Rolling Stone’s Taibbi, liberal think-tank take aim at Raimondo

It’s safe to say this isn’t the most pleasant day in Treasurer Gina Raimondo’s office.

Teachers and possibly other government employees are planning a protest Thursday evening outside a Raimondo fundraiser at Roger Williams Park Casino, a reminder that the treasurer is likely to face constant opposition from public-sector labor if she enters the Democratic primary for governor next year.

And now Matt Taibbi – the slash-and-burn anti-finance Rolling Stone writer who famously labeled Goldman Sachs “a great vampire squid” – is out with a lengthy new article called “Looting the Pension Funds” that unflattering describes Raimondo as an “ostentatiously ambitious” politician who bought into a Wall Street-driven push to reduce workers’ pension benefits and then handed $1 billion to large hedge funds:

What few people knew at the time was that Raimondo’s “tool kit” wasn’t just meant for local consumption. The dynamic young Rhodes scholar was allowing her state to be used as a test case for the rest of the country, at the behest of powerful out-of-state financiers with dreams of pushing pension reform down the throats of taxpayers and public workers from coast to coast. One of her key supporters was billionaire former Enron executive John Arnold – a … ubiquitous young right-wing kingmaker with clear designs on becoming the next generation’s Koch brothers, and who for years had been funding a nationwide campaign to slash benefits for public workers.

Nor did anyone know that part of Raimondo’s strategy for saving money involved handing more than $1 billion – 14 percent of the state fund – to hedge funds, including a trio of well-known New York-based funds: Dan Loeb’s Third Point Capital was given $66 million, Ken Garschina’s Mason Capital got $64 million and $70 million went to Paul Singer’s Elliott Management. … Felicitously, Loeb, Garschina and Singer serve on the board of the Manhattan Institute, a prominent conservative think tank with a history of supporting benefit-slashing reforms. The institute named Raimondo its 2011 “Urban Innovator” of the year.

(Fair warning: Taibbi’s story is peppered with off-color language.)

Raimondo, who was interviewed by Taibbi for the story, will strongly dispute his narrative. Oddly enough, two of her main critics in the piece aren’t part of the state pension system she overhauled: Paul Doughty and Stephen Day, respectively the current and former leaders of the Providence firefighters union, which is of course part of the city pension system that has also reduced benefits under Mayor Angel Taveras.

Taibbi’s article coincides with release of a new report by the Institute for America’s Future, a liberal think tank, called “The Plot Against Pensions: How Pew and the Arnold Foundation Plan to Undermine America’s Retirement Security” [pdf]. Like Taibbi’s article, the report focuses on John Arnold, the billionaire Enron alum who donated more than $100,000 to Engage Rhode Island, the advocacy group that backed Raimondo.

Update: Raimondo spokeswoman Joy Fox issued a statement Thursday afternoon responding to Taibbi:

This is clearly a political propaganda piece driven by the critics of pension reform, including those who are paid by local labor leaders to discredit the state’s reforms and its investment policies. The author does not appear to have a clear understanding of the 2011 pension process and its goals, and conveniently omits many important facts.

The Treasurer stands by the work of the General Assembly to provide retirement security for hardworking public employees and retirees.

This story also unfortunately glosses over what actually happens to people when leaders do not make tough choices. The retirees of the City of Central Falls saw their pensions cut in half. Leaders do not want the same to happen again to public employees and retirees in the state system.

In 2011, Rhode Island had a choice. It could have done nothing and been dishonest about its problem. Instead, Rhode Island leaders came together, courageously put politics aside, and made the tough decision to protect the retirements of hard working public employees and retirees.

It is important to remember:

– The treasurer fought to always keep a defined benefit pension, and always respected collective bargaining.

– Reform passed overwhelmingly in a Democrat-controlled General Assembly

– There were countless hours of labor-attended pension advisory group meetings, legislative hearings and town hall-style meetings with the Treasurer and Governor

– All but one vote to approve the hedge funds were unanimous. The only vote to approve hedge funds that was not unanimous was due to one abstention – again, showing strong SIC support to execute this investment strategy

• Related: Unions taking steps to prepare for RI pension suit settlement (Sept. 25)

  • Aaron M. Renn

    Gina Raimondo and a majority of the Rhode Island legislature are Democrats, something I did not see mentioned in a piece full of supposedly linkages to people on the far right. Angel Taveras also sought and achieved pension reductions through negotiations, and he’s anti-hedge fund IIRC.

    Taibbi is a great writer, but he’s just throwing stuff at the wall to see what he can make stick in this one. With all of the amazing data he came up with, he didn’t have a single piece of solid evidence linking these things together (e.g. pension reform with hedge funds or 38 studios).

  • Rob Shaw

    He didn’t link pension reform and hedge funds? What article did you read Aaron? The whole point is that you can’t come in and say you’re going to save Rhode Islanders money by imposing a pension reform scheme, then take all the savings and re-channel it to hedge fund goons on Wall Street (who then turn around and shower you with campaign money). And 38 Studios was brought up as an example of half-baked priorities…RI didn’t have the money to make necessary payments to the pension system, but could lose $100M by throwing money at a ex-ballplayer dabbling in business for the first time, running a company in an industry with a shaky success rate. That’s not throwing shit at the wall, that’s pointing out the hypocrisy of political leaders who consistently make bad choices.

  • Aaron M. Renn

    I might also note that Detroit’s pensions (which he mentions as well), appears to be in part underfunded because the fund gave out extra money to employees and retirees who didn’t earn it:

  • SteveD

    Mr. Renn, Detroits pension is 77% funded. And those employee’s will take a beheading so Wall St. can get paid. 77% That’s better than 90% of the public pensions out there! P.S. Ted, love the “Lefty” description. Debate the facts, not the think tank. I can show you some “Righty” think tanks, that will tell you the tax cuts for the rich helped the middle class! LOL

  • Mr.Fish

    Curious…why does a guy from the mid west ( M. Renn) feel the need to jump to GR’s defense?

  • Aaron M. Renn

    Well, for one thing I live in Rhode Island now so am on the hook personally for paying pensions here. Regardless, I’m not defending Raimondo. I personally think investing pensions in hedge funds is a bad idea myself. However, that Taibi piece was very weak.

  • joe

    Ted your true colors come out…when you call Matt Taibi a slash and burn writer…and American Future a left wing think tank…I have said before and will say it again…gina is a wolf in sheep’s clothing who stole agreed upon pensions from retirees and gave the money to her hedge fund cronies who are supporting her campaign..I am talking about retired state workers who make less than 20k….do you really think she cares about them….she should not be a democrat any more than I should be called a right winger…Ted…let the reader decide what is true or not without labeling things so overtly…I think you are a great reporter but be more objective about the facts….this is not fox noise…also called fox propaganda!

  • John O

    There is a continuation of misperception being offered by the Treasurer’s spokesperson when she compares Central Falls and Detroit with the potential losses to retirees within cities pension systems and state’s pension systems. City pension systems are by nature of their size and resources more vulnerable than are state retirement systems. The Treasurer’s spokesperson is attempting to use fear as a tactic when comparing apples and oranges. Furthermore, any examination of the state of RI ‘s management of finances will result in a resounding rejection of the notion that the state has done all that it needs to do to right the wrongs that the Treasurer acknowledges we’re made in the past, both long and recent past. There is no legal way that the state of RI can maintain that their current financial underfunding of the pension system requires the breaking of contracted COLA’s with retirees before the change of laws . If the case goes to court the cost will only make matters worse. What needs to happen is that the COLA issue has to be separated from all other aspects of this mediation . Then a serious look has to occur into the Treasurer’s decision to go all into expensive hedge fund fees rather than the more conservative and better performing index fund with low fee structures recommended by the likes of Warren Buffett and John Bogle , two of the most successful money managers of the last fifty years!

  • Kenny T.

    It’s completely wrong to view this as a left-vs-right issue. This “free market” ideal is pervasive in both parties. This is about elitists like Raimondi promoting policies created for the benefit of the investor class. The pension crisis is a man-made disaster meant to fleece public workers. Don’t believe me: just read her office’s statement. She’s toast.

  • Jim Donahue

    Tabbi is now a paid hit man.

  • snow

    Raimondo knows right well that states cannot go bankrupt the way CF could. She also knows that labor had no imput and that her little working group was rigged from the start. I went to those meetings and nothing that was said ended up in the bill. Paiva-Weed herself said that Raimondo wouldn’t negotiate a thing in the bill. She is done, and should save her money, she’ll never be gov of this state because there will be a primary.

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