The big media’s increasingly familiar narrative of how Treasurer Gina Raimondo single-handedly fixed Rhode Island’s pension system (and, judging by the coverage, barely broke a sweat) will be read Thursday at high-powered breakfast tables across Europe thanks to the Financial Times.
The FT’s Gillian Tett – who’s become one of the world’s most influential journalists thanks to her savvy pre-crisis coverage of the credit bubble – does the honors this time in a piece headlined “Raimondo offers vision for pension crisis.”
Just a few years ago, Tett explains, “the iconic north eastern US state” of Rhode Island “epitomised everything wrong with American state finances.” Not anymore:
But in 2009, Gina Raimondo, a former venture capitalist from a blue collar background, was elected state treasurer. She seemed an unconventional person to hold office: a Democrat, she was not part of the local clubby (and sometimes scandal-tainted) political elite. But she campaigned on a “transparency” platform, insisting that voters needed to know the truth about the fiscal woes – and force politicians to act.
And act she did ….
Tett goes on to explain the main tenets of last year’s bill and, like so many other national observers, she is clearly impressed by the changes Raimondo crafted and pushed through. “So what are the key lessons?” Tett asks. “And – crucially – can they be copied?”
The answers Raimondo gave her are the same ones she usually offers: focus on the numbers; empower the technocrats; warn some promises won’t be kept; and spend a lot of time getting the press to cover the story.
Tett suggests a few more lessons:
The fact that Rhode Island is a small, relatively cohesive and well-educated state has made it far easier for Raimondo to build the all-important consensus via local media than it might be elsewhere; replicating this in the fragmented canvas of California, for example, would be much harder, let alone across America as a whole. The sheer scale of Rhode Island’s fiscal crisis also focused voters’ minds, and the legal structure of the local pension system has given Raimondo scope to act …. Then there is the extraordinary, path-breaking persona of Ms Raimondo herself. “The fact that I was brand new, and came with real analytical skills, helped a lot,” she admits. It is unclear how many other would-be Raimondo’s exist in America today; let alone, how many would be willing to work in the sordid world of Washington, rather than at the local level where they can have more freedom to act.
Tett closes her piece by saying “the Rhode Island tale is a good reminder that the political economy can sometimes spring surprises” – a fair point considering how many people in Rhode Island, let alone in other places, were surprised to see the governor signing a bill into law last November that cut $3 billion off the pension tab.
Stepping back from this latest article, Raimondo and the pension tale have now won positive coverage from the FT, The Wall Street Journal, The New York Times, Bloomberg News, Time magazine, CNBC (twice), MSNBC, and all sorts of smaller publications. It’s hard to argue that the publicity isn’t a boon for Rhode Island, considering how lousy the state looks to outsiders who base their opinions on those much-discussed business-friendliness rankings.
The question, though, is how much the state can capitalize on the pension story considering what a fiscal mess it remains in other ways – not least because of the 36 locally run pension funds that pushed Central Falls into bankruptcy and now threaten to drag Providence down, too. (Tett, like The Wall Street Journal, doesn’t mention that Raimondo barely touched those.) If anything, the level of focus on the state pension system last year may have distracted leaders from the more pressing problems of the failing cities.
One thing isn’t in doubt, though – the whole thing has spread Raimondo’s fame far beyond Rhode Island.