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Aaron Regunberg: A Closer Look at Raimondomania

Saturday, October 27, 2012

 

General Treasurer Gina Raimondo is once again the recipient of national media attention this week, with a fawning blurb in The Atlantic anointing her one of the magazine’s “2012 Brave Thinkers” for her work on pension reform. The piece read: “Last year she led an unprecedented reform, raising the retirement age (to 67), freezing cost-of-living increases, and adding a 401(k)-like plan to the traditional (shrunken) defined-benefits plan. Raimondo, a Democrat, says she ran for office largely to perform this thankless task. The state’s pension payments were crowding out spending on things like libraries and public buses—services she depended on in her youth.”

It makes you wonder whether Raimondo knows someone at The Atlantic. I understand that the magazine was not trying to get into an in-depth analysis of Rhode Island state politics and fiscal policy, but there is a difference between a positive puff piece and misinforming cheerleading. In my opinion, their ‘Raimondomania,’ as Ian Donnis calls it, pushes that line.

Let’s first take their characterization of the job Raimondo undertook as “thankless.” The Atlantic, it seems, would have us believe that the general treasurer was a martyr figure fighting against every powerful special interest for the sake of the little guy. In reality, when it came down to it there was really only one interest group standing up for public employees, and that was the public employees themselves and their unions. Raimondo had on her side every big business interest, banking interest, corporate interest, and bipartisan right-wing conservative interest in the state (and beyond the state). The Atlantic may not have noticed, but all of these wealthy special interests have been giving Raimondo plenty of thanks, often in the form of fat campaign contributions. They know full well that fewer dollars going towards hard-working middle class families means more dollars available for their own taking, and now they owe Raimondo a great debt of gratitude that she can continue raking in as long as she wants to.

Then there’s the line, “The state’s pension payments were crowding out spending on things like libraries and public buses.” That’s a powerful justification for cutting pensions, and one that I would agree with—if it were true. To be clear, as someone who is not a public employee, who doesn’t have any family members who are public employees, and who spends most of his time working with people living in poverty who rely on these programs, I would certainly come down on the side of saving critical social spending.

Unfortunately for this line of argument, Gina Raimondo has been fundamentally dishonest in her characterization of this pension-or-social-spending choice we face. What The Atlantic article does not mention is that our state has chosen to cut income taxes on the wealthiest Rhode Islanders time and time and time again over the last 15 years (each time promising it would bring us jobs, while the unemployment rate continued to climb). To claim, after this series of budget wrecking balls for the benefit of the rich, that the squeezing of funding for libraries and public transportation is the fault of public employees is deceitful. To argue that the blame lies on folks like my friend, who’s spent decades working as a nurse—who had her ribs broken twice on the job by violent patients and came to work the next day anyways—and who now is scrambling to figure out how to live on her slashed pension, is not something we should be glorifying.

Besides, if we’re going to sing the praises of any pension reform efforts in Rhode Island, it seems to me like the accomplishments of Angel Taveras in Providence are far and away a better recipient of our admiration. First of all, Providence was dealing with a much more acute problem than the state of Rhode Island had on its hands. But despite the severity of the fiscal situation the city was in, Taveras did not, like Raimondo, focus on a solely unilateral attack on public employees. He did not choose to villainize hard-working families, or try to turn public opinion against them by painting them as lazy or greedy. Instead, he worked with them. He negotiated—he negotiated hard, certainly, but he also negotiated honestly and fairly. As a result, he was able to come to a compromise that achieved buy-in from all parties.

In this manner, the Mayor’s approach was not only morally superior to Raimondo’s divisive strategy, it was also more effective. One need look no further than the legal fallout of pension reform to see this. Right now Raimondo’s law is being challenged in court, and though I am far from a legal expert, it seems from what I’ve read that labor’s case has at least a significant chance of prevailing. After all, in order to break a contract with its employees, the State needs to prove that there was a public emergency for which there were no other options. Not only was there no public emergency—but rather a manufactured crisis caused by changing some actuarial assumptions—there were also many other options on the table, from cutting management to rolling back tax cuts on the rich.

Providence’s pension changes, on the other hand, appear stable and secure precisely because they were arrived at through partnership rather than one-sided bludgeoning (in fact, even the conservative Wall Street Journal recognized the Taveras approach as “a better model”).

Folks who’ve read my writing know I’m no Taveras partisan—I have plenty of criticism for some of the choices his administration has made. But as talk of 2014 continues to heat up, I think the pension reform issue serves as a good example of the different governing styles Rhode Island voters may have to pick between in the future. For me, I’ll pick direct and effective leadership over divisive scapegoating any time.

 

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Comments:

You say that Mayor Taveras faced problems. I agree. But, where did the problems come from? Who left him with those problems? Should not THAT person be held responsible, and driven from the political scene?

Comment #1 by Michael Trenn on 2012 10 27

Mayor Taveras had a little more leverage when bargaining than Raimondo did. Providence would go bankrupt without the changes to pension, just like Central Falls (those pensions were slashed, unlike the state's where they only had a freeze on their compounded raises). The state can't file bankruptcy. Very different situation, very different leverage point. It's impossible to negotiate with no leverage.

Comment #2 by pamela gencarella on 2012 10 27

Here's why pension cuts are unconstitutional: Before the constitution, one of the most common examples of government overreach was governments unilaterally altering contracts. The government could contract with a company to build a bridge and then just decide not to pay for it. Clearly this is a power the state should not have, since it renders any promises the state makes meaningless. The founders recognized this, and they wrote a clause into Article One, Section Ten of the Constitution forbidding states from unilaterally altering contracts.

This, for instance, is the reason why Rhode Island cannot just alter Brown's charter to remove tax exemption from the commercial property Brown owns.

Pensions are contracts. Many state employees came to Rhode Island because of those pensions, turning down jobs that might have paid more up front but offered fewer benefits. The state has absolutely no ability to unilaterally alter those contracts. If it had that power, no pension promises would mean anything. Indeed, pension reform will probably make it much harder for us to attract high-quality public sector workers. Legally speaking, the only way the state can break contracts is if it goes bankrupt. Since Rhode Island is not bankrupt, there really is zero legal justification for pension cuts. However, the intense political pressure and the exemptions built in for judges give the law probably an even shot at survival. As we all know, courts rule largely for political reasons, not legal ones.

Comment #3 by Samuel Bell on 2012 10 27

Just curious where all the increased funding for libraries is...the State Reference Resource Center funding was cut and I'm not aware of any increases in other state funding to libraries either.

Comment #4 by Karen McAninch on 2012 10 27

RAIMONDO'S ATTEMPTED THEFT WAS ALSO TRIED IN COLORADO, IT IS ON THE ROAD TO FAILURE.

COLORADO COURT OF APPEALS CONFIRMS COLORADO PERA PUBLIC PENSION COLA BENEFITS AS CONTRACTUAL.

The Colorado Court of Appeals has reversed and remanded an initial District Court ruling that denied the contractual status of public pension COLAs in Colorado. The Court of Appeals confirmed that Colorado PERA pension COLA benefits are a contractual obligation of the pension plan Colorado PERA and its affiliated public employers. A huge victory for public sector retirees in Colorado! The Colorado Legislature may not breach its contracts and push taxpayer obligations onto the backs of a small group of elderly pensioners.

The lawsuit is continuing. Support pension rights in the U.S. by contributing at saveperacola.com. Friend Save Pera Cola on Facebook!

Comment #5 by Al Moncrief on 2012 10 28




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