When Sanders Liked Bankruptcy
Published: Friday, January 11, 2008 10:03 AM PST
A reader responding to my last post wonders where I got the idea that Sanders himself was proud of championing the bankruptcy option as a candidate for mayor.
Here's the reader comment:
You wrote: "When Sanders himself was running for mayor, he may not have said that the only way out of the fiscal crisis was through bankruptcy. But he certainly was proud to be among those who saw it as an option." I don't know what you mean by "proud" here, but as I recall Sanders pretty much ruled out bankruptcy, along with a tax increase. At the VERY most he said it was not anything he planned and would only be a last resort, but I don't think he even said that. You have lexis nexis, look it up and give us some quotes, especially late in the campaign. I doubt you on this.
A doubter!
Ask and you shall receive.
First off, I got the notion Sanders was "proud" to tout bankruptcy as an option from my vivid memory of the now-mayor at a debate. When the issue of bankruptcy came up, Sanders claimed he was the first candidate to come up with the idea to threaten city employee unions with bankruptcy to lure them to renegotiate their contracts.
That Sanders was the first to tout bankruptcy came as a surprise particularly to lawyer Pat Shea, who had been running on a platform wholly constructed around the idea of taking the city through bankruptcy.
In my own archives there are plenty of quotes, but let's go to the paper of record, the Union-Tribune first.
From reporter Philip J. LaVelle in the Oct. 8, 2005 Union-Tribune (emphasis added):
Last week, Frye criticized Sanders for proposing layoffs.
Her plan also calls for asking voters to give the next mayor exclusive power to negotiate concessions from labor unions and take the city into bankruptcy if talks fail. Sanders' plan threatens hundreds of layoffs if unions refuse to make concessions on benefits. He also holds out the possibility of bankruptcy.
Next, LaVelle again the very next day:
Predictably, the candidates have bashed each other. Frye, a City Council member, says Sanders' plan is "piecemeal" and dishonest with voters. Sanders, a former San Diego police chief, calls hers "a sham."
Both plans have evolved over time: Sanders added a threat to lay off hundreds of city workers 11 days ago; Frye wedged layoffs into her plan Friday.
The plans bear some resemblance to each other. Each uses bankruptcy as a negotiating weapon to force labor unions to make concessions, including pension benefit rollbacks.
There are uncertainties in Sanders' plan.
It is not clear how quickly the pension deficit can be closed. It also is not clear how much more city workers would pay for health insurance or at what level the city's health-care payments would be capped.
Laying off 10 percent of the work force may not be up to him: The next mayor will have "strong mayor" powers, but the City Council will have power to overturn a mayor's budget. The mayor also would need council backing to take the city into bankruptcy. Sanders' plan does not say what he would do if the council says no.
LaVelle never actually quotes Sanders' position on bankruptcy in the stories I could find. So I'll turn to our archives.
When comparing Sanders' plan to Councilwoman Donna Frye's plan we quoted Sanders in this story as such:
Yet Sanders' second highest financial priority is to "renegotiate employment contracts."
"I have said from day one that I would use the threat of bankruptcy and that the unions will respond to that threat and come back to the negotiating table," Sanders said.
I and others were intrigued with Sanders' position. At what point would he know whether to act on that threat, or was he just bluffing?
On Friday, Nov. 4 -- just days before the election -- Sanders answered that:
"If they do not come back to the table and we have to conclude labor negotiations without an agreement to put us on a sound basis, then we would know that by May and that may be when the bankruptcy option has to be triggered," Sanders said at the press conference.
Well, May came and went and the employees didn't concede a thing. But Sanders and his team heard that the municipal credit rating agencies did not want to hear talk of bankruptcy any longer so they were not going to bring it up again.
And they didn't.
So yeah, as I wrote last night, candidate Sanders never said bankruptcy was the only option. But it certainly was an arrow in his quiver -- one he got rid of as fast as he could after getting the gig.
I got plenty of tidbits out of last night that I'm dying to get down. So stay tuned.
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