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Out of Control?

What Eliot Spitzer plans to do if he wins.

Jul 29, 2013, Vol. 18, No. 43 • By MICHAEL WARREN
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It’s surprising when a candidate for office tells you exactly what he’ll do if elected. It’s even more surprising when that candidate is Eliot Spitzer. The former Democratic governor of New York resigned in 2008 after being exposed as a client of a high-priced prostitution ring, but as the New York Times revealed earlier this month, he’s getting back into politics by running for an office few can even pronounce: New York City comptroller. (For the record, it sounds like “controller.”) And Spitzer is telling anyone who will listen that he wants to use the office to continue the anti-corporate crusade that has defined his public career.

Gary Locke

Gary Locke

To most observers, the comptroller’s office would seem a demotion. After all, Anthony Weiner, the former congressman who engaged in his own unusual behavior, is now the leading candidate for New York mayor, the job he always wanted anyway. Why would Spitzer settle for comptroller? Slate’s Dave Weigel gave voice to the conventional wisdom in a Twitter post soon after Spitzer entered the race: “Shouldn’t it be Spitzer for mayor and Weiner for comptroller?”

But Spitzer is thinking bigger than that. Of the comptroller position, he told the Times: “It is ripe for greater and more exciting use of the office’s jurisdiction.” If elected, Spitzer would essentially be the city’s chief financial officer, a glorified accountant responsible for New York’s $70 billion budget. But that’s small potatoes next to the comptroller’s other role of overseeing pension funds for city workers totaling $140 billion. And Spitzer, who’s now outpolling his Democratic primary opponent, has been brutally honest about what he’d like to do with that responsibility.

“That is where the power really comes from,” he recently told Jay Leno, “$140 billion worth of pension funds, which in the equity markets are a lever to control corporate governance, rein in CEO pay, make sure that the Wall Street titans are acting fairly and honestly, making sure that the market is functioning properly, making sure capital is allocated as it should be. So these are all important things that the comptroller can do.”

He “can do” it, sure, but should he? As Yale law professor Jonathan Macey says, the comptroller’s top duty is to get a good return on the city’s investment of its pension funds. “It’s a public trust,” Macey says. “His fiduciary responsibility is to maximize the returns of the beneficiaries.”

But what Spitzer is proposing instead—in interviews, in articles, and in his new book, Protecting Capitalism Case by Case—is to use the power of public-employee pension funds to influence corporate policies. Ostensibly, he’d do that for the sake of the public good. What’s more likely to happen is that Spitzer will use the city’s power as shareholder to extract concessions from corporate America that further a populist liberal agenda.

The current comptroller, fellow Democrat John Liu, is already doing just that. Consider a January 2011 letter Liu sent to the CEO of Siemens AG, the German engineering conglomerate in which the city’s pension funds invest, requesting that Siemens stop contributing to the U.S. Chamber of Commerce. The Chamber, the comptroller’s office said, “vigorously opposed environmental reform.”

“It’s not right for our shareholders’ money to support efforts that perpetuate environmental harm,” Liu wrote. “Siemens is known for green innovation, but it’s supporting a group that bends over backwards to stand in the way of environmental protection.”

That’s true enough; the Chamber has frequently opposed efforts by the EPA and Congress to regulate greenhouse gases. The Chamber’s PAC also donates heavily, though not exclusively, to Republican candidates who oppose those regulations, too. But what did any of this have to do with providing a return on investment for New York City employees’ pensions?

“Given the importance of the green economy to Siemens’ long-term business plan and the company’s reputation as a global environmental leader, we believe it is time for the Supervisory Board to formally sever the company’s relationship with the U.S. Chamber,” Liu wrote. He added for good measure: “Unlike Germany, where membership in the chamber of commerce is compulsory, membership in the U.S. Chamber is strictly voluntary.” 

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