or Mayor Rahm Emanuel. "Democrats will have a divisive primary," he said, with Pritzker, Chris Kennedy, Daniel Biss, Ameya Pawar and a few others trashing each other. Rauner "will run against Madigan," Sposato said, adding that none of the potential Democrats now have any real "separation" from Madigan.
Rauner’s "opposition research" is now likely busily plumbing his potential opponents’ backgrounds. Pritzker would be Rauner’s opponent-of-choice, the most beatable, and revelations of his tangled web of corporations, trusts, tax payments (or lack thereof) and campaign donations will all surface. Pritzker’s sister, Penny, was Obama’s Commerce Secretary, a plum that goes to the politically connected major donors; her predecessor was Bill Daley. Somewhere, media or Rauner’s diggers will find some potential conflict of interest, or some dubious donation. J.B. and Penny gave a bundle to Hillary Clinton in 2016. More implosions are inevitable.
Rauner is already on TV, with ads proclaiming that he wants to "work together" to solve Illinois’ fiscal woes. The state hasn’t had a budget in place for 2 years, any budget must be balanced, which means the revenue shortfall must be addressed…which means a huge tax increase . . . which neither Rauner nor Madigan will do. So J.B., if he wins, would be the fall guy, the next Dick Ogilvie. Madigan’s Democrats will eagerly pass tax hike, as long as Pritzker takes the heat.
Rauner’s game plan is simple: He will keep running positive "work together" ads throughout 2017 into 2018. The rich self-funders, Pritzker and Kennedy, will run introductory ads. Generic anti-Rauner ads do benefit them, because at some point they need to either position themselves as the most anti-Rauner Democrat — which is what Madigan is — or the most anti-Madigan Democrat. By January, leading up to the March 2018 primary, they will all begin attacking each other, and the cash will flow in torrents. Biss and Pawar will be the "reformers," and Kennedy the "outsider." Since Pritzker will be the frontrunner, they will all start pounding on him, and his "insider" ties.
The Rauner campaign’s hope is that Pritzker implodes not before the primary, but after. If Rauner runs against Kennedy, Biss or Pawar, the race would be a referendum on Rauner; if he runs against Pritzker, it would be a referendum on the flawed Pritzker and the reviled Madigan. "Vote against Pritzker/Madigan" would be the tagline. It could work.
Illinois has a rich history of "imploders," and the implosions of 2004 are what sent Barack Obama to the White House in 2008. Implosions can be pre-election, post-election, and out-of-office. They fall into various categories of actual or perceived misdeeds: (1) Moral turpitude, which involves dishonesty in fiscal matters, non-payment of taxes, campaign finance violations, bribery, and conflicts-of-interest. (2) Personal misconduct, particularly of a sexual nature. (3) Stupid comments, especially those offensive to a particular constituency. Implosions follow a federal investigation, indictment, and implication in wrongdoing or gross incompetence.
1980: Bill Scott, Illinois longtime attorney general, was involved in a contentious divorce when his wife dropped the bombshell that he had safety deposit boxes stuffed with cash. Scott ran for U.S. Senator but his campaign imploded after the Internal Revenue Service and U.S. Attorney began investigations. Scott lost the primary, was indicted, pled guilty to tax evasion, and resigned.
2004: Blair Hull, a wealthy businessman, had been throwing money at Democrats for years, including Rod Blagojevich in 2002. He had the governor’s endorsement. But court records surfaced regarding a domestic violence allegations; there was no conviction, he was toast. Obama won the U.S. Senate primary, and Hull got 10.8 percent. On the Republican side, wealthy businessman Jack Ryan was the nominee, but court records from his divorce included allegations that he tried to persuade his actress wife to go to a Paris sex club. He was toast.
2010: Scott Lee Cohen made his fortune as a pawnbroker, and scored an upset in the Democratic primary for lieutenant governor. Nobody took him seriously, but subsequent allegations of domestic violence and drug use caused him to withdraw.
2016: Dan Rutherford was a popular state treasurer and Republican frontrunner for governor in 2014. But then a male employee in his office alleged that Rutherford was harassing him, a charge Rutherford adamantly denied. But innuendo caused his campaign to implode; he got only 8 percent, finishing last.
Congressmen Jesse Jackson Jr. and Aaron Schock’s careers imploded due to financial disclosure violations, and former speaker Dennis Hastert reputation imploded due to bank fraud.
E-mail Russ@russstewart.com or visit his website at www.russstewart.com.