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)