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Monthly Archives: October 2016

“I couldn’t live on it — no way,” she said. “I can’t go back to work. I’m 71 years old. Who’s going to hire me?”

Public pensions are supposed to be bulletproof, because cities — unlike companies — seldom go bankrupt, and states never do. Of all the states, experts say, California has the most protective pension laws and legal precedents. Once public workers join Calpers, state courts have ruled, their employers must fund their pensions for the rest of their careers, even if the cost was severely underestimated at the outset — something that has happened in California and elsewhere.

Across the country, many benefits were granted at the height of the 1990s bull market on the faulty assumption that investments would keep climbing and cover most of the cost. And that flawed premise is now hitting home in places like Loyalton.

There and elsewhere, local taxpayers are paying more and more, and some elected officials say they want to get off the escalator. But Calpers is strict, telling its 3,007 participating governments and agencies how much they must contribute each year and going after them if they fail to do so. Even municipal bankruptcy is not an excuse.

The showdown in Loyalton is raising the possibility that California’s pension promise is not absolute. There may be government backstops for bank failures, insurance collapses and pensions owed to workers by bankrupt airlines and steel mills — but not, apparently, for the retirees of a shrinking town.

“The State of California is not responsible for a public agency’s unfunded liabilities,” said Wayne Davis, Calpers’s chief of public affairs. Nor is Calpers willing to play Robin Hood, taking a little more from wealthy communities like Palo Alto or Malibu to help luckless Loyalton. And if it gave a break to one, other struggling communities would surely ask for the same thing, setting up a domino effect.

Some see a test case taking shape for Loyalton and for other cities with dwindling means. “Nobody has forced this issue yet,” said Josh McGee, vice president for public accountability for the Laura and John Arnold Foundation, which focuses in part on sustainable public finance.

When Stockton, Calif., was in bankruptcy, for instance, the presiding judge, Christopher M. Klein, said the city had the right to break with Calpers — but it could not switch to a cheaper pension plan without first abrogating its labor contracts, which would not be easy. Stockton chose to stay with Calpers and keep its existing pension plans, cutting other obligations and pushing through the biggest sales tax increase allowed by law.

Photo

Loyalton has shrunk since a sawmill closed in 2001, wiping out jobs and paychecks.

Credit
Kevin Clifford for The New York Times

Loyalton — which sits in a rural area of Northern California near the Nevada border, less than an hour’s drive from Reno — severed ties with Calpers three years ago. It has no labor contracts to break. Though the town is not bankrupt, its finances are in disarray: It recovered more than $400,000 after a municipal employee caught embezzling was fired. But a recent audit found yet another shortfall of more than $80,000.

“If a city doesn’t have the funds to pay, it’s just completely unclear how the legal plumbing would work,” Mr. McGee said. “I don’t know what would happen if the retirees sued.”

The retirees say they are open to filing a suit but cannot afford to hire lawyers for a titanic legal clash with Calpers.

Photo

John Cussins, a Loyalton City Council member. As a retired maintenance foreman for the city, he was not allowed to participate in the Council’s pension discussions because he was deemed to have a conflict of interest.

Credit
Kevin Clifford for The New York Times

“Nobody does squat for you with Calpers,” said John Cussins, Loyalton’s retired maintenance foreman, who now serves on the City Council. “I contacted every agency possible. To me, it’s just unbelievable that there isn’t some kind of help out there with the legal side of things. It leaves us at the mercy of the city and Calpers.”

Mr. Cussins said he had a severe stroke last year and was recently told he had Parkinson’s disease. He needs continuing care and said he might not be able to afford his health insurance if his pension were cut. Every time the pension issue comes up at City Council meetings, he is told to leave because, as a retiree, he is deemed to have a conflict of interest.

“I’d like to see somebody go to jail for this,” he said.

Calpers has total assets of $290 billion, so an unpaid bill of $1.6 million would hardly be a deathblow. But if Calpers gave one struggling city a free ride, others might try the same thing, causing political problems. Palo Alto may have lots of money, but its taxpayers still do not want to pay retirees who once plowed the snow or picked up the trash in far-off Loyalton.

“I think this is all about precedent setting,” Mr. McGee said.

In September, Calpers sent “final demand” letters to Loyalton and two other entities, the Niland Sanitary District and the California Fairs Financing Authority. The Niland Sanitary District has struggled with bill collections, and the fairs financing authority was disbanded several years ago when the state cut its funding. Both entities stopped sending their required contributions to Calpers in 2013 but have continued to allow Calpers to administer their pension plans.

In Loyalton, the City Council voted in 2012 to drop out of Calpers, hoping to save the $30,000 a year or more that the town had previously sent in, said Pat Whitley, a former mayor and a City Council member. (She is not one of the four Loyalton retirees but earned a Calpers pension through previous work on the Sierra County Board of Supervisors.)

“All our audits said that our benefits were going to break the city,” Ms. Whitley said. “That’s exactly why we decided to withdraw. We decided it would be a perfect time to get out, because everybody was retired.”

Loyalton did not plan to offer pensions to new workers, she said. And it had been paying its required yearly contributions to Calpers, so officials thought its pension plan must be close to fully funded.

But Calpers calculates the cost of pensions differently when a local government wants to leave the system — a practice that has caught many by surprise. If a city stays, Calpers assumes that the pensions won’t cost very much, which keeps annual contributions low — but also passes hidden costs into the future, critics say. If a city wants to leave, Calpers calculates a cost that doesn’t rely on any new money and requires the city to pay the whole amount on its way out the door.

That is why Calpers sent Loyalton the bill for $1.6 million.

“I never dreamed it was going to be that, ever. Ever!” Ms. Whitley said. “It defies logic, really.”

Loyalton’s expenditures for all of 2012 were only $1.2 million, and much of that money came from outside sources, like the federal and county governments. Local tax collections yielded just $163,000 that year, according to a public finance website maintained by the Stanford Institute for Economic Policy Research.

Ms. Whitley said Calpers had snared Loyalton in a Catch-22. The agency would not tell the town the cost of terminating its contract until the contract was ended, she said. But once that was done, it was too late to go back.

“We were very confused about why we owe $1.6 million, and why didn’t they tell us that before we signed all the papers,” she said.

Mr. Davis, the Calpers spokesman, said that since 2011, Calpers had been giving its member municipalities a “hypothetical termination liability” in their annual actuarial reports, so there was little excuse for not knowing.

Ms. Whitley disagreed. “It’s just too confusing,” she said. “I looked at what’s been happening with all the other entities, and I saw that eventually it’s got to collapse. It’s almost like a Ponzi scheme.”

The bill was due immediately, but Loyalton did not pay it. It has been accruing 7.5 percent annual interest ever since.

Meanwhile, Calpers has continued to pay Loyalton’s four retirees their pensions. But at a Calpers board meeting in September, some trustees said it was time to find Loyalton in default and cut the pensions. The board is expected to make a final decision at its next meeting, in November.

In Loyalton, Mr. Cussins, the retiree and City Council member, said he was so frustrated about being barred from the council’s pension discussions that he and another former town worker drove to Sacramento to attend Calpers’s last board meeting.

The trustees were cordial, he said, but they held out little hope.

“We had a bunch of them come and shake our hands,” he said. “I said, ‘We need some guidance.’ They told us the city could apply to get back into Calpers next spring. But they made it very clear that they will not allow the city to get back into Calpers until that $1.6 million is paid.”

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Mr. Bush — the former governor, that is — approached his campaign as if it would be operating in a normal political news environment, where at least some of the focus would be on economic and educational proposals, foreign policy plans and those words that were once so revered in Republican politics, “values” and “character.”

But Mr. Trump came at it with a new philosophy: Give them a big, messy show with a regular stream of action, and they will come with their cameras and won’t turn them off. Jeb Bush and his college affordability plan never stood a chance.

By then it was a proven formula for Mr. Trump.

He reached the highest level of electoral politics not through legislative or executive accomplishment but through a series of video moments that showcased a can’t-look-away personality as much as anything he achieved in business.

Those moments span more than three decades, and the trail they leave on YouTube follows the media’s evolution to its current discombobulated state.

We first see Mr. Trump discussing the presidency in an interview with the gossip writer Rona Barrett in 1980, just as he was becoming an item of fascination in New York.

As Ms. Barrett recounted in an interview with The Washington Post this year, she asked him about the presidency for no other reason than that he began complaining about the state of the world, lamenting that other nations were taking advantage of the United States. (He said he had no interest in running.)

Oprah Winfrey followed with the same question in 1988, after Mr. Trump published his smash hit book “The Art of the Deal” and became an outspoken critic of the trade deficit. When she asked Mr. Trump if he would run, he told her, “Probably not, but I wouldn’t rule it out.” It was daytime television, and it all seemed like good fun.

But then, that same year, he was suddenly talking about it at the Republican convention on CNN, with Larry King, who was, in his way, an open door in the wall that had separated entertainment and news. A decade later, during Bill Clinton’s impeachment trial, it was Rowland Evans and Robert Novak on CNN raising the P-word (president) with him as he defended Mr. Clinton.

All the while, Mr. Trump was making regular visits to the studio of the radio talk show host Howard Stern, where he shared views of women such as, “A person who is flat-chested is very hard to be a 10.” (Mr. Trump recently said such commentary was being offered “for the purpose of entertainment,” apparently as he promoted the beauty pageants he owned with CBS at the time.)

So it was not surprising that such a deep well of incredulity rose up when Mr. Trump emerged as a candidate for the Reform Party’s presidential nomination in 1999. “Is it Campaign 2000 or ‘Entertainment Tonight’?” Howard Kurtz, then the host of “Reliable Sources” on CNN, asked in reference to the media attention to Mr. Trump. Still, Mr. Trump made it all the way to the political proving ground of Tim Russert’s “Meet the Press,” before his bid fell apart a few months later.

Yet as we know now, nothing did more to set up Mr. Trump for 2016 presidential politics than his own TV show, “The Apprentice,” which became a hit during its first season, in 2004. Its huge ratings success made Mr. Trump an even more coveted guest on entertainment shows, like “Access Hollywood” and “Late Show With David Letterman,” and mainstream news programs, which were ever more desperate for ratings and, therefore, ever more willing to embrace celebrities.

Mr. Trump always made it worth their while. He had a willingness to talk about whatever an interviewer threw at him, which is how a one-on-one session with Wolf Blitzer in 2007 came to be dominated by Mr. Trump’s views of the Iraq War (“a disaster” that called for an immediate withdrawal) and his critique of President George W. Bush’s leadership.

He had no policy expertise and was not a historian, but he offered something more compelling for news producers: ratings, which is the only thing that can explain all the coverage he later received for his news conferences questioning President Obama’s citizenship.

Mr. Trump took two other clear lessons away from “The Apprentice”: Television audiences will reward anything that at least looks like authenticity. And the best way to hold an audience is to give it a steady stream of drama, with compelling plotlines that continually surprise.

Those two precepts have consistently seemed to animate Mr. Trump’s campaign, which has sustained various plotlines. There’s always the A plot, based on his own performance. Then there’s a rotating set of B, C, and D plots — be it his ugly war with Ted Cruz, his running feud with the Fox News anchor Megyn Kelly or the whodunit surrounding the lifted passages in the convention speech given by his wife, Melania Trump.

It wasn’t always pretty, and as Mr. Trump told me a few months ago in an interview, he did not set out to produce negative story lines. Nonetheless, his robust menu of content crowded out the message of his Republican opponents’ and, for a time, that of Hillary Clinton’s. It worked well for him.

But as the general election campaign has ground on, his copious video and audio content has buried him. In effect, it has become the equivalent of a senator’s voting record.

His video moments have come to be used against him. In August, for instance, the CNN host Don Lemon asked Mr. Trump how he could he say President Obama and Mrs. Clinton caused the creation of ISIS by prematurely withdrawing from Iraq in 2011, when he had told Mr. Blitzer in 2007 — on tape — that the United States should “get out” right then?

If he thinks Mr. Clinton was “a disaster” with women, why was it that he told Evans and Novak in 1997, “I think Bill Clinton is terrific”? What about Mr. Trump’s comments about women on Howard Stern’s show?

Of course, his banter with Billy Bush during his “Access Hollywood” appearance is far worse. The Washington Post was the first to expose the tape because an “Access Hollywood” report was delayed, pushing back one that NBC News was preparing to run immediately afterward. Over the weekend, some political commentators wondered why NBC News didn’t take the lead anyway.

But what’s the difference? It all leads to the same place. The question for Mr. Trump is whether that place is the end of the road.

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On Saturday, NBC officials said that they had acted responsibly in vetting the Trump video and that a three-day delay was a short amount of time to prepare a story of such magnitude and sensitivity.

NBC lawyers, erring on the side of caution, examined whether the network could be vulnerable to a lawsuit for airing the recording, and discussed whether it was ethical to use live-microphone audio from a private moment with Mr. Trump — who was inside a van, off-camera — that was not intended to be broadcast.

Executives at NBC’s news division, meanwhile, deferred to their corporate cousins at “Access Hollywood,” giving them first crack at airing the footage that was theirs. NBC officials, believing that the footage was closely guarded, did not think it was in danger of leaking.

Complicating matters was the presence in the tape of Billy Bush, one of NBC’s most important on-air personalities, who can be heard ogling a woman’s legs and laughing along with Mr. Trump as he jokes about kissing women, and grabbing their genitalia, without their consent.

Mr. Bush, who said he was “embarrassed and ashamed” by his behavior, is facing an online backlash. But NBC has no plans to discipline Mr. Bush, and he is expected to be back on the “Today” show on Monday morning, where he will address the matter, according to a person briefed on the plans.

Mark Kornblau, a senior vice president of communications for NBC News, said that throughout the process the news division was always prepared to run with the news and that it applied rigorous journalistic standards in approaching the story.

“The only filter we looked through this story was: Is it newsworthy? Yes,” Mr. Kornblau said. “And then how can we, as quickly and as responsibly as possible, get it to publication? We did exactly what you want and expect from great news organization to get there.”

NBC employees have speculated on who might have leaked the “Access Hollywood” video to The Post, wondering if someone inside the network believed the due diligence was taking too long.

The timing is unfortunate for NBC, which has faced criticism throughout the presidential campaign. The anchor Matt Lauer, for instance, was castigated for his less-than-aggressive questioning of Mr. Trump at a town hall forum last month.

NBC also invited Mr. Trump to host “Saturday Night Live” during the Republican primary; CNBC held a widely panned Republican primary debate that prompted a backlash from the party; and even Jimmy Fallon, the “Tonight Show” host, was dinged by fellow comedians for playfully rustling Mr. Trump’s hair during an interview.

This latest episode began on Monday, when “Access Hollywood” producers read about Mr. Trump’s treatment of women on “The Apprentice,” and recalled their own 2005 segment featuring Mr. Trump and a trip to a soap opera set.

After unearthing the footage of Mr. Trump making crude remarks, Rob Silverstein, the executive producer of “Access Hollywood,” informed NBC News executives of the discovery, according to two people familiar with the timeline.

But conversations about how to handle the bombshell moved slowly, in part because of the Rosh Hashana holiday. On Tuesday, Mr. Lack found out about the tape, as two NBC Universal lawyers, Kimberley Harris and Susan Weiner, began considering a variety of legal questions. Did NBC have the right to broadcast the tape? Could it be sued?

The legal back-and-forth — and the huge corporate infrastructure at NBC, which is owned by Comcast — slowed down the process, even though everyone involved acknowledged the tape’s newsworthiness, several people said.

Still, a plan was put in place: Once the lawyers gave a green light, “Access Hollywood” would report the story first, and NBC News could quickly follow up. “Access Hollywood” and NBC News were not working in concert on their reports, according to several people.

By Friday morning, lacking comment from some principals — including the Trump campaign — and with Hurricane Matthew dominating the news cycle, “Access Hollywood” producers decided to push their broadcast to this Monday, after the second presidential debate, scheduled for Sunday night.

But then The Post called for comment early Friday afternoon. “Access Hollywood” and NBC News producers were blindsided. NBC News rushed to pull together a story. On MSNBC’s initial report that afternoon, Ms. Tur described the contents of the video, but referred to The Post only once, citing a comment from the Trump campaign that the network had not yet obtained.

There is unlikely to be another bombshell from “Access Hollywood.” A spokeswoman for the show said in a statement: “We have combed through every interview we have done with Mr. Trump over the past 20 years and at this time, we have not uncovered any other footage that rises to this level.”

Rival syndicated entertainment shows like “Extra!,” “Inside Edition” and “Entertainment Tonight” are searching for their own newsworthy footage of Mr. Trump, though there are no indications that they have found equally explosive material.

As for Mr. Bush, his Facebook page has been flooded with critical comments, many from women, a major viewership of “Today.” A call to his office line at NBC headquarters went to a voice mail message, apparently recorded by an assistant.

“You’ve reached Billy Bush’s office,” the message says. “He’s busy making America great again.”


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