| | Advanced Search


Friday Financial Five - August 29, 2014—The Tax Foundation has put together a helpful…

5 Live Music Musts - August 29, 2014—We’ve got Rhythm and Roots and a whole…

The Cellar: Late Summer Values—While this week saw some fantastic weather there…

URI Ranked in Top 50 of LGBTQ-Friendly Universities in the Country—The University of Rhode Island has been ranked…

RI Politicians Who Sought Redemption from Misdeeds—See the Rhode Island politicians who have bounced…

Fall’s Best Foodie Events—Something that's different now -- much different than…

Brian Counihan Joins Iron Works Tavern as Executive Chef—Chef Brian Counihan has joined the team at…

Narragansett Bay Ranked #5 as Best for Boaters in US—Providence has ranked as the #5 best region…

newportFILM To Present Last Two Outdoor Screenings of the Summer—newportFILM will host their last two outdoor screenings…

Trinity Rep to Debut Great Writers Series for 2014-2015 Season—Trinity Rep will present the Great Writers Series…


Michael Riley: Rhode Island’s Potential Pension Nightmare

Tuesday, April 15, 2014


Much of Rhode Island will be headed for disaster later this year, according to Michael Riley.

Rhode Island’s widely heralded innovation, the Pension Reform Act of 2011, now appears to be in danger, to be tested in court. The trial date set for this lawsuit, affecting state employee pension plans, is now mid-September 2014. When RIRSA was enacted in 2011, the reforms that took place were estimated to save taxpayers approximately $3 billion.

At that time, Rhode Island was challenging Illinois for the worst funded state pension system in America. We were clearly in the midst of a crisis even though we still hear union advocates say the crisis was “manufactured“ by Gina Raimondo. This argument is pure bunk. Not only is it empirically provable that the high rates used to discount liabilities needed to be much lower to provide an accurate picture of funding levels, those rates will come down further toward 6% as suggested by both Moody’s and GASB rule changes that go into effect in 3 months.

Numbers real and fudged

When Rhode Island calculated the actuarial liability in 2011, it was estimated that RI state pension funds were approximately $4 billion underfunded (assets $6.4 billion, liabilities $10.49 billion). Although assets were smoothed and that may no longer be allowed, they were pretty accurate. Liabilities on the other hand, were not accurate and were significantly understated because they were calculated assuming a fully funded plan was going to achieve 8.25% compounded annually going forward. That assumption was wrong for two reasons: the plan was not fully funded (it was 60% funded, assuming 8.25%), and accounting rules are forcing more realistic discount rate assumptions, not Gina Raimondo or Michael Riley as some say.

Moody’s will use between 3% and 6% depending on the condition of the plan and GASB rules indicate underfunded plans can no longer just select an investment rate expected return, but must reflect rates consistent with the level of funding. Plans that are underfunded should be calculated using a discount rate of 3.9% (AA 20-year municipal yield).

Gasb 68: The consistency and transparency of the information reported by employers and governmental non-employer contributing entities about pension transactions will be improved by requiring:

The use of a discount rate that considers the availability of the pension plan’s fiduciary net position associated with the pensions of current active and inactive employees and the investment horizon of those resources, rather than utilizing only the long-term expected rate of return regardless of whether the pension plan’s fiduciary net position is projected to be sufficient to make projected benefit payments and is expected to be invested using a strategy to achieve that return

Projected benefit payments are required to be discounted to their actuarial present value using the single rate that reflects (1) a long-term expected rate of return on pension plan investments to the extent that the pension plan’s fiduciary net position is projected to be sufficient to pay benefits and pension plan assets are expected to be invested using a strategy to achieve that return and (2) a tax-exempt, high-quality municipal bond rate to the extent that the conditions for use of the long-term expected rate of return are not met.

The chart below attempts to show a scenario analysis using these accounting rules. It starts by showing our status in 2011, just prior to when reform took place. In 2011, Rhode Island was 61% funded based on actuarial assumptions of a fully funded plan getting 8.25% returns compounded going forward. The reforms including cola suspension and benefit changes had the effect of decreasing the state’s unfunded liability by approximated $3 billion, according to the state figures. At the same time, they changed the discount rate from 8.25% to 7.5%, which increased the projected unfunded liability by over $2.5 billion according to the state.

This chart tries to isolate the impact of the discount rate assumptions both before and post-reform. The key question is this: What are the risks we face individually and as a state if the unions win their lawsuit in court and RIRSA is repealed? I assume that any reform progress at the municipal level dries up and what little progress in municipal pensions proceeds at Commissioner Gallogly’s snail’s pace. Reforms similar to the settlements reached in Providence have very little effect on the unsustainable nature of their plans.

My estimates show the effect of unwinding re-amortization and also the costly effect of returning to the benefit schedules and colas to settings before reform. I used the state’s estimate of $3 billion in savings (now unwound) and added it back to the liability that would be calculated under GASB rules. Because the state fund would still be significantly underfunded even if the law were not repealed, we continue to run the risk of being measured at a 4% discount rate under new rules.

What is the nightmare scenario?

In a nightmare scenario, the existing law would be overturned in the courts and we would then be significantly downgraded by ratings agencies, causing at least 100 times the damage to borrowing costs of not paying Studio 38 bonds. Even if the state then appeals, the $3 billion in savings will be added back to the liability by every rating agency and will be discounted from 3.9% to 4.5%, just like what happened to Chicago a few weeks ago. The state will then be 39% funded, increasing ARCs in both the state and municipalities, thus causing the state’s annual costs to explode beyond the $600 million projected annual cost for 2016. Unwinding RIRSA would immediately increase short-term costs and long-term liability for most cities and towns most of them simply won’t be able to survive.

This scenario would be devastating, and in my opinion would ruin the pension system. The negative effects would harm every taxpayer and destroy the life savings of tens of thousands of public workers past and present. I can’t believe this result is would be good for the next generation of Rhode Islanders. One way or another, the math catches up and the bill comes due. Public employee unions should be careful what they wish for.


Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC news, Yahoo TV, and CNBC.


Related Slideshow: New England States With the Most State Debt

Prev Next

6. Vermont

Debt Per Capita: $12,566

National Rank: 36th Most

Total Debt (in thousands): $7,866,666

National Rank: 49th Most

Debt as a Percentage of Gross State Product: 29%

Prev Next

5. Maine

Debt Per Capita: $12,577

National Rank: 35th Most

Total Debt (in thousands): $16,717,250

National Rank: 42nd Most

Debt as a Percentage of Gross State Product: 31%

Prev Next

4. New Hampshire

Debt Per Capita: $13,951

National Rank: 27th Most

Total Debt (in thousands): $18,425,567

National Rank: 41st Most

Debt as a Percentage of Gross State Product: 28%

Prev Next

3. Rhode Island

Debt Per Capita: $17,960

National Rank: 16th Most

Total Debt (in thousands): $18,863,153

National Rank: 40th Most

Debt as a Percentage of Gross State Product: 37%

Prev Next

2. Massachusetts

Debt Per Capita: $19,493

National Rank: 12th Most

Total Debt (in thousands): $129,550,263

National Rank: 10th Most

Debt as a Percentage of Gross State Product: 32%

Prev Next

1. Connecticut

Debt Per Capita: $31,298

National Rank: 3rd Most

Total Debt (in thousands): $112,372,072

National Rank: 12th Most

Debt as a Percentage of Gross State Product: 49%


Related Articles


Enjoy this post? Share it with others.


Perhaps you are right that Ri would be downgraded in the event that the pension law is overturned, but I think it's important to remember how we got here. There was no need to lower the rate of return. The average twenty year return is over 9%. The 2008 crash was an anomaly and does not represent the long term, and pension funds are nothing if not determined long term. Another problem that was indeed manufactured by Raimondo to further her own agenda, was the mortality rate. Many state worker, MERS, and teachers, retire earlier than age 65. The morality rate was based on this age, and so the tables were inflated. Those who retire before age 65 cannot be put in a pool with those who will live until age 87, that number is based on retirees who retire at age 65, not who are alive at age 65. The number should be closer to age 76, the mortality rate of the average Rhode Islander.

Aside from the assumptions imbedded in the pension law, changes to the pension plan could have been negotiated by the unions with the state. Raimondo is fond of saying that she held meeting, groups, and listened to everyone. That is a blatant lie. She shopped this pension theft to every chamber of Commerce meeting she could find, and the group that she assembled in the summer of 2011" was a farce. I was at those meetings and everything that was discussed was completely ignored by the final pension legislature. It was all for show.

If this law gets overturned, the state will have no one to blame but itself. The fund did well before the crash and could do so again. It could have been re-amortized, the mortality could have been lowered, and the rate of return left where it was. And yes, perhaps if the unions were actually at the table some compromises could have been reached, but that was not the case. Raimondo and EngageRI bulldozed this thing through and post-crash RI panicked and went along, in the same way as the Studio 38 debacle. Fear and panic does not trump the constitutionality of law. Rhode Island needs leadership, not the new quick fix, that engendered the 38 studios and so-called pension reform. Carcieri , the flat tax, and his other austerity measures have starved the cities and towns, not the salaries and pension contributions state employees and teachers have worked for.

Comment #1 by Candace McCall on 2014 04 15


We are not- we are not great but we are #11 on Bloomsberg's list.
Recheck your facts. Also what about the kickbacks the state gives to CVS for creating jobs- over 60 million and counting even though in one year they layed off people.

Comment #2 by Sharon Knettell on 2014 04 15


Here is what Chigago does with the money it should be using for pension funds.
Get your facts right.

Comment #3 by Sharon Knettell on 2014 04 15

Sharon, someone I know who works for CVS said that the money can legally be used, and was used, to outsource IT to India. Corporate welfare cost RI taxpayers far more than pension payments. It's the classic "look here, not there," scenerio . You can work people up about their neighbors who have pensions because they live next door and you noticed they just bought a pool, and you want a pool, it's all about proximity, but few know CEOs or see their Infinity pools in their backyards.

Comment #4 by Candace McCall on 2014 04 15



I tried to get documents from the law firm or anybody from RIEDC who had authorization to find out how they figured out the legalized theft of the CVS kickbacks. I got a completely useless pile of paper not relating to it at all. RIEDC changed its name for more legalized theft.
Hang on to your pensions.

Comment #5 by Sharon Knettell on 2014 04 15


Follow the money to the big pockets of Rhode Island.

This is money that could fund the pensions. I am so mad I could spit.

I have seen those infinity pools.

Mr Riley- the yacht basin or whatever should go.

Comment #6 by Sharon Knettell on 2014 04 15


The ACA is lowering the deficit- not raising it. Get your facts straight Mr. Riley- the ones on your site.

Don't you want people to have health care- I guess not so it would seem.

Some Rhode Islanders can read.

Comment #7 by Sharon Knettell on 2014 04 15


$56 Million- How's this for a pension- oink, oink, oink CVS Tom Ryan's 2012 pension.

Comment #8 by Sharon Knettell on 2014 04 15

Ms. Raimondo uses mortality tables for a 30 year old, to steal from a 70 year old. And Mr Reilly keeps spewing this BS. It is blatantly false. And I love how he keeps threatening that S&P is going to use a 3.9% return for unfunded pensions....What if all state and municipal pensions found new investments outside of the US stock exchange? S&P would have a shit fit!

Comment #9 by Stephen DeNinno on 2014 04 15

Hind sight is just that, most pension systems are unsustainable and were negotiated by union friendly town/city governments leading to conflicted interests. We now have to figure out how to best resolve the issue, the taxpayer in RI can't take on more.
There will have to be some give back as too much was given away to the unions, hold all of the past politicians and unions to task.

Comment #10 by Gary Arnold on 2014 04 15

Perish the thought this three walnut shells and a pea "pension reform" gets tested for legality in a court of LAW, right? We ONLY go to court when we want to screw the little guy, this time it might be the other way 'round. I'd advise not dislocating your shoulders patting yourselves on the back ove screwing the middle class worker until the Supreme Court hears this.

Comment #11 by G Godot on 2014 04 15

Funding issue aside, seems to me that it would be more prudent to manage a pension fund with an assumed 6% return rather than having to rely on 9% in order to meet the fund's obligations, no?

Comment #12 by Ben Algeo on 2014 04 15

I for one, if nothing else comes out of this case, hope the fraud Raimondo is laid bare in front of all taxpayers. Now we will hear once and for all, the details of the investment strategy of the Treasurer. Let us all see if taking away the COLA and giving the massive amounts to wall St was worth the risk! I just couldn't believe after winning the election, in just 11 months she figured out the way to "save" the pension system was to screw the people that paid in, and enrich hedge fund managers. Mr. Reilly’s association with the freedom for prosperity group, which is shadow funded by some of the most extreme right wingers of our time. makes his weekly contribution suspect. Mr. Reilly’s constant drum beat about unsustainable pensions without a word about whom or what did not pay in is laughable at best. He is controlled by these same Wall St Barons that are buying their 3rd home in the Hamptons. Yes my friends, let Wall St take your colas, after all they are so honest anyway

Comment #13 by Stephen DeNinno on 2014 04 15

Regrettably, I think all you pension problem "denyers" may be in for a very rude awakening. Just keep looking back and pointing fingers at this one or that one, all the while ignoring the fact that future pension liabilities are totally unsustainable.

The time of reckoning is fast approaching.

Comment #14 by Walter Miller on 2014 04 15

Walter, those that forget the past, are doomed to repeat it! This is exactly what the politicans want you to do. So if we don't point fingers, whats to stop this from happening again? Just like if you don't get a ruling, whats to stop the next treasurer from making more cuts? I am in the Providence fire pension, and I am going to court to get a ruling on what was IN my contract, so they don't do it again!

Comment #15 by Stephen DeNinno on 2014 04 15


Comment #16 by LENNY BRUCE on 2014 04 16

That is not quite the whole story. While there was indeed quite a lot of cozying up to the unions when many of the contracts were originally written, the main reason that the pension plans are bankrupt is that the municipalities never put any funds aside to cover their future obligations. Unfortunately, while private corporations where required to do that, state and local governments were exempt from that law; I suppose on the grounds that such public entities could always tax their constituencies to cover any shortfalls. Corporate pension on the other hand were systematically eroded from with the aid of lobbied changes in the original law passed by the U.S. Congress in 1974 (Employee Retirement Income Security Act of 1974 (ERISA) ERISA was enacted in 1974 and signed into law by President Gerald Ford on September 2, 1974, Labor Day. In the years since 1974, ERISA has been amended repeatedly. Now that they are essentially all gone, the public employee unions have become the fall guys for all financial problems in the country. The only significant difference is that corporations were able to cover their retreat from pensions with buy-out plans so it wasn't so obvious that the pensions (that for the most part were fully funded and could have sustained the retirees well into 2020) had been secretly absorbed by the corporations..

Dr. E. E. Crisman
Crawford Hall
College of Engineering

Comment #17 by Sharon Knettell on 2014 04 16

Look, the first pieces of reality begin to filter in.

PROVIDENCE, R.I. (WPRI) – Obamacare will likely cost Rhode Island more money than state leaders expected. But nobody knows exactly how much yet.

Figures obtained from the Chafee administration by WPRI.com show that out of the 64,590 Rhode Islanders who signed up for Medicaid from October through March using the state’s new HealthSource RI marketplace, 34% were eligible before the new law expanded the rules for who could sign up.

That means state taxpayers will have to help pay for the cost of those individuals’ care immediately – and the cost could be significant, since new Medicaid enrollment has already blown through Rhode Island’s initial projection for Obamacare’s first year.

Beryl Kenyon, a spokeswoman for the R.I. Executive Office of Health and Human Services, said Rhode Island officials have yet to put together an estimate of how much money the higher-than-projected Medicaid enrollment will cost Rhode Island taxpayers during the state’s current budget year, which ends June 30, or in the next budget year.

Comment #18 by Jim D on 2014 04 16

Why not just put public employees into social security like the rest of us. Let the workers manage their own retirement and get government out of it. FICA is only 7.5% of your salary so employees would be getting an automatic raise. Win win

Comment #19 by Redd Ratt on 2014 04 16

Redd, FICA is 6.2% for the employee and 6.2% for the employer. The fact is, the only one in the city that was hurt by not paying FICA was fire and police. So if the city goes the way of CF, I will have nothing to fall back on. The ciies and towns that opted out of SS, have saved the city millions. You cannot "get out" of paying the feds. So the city did not have to pay SS and they barely paid their share of the pension, if at all. To all, the providence pension system was founded before ONE union was incorporated in Providence. We did not negotiate any changes in pension system NONE, until 3% COLA. This was after we were giving food baskets to retired police and fire in the 70's and 80s.....What were they taking home? $175-$250 a month. NEVER AGAIN!

Comment #20 by Stephen DeNinno on 2014 04 16

Combining social security at 6.2% and medicare at 1.45% brings the employee up to 7.65%. The city and state should put all employees in to social security and get out of the pension business. Forcing towns to pay what they owe in a timely matter is the only way to get them to use good governance. Why would the government force the rest of Americans into social security but not their own employees. Once were all on equal footing there won't be the conflict between workers and their neighbors.

Comment #21 by Redd Ratt on 2014 04 16

11:19am on Tuesday, April 15, 2014

Read this from the CBO.


The ACA is lowering the deficit- not raising it. Get your facts straight Mr. Riley- the ones on your site.

Don't you want people to have health care- I guess not so it would seem.

Some Rhode Islanders can rea

Comment #22 by Sharon Knettell on 2014 04 16

Redd, first any police and fire hired after 84 pays medicare. Secondly, are you suggesting police and fire have to work to 67? You think this would be a good idea? Because before long it's going to be 70. And firefighters will be dropping dead left and right. But they will be equal to their neighbors right? Lets face it, pensions should have been for police and fire, Smaller pensions for those that will get SS. I get my pension only, although I payed SS for other jobs and my business. In fact I pay 13 thousand a year for something I am only going to get about $100 dollars a year when I turn 65. It's called WEP. I can't collect because my main job did not participate in SS, but a billionaire can. Makes sense right? I paid 10% into my pension and my benefit is about $800 dollars more than my wife's SS. I contributed 180K she contributed about 100k. Although there were many sins of the past, 6% colas, that was not a union deal. Some greedy retirees gouged that. But the main problem is and will always be cities and towns NOT paying their share. The state has 8 billion dollars in the system, I don't see it going broke any time soon do you? There is also the fact that municipalities may not be able to cut pensions if they are in the state system. States cannot claim BR.

Comment #23 by Stephen DeNinno on 2014 04 16

Huge business like GE keep changing the laws on pensions whittling away at them every year. Now those with reduced pensions are envious of the public sector pensions.


In New York state, anti-union pundits and politicians are demanding pension cuts for new public employees. They argue that private-sector workers don’t have pensions this good, so in fairness, public-sector benefits must come down to the private-sector level.

But as former Wall Street Journal reporter Ellen Schultz details below, the erosion of private-sector pensions didn’t “just happen.” It is the result of a deliberate transfer of wealth from workers to corporate executives and shareholders – a “pension heist,” to borrow the title of Schultz’s new book. The excerpt below summarizes her conclusions and details the recent case of General Electric; the book is filled with detailed accounts of similar maneuvers by other corporations.

The same corporate interests that attacked private-sector pensions yesterday are leading the charge to slash public-sector pensions today. For example, General Electric’s GE Asset Management is part of the Partnership for New York City, a corporate lobbying group that is one of the loudest voices calling for cuts in the pensions of public workers (see Clarion, April 2011).

Meanwhile, GE’s top executives have seen their pensions grow richer than ever.

Comment #24 by Sharon Knettell on 2014 04 16

Going after GE's shareholders is just ignorant. The stock is down 37% since Jeff Immelt became CEO 13 years ago. It pays a $0.22 quarterly dividend (once $0.40). The long term shareholders (many of them employees and former employees) are hardly to blame.
The investors (shareholders) provide the capital that companies invest to grow their earnings and in turn grow the economy. Why that hasn't led to a job explosion in many sectors is complicated and multi faceted. It is not however because people investing their money expect a return.

Comment #25 by Redd Ratt on 2014 04 16

11:28am on Wednesday, April 16, 2014

If you are an ERSRI retiree who left service before 11/18/2011 and want to continue the fight for the reinstatement of your COLA,please email [email protected]
A group of retirees,who opposed the S.A., have retained legal counsel and filed a separate Complaint from that which was filed by the retiree coalitions,chapters,etc.-who have vigorously supported the acceptance of that agreement.
Note:If you are a member of a retiree coalition...you are now represented by Atty.Iafrate. If you never joined a retiree coalition...,you presently do not have representation

Comment #26 by catherine celeberto on 2014 04 16

Mr. Riley:

Speaking of nightmares, the passion play in Narragansett is amazing! While town council members have given lip service to maxing out the tax cap as proposed by the town manager, the blue ribbon Finance Committee is going in the opposite direction. They want to cut that in half to 2% which will not even come close to meeting Narragansett's plan filed with the State. They want more from the employees and retirees to offset what the Town has failed to pay. Heck, even retirees in bankrupt Detroit are getting a better deal in bankruptcy than Narragansett now proposes. Plenty of money for philharmonic concerts, fireworks, athletic fields,but not a dime for their contractual obligations. Go figure!

Comment #27 by Gansett Proud on 2014 04 16

Stephen, Cops are somehow unfit to do the job at 50-55 but are somehow able to go do the same job in another jurisdiction while collecting a pension. This is clear evidence that cops can in fact keep doing the job. As for firefighters and cops that are unfit to do the job they can finish out their working years doing other jobs for the city. Clerks in city hall, drive garbage trucks, DPW. For those that want to take their pension before social security fully vests they should be able to take a reduced pension just like folks that take ss early. We need to stop paying people pensions for forty years. As for as you not being able to collect ss but have to pay in, that isn't right. SS sucks we should reduce it to 3% (to subsidize the very poor, not for us) and then force every American to put 4-5% into a personal retirement account. Australia uses a system like this and it has greatly reduced the poverty of the elderly.

Comment #28 by Redd Ratt on 2014 04 16

Redd, that's my point. I am paying for everyone's SS but mine...13k a year, that's more than what most people pay in state and local taxes. You don't ever see me on here crying or bitching about it. It is a cost of doing business. Just like my heating oil bill went from 1000 a year to 5000 a year but hey they are a private business right? Can't bitch about that. But commenters on here and other sites think that their taxes should never go up, only cut cut cut until you have police fire and teachers working for minimum wage. All the while, the filthy rich have switched the blame on these same workers and their benefits. Rhode Island's budget is 47% social welfare...47%. That means the remaining 53% pays for workers, road repair, higher ed, primary and secondary ed. ECT. Maybe that is where we need to bind together and fight, not against the working person! I will fully admit mistakes and greed are involved, however, The vast majority are hard working professionals and fully deserve their pay and benefits.

Comment #29 by Stephen DeNinno on 2014 04 16

We have the highest unemployment in the country. Our social welfare limits should be less generous than competing states. Logic dictates that we simply can't afford to be as generous as we are.
In regard to people bitching about taxes going up; A well run government increases its revenue through economic growth. Not by sucking the life out of its residents and businesses. I have no problem paying taxes at all. I mind paying taxes for contracts that were signed 40 years ago. I mind seeing our schools level funded every year. I mind seeing my local government agencies getting smaller and smaller because every dime of the new revenue needs to pay for pensions and benefits. The rate in Warwick has gone from $12 to over $19 in 8 years. The city is losing residents. There is no world where this is sustainable. Don't misunderstand me. I'm fine. I advocate for my neighbors.

Comment #30 by Redd Ratt on 2014 04 16

Mr Ratt,

You cite opinions, your own I presume without any links to prove them. You do not read the posts thoroughly- we are talking about RI public pensions here- not GE's problems- but if you must- GE is heavily into the home sector business, appliances- millennials are not buying either them or houses or cars or much of everything- they are squeezed ourt by their college tuition and student loan debt. http://www.theatlantic.com/magazine/archive/2012/09/the-cheapest-generation/309060/
GE's problems are not exacerbated by their pension fund-please!

Please back up your opinions with proof or they are meaningless like Mr. Rileys.

Comment #31 by Sharon Knettell on 2014 04 16

I can read Sharon, can you? You certainly ignored the fact that this is going to cost RI a lot more than they thought and it seems you just read the headlines on links you post.


FALLING DEFICITS TO END The CBO left intact its previous economic projections, which envision rising deficits after 2015 as more of the massive "baby boom" generation retires and draws more federal benefits or drops out of the workforce.

Mandatory spending programs, including Medicare, Social Security and Medicaid, will swell to 11.5 percent of GDP in 2024 from 9.5 percent in 2013. In 2024, they will cost $3.1 trillion, CBO said, accounting for more than half of all federal spending.

"If current laws do not change, the period of shrinking deficits will soon come to an end," the CBO said in the report.

Deficits will reach a low point of $469 billion, or 2.6 percent of U.S. gross domestic product, in fiscal 2015, then gradually start to rise, topping $1 trillion again in 2023 and 2024, a level that would be near 4 percent of GDP.

Comment #32 by Jim D on 2014 04 16

Ms. Knettell, Um, the dividend yield and stock price history is available at yahoo finance or any hundred other financial websites. You were the one that started bitching about GE and their evil shareholders. Here is a link so you can see the historical stock price of GE. I in no way blamed any pension problems for GE's woes. And you are woefully ignorant of what GE is heavily into. Home appliance is a small part of their business and one that may soon be spun-off.

FYI, GE releases its Q1 earnings tomorrow morning at 6:30. Make sure you listen in.


Comment #33 by Redd Ratt on 2014 04 16

Mr Ratt,

You missed the point again. The point was that GE chiseled the pension plan- that has nothing to do with its earnings which apparently has many causes one of which I noted.

We are talking about PENSIONS here- not GE's performance. GE was brought up to illustrate what is happening to pension plans corporate and public- that is all.

Comment #34 by Sharon Knettell on 2014 04 16

Redd, you're paying taxes on contracts signed 40 years ago, because they never funded them then. My biggest beef with Mr Reilly is his inconvenient truth of leaving this out. The reason I harp on this so much, is not only did we lose the original investment, we've lost millions upon millions of investment returns. Only a forensic audit, will show everyone the truth. As far as Providence goes, The ARC is less than 10% of the budget. It would be about 3% of the budget if certain mayors paid their share (and didn't steal it)! Lastly to the OBEB, this is health insurance. The big lie here is that we all get this for the rest of our lives. In Providence, at 65 you go to Medicare (I am fighting this). But you have commentators here and other blogs giving figures of 3 billion unfunded. Now the city has the same amount at any time retired. The entire budget of he city is 635million dollars. Did you ever ask how come the budget isn't 2 billion dollars? Because after all they are paying for health insurance for retirees now? Think about it.

Comment #35 by Stephen DeNinno on 2014 04 16

You didn't articulate your point very well. Why would you even mention GE shareholders? You quoted "a transfer of wealth from workers to executives and shareholders". If you have held the stock for the last 13 years you have not had much wealth accretion. This article is about PUBLIC pensions. Stay on point, and I won't have to point out how misinformed you are. BTW the bulk of GE's problems were derived from GE capital. Appliances are a low profit, low growth segment of the business. No analyst is sitting on edge waiting to hear about appliances. So the "cause" you noted wasn't a driver of GE's struggles. Stick to what you know, whatever that is.

Comment #36 by Redd Ratt on 2014 04 16

Mr. Ratt.

Pension,pensions pensions. Again, the article was to point out how GE looted its pensions making the pensions less valuable- this has been a CORPORATE MODEL NOT JUST GE's- paving the way and the raison d'etre for the reduction of PUBLIC pensions.

It does not matter if it was GE or the GIANT CUBEB.com corporation.

Keep to the point if you know what it is.

Comment #37 by Sharon Knettell on 2014 04 16

Stephen, agreed. The cities didn't have the money that was wanted by the unions so they agreed that it would be passed onto the unborn grandchildren. I understand how it happened. They didn't fund the pensions because they wanted to get re-elected. This way they kept labor happy and the taxpayer oblivious to the costs in the out years. This is a huge fraud that has been perpetrated on the people of states, cities and towns across America. Well the bill is due, and people are leaving because they can't earn a living or afford the taxes.
The only way to hold politicians accountable is to force them to pay every dime owed to employees as it becomes due. Not a minute later. There is too much risk on the taxpayers with defined benefit pensions. If residents have visibility to the true costs of services they'll either do with less city services or pay more in taxes. It will be an informed decision.

Comment #38 by Redd Ratt on 2014 04 16

Let's point out that since 2009 the Fed has been buying huge amounts of US Treasuries, skewing the market for Treasuries so interest rates are lower AND they are giving the interest back to the Treasury.

That program is ending so the Fed will start to raise interest rates and Treasuries will begin to offer bonds with higher interest rates to attract buyers. In other words the debt will grow much faster. Inflationary pressures are already popping up as a result of the Fed's practice of monetizing our debt.

We are headed towards doubling the amount of Federal spending on healthcare.


"Federal spending for the major health care programs and Social Security would increase to a total of 14 percent of GDP by 2038, twice the 7 percent average of the past 40 years."

If you read the actual documents rather than what some liberal editor wants you to see and think the bad news comes out.


If current laws do not change, the period of shrinking deficits will soon come to an end. Between 2015 and 2024, annual budget shortfalls are projected to rise substantially from a low of $469 billion in 2015 to about $1 trillion from 2022 through 2024—mainly because of the aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt.

Comment #39 by Jim D on 2014 04 16

Jim D

Since when is the CBO liberal or for that matter Yahoo?


The ACA is lowering the deficit- not raising it. Get your facts straight Mr. Riley- the ones on your site.

Don't you want people to have health care- I guess not so it would seem.

I assume you have healthcare and prefer those who don't to die?

Comment #40 by Sharon Knettell on 2014 04 16

You linked back to the same article rather than read the actual document from the CBO?

If you read the ACTUAL CBO REPORT you'll see you are wrong.

The CBO states that their previous projections were higher than necessary NOT that it is saving money! You may not be able to understand the difference or your selective reading skills may not allow you to even see it. This is like going to a mechanic and having them give you an estimate of $5,000 to rebuild the engine and when you come back he says it's only going to cost $4,800. Sure you can choose to see it as a $200 savings but its still actually a $4,800 outlay.

Meanwhile RI's bill for Medicaid will go through the roof. That from my 1st post.

I realize you cant't read anything that disagrees with your fantasy viewpoint so go ahead and link to the Yahoo story once again.

Comment #41 by Jim D on 2014 04 16


Comment #42 by LENNY BRUCE on 2014 04 17

86MILLION Full-Time Private-Sector Workers Sustain 148MILLION Benefit Takers! AND FUND the union pensions.

Comment #43 by LENNY BRUCE on 2014 04 17

86MILLION Full-Time Private-Sector Workers Sustain 148MILLION Benefit Takers! AND FUND union pensions.

Comment #44 by LENNY BRUCE on 2014 04 17


Private equity and public pensions are one of Wall Street’s most peculiar love affairs. Recently, the two have tried to become even closer. But don’t get mushy — this relationship is about money, not romance.
Public pensions pay billions in fees to private equity. The question is whether it is worth it.

The private equity firms know they have a good thing going. A few years ago, a senior adviser to the Blackstone Group called state pension benefits “too generous.” At least one pension fund subsequently refused to deal with Blackstone, most likely pushing the private equity firm to issue a remarkable statement that the firm opposed “scapegoating” of public employees and that it believed “a pension is a promise” that should be honored.

Perhaps it looks like we should look at the Canadian model.

The Canadian fund has hired its own team that arranges private equity transactions (though they also at times invest directly in a private equity firm’s funds). The pension plan has bought the Toronto Maple Leafs and Raptors sports teams, and just last week was part of a group paying $1.3 billion to buy Blue Coat Systems, an enterprise software company. The pension fund has outearned many of the private equity firms, earning 18.5 percent on its private equity investments through the end of last year from its beginning in 1990.

In comparison, the California Public Employees’ Retirement System, known as Calpers, says that it has earned a return of 11.1 percent on its alternative investment program since its inception, also in 1990. The Texas Retirement Fund, meanwhile, has had an annualized return of 13.1 percent in the last 10 years, while Preqin reports that the average pension plan earned just 7.2 percent on its private equity investments in the last 10 years.

The Ontario teachers’ fund strategy of direct investing eliminates the fees paid to private equity. The fund also doesn’t have to deal with placement agents who get a commission from private equity firms for selling pension fund investments to them.

Comment #45 by Sharon Knettell on 2014 04 17

Mr. Monkey,

"86MILLION Full-Time Private-Sector Workers Sustain 148MILLION Benefit Takers! AND FUND union pensions."

Are these your own figures- how did you come about them- do you have documentation or proof?


Comment #46 by Sharon Knettell on 2014 04 17

Mr Jim D

Your figures are out of date.


Facts & Figures: A Cheaper ‘Obamacare’
By THE EDITORS APRIL 15, 2014, 12:23 PM

In February, the last time CBO addressed these issues comprehensively, it predicted that the net cost of the law’s coverage provisions would be about $1.4 trillion over ten years. Now, CBO says, it’s likely to be about $1.3 trillion, or $100 billion less.
It’s actually the latest in a series of revisions, each one suggesting the law would cost less money than the previous projection had suggested. And why this latest change? It doesn’t appear to be because the law will reach fewer people. CBO now expects slightly more people to end up with health insurance, at least over the long run. The CBO’s primary explanation for lower costs is that health insurance premiums on the new exchanges — what the administration calls “marketplaces”— are lower than CBO had originally expected they would be.

Comment #47 by Sharon Knettell on 2014 04 17

That CBO report that you refuse to read is from April 2014.

You really are reading challenged aren't you?

Comment #48 by Jim D on 2014 04 17


Comment #49 by LENNY BRUCE on 2014 04 17

JOJO, Right I don't pay taxes? Are you nuts? What a comment. BTW I guess you are not going to take your cola in SS? Thanks, because I pay 13 grand a year into a system I cannot use, enjoy. Who is paying who? Lastly since you made that most ignorant comment about you paying my pension. Lets make a bet, my tax return against yours, for a month of my pension! I would love to see what would happen if these comments were made against social security!

Comment #50 by Stephen DeNinno on 2014 04 17

Jim D,

I read it but my conclusions and that of the New York Times were so different so I assumed that you gave me an earlier one.

Your conclusions seem to differ but then you could scream "liberal bias' which is not an argument but a rant which most anonymous posters are prone to.

Comment #51 by Sharon Knettell on 2014 04 17

Jim D

This is what I got from the CBO. Your conclusions seem to differ from mine, The New Republic and The New York Times.


Comment #52 by Sharon Knettell on 2014 04 17

Jim D

I am sorry, I made a mistake, I should have said "incessant rants".

Dear if you are happy with your "conclusions" that is fine and I am sure that they will make you happy.

I am out of here. Stay happy! By!

Comment #53 by Sharon Knettell on 2014 04 17

Write your comment...

You must be logged in to post comments.