November 4, 2025 • 40 mins
How did Democrats take over American cities? To find the answer, we tell the story of how a Wall Street analyst inadvertently poked a powerful syndicate…a syndicate that slowly helped Democrats control just about every major municipality in the country.
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Speaker 1 (00:03):
This is Red Pilled America. It's Red Pilled America's seven
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(00:25):
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That's RPA and the number seven support what you Lover,
It Goes Away. This episode was originally broadcast on March fifth,
(00:47):
twenty twenty one. Democrats seem to run every metropolis in America.
New York City, Los Angeles, Chicago, Philadelphia, San Francisco. They
run them all, and it's not just blue state cities. Houston, Phoenix,
and Nashville all in red states, but all run by
(01:09):
the left. Atlanta hasn't had a Republican mayor since eighteen
seventy nine, and for New Orleans, you have to go
all the way back to eighteen seventy two to find
a GOP mayor. Out of the top twenty five most
populated cities in America, only two are run by Republicans.
(01:29):
How did that happen? How did Democrats take over American cities?
I'm Patrick Carrelci.
Speaker 2 (01:39):
And I'm Adriana Cortez.
Speaker 1 (01:40):
And this is Red Pilled America, a storytelling show.
Speaker 2 (01:45):
This is not another talk show covering the day's news.
We are all about telling stories.
Speaker 1 (01:50):
Stories. Hollywood doesn't want you to hear stories.
Speaker 2 (01:53):
The media marks stories about everyday Americans with the globalist ignore.
Speaker 1 (01:59):
You could think of Red Pilled America as audio documentaries,
and we promise only one thing, the truth. Welcome to
Red Pilled America Today. It seems to be a given
(02:22):
that Democrats run all of America's major cities. People don't
even think twice about it. If it's a big metropolis,
it's almost always run by a Democrat. How did that happen?
How did the left take over America's major cities? Define
the answer. We're going to tell the story of how
a Wall Street analyst inadvertently poked a powerful syndicate a
(02:42):
syndicate that slowly helped Democrats control just about every major
city in the country.
Speaker 2 (02:51):
She probably didn't even realize it at the time that
Meredith Whitney was about to awaken a strange beast, one
that feeds off unsuspecting city dwellers. It was September twenty ten,
and everyone was on edge.
Speaker 3 (03:07):
The Dow tumbled more than five hundred points after two
pillars of the Street tumbled over the weekend. Lehman Brothers,
a one hundred and fifty eight year old firm, filed
for bankruptcy.
Speaker 2 (03:17):
The shock of the financial crisis still lingered, and people
were wondering what was going to be the next shoe
to drop. Banking analyst Meredith Whitney thought she knew.
Speaker 4 (03:26):
We looked around and there was nothing available to tell
you about this process of state budgeting, how monies are transferred.
It reminded me of the state situation, remind me so
much of the banks.
Speaker 2 (03:36):
It's pre crisis, that's Meredith.
Speaker 5 (03:38):
So in other words, you believe that the fiscal challenges
facing the states right now could.
Speaker 6 (03:42):
Be the next systemic risk for the financial system and
for the economy.
Speaker 4 (03:47):
There's no doubt about it. And the similarities between the
states and the banks are extreme.
Speaker 2 (03:56):
By her calculation, cities and states were in big trouble.
They were spending far more money than was coming in,
and municipal bonds, the debt vehicle they used to cover
the deficit, were looking like they could trigger the next
financial crisis. It was a dire prediction, and the finance
world took notice because when Meredith Whitney spoke, Wall Street listened,
(04:17):
and why well, she was one of the first to
sound the alarm on the two thousand and eight financial crisis,
almost a year before it happened. She looked like a
fortune teller. So in September twenty ten, when Meredith predicted
the finances of cities and states were going to be
the next catastrophe, big money had to take her seriously.
Her warning made a splash throughout the financial industry, and
(04:38):
media wanted to hear more.
Speaker 7 (04:40):
Meredith, your latest report really fascinating tragedy of the Commons
launching ratings on states. And what you've said is that
the states remind you of the Bank's pre crisis.
Speaker 1 (04:50):
I mean this is serious.
Speaker 7 (04:51):
Well, she made a name for herself when she correctly
forecasts the problems at City Group. Now analyst Meredith Whitney
is veering in on the problems plaguing the states.
Speaker 2 (05:00):
Her message was getting some traction, but the stock market
hadn't yet reacted. It would take the twenty ten midterms
to trigger a response.
Speaker 8 (05:08):
CNN that cannot project the Republicans will gain have a
net gain of thirty nine seats, at least thirty nine seats.
They will become the majority in the House of Representatives.
Speaker 2 (05:31):
With the Republicans winning the House, it became evident that
Obama stimulus checks were about to dry up, and that
was a problem because it was those checks that were
propping up city and state finances. If the White House
stopped helping local governments, could they make the payments on
their loans? The question spooked Wall Street. Maybe Meredith Whitney
was right, so in the no, investors began selling the
(05:53):
municipal bonds that carried those loans.
Speaker 7 (05:55):
We're going to focus right now in the municipal bond market.
Take a look at this chart. Crisis from municipal bond
securities have taken a nose down. Prices have fallen off
about ten percent since sitting high at the end of August.
Speaker 2 (06:08):
Bond prices plummeted, but even with the selloff, Meredith Whitney's
message was only reaching the finance world. It hadn't yet
hit Main Street. That day would arrive in December twenty ten.
Speaker 9 (06:24):
By now, just about everyone in the country is aware
of the federal deficit problem, but you should know that
there is another financial crisis looming involving state and local governments.
Speaker 2 (06:33):
Sixty Minutes ran a segment entitled The Day of Reckoning,
and it told the story of the precarious financial condition
of state and local governments that could lead to the
next financial crisis.
Speaker 9 (06:43):
The states have been getting by on billions of dollars
in federal stimulus funds, but the day of Reckoning is
at hand. The debt crisis is already making Wall Street nervous,
and some believe that it could derail the recovery, cost
a million public employees their jobs, and require another big
bailout package that no one in Washington wants to talk about.
Speaker 2 (07:03):
With the nation still shell shocked from the banking crisis,
the report's warning was ominous and sounded all too familiar.
Meredith Whitney took center stage on the show.
Speaker 9 (07:13):
Meredith Whitney is one of the most respected financial analysts
on Wall Street and one of the most influential women
in American business. Now she's warning about a financial meltdown
in state and local governments.
Speaker 4 (07:25):
I think, next to housing, this is the single most
important issue in the United States and certainly the largest
threat to the US economy.
Speaker 2 (07:34):
The report highlighted some of the worst states.
Speaker 9 (07:37):
California, which faces a nineteen billion dollar budget deficit next year,
has a credit rating approaching junk status. It now spends
more money on public employee pensions than it does on
the state university system.
Speaker 2 (07:51):
All the interviews were compelling, but it was Meredith Whitney
that delivered the quote that drew out a strange beast
from hiding.
Speaker 9 (07:57):
Whitney believes the states will find a way to honor
their debts, but she's afraid that some local government which
depend on their state for a third of their revenues,
will get squeezed as the states are forced to tighten
their belts. She's convinced that some cities and counties will
be unable to meet their obligations to municipal bondholders who
finance their debt.
Speaker 4 (08:18):
There's not a doubt in my mind that you will
see a spate of municipal bond defaults.
Speaker 9 (08:22):
How many is a state?
Speaker 4 (08:24):
You could see fifty sizeable defaults, fifty to one hundred
sizeable default more. This will amount to hundreds of billions
of dollars worth of default.
Speaker 2 (08:33):
And what was the timing on this building crisis?
Speaker 10 (08:36):
It'll be something to worry about within the next twelve months,
twelve months, twelve months.
Speaker 2 (08:54):
The Day of Reckoning was viewed by eighteen million Americans
and the show immediately ignited a media firestorm.
Speaker 6 (09:04):
One of the people predicting a tough year for Munie's
is analyst Meredith Whitney. These days, Whitney is focusing on
Munie's and she says there will be as many as
one hundred significant MOUNI bond default this coming year, totally
hundreds of billions of dollars. It's a bold call, for sure.
Speaker 11 (09:18):
So will the federal government come to the rescue? Just
how freaked out should you be about AMMUNI meltdown? According
to Meredith Whitney, a prominent market research analyst, a new
disaster is looming. She's warned that as many as one
hundred US cities face default on their municipal bonds, So
are we about to see the next bubble first?
Speaker 12 (09:37):
Meanwhile, over one hundred American cities that could go bankrupt
in twenty eleven as the Dead crisis, it threatens to
spark a municipal meltdown. That is, according to the us
OR research analyst Meredith Whitney, who correctly predicted the global
credit crunch, New York City, Detroit, San Francisco, and Los
Angeles are among the cities fear to go bust in
(09:59):
twenty eleven.
Speaker 2 (10:00):
It wasn't long before a legion of peculiar detractors came
out to attack Meredith Whitney, and they came from all angles.
Speaker 13 (10:06):
Frankly, she's dead wrong.
Speaker 3 (10:08):
I know, only disagree. I think her comments are irresponsible.
Speaker 6 (10:11):
Could or what a state default?
Speaker 2 (10:13):
Not really the idea that there would be hundred of
millions of dollars worth of default, that that's unquantifiable.
Speaker 14 (10:19):
It's an absurdity.
Speaker 4 (10:22):
I disagree, though, that there are going to be widespread
municipal defaults.
Speaker 2 (10:26):
Her prediction was called ludicrous and irresponsible, with one municipal
bond veteran claiming that.
Speaker 1 (10:31):
To quote to be talking about massive defaults is the
equivalent of talking about meteors the downfall of Rome and
the end of Western civilization.
Speaker 2 (10:40):
The day after the broadcast, one of the most powerful
public employee unions in America ass ME shot off of
video demanding Meredith stop the lies. The man in charge
of California's accounting published an op ed saying California isn't broken,
and a representative from the largest municipal bond fund said
Meredith's analysis wasn't worth the paper it was written on.
(11:01):
In the weeks that followed, the municipal bond market was
rattled by a massive investor selloff. Political pundits started debating
a state bankruptcy option, which would be an unprecedented move
because states can't claim bankruptcy. The Securities Exchange Commission was
reported to be monitoring Meredith Whitney, and even a House
Oversight committee requested her appearance at a hearing. When she declined,
(11:23):
the chairman suggested they might force her to appear.
Speaker 15 (11:26):
Our beauty bonds the next big crisis for this country.
Speaker 11 (11:30):
Congress is investigating in a hearing today on Capitol Hill.
Speaker 6 (11:33):
You look at Meredith Whitney's report that she declined to
make public, only gave it to some of her clients.
Speaker 16 (11:41):
No, I've yet to see the report.
Speaker 6 (11:43):
We have not had access to that, but if you'd
like to share it with me, I'd be happy to
take a look.
Speaker 15 (11:48):
Well, see, that's why you should bring her in front
of you. It is not because we want her opinion.
We want to know the facts upon which she based
her opinion. That's the reason to subpoena her, not for
her opinion, for what data she supposedly at or lacked
her up.
Speaker 2 (12:01):
The financial analyst was being in intimidated watching the whole
thing play out in real time, you have to ask
yourself what just happened? How could this one woman, in
the course of a single televised interview, ignite a media
firestorm that would shake the entire financial market, panic Congress,
(12:22):
anger government officials, and trigger an attack by public sector unions.
Nothing she said was really that controversial. Everyone knew cities
and states were in massive debt. Well, it all happened
because Meredith Whitney exposed the grift of a syndicate that
feeds off the people of Gotham, the same syndicate that
helped Democrats take over almost every major metropolitan area in America.
Speaker 1 (12:48):
History shows that every market eventually falls. Every currency collapses,
and today the US dollar is hanging by a thread.
Trillions in national debt record high markets define gravity, but
stocks can't go up forever. Meanwhile, rosueze, housing, and transportation
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(13:08):
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Speaker 10 (13:15):
Gold.
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(13:57):
consider and review all risks involved.
Speaker 2 (14:01):
Welcome back to red Pilled America. So, in one sixty
minutes interview in December twenty ten, then banking analyst Meredith
Whitney unleashed a firestorm of controversy by predicting that cities
would default on their municipal bonds. Watching the whole thing
play out in real time, you have to ask yourself,
what just happened? How could this one woman, in the
(14:23):
course of a single televised interview, ignite a media firestorm
that would shake the entire financial market, panic Congress, anger
government officials, and trigger an attack by public sector unions.
Nothing she said was really that controversial. Everyone knew cities
and states were in massive debt. Well, it all happened
because Meredith Whitney exposed the grift of a syndicate that
(14:46):
feeds off the people of Gotham, the same syndicate that
helped Democrats take over almost every major metropolitan area in America.
This syndicate is comprised of everyone that makes money off
government spending, city, state, and county employees, government conc tractors,
municipal bond brokers, the fund managers and investment bankers of
(15:07):
these bonds, and of course politicians. These municipal grifters make
up the muni syndicate, and over the course of half
a century, they've been pulling out so much cash from
cities and states that they've plunged them into massive debt.
To give you an idea of how much money this
syndicate has drained from our coffers, in nineteen seventy five,
(15:28):
local and state governments were two hundred and thirty five
point four billion dollars in debt through muni bonds. Today
that number has risen to roughly four trillion dollars. How
did this muni syndicate form, where did it get its power?
And how did it help democrats take over major cities.
The answer to these questions can be boiled down to
(15:48):
three words, public sector unions.
Speaker 1 (15:56):
By the mid twentieth century, public sector unions were considered
the weakling offspring of the labor movement. To get an
idea of how minuskuild their power was at the time,
in nineteen fifty five, public sector unions had four hundred
thousand members. That same year, private sector union's membership exceeded
fifteen million. The primary reason for this difference in size
(16:18):
was that, unlike their private sector cousins, public employee unions
were lacking a key ingredient, a thing called collective bargaining. Basically,
collective bargaining allows a representative to negotiate with an employer
the salary, benefits, and working conditions of all their employees.
Prior to the late nineteen fifties, allowing collective bargaining in
(16:40):
the public sector was considered a recipe for disaster. Franklin D. Roosevelt,
who was considered a friend of the labor movement, famously
stated quote, the process of collective bargaining as usually understood
cannot be transplanted into the public service end. Even George Meenie,
former president of the massive afl CIO labor union, claimed
(17:01):
it is impossible to bargain with the govern There was
a consensus public sector unions should not be allowed to
collectively bargain. And why Well, imagine this scenario. You're working
at a company and you don't like your pay, health
care and retirement benefits. So you march into your boss's
office and say I want more. Your boss looks at
(17:22):
his budget and calmly responds that he can't do it.
There's a back and forth, and he eventually tells you
to get lost. So you go out to the city
and find someone that agrees to give you what you want,
even if the company can't afford it. You shake hands
with this guy, then you tell hundreds of thousands of
your coworkers to vote for this new guy, and he
becomes your boss. And the old boss that was trying
(17:43):
to be responsible with the company's money, he's out. That
is what collective bargaining is like for public sector unions.
In essence, they're given the power to hire and fire
their own boss. This is why even progressive leaders in
the mid twentieth century agreed that public unions should not
be allowed to collectively bargain. That perspective was not shared
(18:04):
by all enter The American Federation of State, County and
Municipal Employees, or AFSME for short, formed in the nineteen thirties, AFSME,
was the lead advocate of collective bargaining for public sector unions.
On February thirteenth, nineteen fifty seven, they had a breakthrough.
They convinced the Democrat mayor of Philadelphia, Richardson Dilworth, to
(18:26):
make a radical announcement. Philadelphia announ steps forward as the
first large American city to adopt for its non office
workers and white collar employees what has been the rural
in private industry exclusive bargaining rights in one majority union.
I am sure that the city and the general public
will benefit tremendously from the pioneering move we have made
(18:47):
this day. The contract covered fifteen thousand city employees and
the exclusive contract to bargain was granted to AFSME. A
citywide action of this size was unprecedented. The Philadelphia mayor
gave birth to a beast. This development spread to New
York City right into the hands of a rising APPS
organizer named Jerry Worth.
Speaker 5 (19:08):
It's important to understand that at the time we took power,
the union was conservative in stance, although you know, orthodox
liberal and resolutions were adopted at meetings.
Speaker 1 (19:23):
That's Jerry Worth. Jerry was a brash, tireless union organizer
and radical socialists that wanted to change the positioning of
his public sector union APPSME.
Speaker 5 (19:33):
The union also had no importance on the American scene.
Not many people knew us. Not only do we have
a clumsy name, but you know, we had no real
impact in any event. When we took power, things began
to change the union. When we took power was white
Anglo Saxon mobably Protestant in the cities ethnically divided, mostly Catholic.
(20:00):
The thing is is that this crowd took over and
we began to reshape the union. At that time, we
couldn't reshape it structurally, we needed another convention, but we
began to reshape it philosophically.
Speaker 1 (20:13):
Jerry had an ambitious goal. He didn't want to just
bring collective bargaining to the Big Apple. He wanted union
membership dues automatically taken out of New York City employees paychecks,
whether they liked it or not. But in the nineteen fifties,
the New York legislature was predominantly conservative, and he knew
he'd never reach his goals through a Republican mayor. The
Socialists would have to align with the Democrats. So in
(20:37):
the lead up to the nineteen fifty three mayoral election,
Jerry turned to a promising Democrat contender by the name
of Robert F. Wagner Junior. He targeted this guy because
his dad wrote the seminal legislation that brought collective bargaining
to all private sector workers. To put him on the spot,
Jerry asked the candidate to address AFSME union members during
(20:57):
his run for the mayor. Wagner accepted and fell right
into Jerry's trap. You see, in his youth, Jerry was
a member of the Young People's Socialist League, so he
understood the power of agitation. He made sure that every
AFSME member that could be rounded up was in attendance.
The Democrat mayoral candidate arrived to a midtown Manhattan hotel
(21:19):
bursting at the seams with union members and several thousand
mores spilling into the streets. Jerry cornered the candidate and
had two primary questions for him. Would he issue an
executive order extending collective bargaining to New York City employees
and would he allow union dues to be automatically taken
from cities workers paychecks. With the overwhelming head count of
(21:40):
the event, the candidate made a political calculation and agreed
to both requests if he was elected mayor. This moment
signaled the future dynamic of union negotiations. Give us what
we want, or we'll elect a different boss, asked me.
Would go on to help get Robert Wagner Junior elected
and in March nineteen fifty eight, Mayor Wagner signed Executive
(22:01):
Order forty nine that gave the union and everything they
asked for. A year and a half later, asked me
pushed Democrat Wisconsin Governor gay Lord Nelson to sign the
first statewide legislation allowing collective bargaining for the public employees
of Wisconsin. The trend spread to other states over the
coming years. The public sector unions were developing a business model.
(22:21):
Align with Democrat politicians, and only Democrat politicians because the
unions were run by socialists. Make the politician promise to
deliver goodies to union members, get the politician elected, receive
the goodies, then repeat the process all over again when
the politician's term was up. If a candidate wouldn't commit
to their demands, they would have an exponentially harder time
getting elected. And if say a mayor didn't have enough
(22:44):
in the budget to deliver higher wages or platinum benefits
or increased jobs, they simply asked the public for a
loan by issuing municipal bonds. This little arrangement worked swimmingly
for about a decade and a half. After collective bargaining
spread to parts of the country, the size of public
sector unions exploded. From a paltry four hundred thousand members
(23:05):
in nineteen fifty five, membership grew to four million by
the nineteen seventies, an astounding growth rate by any measure.
And as union membership grew, they drove up the city's
budgets and debt, which grew union membership, which in turn
grew government budgets and debt, and on and on in
a never ending feedback loop, until one city was pushed
(23:27):
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Do you want to hear Red Pilled America stories ad free?
Then become a backstage subscriber. Just log onto Redpilled America
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and help us save America one story at a time.
Welcome back to Red Pilled America. Near the end of
nineteen seventy four, New York City's finances were in dire strait.
(25:01):
For roughly a decade and inn and a half, the
city had been spending more than it had been taking in,
due in large part to the promises politicians made to
the public sector unions. To make up the budget deficit,
New York City turned to issuing municipal bonds to borrow
money from the public. These muni bonds, as they're called,
were attractive to cautious investors because they're very low risk.
(25:23):
Cities rarely go bankrupt, and that's because they avoid missing
the debt payment on their muni bonds at all costs
for one simple reason. If they don't pay back these loans,
they'd have a much harder time borrowing in the future.
Many state and local governments placed the payment of bond
debt above almost all other expenditures. In the case of California,
for example, paying bond debt has priority over all other
(25:45):
budget items except education. While for years the Big Apple
was taking on debt like a drunken socialite at a
shoe sale, people began questioning the city's ability to pay
its debts, and the New York Times wasn't making things
easier for the mayor. The newspaper ran an article headlined
bankrupt City. The Democrat mayor Abraham Beam responded, issuing a
(26:07):
statement stating.
Speaker 1 (26:08):
Quote bankruptcy means that liabilities exceed assets or that credit
obligations cannot be met. A situation in which the City
of New York, even in the darkest days of the
Great Depression, never has found itself, nor will it.
Speaker 2 (26:22):
But nobody was buying his spin. Not long after city
officials arrived at a regular meeting to issue bonds to
the public they needed to borrow money, New York City's
financial Controller announced the investment Opportunity Morning.
Speaker 17 (26:35):
Ladies and gentlemen. Today the city in New York is
war frank for competitive bidding, saled two hundred and sixty
million tax anticipation notes, of which one hundred million will mature.
On Juke third, nineteen seventy five.
Speaker 2 (26:47):
The banks were supposed to arrive at eleven AM to
buy the bonds, which they would in turn sell to
the public, but the banks were all a no show.
The meeting was rescheduled for three hours later, but then
two PM arrived, then two thirty, then two forty five pm.
The banks again didn't show up.
Speaker 16 (27:08):
The announcement on behalf of the controller is that the
offer which we had expected to receive an announced at
two o'clock this afternoon, is now expected at four o'clock.
Speaker 14 (27:21):
Well, does this mean that so far nobody wants those bonds.
Speaker 16 (27:24):
We will be making a further announcement at four o'clock,
and anything further that I could say now I think
would not advance the interests of the sale which is
now in progress.
Speaker 8 (27:33):
Does this mean that you have not been able to
sell them so far?
Speaker 14 (27:35):
Today?
Speaker 16 (27:36):
We will have a further announcement.
Speaker 18 (27:38):
At four o'clock.
Speaker 2 (27:39):
The city's finances were on the verge of a collapse,
and the banks knew it. They didn't show up because
they were concerned that if they got involved with the
city's bond offering, they could possibly be criminally liable. Only
thirty three percent of these bonds were sold, leaving the
city in a position to default on its debt the
next month. But the bad news was just beginning, adding
(28:01):
a devastating blow to the city. Standard and Poors suspended
its rating for New York City bonds, sending a message
to the public that the Big Apple could actually be
going bankrupt. Two days later, as a last resort, the
State of New York announced it would lend the city
four hundred million dollars to help it get through the
next few weeks. Things were getting so bad in the
(28:22):
Big Apple that local stores were offering discounts to unpaid
city workers.
Speaker 18 (28:27):
We're here with the Press and Bond stores where Bonds
has just announced a new concept and a self help
program for the city. Right.
Speaker 19 (28:34):
The idea is very simple, and Washington can't come through.
If all Benny is hesitant, then at least we who
do business in New York can help those people who
help us be the.
Speaker 18 (28:41):
City we are be leaving. The New York City municipal
employee shouldn't take the brunt of our budget.
Speaker 14 (28:46):
Christ and he sure shouldn't.
Speaker 18 (28:47):
Bonds will give each and every city employee a ten
percent discount to help cut his cost of living right now.
Speaker 19 (28:53):
Right, and if other retailers take up this banner, then
all of us will benefit by helping those who help us,
like the policemen and firemen, the teachers, the sanitation ment,
the hospital employee.
Speaker 18 (29:02):
All those munits of employees who work for the biggest
and still greatest city in America.
Speaker 2 (29:06):
With the state offers nearly running dry, New York City's
mayor made the track to the nation's capital to plead
for help.
Speaker 20 (29:14):
New York's Mayor, Abraham Beem, led a delegation of fellow
mayors to Washington today seeking federal financial aid for New York.
Speaker 21 (29:21):
Fifteen mayors, most from big cities, appealed to the Congressional
Joint Economic Committee today for some federal emergency help for
New York City, arguing that a New York default would
hurt every other city in the country by making it
impossible for other cities to borrow money.
Speaker 22 (29:35):
The state has done all it can, the city has
done and has committed to.
Speaker 14 (29:41):
Do more of what we've done, and if.
Speaker 22 (29:45):
The federal government does not help us, I think it
will find the problem afterwards which it would have to
help us with much more serious.
Speaker 21 (29:54):
The mayors asked for federal guarantees for New York City
bonds and notes, and, if necessary, emergency loans. The first
answer from the Ford administration was allowed firm no to.
Speaker 13 (30:04):
Costs and risks associated with any program to provide special
federal financial assistance to prevent the fault substantially outweigh the
benefits which prevention would provide.
Speaker 2 (30:15):
Would the Big apples financial position becoming more and more compromised.
The city was faced with defaulting on its step by
the close of business on Friday October eighteenth, nineteen seventy five,
and the media was doing its part to scare politicians
into action.
Speaker 21 (30:28):
Governor Hugh Carey of New York told Congress today that
default by New York City would be an economic Pearl
Harbor for the rest of the nation.
Speaker 22 (30:35):
West German Chancellor Schmidt came here and said the collapse
of the world's financial capital could push the whole world
back into recession.
Speaker 23 (30:44):
New York City is right on the edge of financial
disaster this morning and this time, as they said at
Pearl Harbor, it's no drill.
Speaker 14 (30:52):
The biggest problem trustees of union pension funds were reluctant
to lend the city money. Earlier, state unions had won
a court case against using their pension funds to bail
the city out, and yesterday the city's teachers union joined
in that refusal. So early this morning Felix rowan from
the city financier trying to raise the money to pay
(31:12):
the city's bills today four hundred and fifty million dollars worth,
came out to say that he couldn't do it.
Speaker 18 (31:19):
I'm sorry to have to tell you that the teacher's
pension system has voted against making the commitment to us.
Speaker 21 (31:26):
Yeah, there is no further change at seven o'clock. Does
this mean New York will default tomorrow?
Speaker 9 (31:31):
I would think if this stands, the likelihood is very
great that we will default tomorrow.
Speaker 14 (31:36):
Default, if it comes, will in its first stage mean
that four hundred and fifty three million dollars of city
debts borrowed exactly one year ago will not be paid
back as they are supposed to be when the bank's
open at nine am Eastern time this morning. But even
if default doesn't come today, it's apparent now that it's
not very far off unless there's major financial help from
(31:56):
the federal government very quickly. There is a risk that
Felix Rowett and last night or early this morning, that
part of the payroll won't be met, and then suddenly
some city workers aren't going to be working, and then
it's very hard to tell. If sanitation men don't work,
don't get paid, will they work? If city services are
cut back, what will happen? Is there a risk of
social disorder? But National guardsmen have to be brought in,
(32:18):
and once the services are cut off, then no one
knows just how badly people will be hurt. The end
results of one banker is that New York could turned
into a cow cutter wow.
Speaker 2 (32:41):
Under tremendous pressure, the trustees of the city Teachers' union
pension fund agreed to invest one hundred and fifty million
dollars into city bonds just hours before the Big Apple defaulted.
But this only bought the city a few weeks. So
the Democrat governor of New York went on the offense
to pressure President Ford into a bailout.
Speaker 14 (32:59):
Governor carry charge the real bankruptcy was not in New York,
but in the presidential leadership of Gerald Ford.
Speaker 20 (33:06):
It is only by sitting on their hands that the
federal treasury stands to lose hundreds of millions of tax
revenues if the city to falls.
Speaker 2 (33:16):
President Ford shot back, as we worked with a wonderful
people of New York to overcome their difficulties, and they will.
Speaker 23 (33:23):
We must never forget what brought this great center of
human civilization to the brink. If we go on spending
more than we have, providing more benefits and more services
than we can pay for, than a day of reckoning
will come to Washington and the whole country, just as
(33:44):
it has to New York City. And so let me
conclude with one question of my own. When that day
of reckoning comes who will bail out the United States
of America.
Speaker 2 (34:00):
The media and high profile New York Democrats continue to
tag team attack on President Ford. The day after he
rejected to bail out of the Big Apple, the New
York Daily News ran with the famous headline forward to
city drop dead. The New York Post and The New
York Times ran with front page above the fold headlines
shaming Ford into action. Then New York's governor jumped back
(34:23):
into the ring.
Speaker 20 (34:24):
I am here tonight to say that I agree with
Gerald Ford. Washington should not bail out New York. It's
also true that the undeniable dislike of many Americans for
the cultural climate of New York makes intelligent debate very difficult.
But I still believe that if Americans understand what New
(34:45):
York is really asking for, they will support it. Not
because they love the city, and certainly not because they
want to pay the cost to pass mistakes. They will
support it because it will save them money. This is
the single most important fact that the White House chooses
to ignore. The low and guarant arrantee plan now before
Congress does not give New York City one red cent.
(35:09):
It gives a city time to pay its debts and
reform its practices. There is a sorry history of reckless
fiscal policy in New York City going back years, perhaps decades,
and there is blame enough for everyone. City officials and
interest groups banks that did not ask the hard questions,
a state legislature, and a governor now mister Ford's hand
(35:33):
picked vice president that specifically authorized every fringe and pension benefit,
and every unwise borrowing mister Ford now attacks so righteously.
Speaker 2 (35:44):
New York City's financial crisis reached a peak in November
nineteen seventy five. By mid month, what was said could
never happen happened. New York State passed legislation halting the
payment of its debt for three years. In essence, New
York City was defaulting on its debt about a weekly.
The States scraped together even more cash for the Big
(36:06):
Apple to avoid bankruptcy, but national public opinion began to shift.
Many feared that a New York City default could spread
to their city. With the heightened fear taking its toll,
and just one year away from an election, President Ford
finally relented on Thanksgiving Eve nineteen seventy.
Speaker 23 (36:22):
Five, I have decided to ask the Congress when it
returns from recess for authority to provide a temporary line
of credit to the State of New York to enable
it to supply seasonal financing of essential services for the
people of New York City. New York officials must continue
(36:45):
to accept primary responsibility. There must be no misunderstanding of
my position.
Speaker 2 (36:51):
The Democrat New York City mayor got his bailout.
Speaker 22 (36:55):
The President's action, crucial as it may be, does not
bring our serious difficulties to an end. The coming two
months and years will mean new sacrifices for all New Yorkers.
Speaker 1 (37:17):
The crisis that many felt stem from public sector unions
had come to a close. City leaders all across the
country learned that they can continue their financial scheme with
their local muni syndicate because Washington d c Would eventually
bail them out. One of the key members of New
York City's Muni syndicate was asked about his takeaway from
the Big Apples nineteen seventy five financial crisis. He responded saying, quote,
(37:41):
a sea wall is all stronger for having been repaired,
and he was right. Their grift did get stronger, and
their hold over major cities has grown ever since. From
nineteen seventy five to twenty twenty one, the powerful municipal
syndicate has grown state and local government debt by a
jaw dropping seventeen hundred percent, and in the process, they
(38:01):
helped their Democrat figurehead take over the major cities that
line their pockets, which leads us back to the question
how did Democrats take over American cities? The answer is
(38:21):
they became the figureheads of a powerful syndicate, a municipal
syndicate designed to extract money from city budgets. This financial alliance,
led by the public sector unions, has created a near
impenetrable force for Republicans in every major city in America.
They use the money they pull from city coffers to
grow their numbers, then use those numbers to hire their
(38:44):
own boss. And because the ringleaders of this muni syndicate
are socialists, the bosses they successfully hire are always Democrats.
You may think this cartel is too small to impact elections,
but you'd be wrong in that assumption. The bigger the city,
the bigger the muni syndicate, and they're some of the
most politically active people in America. They volunteer for campaigns
(39:05):
become poll workers, count election day ballots, donate to campaigns,
and protest at the home of a local politician they
want replaced. They've turned just about every major city in
America blue. Financial analyst Meredith Whitney inadvertently uncovered this muni
syndicate when she sounded the alarm on the debt they
were creating. Her prediction didn't come true. City bankruptcies did
(39:28):
not become the next financial crisis. But the thing about
predictions is that it's all about the timing.
Speaker 24 (39:34):
Federal government was very quick to bail out the banks
a decade ago, no questions asked. Faral government was very
quick to bail out the auto industry. How about bailing
out the nation's largest city. How about bailing out the
epicenter of this crisis where people have been suffering. That
is what our federal government should do.
Speaker 2 (39:55):
Red Pilled America is an iHeartRadio original podcast. It's owned
and produced by Patrick Carrelci and me Adriana Cortez for
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(00:25):
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That's RPA and the number seven support what you Lover,
It Goes Away. This episode was originally broadcast on March fifth,
(00:47):
twenty twenty one. Democrats seem to run every metropolis in America.
New York City, Los Angeles, Chicago, Philadelphia, San Francisco. They
run them all, and it's not just blue state cities. Houston, Phoenix,
and Nashville all in red states, but all run by
(01:09):
the left. Atlanta hasn't had a Republican mayor since eighteen
seventy nine, and for New Orleans, you have to go
all the way back to eighteen seventy two to find
a GOP mayor. Out of the top twenty five most
populated cities in America, only two are run by Republicans.
(01:29):
How did that happen? How did Democrats take over American cities?
I'm Patrick Carrelci.
Speaker 2 (01:39):
And I'm Adriana Cortez.
Speaker 1 (01:40):
And this is Red Pilled America, a storytelling show.
Speaker 2 (01:45):
This is not another talk show covering the day's news.
We are all about telling stories.
Speaker 1 (01:50):
Stories. Hollywood doesn't want you to hear stories.
Speaker 2 (01:53):
The media marks stories about everyday Americans with the globalist ignore.
Speaker 1 (01:59):
You could think of Red Pilled America as audio documentaries,
and we promise only one thing, the truth. Welcome to
Red Pilled America Today. It seems to be a given
(02:22):
that Democrats run all of America's major cities. People don't
even think twice about it. If it's a big metropolis,
it's almost always run by a Democrat. How did that happen?
How did the left take over America's major cities? Define
the answer. We're going to tell the story of how
a Wall Street analyst inadvertently poked a powerful syndicate a
(02:42):
syndicate that slowly helped Democrats control just about every major
city in the country.
Speaker 2 (02:51):
She probably didn't even realize it at the time that
Meredith Whitney was about to awaken a strange beast, one
that feeds off unsuspecting city dwellers. It was September twenty ten,
and everyone was on edge.
Speaker 3 (03:07):
The Dow tumbled more than five hundred points after two
pillars of the Street tumbled over the weekend. Lehman Brothers,
a one hundred and fifty eight year old firm, filed
for bankruptcy.
Speaker 2 (03:17):
The shock of the financial crisis still lingered, and people
were wondering what was going to be the next shoe
to drop. Banking analyst Meredith Whitney thought she knew.
Speaker 4 (03:26):
We looked around and there was nothing available to tell
you about this process of state budgeting, how monies are transferred.
It reminded me of the state situation, remind me so
much of the banks.
Speaker 2 (03:36):
It's pre crisis, that's Meredith.
Speaker 5 (03:38):
So in other words, you believe that the fiscal challenges
facing the states right now could.
Speaker 6 (03:42):
Be the next systemic risk for the financial system and
for the economy.
Speaker 4 (03:47):
There's no doubt about it. And the similarities between the
states and the banks are extreme.
Speaker 2 (03:56):
By her calculation, cities and states were in big trouble.
They were spending far more money than was coming in,
and municipal bonds, the debt vehicle they used to cover
the deficit, were looking like they could trigger the next
financial crisis. It was a dire prediction, and the finance
world took notice because when Meredith Whitney spoke, Wall Street listened,
(04:17):
and why well, she was one of the first to
sound the alarm on the two thousand and eight financial crisis,
almost a year before it happened. She looked like a
fortune teller. So in September twenty ten, when Meredith predicted
the finances of cities and states were going to be
the next catastrophe, big money had to take her seriously.
Her warning made a splash throughout the financial industry, and
(04:38):
media wanted to hear more.
Speaker 7 (04:40):
Meredith, your latest report really fascinating tragedy of the Commons
launching ratings on states. And what you've said is that
the states remind you of the Bank's pre crisis.
Speaker 1 (04:50):
I mean this is serious.
Speaker 7 (04:51):
Well, she made a name for herself when she correctly
forecasts the problems at City Group. Now analyst Meredith Whitney
is veering in on the problems plaguing the states.
Speaker 2 (05:00):
Her message was getting some traction, but the stock market
hadn't yet reacted. It would take the twenty ten midterms
to trigger a response.
Speaker 8 (05:08):
CNN that cannot project the Republicans will gain have a
net gain of thirty nine seats, at least thirty nine seats.
They will become the majority in the House of Representatives.
Speaker 2 (05:31):
With the Republicans winning the House, it became evident that
Obama stimulus checks were about to dry up, and that
was a problem because it was those checks that were
propping up city and state finances. If the White House
stopped helping local governments, could they make the payments on
their loans? The question spooked Wall Street. Maybe Meredith Whitney
was right, so in the no, investors began selling the
(05:53):
municipal bonds that carried those loans.
Speaker 7 (05:55):
We're going to focus right now in the municipal bond market.
Take a look at this chart. Crisis from municipal bond
securities have taken a nose down. Prices have fallen off
about ten percent since sitting high at the end of August.
Speaker 2 (06:08):
Bond prices plummeted, but even with the selloff, Meredith Whitney's
message was only reaching the finance world. It hadn't yet
hit Main Street. That day would arrive in December twenty ten.
Speaker 9 (06:24):
By now, just about everyone in the country is aware
of the federal deficit problem, but you should know that
there is another financial crisis looming involving state and local governments.
Speaker 2 (06:33):
Sixty Minutes ran a segment entitled The Day of Reckoning,
and it told the story of the precarious financial condition
of state and local governments that could lead to the
next financial crisis.
Speaker 9 (06:43):
The states have been getting by on billions of dollars
in federal stimulus funds, but the day of Reckoning is
at hand. The debt crisis is already making Wall Street nervous,
and some believe that it could derail the recovery, cost
a million public employees their jobs, and require another big
bailout package that no one in Washington wants to talk about.
Speaker 2 (07:03):
With the nation still shell shocked from the banking crisis,
the report's warning was ominous and sounded all too familiar.
Meredith Whitney took center stage on the show.
Speaker 9 (07:13):
Meredith Whitney is one of the most respected financial analysts
on Wall Street and one of the most influential women
in American business. Now she's warning about a financial meltdown
in state and local governments.
Speaker 4 (07:25):
I think, next to housing, this is the single most
important issue in the United States and certainly the largest
threat to the US economy.
Speaker 2 (07:34):
The report highlighted some of the worst states.
Speaker 9 (07:37):
California, which faces a nineteen billion dollar budget deficit next year,
has a credit rating approaching junk status. It now spends
more money on public employee pensions than it does on
the state university system.
Speaker 2 (07:51):
All the interviews were compelling, but it was Meredith Whitney
that delivered the quote that drew out a strange beast
from hiding.
Speaker 9 (07:57):
Whitney believes the states will find a way to honor
their debts, but she's afraid that some local government which
depend on their state for a third of their revenues,
will get squeezed as the states are forced to tighten
their belts. She's convinced that some cities and counties will
be unable to meet their obligations to municipal bondholders who
finance their debt.
Speaker 4 (08:18):
There's not a doubt in my mind that you will
see a spate of municipal bond defaults.
Speaker 9 (08:22):
How many is a state?
Speaker 4 (08:24):
You could see fifty sizeable defaults, fifty to one hundred
sizeable default more. This will amount to hundreds of billions
of dollars worth of default.
Speaker 2 (08:33):
And what was the timing on this building crisis?
Speaker 10 (08:36):
It'll be something to worry about within the next twelve months,
twelve months, twelve months.
Speaker 2 (08:54):
The Day of Reckoning was viewed by eighteen million Americans
and the show immediately ignited a media firestorm.
Speaker 6 (09:04):
One of the people predicting a tough year for Munie's
is analyst Meredith Whitney. These days, Whitney is focusing on
Munie's and she says there will be as many as
one hundred significant MOUNI bond default this coming year, totally
hundreds of billions of dollars. It's a bold call, for sure.
Speaker 11 (09:18):
So will the federal government come to the rescue? Just
how freaked out should you be about AMMUNI meltdown? According
to Meredith Whitney, a prominent market research analyst, a new
disaster is looming. She's warned that as many as one
hundred US cities face default on their municipal bonds, So
are we about to see the next bubble first?
Speaker 12 (09:37):
Meanwhile, over one hundred American cities that could go bankrupt
in twenty eleven as the Dead crisis, it threatens to
spark a municipal meltdown. That is, according to the us
OR research analyst Meredith Whitney, who correctly predicted the global
credit crunch, New York City, Detroit, San Francisco, and Los
Angeles are among the cities fear to go bust in
(09:59):
twenty eleven.
Speaker 2 (10:00):
It wasn't long before a legion of peculiar detractors came
out to attack Meredith Whitney, and they came from all angles.
Speaker 13 (10:06):
Frankly, she's dead wrong.
Speaker 3 (10:08):
I know, only disagree. I think her comments are irresponsible.
Speaker 6 (10:11):
Could or what a state default?
Speaker 2 (10:13):
Not really the idea that there would be hundred of
millions of dollars worth of default, that that's unquantifiable.
Speaker 14 (10:19):
It's an absurdity.
Speaker 4 (10:22):
I disagree, though, that there are going to be widespread
municipal defaults.
Speaker 2 (10:26):
Her prediction was called ludicrous and irresponsible, with one municipal
bond veteran claiming that.
Speaker 1 (10:31):
To quote to be talking about massive defaults is the
equivalent of talking about meteors the downfall of Rome and
the end of Western civilization.
Speaker 2 (10:40):
The day after the broadcast, one of the most powerful
public employee unions in America ass ME shot off of
video demanding Meredith stop the lies. The man in charge
of California's accounting published an op ed saying California isn't broken,
and a representative from the largest municipal bond fund said
Meredith's analysis wasn't worth the paper it was written on.
(11:01):
In the weeks that followed, the municipal bond market was
rattled by a massive investor selloff. Political pundits started debating
a state bankruptcy option, which would be an unprecedented move
because states can't claim bankruptcy. The Securities Exchange Commission was
reported to be monitoring Meredith Whitney, and even a House
Oversight committee requested her appearance at a hearing. When she declined,
(11:23):
the chairman suggested they might force her to appear.
Speaker 15 (11:26):
Our beauty bonds the next big crisis for this country.
Speaker 11 (11:30):
Congress is investigating in a hearing today on Capitol Hill.
Speaker 6 (11:33):
You look at Meredith Whitney's report that she declined to
make public, only gave it to some of her clients.
Speaker 16 (11:41):
No, I've yet to see the report.
Speaker 6 (11:43):
We have not had access to that, but if you'd
like to share it with me, I'd be happy to
take a look.
Speaker 15 (11:48):
Well, see, that's why you should bring her in front
of you. It is not because we want her opinion.
We want to know the facts upon which she based
her opinion. That's the reason to subpoena her, not for
her opinion, for what data she supposedly at or lacked
her up.
Speaker 2 (12:01):
The financial analyst was being in intimidated watching the whole
thing play out in real time, you have to ask
yourself what just happened? How could this one woman, in
the course of a single televised interview, ignite a media
firestorm that would shake the entire financial market, panic Congress,
(12:22):
anger government officials, and trigger an attack by public sector unions.
Nothing she said was really that controversial. Everyone knew cities
and states were in massive debt. Well, it all happened
because Meredith Whitney exposed the grift of a syndicate that
feeds off the people of Gotham, the same syndicate that
helped Democrats take over almost every major metropolitan area in America.
Speaker 1 (12:48):
History shows that every market eventually falls. Every currency collapses,
and today the US dollar is hanging by a thread.
Trillions in national debt record high markets define gravity, but
stocks can't go up forever. Meanwhile, rosueze, housing, and transportation
costs are all going up, and your dollar, it's buying
(13:08):
less every single day. If the system breaks, your stocks
and dollars won't save you, but one thing will.
Speaker 10 (13:15):
Gold.
Speaker 1 (13:16):
Gold has always survived to collapse. That's why banks and
billionaires are stocking up, and Americans are protecting their savings
with physical gold before the next shoe drops. Call Lear
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(13:36):
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should only invest if you can afford to bear the
risk of loss. Before making investment decisions, you should carefully
(13:57):
consider and review all risks involved.
Speaker 2 (14:01):
Welcome back to red Pilled America. So, in one sixty
minutes interview in December twenty ten, then banking analyst Meredith
Whitney unleashed a firestorm of controversy by predicting that cities
would default on their municipal bonds. Watching the whole thing
play out in real time, you have to ask yourself,
what just happened? How could this one woman, in the
(14:23):
course of a single televised interview, ignite a media firestorm
that would shake the entire financial market, panic Congress, anger
government officials, and trigger an attack by public sector unions.
Nothing she said was really that controversial. Everyone knew cities
and states were in massive debt. Well, it all happened
because Meredith Whitney exposed the grift of a syndicate that
(14:46):
feeds off the people of Gotham, the same syndicate that
helped Democrats take over almost every major metropolitan area in America.
This syndicate is comprised of everyone that makes money off
government spending, city, state, and county employees, government conc tractors,
municipal bond brokers, the fund managers and investment bankers of
(15:07):
these bonds, and of course politicians. These municipal grifters make
up the muni syndicate, and over the course of half
a century, they've been pulling out so much cash from
cities and states that they've plunged them into massive debt.
To give you an idea of how much money this
syndicate has drained from our coffers, in nineteen seventy five,
(15:28):
local and state governments were two hundred and thirty five
point four billion dollars in debt through muni bonds. Today
that number has risen to roughly four trillion dollars. How
did this muni syndicate form, where did it get its power?
And how did it help democrats take over major cities.
The answer to these questions can be boiled down to
(15:48):
three words, public sector unions.
Speaker 1 (15:56):
By the mid twentieth century, public sector unions were considered
the weakling offspring of the labor movement. To get an
idea of how minuskuild their power was at the time,
in nineteen fifty five, public sector unions had four hundred
thousand members. That same year, private sector union's membership exceeded
fifteen million. The primary reason for this difference in size
(16:18):
was that, unlike their private sector cousins, public employee unions
were lacking a key ingredient, a thing called collective bargaining. Basically,
collective bargaining allows a representative to negotiate with an employer
the salary, benefits, and working conditions of all their employees.
Prior to the late nineteen fifties, allowing collective bargaining in
(16:40):
the public sector was considered a recipe for disaster. Franklin D. Roosevelt,
who was considered a friend of the labor movement, famously
stated quote, the process of collective bargaining as usually understood
cannot be transplanted into the public service end. Even George Meenie,
former president of the massive afl CIO labor union, claimed
(17:01):
it is impossible to bargain with the govern There was
a consensus public sector unions should not be allowed to
collectively bargain. And why Well, imagine this scenario. You're working
at a company and you don't like your pay, health
care and retirement benefits. So you march into your boss's
office and say I want more. Your boss looks at
(17:22):
his budget and calmly responds that he can't do it.
There's a back and forth, and he eventually tells you
to get lost. So you go out to the city
and find someone that agrees to give you what you want,
even if the company can't afford it. You shake hands
with this guy, then you tell hundreds of thousands of
your coworkers to vote for this new guy, and he
becomes your boss. And the old boss that was trying
(17:43):
to be responsible with the company's money, he's out. That
is what collective bargaining is like for public sector unions.
In essence, they're given the power to hire and fire
their own boss. This is why even progressive leaders in
the mid twentieth century agreed that public unions should not
be allowed to collectively bargain. That perspective was not shared
(18:04):
by all enter The American Federation of State, County and
Municipal Employees, or AFSME for short, formed in the nineteen thirties, AFSME,
was the lead advocate of collective bargaining for public sector unions.
On February thirteenth, nineteen fifty seven, they had a breakthrough.
They convinced the Democrat mayor of Philadelphia, Richardson Dilworth, to
(18:26):
make a radical announcement. Philadelphia announ steps forward as the
first large American city to adopt for its non office
workers and white collar employees what has been the rural
in private industry exclusive bargaining rights in one majority union.
I am sure that the city and the general public
will benefit tremendously from the pioneering move we have made
(18:47):
this day. The contract covered fifteen thousand city employees and
the exclusive contract to bargain was granted to AFSME. A
citywide action of this size was unprecedented. The Philadelphia mayor
gave birth to a beast. This development spread to New
York City right into the hands of a rising APPS
organizer named Jerry Worth.
Speaker 5 (19:08):
It's important to understand that at the time we took power,
the union was conservative in stance, although you know, orthodox
liberal and resolutions were adopted at meetings.
Speaker 1 (19:23):
That's Jerry Worth. Jerry was a brash, tireless union organizer
and radical socialists that wanted to change the positioning of
his public sector union APPSME.
Speaker 5 (19:33):
The union also had no importance on the American scene.
Not many people knew us. Not only do we have
a clumsy name, but you know, we had no real
impact in any event. When we took power, things began
to change the union. When we took power was white
Anglo Saxon mobably Protestant in the cities ethnically divided, mostly Catholic.
(20:00):
The thing is is that this crowd took over and
we began to reshape the union. At that time, we
couldn't reshape it structurally, we needed another convention, but we
began to reshape it philosophically.
Speaker 1 (20:13):
Jerry had an ambitious goal. He didn't want to just
bring collective bargaining to the Big Apple. He wanted union
membership dues automatically taken out of New York City employees paychecks,
whether they liked it or not. But in the nineteen fifties,
the New York legislature was predominantly conservative, and he knew
he'd never reach his goals through a Republican mayor. The
Socialists would have to align with the Democrats. So in
(20:37):
the lead up to the nineteen fifty three mayoral election,
Jerry turned to a promising Democrat contender by the name
of Robert F. Wagner Junior. He targeted this guy because
his dad wrote the seminal legislation that brought collective bargaining
to all private sector workers. To put him on the spot,
Jerry asked the candidate to address AFSME union members during
(20:57):
his run for the mayor. Wagner accepted and fell right
into Jerry's trap. You see, in his youth, Jerry was
a member of the Young People's Socialist League, so he
understood the power of agitation. He made sure that every
AFSME member that could be rounded up was in attendance.
The Democrat mayoral candidate arrived to a midtown Manhattan hotel
(21:19):
bursting at the seams with union members and several thousand
mores spilling into the streets. Jerry cornered the candidate and
had two primary questions for him. Would he issue an
executive order extending collective bargaining to New York City employees
and would he allow union dues to be automatically taken
from cities workers paychecks. With the overwhelming head count of
(21:40):
the event, the candidate made a political calculation and agreed
to both requests if he was elected mayor. This moment
signaled the future dynamic of union negotiations. Give us what
we want, or we'll elect a different boss, asked me.
Would go on to help get Robert Wagner Junior elected
and in March nineteen fifty eight, Mayor Wagner signed Executive
(22:01):
Order forty nine that gave the union and everything they
asked for. A year and a half later, asked me
pushed Democrat Wisconsin Governor gay Lord Nelson to sign the
first statewide legislation allowing collective bargaining for the public employees
of Wisconsin. The trend spread to other states over the
coming years. The public sector unions were developing a business model.
(22:21):
Align with Democrat politicians, and only Democrat politicians because the
unions were run by socialists. Make the politician promise to
deliver goodies to union members, get the politician elected, receive
the goodies, then repeat the process all over again when
the politician's term was up. If a candidate wouldn't commit
to their demands, they would have an exponentially harder time
getting elected. And if say a mayor didn't have enough
(22:44):
in the budget to deliver higher wages or platinum benefits
or increased jobs, they simply asked the public for a
loan by issuing municipal bonds. This little arrangement worked swimmingly
for about a decade and a half. After collective bargaining
spread to parts of the country, the size of public
sector unions exploded. From a paltry four hundred thousand members
(23:05):
in nineteen fifty five, membership grew to four million by
the nineteen seventies, an astounding growth rate by any measure.
And as union membership grew, they drove up the city's
budgets and debt, which grew union membership, which in turn
grew government budgets and debt, and on and on in
a never ending feedback loop, until one city was pushed
(23:27):
to the biggest financial crisis it had faced since the
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Speaker 2 (24:39):
Do you want to hear Red Pilled America stories ad free?
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and help us save America one story at a time.
Welcome back to Red Pilled America. Near the end of
nineteen seventy four, New York City's finances were in dire strait.
(25:01):
For roughly a decade and inn and a half, the
city had been spending more than it had been taking in,
due in large part to the promises politicians made to
the public sector unions. To make up the budget deficit,
New York City turned to issuing municipal bonds to borrow
money from the public. These muni bonds, as they're called,
were attractive to cautious investors because they're very low risk.
(25:23):
Cities rarely go bankrupt, and that's because they avoid missing
the debt payment on their muni bonds at all costs
for one simple reason. If they don't pay back these loans,
they'd have a much harder time borrowing in the future.
Many state and local governments placed the payment of bond
debt above almost all other expenditures. In the case of California,
for example, paying bond debt has priority over all other
(25:45):
budget items except education. While for years the Big Apple
was taking on debt like a drunken socialite at a
shoe sale, people began questioning the city's ability to pay
its debts, and the New York Times wasn't making things
easier for the mayor. The newspaper ran an article headlined
bankrupt City. The Democrat mayor Abraham Beam responded, issuing a
(26:07):
statement stating.
Speaker 1 (26:08):
Quote bankruptcy means that liabilities exceed assets or that credit
obligations cannot be met. A situation in which the City
of New York, even in the darkest days of the
Great Depression, never has found itself, nor will it.
Speaker 2 (26:22):
But nobody was buying his spin. Not long after city
officials arrived at a regular meeting to issue bonds to
the public they needed to borrow money, New York City's
financial Controller announced the investment Opportunity Morning.
Speaker 17 (26:35):
Ladies and gentlemen. Today the city in New York is
war frank for competitive bidding, saled two hundred and sixty
million tax anticipation notes, of which one hundred million will mature.
On Juke third, nineteen seventy five.
Speaker 2 (26:47):
The banks were supposed to arrive at eleven AM to
buy the bonds, which they would in turn sell to
the public, but the banks were all a no show.
The meeting was rescheduled for three hours later, but then
two PM arrived, then two thirty, then two forty five pm.
The banks again didn't show up.
Speaker 16 (27:08):
The announcement on behalf of the controller is that the
offer which we had expected to receive an announced at
two o'clock this afternoon, is now expected at four o'clock.
Speaker 14 (27:21):
Well, does this mean that so far nobody wants those bonds.
Speaker 16 (27:24):
We will be making a further announcement at four o'clock,
and anything further that I could say now I think
would not advance the interests of the sale which is
now in progress.
Speaker 8 (27:33):
Does this mean that you have not been able to
sell them so far?
Speaker 14 (27:35):
Today?
Speaker 16 (27:36):
We will have a further announcement.
Speaker 18 (27:38):
At four o'clock.
Speaker 2 (27:39):
The city's finances were on the verge of a collapse,
and the banks knew it. They didn't show up because
they were concerned that if they got involved with the
city's bond offering, they could possibly be criminally liable. Only
thirty three percent of these bonds were sold, leaving the
city in a position to default on its debt the
next month. But the bad news was just beginning, adding
(28:01):
a devastating blow to the city. Standard and Poors suspended
its rating for New York City bonds, sending a message
to the public that the Big Apple could actually be
going bankrupt. Two days later, as a last resort, the
State of New York announced it would lend the city
four hundred million dollars to help it get through the
next few weeks. Things were getting so bad in the
(28:22):
Big Apple that local stores were offering discounts to unpaid
city workers.
Speaker 18 (28:27):
We're here with the Press and Bond stores where Bonds
has just announced a new concept and a self help
program for the city. Right.
Speaker 19 (28:34):
The idea is very simple, and Washington can't come through.
If all Benny is hesitant, then at least we who
do business in New York can help those people who
help us be the.
Speaker 18 (28:41):
City we are be leaving. The New York City municipal
employee shouldn't take the brunt of our budget.
Speaker 14 (28:46):
Christ and he sure shouldn't.
Speaker 18 (28:47):
Bonds will give each and every city employee a ten
percent discount to help cut his cost of living right now.
Speaker 19 (28:53):
Right, and if other retailers take up this banner, then
all of us will benefit by helping those who help us,
like the policemen and firemen, the teachers, the sanitation ment,
the hospital employee.
Speaker 18 (29:02):
All those munits of employees who work for the biggest
and still greatest city in America.
Speaker 2 (29:06):
With the state offers nearly running dry, New York City's
mayor made the track to the nation's capital to plead
for help.
Speaker 20 (29:14):
New York's Mayor, Abraham Beem, led a delegation of fellow
mayors to Washington today seeking federal financial aid for New York.
Speaker 21 (29:21):
Fifteen mayors, most from big cities, appealed to the Congressional
Joint Economic Committee today for some federal emergency help for
New York City, arguing that a New York default would
hurt every other city in the country by making it
impossible for other cities to borrow money.
Speaker 22 (29:35):
The state has done all it can, the city has
done and has committed to.
Speaker 14 (29:41):
Do more of what we've done, and if.
Speaker 22 (29:45):
The federal government does not help us, I think it
will find the problem afterwards which it would have to
help us with much more serious.
Speaker 21 (29:54):
The mayors asked for federal guarantees for New York City
bonds and notes, and, if necessary, emergency loans. The first
answer from the Ford administration was allowed firm no to.
Speaker 13 (30:04):
Costs and risks associated with any program to provide special
federal financial assistance to prevent the fault substantially outweigh the
benefits which prevention would provide.
Speaker 2 (30:15):
Would the Big apples financial position becoming more and more compromised.
The city was faced with defaulting on its step by
the close of business on Friday October eighteenth, nineteen seventy five,
and the media was doing its part to scare politicians
into action.
Speaker 21 (30:28):
Governor Hugh Carey of New York told Congress today that
default by New York City would be an economic Pearl
Harbor for the rest of the nation.
Speaker 22 (30:35):
West German Chancellor Schmidt came here and said the collapse
of the world's financial capital could push the whole world
back into recession.
Speaker 23 (30:44):
New York City is right on the edge of financial
disaster this morning and this time, as they said at
Pearl Harbor, it's no drill.
Speaker 14 (30:52):
The biggest problem trustees of union pension funds were reluctant
to lend the city money. Earlier, state unions had won
a court case against using their pension funds to bail
the city out, and yesterday the city's teachers union joined
in that refusal. So early this morning Felix rowan from
the city financier trying to raise the money to pay
(31:12):
the city's bills today four hundred and fifty million dollars worth,
came out to say that he couldn't do it.
Speaker 18 (31:19):
I'm sorry to have to tell you that the teacher's
pension system has voted against making the commitment to us.
Speaker 21 (31:26):
Yeah, there is no further change at seven o'clock. Does
this mean New York will default tomorrow?
Speaker 9 (31:31):
I would think if this stands, the likelihood is very
great that we will default tomorrow.
Speaker 14 (31:36):
Default, if it comes, will in its first stage mean
that four hundred and fifty three million dollars of city
debts borrowed exactly one year ago will not be paid
back as they are supposed to be when the bank's
open at nine am Eastern time this morning. But even
if default doesn't come today, it's apparent now that it's
not very far off unless there's major financial help from
(31:56):
the federal government very quickly. There is a risk that
Felix Rowett and last night or early this morning, that
part of the payroll won't be met, and then suddenly
some city workers aren't going to be working, and then
it's very hard to tell. If sanitation men don't work,
don't get paid, will they work? If city services are
cut back, what will happen? Is there a risk of
social disorder? But National guardsmen have to be brought in,
(32:18):
and once the services are cut off, then no one
knows just how badly people will be hurt. The end
results of one banker is that New York could turned
into a cow cutter wow.
Speaker 2 (32:41):
Under tremendous pressure, the trustees of the city Teachers' union
pension fund agreed to invest one hundred and fifty million
dollars into city bonds just hours before the Big Apple defaulted.
But this only bought the city a few weeks. So
the Democrat governor of New York went on the offense
to pressure President Ford into a bailout.
Speaker 14 (32:59):
Governor carry charge the real bankruptcy was not in New York,
but in the presidential leadership of Gerald Ford.
Speaker 20 (33:06):
It is only by sitting on their hands that the
federal treasury stands to lose hundreds of millions of tax
revenues if the city to falls.
Speaker 2 (33:16):
President Ford shot back, as we worked with a wonderful
people of New York to overcome their difficulties, and they will.
Speaker 23 (33:23):
We must never forget what brought this great center of
human civilization to the brink. If we go on spending
more than we have, providing more benefits and more services
than we can pay for, than a day of reckoning
will come to Washington and the whole country, just as
(33:44):
it has to New York City. And so let me
conclude with one question of my own. When that day
of reckoning comes who will bail out the United States
of America.
Speaker 2 (34:00):
The media and high profile New York Democrats continue to
tag team attack on President Ford. The day after he
rejected to bail out of the Big Apple, the New
York Daily News ran with the famous headline forward to
city drop dead. The New York Post and The New
York Times ran with front page above the fold headlines
shaming Ford into action. Then New York's governor jumped back
(34:23):
into the ring.
Speaker 20 (34:24):
I am here tonight to say that I agree with
Gerald Ford. Washington should not bail out New York. It's
also true that the undeniable dislike of many Americans for
the cultural climate of New York makes intelligent debate very difficult.
But I still believe that if Americans understand what New
(34:45):
York is really asking for, they will support it. Not
because they love the city, and certainly not because they
want to pay the cost to pass mistakes. They will
support it because it will save them money. This is
the single most important fact that the White House chooses
to ignore. The low and guarant arrantee plan now before
Congress does not give New York City one red cent.
(35:09):
It gives a city time to pay its debts and
reform its practices. There is a sorry history of reckless
fiscal policy in New York City going back years, perhaps decades,
and there is blame enough for everyone. City officials and
interest groups banks that did not ask the hard questions,
a state legislature, and a governor now mister Ford's hand
(35:33):
picked vice president that specifically authorized every fringe and pension benefit,
and every unwise borrowing mister Ford now attacks so righteously.
Speaker 2 (35:44):
New York City's financial crisis reached a peak in November
nineteen seventy five. By mid month, what was said could
never happen happened. New York State passed legislation halting the
payment of its debt for three years. In essence, New
York City was defaulting on its debt about a weekly.
The States scraped together even more cash for the Big
(36:06):
Apple to avoid bankruptcy, but national public opinion began to shift.
Many feared that a New York City default could spread
to their city. With the heightened fear taking its toll,
and just one year away from an election, President Ford
finally relented on Thanksgiving Eve nineteen seventy.
Speaker 23 (36:22):
Five, I have decided to ask the Congress when it
returns from recess for authority to provide a temporary line
of credit to the State of New York to enable
it to supply seasonal financing of essential services for the
people of New York City. New York officials must continue
(36:45):
to accept primary responsibility. There must be no misunderstanding of
my position.
Speaker 2 (36:51):
The Democrat New York City mayor got his bailout.
Speaker 22 (36:55):
The President's action, crucial as it may be, does not
bring our serious difficulties to an end. The coming two
months and years will mean new sacrifices for all New Yorkers.
Speaker 1 (37:17):
The crisis that many felt stem from public sector unions
had come to a close. City leaders all across the
country learned that they can continue their financial scheme with
their local muni syndicate because Washington d c Would eventually
bail them out. One of the key members of New
York City's Muni syndicate was asked about his takeaway from
the Big Apples nineteen seventy five financial crisis. He responded saying, quote,
(37:41):
a sea wall is all stronger for having been repaired,
and he was right. Their grift did get stronger, and
their hold over major cities has grown ever since. From
nineteen seventy five to twenty twenty one, the powerful municipal
syndicate has grown state and local government debt by a
jaw dropping seventeen hundred percent, and in the process, they
(38:01):
helped their Democrat figurehead take over the major cities that
line their pockets, which leads us back to the question
how did Democrats take over American cities? The answer is
(38:21):
they became the figureheads of a powerful syndicate, a municipal
syndicate designed to extract money from city budgets. This financial alliance,
led by the public sector unions, has created a near
impenetrable force for Republicans in every major city in America.
They use the money they pull from city coffers to
grow their numbers, then use those numbers to hire their
(38:44):
own boss. And because the ringleaders of this muni syndicate
are socialists, the bosses they successfully hire are always Democrats.
You may think this cartel is too small to impact elections,
but you'd be wrong in that assumption. The bigger the city,
the bigger the muni syndicate, and they're some of the
most politically active people in America. They volunteer for campaigns
(39:05):
become poll workers, count election day ballots, donate to campaigns,
and protest at the home of a local politician they
want replaced. They've turned just about every major city in
America blue. Financial analyst Meredith Whitney inadvertently uncovered this muni
syndicate when she sounded the alarm on the debt they
were creating. Her prediction didn't come true. City bankruptcies did
(39:28):
not become the next financial crisis. But the thing about
predictions is that it's all about the timing.
Speaker 24 (39:34):
Federal government was very quick to bail out the banks
a decade ago, no questions asked. Faral government was very
quick to bail out the auto industry. How about bailing
out the nation's largest city. How about bailing out the
epicenter of this crisis where people have been suffering. That
is what our federal government should do.
Speaker 2 (39:55):
Red Pilled America is an iHeartRadio original podcast. It's owned
and produced by Patrick Carrelci and me Adriana Cortez for
Informed Bends. Now, you can get ad free access to
our entire catalog of episodes by becoming a backstage subscriber.
To subscribe, just visit Redpilled America Dot com and clid
join in the topmenu. Thanks for listening.
Hosts And Creators
Adryana Cortez
Patrick Courrielche
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