April 11, 2011

Forthright Raimondo

Marc Comtois

As the ProJo profile showed on Sunday, General Treasurer Gina Raimondo is in an interesting spot. As a Democrat, she has the support of the various groups that stand underneath that party's umbrella, particularly the progressive wing. Yet, she is viewed with caution by the biggest portion of that group, labor. They are willing to give her the benefit of the doubt--to a point--but they are very wary of what she has in store for their pension future.

Raimondo says she wants to help craft a pension solution that labor can live with, even if it involves sacrifice –– a solution that would avert legal challenges. She is aware that the state’s largest public employee union, Council 94 of AFSCME, is suing the state over pension reductions in 2009 and 2010. And she has said that the issue of pensions as a guaranteed property right is “an unsettled area of the law.”

She didn’t win the endorsement of the NEA teachers union during the campaign because she would not promise she wouldn’t touch their pensions. And while the NEA’s Walsh says her comments about “haircuts” have been alarming, he says that her values and the union’s “overlap.”

“Her heart starts in the right place,” adds Walsh. “We’ll have to see where her head is at.”

That is where she has been successful so far: not coming across as the boogey man to the union. A Republican would have automatically fit that role. Raimondo--due to her roots, contacts and word-of-mouth--has disarmed those who would, in any other time, considered her a fellow-traveler (and probably still do run into her and her friends at the right sort of parties--though to be fair, it doesn't sound like Raimondo has spent a lot of time relaxing lately). It appears that the characteristic that makes up a great part of her appeal and popularity--her honesty--is problematic for them as they try to protect their bailiwick. Dammit, they like her but not what she's saying. How to "personalize" and demonize?!!
J. Michael Downey, president of Council 94, said his union endorsed Raimondo, despite not liking her answers on the possibility of cutting pension benefits, because “she was honest.” Downey doesn’t believe the retirement system is as bad off as Raimondo does, arguing that strong stock-market returns following the 2008-09 recession have boosted the fund.

Raimondo disagrees. Addressing a meeting of retired state workers in West Warwick on Wednesday, she was asked if the crisis would have been averted if pension investments had earned 8.25 percent over the past decade, as assumed. Raimondo answers no, not entirely.

“Well, that’s something that’s never mentioned,” the man replied. “All that gets mentioned is ‘the greedy public workers’ and politics.”

To a large degree, Raimondo's success thus far has been in her style and her forthright approach to the pension problem. Like most liberals/progressives, she is skeptical of 401(k) type retirement plans (like the Federal Government offers) and still thinks a more responsible defined-benefit plan can be worked out. I'm not so sure about that. Yet, so far, her willingness to be upfront about the problem, even proposing that current pensioners may have to see a reduction, has been refreshing. When it came to the General Treasure election in 2010, I was a single-issue voter. I voted for Raimondo (with some trepidation and fingers crossed), even though I knew I would disagree with her on some issues, because she struck me as the right person at the right time to deal with the current pension problem. So far, she hasn't disappointed me. But talk is easy. I'm still holding my breath to see what she actually does.

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"I voted for Raimondo "

I give you a lot of credit, Marc. She struck me as a complete political climber lightweight.

Boy, was I wrong. She's got way more brains and courage and gravitas than 99% of the people who ever held a General Office in this state.

Posted by: Monique at April 11, 2011 2:15 PM

Wow, she's might actually be part of the solution instead of part of the problem.
Strange role reversal for a Democrat!

Posted by: Bobbbb at April 11, 2011 4:21 PM

Raimondo and to some extent Kilmartin have proven to be the adults in this otherwise class-clown administration so far. Perhaps in a lucid moment she'll consider the logical consistency of her various political positions and make the rational choice to become a Republican.

Posted by: BobN at April 11, 2011 4:35 PM

Why the immediate partisanship? Who cares what party she's in if she gets the job done better than anyone else? She could be a communist or socialist for all I care if she fixes the state's treasury problems.

Posted by: Patrick at April 11, 2011 4:39 PM

I think the most telling part of the article was how she was actually locked in at the state house twice already because she was working late and the guards figured that the building was empty.

Call me crazy, but my coworkers and I stay at work into the wee-hours fairly frequently, sometimes just to make a single professor happy, or push out a tweak that shaves a few seconds of time off the institution's 'waiting time' on the computers. Wouldn't you think that there would be more dedicated night-owls at the state house, especially in times as dire as this?

I know that if I had a job that did interesting policy stuff like this, it would be hard to pull me from my desk when the whistle blew.

Posted by: mangeek at April 11, 2011 4:50 PM

Because this is but the first step in her political career and I would hate to see her talent wasted on the destructive Progressive agenda.

Posted by: BobN at April 11, 2011 5:35 PM

Don't be fooled.
This woman is just another faux populist like Caprio. She will "talk" the talk but do NOTHING. Then she will run for Governor on her "courage"-her 4 years empty words. Just like Caprio.
The most telling part of the article is buried in the middle where it says "nothing will be done this year".

Posted by: Tommy Cranston at April 11, 2011 7:01 PM

"I would hate to see her talent wasted on the destructive Progressive agenda."

She's resisting it so far even when the other blog thought she was the second coming.

"Wouldn't you think that there would be more dedicated night-owls at the state house, especially in times as dire as this?"

HA HA HA HA HA HA! Go sit outside the State House between 4:25 and 4:35 pm and watch the mass exodus. Looks like chickens with their heads cut off. They can't get out of there fast enough.

Posted by: Patrick at April 11, 2011 7:41 PM

While I voted for her, I admit it was more a vote against King. I appreciate the honesty so far but she really hasn't done anything. It's a pretty sad state of affairs when we get that excited about a politician just because she is perceived to be honest.

Posted by: Max Diesel at April 11, 2011 9:37 PM

I'm seeing the "she's honest" assertions more as a dig at Kerry King and the lies he got caught in during the election. Homestead exemption in Florida? Totally unaware of it? C'mon. Next to that, Pat Crowley almost looks honest.

Posted by: Patrick at April 11, 2011 11:03 PM

The most telling part of the article for me was where she said that 401-k plans were "too risky".

Too risky eh? So they're only good for us suckers in the private sector.

The devil, when he comes, comes dressed as an angel.

Posted by: Rasputin at April 12, 2011 8:59 AM

I wondered about what Rasputin is saying too. Isn't that how she's made her millions? Investing in the stock market and with mutual funds/401Ks?

Posted by: Patrick at April 12, 2011 10:06 AM

How does a 401K system solve the pension problem when already a portion of contributions are going towards the retirement benefits of others? That's not a criticism but a legitimate question. You can put new hires into a 401K plan but you cannot eliminate the defined benefit plans completely. Whether we save and fix the current plans or phase them out over time, the taxpayer still ends up paying.

Posted by: Max Diesel at April 12, 2011 10:56 AM

"Too risky eh? So they're only good for us suckers in the private sector."

She said that the average 401k is horribly underfunded. They're not risky if you contribute your whole life and make realistic assumptions about returns and inflation, they're risky if you DON'T contribute enough early on.

Given how much current state employees contribute (about 10%), they could have REALLY well-funded 403b plans, but the trick would be -requiring- the contribution, and for the state to match the first 10% on a 1:1 ratio. Hell, at 20% of earnings put away, most state workers could probably retire after thirty years and live comfortably on their $BIG 403b savings, and nobody would be able to take it away.

Personally, I'd MUCH rather have a 401k/403b plan with a good match than be in the kind of plan a politician can pull out from under me.

Posted by: mangeek at April 12, 2011 11:32 AM

Mangeek speaks truth. Defined-benefit plans are fiscally unsound and someone is going to get ripped off.

A retirement plan is either a long-term investment fund or a Ponzi scheme.

If the plans are fully funded, then it would be more efficient for the employee to invest privately and avoid the overhead of the pension administrator. Additionally, a sound, long-term private fund is more likely than not to produce retirement income in excess of the defined benefit plan.

If the plans are not fully funded or the actuarial assumptions are wrong (or dishonest), then the defined benefit plan is a Ponzi scheme and as such is fundamentally dishonest, robbing the next generation to pay the benefits for this generation.

In both cases, a privately-owned, efficiently managed, 401K-style plan is the best one.

Several countries, including Singapore, Chile, Australia and I think New Zealand, realized a few decades ago that their Social Security systems were fundamentally unsound and would eventually bankrupt their societies. They converted to privately-owned plans and consequently their governments are in much better shape than ours.

Posted by: BobN at April 12, 2011 11:48 AM
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