Update on Rhode Island Pension Thefts

I was sitting at a bar with an old friend and former state employee and the conversation shifted to the pension disaster in Rhode Island. I was surprised to hear that the retiree was not as concerned as I was about the loss of our COLA for 19 years. I asked him if he knew how much money he would be losing if the courts don't reverse the pension theft. He responded around $40,000. I was shocked. He had not really looked at the issue in depth. When I told him he is actually losing around $400,000, he gasped. I explained the additive nature of the theft. I'm left wondering how many other retirees are not doing the math.

I guess a lot of smart people are not thinking mathematically, but you can bet your last penny that Gina Raimondo knows the bottom line. The Rhode Island legislature, Gina Raimondo and Lincoln Chafee must really like following in Bernie Madoff's footsteps. $Billions are being stolen from the retirees.

After having another conversation with a different retiree that I respect for her dedication to her profession, I became more concerned about the thought process of retirees as a whole. In this conversation, my friend stated that she is glad the issue is behind us and we will never have to face this problem again. I chuckled and told her that she needs to remember how government works. Once government goes to "the well" for money to bail out their pet projects, they spend all the money and face the exact same dilemmas a few years down the road. When resources dry up, politicians continue to return to "the well". This is the nature of politics as we know it.

I ask you, do you really think this is the end of it? Can't you see the politicians 4 years from now demonizing the public retirees again because they get "exorbitant" pensions? I explained to my friend that this is the very reason why the court has to put a stop to the theft now.

I was a big supporter of Lincoln Chafee when he ran for Governor. At one point he was asked in a union setting his position on the public pension debate. Chafee's response was; a promise made is a promise kept. Chafee went back on his word. Raimondo said at the beginning of the process that all parties would have to pitch in to solve the pension crisis. Raimondo went back on her word. The entire solution was laid in the laps of the retirees and current public employees. No new tax solution was even debated to assist the state with keeping its promises.

Bottom line: Chafee is not trustworthy and Raimondo is not trustworthy. Hope lies with the courts and the unambiguous language found in the Rhode Island Constitution. What these crooks did is not constitutional and all public employees should not rest until the court draws the line. Retirees and public employees should not grow complacent and let the thieves get away with it. If our politicians get away with this one, they will most definitely come back to "the well". Mark my words!!

tomtoak

Raimondo's faulty pension data begins to sting Rhode Island

As seen in this blog in prior posts, the pension law changes shoved down the throats of our weak kneed legislature was based on faulty assumptions that I argued would lead to economic decline in this state. Raimondo's most egregious error was to rely on data from actuaries that live in outer space. Her insistence that the life expectancy for retirees should be 87.6 years on average is absolute hogwash. Using such bad data created the crisis which she so joyfully capitalized on.

I draw your attention to the chart. This chart represents a random study of deaths in Rhode Island during the Fall of 2011. Days were randomly selected and age at death calculated from the obituary page of the Providence Journal. In total, there were 257 deaths recorded. The average age of death was 77.4 years and out of the 257 deaths recorded during the study; 50 people lived past 88 years. The green line represents Raimondo's science fiction while the red line represents today's reality. (Please note: On the chart the green line says 88.6 but it represents the 87.6 year target - my mistake) Raimondo's unbelievable pension plan actually adds on 10 years of life in one giant leap of economic whackyness.

I know this information is anecdotal and not a scientific study. This chart does provide a view of the present day longevity of Rhode Island residents. It can be used for comparison purposes. You need to also remember that the chart represents only those people with the hard cash to pay the Providence Journal for the listing. These folks may actually live a little longer than those without the cash. Regardless; the assumptions made by Raimondo are wild-ass assumptions.

Now on to the state's economic decline. Today's Providence Journal rag has a lead story entitled; "Job losses edge up for fourth month." (Please note: I no longer link to the Providence Journal as policy for this blog) Rhode Island lost 1,900 jobs in November and the unemployment rate is again increasing for the first time in nearly 2 years (10.5%). In the same edition of the Journal, the national news headline is: "The Economy: Edging toward recovery" The national unemployment rate has ticked down to 8.6%. While things are getting better in the nation, Rhode Island's downward spiral continues. I guess stealing $billions from retirees is not working. Rhode Island can't even add jobs during the Holiday season. Do you think it has something to do with consumer confidence and retirees holding tight to their money? You bet it does! Get ready for 19 more years of this. Is it coincidence that Rhode Island has been faltering economically during the past 4 months: The same 4 months as the pension debate boiled?

In other more promising news: The Rhode Island Supreme Court denied the state's request for summary judgement on the issue of state pensions being contractual. The Supreme Court sent the case back to Superior Court for trial because the unions have a solid case. Maybe it will take the courts in Rhode Island to straighten up the economy. God knows, the Governor and Treasurer can't do it. Retirees have won round 2!

tomtoak

Anti-Union = Anti-American

In a country filled with political braggadocio, politicians that despise unions are UN-American. I am sick and tired of listening to people blast unions. The landscape in America today has 1% controlling a near majority of wealth in this nation while the middle class struggles to pay the bills, put kids through college and plan for a decent retirement. When will the 1% be happy? When they control 100% of the wealth? Are we all to return to slavery - working our entire lives to enrich our owners. Now just imagine what this country would be like if there was never a union.

Unions have fought for the middle class and stood up to the powerful interests that could care less about worker health, safety, security and retirement. The system has been tipped too far in favor of the wealthy and this needs to change. Take for example the pension systems of private companies. Thanks to our enlightened Congress, pension plans of private corporations are company assets that can be leveraged in favor of the big money interests. When the corporation is sold, the pension plans frequently get stolen leaving the workers with little and the Federal Government partially filling the void. We subject ourselves to constant bailouts of industries that want to do business overseas so they don't have to pay taxes here at home and their actions are always at the expense of the working stiffs.

To get to my primary point, anti-union is anti-capitalism. Why in a free society can't workers organize to argue for justice in the work place? Unions have found a capitalistic niche that should not be overlooked. While unions collect dues from workers, they serve as a leveling force in our society. As unions falter, so will the middle class. Let me think of a government system that hated unions and outlawed them: How about communism? The Scott Walkers of our country, most Republicans and the fanatic radio talk show fringe would turn this country in the direction of communism. I'm serious, there are those that feel that outlawing unions is a good thing. There are those that feel that autocratic rule is the way to get things done. The way to keep the rich rich and to hell with anyone else.

Let's get one thing straight, unions are capitalistic ventures and free marketeers ought to be supporting their role in our society. Management at the negotiating table represent the many (stock holders and monied interests) while unions represent the workers. Unions have a way of leveling the playing field and Americans need to understand their importance to the middle class. Remove unions and we are far closer to totalitarian rule. If you oppose unions, you do not support free market systems. If you believe that the wealthy have a right to make their millions while workers are silenced, then you are anti-American.

We just witnessed another step towards autocratic rule in Rhode Island when General Treasurer Gina Raimondo pushed her pension reform legislation. She did not even consider negotiating with unions. She could not be bothered. Again; I tell Rhode Islanders and Americans, be careful what you wish for.

tomtoak

Profiles in Cowardice

I want to make it clear that what I am about to say is not meant to reflect on those legislators that voted against the Raimondo-Chafee pension reform bill that was passed last week in Rhode Island. I give a special thanks to my local representative, Scott Guthrie, who did the right thing.

The rest of you are truly profiles in cowardice! You have fixed nothing. You have gone after the middle class in this state with a hateful, shameful, immoral and illegal strategy that will put a stranglehold on our state's future. You are asking 50,000 individuals to come up with the $ billions to bail out over 1 million people. You have not lived up to your oath of office; you are thieves and you lack the intelligence to ask the appropriate questions.

Reneging on your oath of office is quite despicable. You all took an oath to uphold the constitution of the state: Am I right? The RI Constitution insists that no ex-post-facto law may be past regarding any contract(Article 1: Section 12): Am I right? The Constitution further stipulates that all taxation will be fair and equitably distributed(Article 1: Section 2): Am I right? To date the superior court has ruled that pensions are in fact contracts and the COLA is a part of that contract: Am I right? You ignored the court's ruling and voted for a bill that, to the best of your knowledge, was unconstitutional: Am I right? You choose to pass a law that uses absurd assumptions regarding the longevity of retirees (87.6 years): Am I right? You choose to tax public employees only, an act so outrageous that the average state retiree ($27,000 annual pension) will lose over $180,000 during a 19 year period: Am I right? You ignored your oath of office by not upholding the Constitution: Am I right? You should all resign immediately: Am I right? You will not resign: Am I right? You are cowards: Right!

General Treasurer Gina Raimondo said in the Providence Journal that as she looked out her window, she felt good knowing that the teacher below will have a pension one day. She was proud of the fact that the system which was less than 50% funded is now over 60% funded. I have news for her! Change the longevity assumption back to a reasonable figure and the pension fund will be 80% funded so the promises made to public employees can be kept.

I just read an article in the "Science News " magazine, February 26, 2011 (this information was available to Raimondo). The title; "U.S, falters in life expectancy gains", discusses the United States falling behind other developed countries in life expectancy gains. The average life expectancy for those over 50 years of age is 79 for males and 83 for females. How dare you rob our future without the appropriate questions being asked.

I hold no allegiance to thieves and I really don't like cowards. Have a nice Thanksgiving.

tomtoak

Is Rhode Island being lied to about pensions II?

OK: The title says it all. We continue to learn about more lies to Rhode Island regarding the proposed pension changes of Governor Chafee and General Treasurer, Gina Raimondo. This article follows a previous article posted on October 4, 2011 in this blog.

First and foremost, we now learn that the General Treasurer is using 87.6 years as the projected life expectancy of the average retiree. No wonder why she says that the state contribution to the pension has to increase to 35% of salary. How truly foolish is this? The U.S. government says the age should be 78 years. (I'm not linking a source because I read this in the Providence Journal and I do not want people to migrate to that site to make more money for that rag). I just attended a Bar Mitzvah where the oldest person was 85. She was frail and had trouble walking because of a previous stroke. While we all know some people that make it past 87.6 years, start counting all of the people you know that did not make it to that age.

Here is another lie to confuse the issue, courtesy of the Providence Journal. A recent article listed "myths" surrounding the pension system. One myth that they tried to tackle involves issues surrounding the state's required contributions. The Journal clearly states that this issue is simply not true, the state made all of its contributions except for some $60 million in payouts to rescue the wealthy in this state during the banking crisis (they didn't say the "wealthy" - I did because our Governor chose to meet all obligations in bank accounts that exceeded $100,000). Your public employees paid for your bailout.

Here is the rub! Even the General Treasurer has the intelligence to say the following: "The state made contributions "as required by law" (note the quotation marks). When I was working budgets, I was livid when Governor DiPrete tapped into the pension contribution for the first time. I remember seeing half of the state's contribution disappear. This trickery continued during the Sundlun administration and yes, they cooked the books to please the legislature. Gina Raimondo is right when she says that unrealistic numbers were used to justify the state's robbery of its pension accounts. The robbery continued. Don't tell me that the state always made it's contribution. When union bosses have robbed the pension accounts of its members, people go to jail. Nobody in this country has been jailed for pulling corporate pension funds or public pension funds. The Journal rag is lying to everyone when it refuses to make this point perfectly clear. The Providence Journal was absent from these facts at a time when it needed to let the public know. We all know that the Journal wanted to be absent because they never liked public pensions because it makes their newspaper operation look cheap in their worker's eyes. The state did not meet it's pension contribution for over 2 decades. The employees made every contribution and also took a 20% pay cut to bailout the banks. We bailed out the banks with our pensions and our salaries. Thank you very much!

Additionally, the $60 million that the Journal seems to brush aside today would be approximately $232 million out of the projected $7 billion shortfall that Raimondo is claiming because we are all going to live to be 87.6 years of age. Yea!

tomtoak

RI General Treasurer's pension plan will devastate businesses

It's curious why General Treasurer, Gina Raimondo would propose her pension reform act before the RI Supreme Court rules on the constitutionality. To date, she has lost in the courts. After seeing her jubilant waves to the "Engage Rhode Island" rally and her refusal to speak to the retiree rally on October 26, 2011, it became clear to me that she only cares about her political future. She should have been saddened by having to be the instrument of broken promises. The jubilation was a shameful act.

The Providence Journal’s pension reform chart (COLA Wars, October 27, 2011) tells an interesting story. Raimondo’s plan is the largest business killing legislation that anyone could dream of. How can the Rhode Island business community and the Governor wave the flag?

The average state retiree will have a cumulative income loss of between $185,500 and $139,386 and the average public school retiree will experience a cumulative income loss of between $227,406 and $146,464 over the next 19 years. With over 50,000 retirees in the system at any one time, the loss to Rhode Island’s economy will be close to $10 billion during the next 19 years. Now let’s assume a subset of retirees is pissed off enough to move out of state. If 20,000 people with their spouses move to states without a state income tax and the family income is $60,000, the state’s economy will be losing an additional $1.2 billion each year. Over the 19 years the total loss to the state’s economy could be well over $30 billion. Make a COLA adjustment but don’t eviscerate retirees and businesses.

I’m glad I don’t own a small business in Rhode Island. If I did I would be fighting this legislation. Be careful what you wish for.

tomtoak

Is Rhode Island being lied to about pensions?

I suppose because I have a direct interest in the outcome, I've studied this issue fully. The brickbat bullies that dominate the airwaves and printed word have not done their homework. Some folks are just fighting for the sake of fighting. They truly believe that they are paying my pension. They are very wrong.

I paid for my pension. Any problem with the system is a direct result of the leadership in this state not living up to it's promises. Are there problems? The current issue has been largely driven by the move of the State to decrease the actuarial growth chart and assume a longer living period for it's retirees. The power of a defined benefit pension plan is in the long-term cost averaging advantages that the state will realize. Individuals may be vulnerable in a defined contribution plan because of market fluctuation and timing associated with retirement dates.

While there may be small problems to deal with, we are being lied to and I mean a whopper of a lie. Rhode Islanders are being told that the state will have to now contribute 35% of salary to save the system. What? Are you fucking kidding me? 35%? Nobody has said that this is a one year issue to infuse the system. We are being led to believe that this is for the future - the foreseeable future at least. Please everyone, I beg you to get out your calculator and do the math. A school teacher that starts at $40,000 per year and tops out at $100,000, 35 years from now would have contributed somewhere in the vicinity of $5 million. Now the teacher retires and let's assume a small actuarial growth of only 5 percent annually, the teachers pension check should be $250,000 per year. This is how absolutely crazy the sob story is. For those of you that are math checkers, don't forget that the teacher is contributing 9.5 % each year (total annual contribution would be 44.5% of salary and don't forget the 7% compounded growth).

Now I know that there were tremendous abuses that the system is still paying for, but those problems are dying. Abuses have been addressed during the past 25 years. Did you know that the Rhode Island system grew by over 20% this year and the actuarial certainty being provided to our citizens is based on old data? Do you know that Rhode Island finished last year with a $60 million surplus which brings the rainy day fund to $130 million?

Now our infamous "Republican" Treasurer (she calls herself a Democrat - just another lie) wants to establish a hybrid plan so that retirees share the risk of the system. Are you kidding me? Do you know what a money maker this is for the state? If the state only met it's fair contribution, dollar for dollar, and made minor adjustments to pay for the sins of the past, a defined benefit pension plan is a huge money maker for the state. Pensions are paid from the accumulated wealth of the system generated by the hard working employees. When the employee or spouse dies, the system swallows the principle. In the case of a school teacher, 19% contribution, half from the teacher, is more than enough to meet the defined benefit.

I know that there are certain jobs that might really want to swing the way of the 401K plan that the General Treasurer is proposing. If I were press secretary to the governor, I'm probably only there for a short time. If you are a school teacher and have chosen the career for your future, you want a defined benefit plan. We need this in place to retain and recruit the best teachers. For new hires, I am not opposed to a choice. Treat the employees like people not pawns. Provide a choice even if you decide that the employee contribution needs to increase to pay for the sins of the past. Give the employees that are not fully vested a choice! Stop shoving things down our throats and try a little honesty.

tomtoak

Rhode Island retirees win round one.

For those following the pension crisis in Rhode Island, I am happy to say that the employees and the retirees won the first round in court. Now the issue goes directly to the RI Supreme Court. Judge Taft-Carter, in a well thought out argument sided with the workers and retirees. Your pension is in fact a contract!! It is therefore, unconstitutional to change the system for those fully vested employees and the existing retirees. Furthermore the judge ruled that the COLA was in fact part of the contract.

This is not stopping our not-so "Democratic" Treasurer, Gina Raimondo from pursuing her Republican agenda of screwing people out of their hard earned pensions. I have written her office on multiple occasions and have received no confirmation. I even went as far as offering possible concessions (if done right) but made it clear that we have a contract. She still intends to pursue a bastardized pension system of 401K and defined benefits for current employees. This strategy is pure Republicanism. Her intent is to eliminate the COLA for retirees for a period of time until the system is deemed healthy again. Can you see a future politician going before the public and saying; "I'm in favor of re-instating the retiree's COLA"? What kind of drug is Raimondo on?

Let's say that she is successful in removing the COLA. What does that mean for me personally? In my case, I will lose about $2000 per year. My taxes go up, my food costs go up, my fuel costs go up etc. I guess in year one I will make the following changes to my life style: No more Providence Journal rag ($440 savings), We eat out twice a week if not more often, so I will no longer have 2 drinks at dinner only 1 ($500 savings), I'll reduce my Cox cable subscription ($500 savings), I'll reduce charitable contributions ($500 savings). I have now made it through year one and largely maintained my standard of living.

Let's go to year 2. I'll need to economize by another $2000. I guess we will only eat out once per week ($3200 savings), but we still have to eat at home but should be able to count $2000 in savings for year 2.

What about year 3? No more dry cleaning my clothes ($700 savings) (I hate the idea of hurting Barry, my friend), we reduce our trips to the movies to once per month ($700 in savings), no more security system on the house ($480 savings) (Sorry Roger, I love you man, we go a long way back to when you were just a kid) and I'll kill a few magazine subscriptions. I'm by year 3.

What about year 4? I'll still need to find another $2000. Now it is time to really attack the charitable giving by gutting donations and my family Temple membership. Wow! That's great, I got through year 4.

Do you think the COLA will return? Dream on! I'll need to find another $2000 to keep up with inflation. I'm starting to run out of ideas. Maybe it's time for the big move. We could sell the house in Rhode Island where we pay $9,000 annually in property taxes and move to the Cape. A home in Mashpee at comparable value is currently taxed at around $3000 annually (Wow, a $6,000 annual savings). Not only do I save here, I will no longer have to pay income tax on my state pension to Rhode Island ($3000 in savings). I can start to collect my social security and my disposable income has now skyrocketed. I can eat out twice a week, hell four times a week. I can have 2 drinks at every meal and I can go to the movies whenever I want.

Let me see? There are currently 60,000 citizens in Rhode Island that share my predicament and many of them are certainly married. That means that 100,000 people could seek similar solutions.

I feel bad for my favorite restaurants and the wait staff, local businesses that I frequent and the charities that I have faithfully supported. If only the state would return to the tax rates for the wealthy that existed before Republican leadership and tax the yachts that line Narragansett Bay, maybe then the state could acquire the financial resources to meet its' obligations to contracted retirees as required by the state's Constitution.

Here's the final kick: Aren't you glad we have such astute businessmen, brilliant politicians and an exceptional Media rag in the State of Rhode Island?

tomtoak

Letter to Governor Chafee and public pensions

Below you will find my recent letter to Governor Chafee that addresses problems with the actions taken in Central Falls regarding the stripping of publicly earned pensions. While the jury is still out on this, it was important for me to state my position and hope that government does the right thing. We can't exist like Germany in the 1930's with wealth being stripped from a select group of people. In Germany, it was the Jews while in America, it seems to be the public employees. Republicans continue to scapegoat public employees and it needs to stop. Besides the attack on public pensions, this year in Rhode Island all longevity increases for state employees was stricken from the law. In Rhode Island, employees enjoyed a 5% bump in pay 4 times throughout their career. That right was taken away without negotiation. Let's hope that Rhode Island's Governor can make a national statement. He has before.

The Honorable Governor Lincoln Chafee

Office of the Governor

222 State House

Providence, RI 02903-1196 July 21, 2011

Dear Governor Chafee:

I could not get much sleep last night thinking about the plight of retired public employees in Central Falls. What is currently happening is reprehensible, morally wrong and, quite possibly, illegal. This country is approaching a precipice and I think it is up to you to stand strong and correct injustice.

The consequence of government action amounts to the taking of wealth from a select group of people (public employee retirees) and reminds me of the taking of wealth from the Jews by the Germans of the 1930’s. Removing the hard earned rights to a pension will result in a waterfall of events that include; foreclosures, personal bankruptcy, inability to enjoy your last years by eating out in Central Falls restaurants, court actions involving alimony payments and significant marital stress.

Beyond the consequences, I want to talk about the legality of such takings. To begin with, the United States Constitution has established priorities for payments of public debt. “The validity of the public debt of the United States…including debts incurred for payment of pensions … shall not be questioned.” U.S. Constitution, Article XIV, Section 4. While the clause uses the “United States”, Congress has clearly elevated the importance of paying pensions when considering the public debt. If I read this amendment like most people read the second amendment (eliminating part of the sentence) than the taking of pensions is unconstitutional.

I want to look a little closer at the Rhode Island Constitution and Article 1, Section 2 says a whole lot. I’m talking here about tax burdens being equally distributed. “…the burdens of the state ought to be fairly distributed among its citizens…” Confiscating wealth of retirees is an unfair distribution of the burden of debt. Government has its way to correct short budgets through taxation. This taxation should be equally shared by all and retirees should not have to folk over half of their earned pensions. By doing so, the public employee becomes the scapegoat, stripped of earned benefits, robbed of their future and paying a higher tax levy to government.

Additionally, Rhode Island has not exhausted its taxing potential and laws that eliminate the sales tax from the boats and yachts that line Narragansett Bay is not constitutionally sound. In this instance, wealthy citizens that can afford the toys of the Bay are excluded from taxation forcing higher burdens on everyone else.

Furthermore, when discussing options for solving pension issues for state employees, the Rhode Island Constitution is very clear. “No ex post facto law, or law impairing the obligation of contracts, shall be passed” RI Constitution, Article 1, Section 12. It is my strong belief that retiree agreements in state government must be met. I have no problem with amending the system for future retirees, but existing retirees should not be obligated to pay a higher tax burden. The Constitution of RI is clear; the burden must be shared equally.

Governor Chafee; I have seen you stand tall many times in the past. I could never forget you standing tall in the Senate when it came to Iraq. I remember you standing tall on the changing of the name of the State of Rhode Island and Providence Plantations by pointing out that the U.S. Constitution would have to be changed. You brought this to light after years of hemming and hawing in this state. I fully appreciate your understanding of constitutional law.

I am no lawyer, but what is occurring now in Rhode Island will spread throughout this country. We need to be making statements about the importance of maintaining the public trust. I was almost denied a mortgage refinance because the bank held feelings that public pensions may be pulled. We need you to stand tall and do what is right. Please do what is morally right. Protect public pensions and share the burden of taxation to fix the problems. Please make a statement now that gets the attention of everyone across this country. You have done it before and I hope you will do it again. I’m counting on you. You are my friend.

Sincerely,


tomtoak

Tax cuts for the rich killing the middle class

The title of this article says it all, but nobody could say it better than Berkley Bedell. Berkley is a businessman and former politician that dedicated his life to making things better for other people. You have to read his own story (click here).

Yes, America is badly hurt by tax cuts for the rich. There may have been a time to reduce taxes on the wealthy, but that time is not now. The wealthy are continuing to pay a smaller and smaller percentage of tax while the middle class struggles to pay bills on a daily basis. Reaganomics has gone too far. Supply side economic theory has done nothing but make the wealthy wealthier while impoverishing the middle class. Enough is enough!

By the way; my letter to the Providence Journal in support of Governor Chafee's tax plan finally was published. I applaud the Journal for publishing my thoughts, although I must say there is a story within the story that I will not repeat here. I must say that you need a very thick skin to publish these days. Individual opinion seems to mean less in this country. It seems like you have to belong to a "tea party" or something. Offer your opinion and you get swamped by brickbats that do not have a clue about what you are saying. The comments to my opinion piece were largely attacks on my person that had no foundation. The authors of those attacks have probably listened to talk radio for far too long and have no right to question my integrity.

If you have read this blog, you will know that many of Berkley Bedell's comments have been discussed here for some time. Berkley is the age of my mother and he makes me realize that there are still great Americans in this country with the age and wisdom to guide us forward. Thank you Berkley for you service to us all. Please make sure you read Berkley's story (click here).

tomtoak

Public Pensions and the Fight Ahead

Governor Scott Walker, Republican ideologue from Wisconsin has done something that I did not think possible a few months ago. Walker has mobilized unions that will serve as counterweight to any Tea Party movement in this country. Governor Scott has ruined chances for Republican leadership in my estimation. Good for him; keep talking Scott Walker, Sarah Palin and Michele Bachmann, you guys are the best thing to happen to the Democratic Party since Franklin Roosevelt had to step in and clean up the Republican mess left by ideologues like you. Remember Republicans; Democrats won 5 consecutive Presidential elections and they only lost because a moderate for all of the people stepped forward to rescue the ideological bankrupt Republican Party. Dwight was a guy for all of the people.

Walker's attempt to strip employee unions of power has nothing to do with the reality of state financial burdens. Everyone needs to read the current McClatchy Report; Why employee pensions aren't bankrupting states. This is a great report that underscores the true reason why Republicans are trying to gain political capital by scapegoating public employees and attacking their pensions.

In Rhode Island, our new Democratic Treasurer, Gina Raimondo has had the nerve to say that she believes that retirees may not own their pensions nor do state employees. Oh really: Who the hell do you think put the money into the fund? Employees put 8.75% of their income and school teachers put 9.5% into the system over their careers of 30+ years, and the state matches that whenever they feel like it (this is the problem), and now you say that system is taxpayer money? Gina Raimondo, you border on delusional and do not belong in a position to speak for the citizens of a free country! You will not get my vote next time around and never will get my vote unless you apologize to all of the hard working public employees across this state.

Governor Lincoln Chafee will be proposing steps to help secure the state's financial position tomorrow. One recommendation will be to increase state employee and teacher contributions to 11.5% for an interim period until a comprehensive pension overhaul can be achieved. Rhode Island employee contributions are already the highest in the Nation and now the move is to increase that by 2% for teachers and 2.75% for state employees?

At first I was really angry at the idea, then I realized it may well be brilliant. The Congress just reduced contributions to Social Security for workers and employers by 2%. This is something that Obama should never have agreed to do. Republicans will use this loss of revenue to argue for privatization of social security. Chafee's plan will result in little change in take home income for public employees that pay into state retirement as well as social security. Money that formerly was going to the Federal Government will now accrue towards the state's retirement plan.

Union workers do not want their pensions decreased. My guess is that most union workers will see this as a step toward fully funding the promises. I must admit though, until the state of Rhode Island taxes all of the yachts in Narragansett Bay, I find it hard to take money away from the hard working middle class.

One last comment that I have already made a half dozen times before in this blog. Donald Carcieri, our past ideologue governor attacked pensions and attacked public employees every day for eight years. Carcieri took 3000 state employees out of the system and yet his final budget proposal called for a 9% increase (from $7 billion to $7.8 billion). Employees are not the problem as salary, fringe and benefits of all employees account for 17% of the entire budget on an annual basis. Public employee pensions are not bankrupting the system. Republican privatization practices are bankrupting the system (more money to their friends).

tomtoak

Rhode Island's idiotic leadership and other thoughts

Before I begin, just a comment on our last two polls. In last week's poll; should the government get involved in bailing out newspapers? The top response was; no, not ever, 85%; Maybe, 10%; yes, 5%. In this weeks poll; who will be the Republican nominee for president in 2012? Seems like Joe the Plumber is the head of his party, 44%; Tim Pawlenty, 24%; Mitt Romney, 8%; None of the above, 8%; Rush Limbaugh, 4%; Jeb Bush, 4%; Bobby Jindal, 4%; Charlie Crist, 4%; Sarah Palin, 0%; Michael Steele, 0%.

Rhode Island is coming down to the wire on this year's fiscal budget and the leadership could best be described as vacuous. Maybe that's a good thing though; because the fewer decisions Carcieri and company make, the better off we all are. Carcieri is hell bent on leading us down the Republican road to ruin. I just hope he takes down the Republican radio talk shows with him. Unfortunately, many Democrats are along for the ride.

Just yesterday, radio talk was aghast at the notion that a forced pay holiday for state workers demonstrates the outrageous costs of state workers. The one day holiday will save approximately $2.4 million. All day long the stupid talking heads were trying to make their point. Can any of you idiots on the radio and in the Governor's office learn how to use a simple calculator. The state budget is $7 billion dollars; divide that by 365 days in a year and you get to see how much money Rhode Island is spending each day. Over $19 million is spent each day by our government and only $2.4 million to pay the workers.

I get it Mr. Carcieri and you other business brains; you have a fiscal crisis and you are always pointing the finger at state employees. That's right, keep trying to balance the state budget by stealing from our state employees. Mr. Carcieri; stealing from the future of our state employees and deamonizing them has been your main platform throughout your terms as Governor. How stupid and callous your leadership has been. Hell, why don't you just lay off all of the state employees; if you did, you still could not balance the state's budget.

Now the short-sighted leadership team will continue to work hard to dismantle state employee and teacher pensions. Fine Mr. Carcieri; if you want to run the state more like a business, then where the hell is my "retension bonus"? Where is my bonus for the years that I brought in hundreds of thousands of additional Federal dollars? Why can't I be paid at a competitive salary commensurate with my peers in the private sector and the Federal sector for that matter? If you think you have all of the answers to these questions; you don't!

Governor Carcieri; a solid and secure pension system is the best way to reward folks that give themselves to their jobs, their community and their state. The public employees are paying their fair share and they always have; the government needs to keep its end of the bargain. Changing the pension system will significantly reduce the state's fiscal condition within a few years. Build for the future, don't destroy the future.

tomtoak

Stephen Laffey: You Don't Have a Clue!

The good news today was that Stephen Laffey, former Mayor of Cranston and senatorial candidate has decided not to run for Governor. Laffey is only capable of two things: raising every one's blood pressure and continually raising people's taxes under the guise of fiscal conservatism. The better news is that Lincoln Chafee is seriously considering a run at Governor as an Independent.

In the Providence Journal yesterday, Mr. Laffey provided all of us with an outrageous editorial regarding his vision for the State. Seems like he wants to totally close down the State Employee Pension System and tell thousands of Rhode Islanders; tough luck. The consequences of such an action would thrust Rhode Island into 1933.

What does Mr. Laffey think retired workers do with their money; and I do stress the word "their"? They spend it Mr. Laffey. Almost every penny of it is going right back to the State, the Community and every business. Take this economic engine away, and business after business will fail. Rhode Island will never recover. You know why, Mr. Laffey? The thousands of former public employees that are an integral part of our community will have to move to states without income taxes, where housing can be found for less cost, and where property taxes are significantly lower. You may say "good riddance's" Mr. Laffey; unfortunately, Rhode Island will become an impoverished and blighted landscape. The State would no longer have a tremendous asset, the pension fund that is being used to shore up businesses. Rhode Island could no longer borrow money because they would lack the direct asset that the public employee pension system provides. You see, Mr. Laffey, that money in the system is not tax payer money - that money belongs to the public employees. The pension system is public employee money that has been put in the State's charge for mutual benefit.

You can not solve this fiscal problem by focusing on a tiny piece of the annual budget. The State contribution to the fund is slightly over 3% of a $7 billion budget. If you're getting your pencil out, stop counting the employee contributions as taxpayer money. I don't own a piece of your 401K and you don't own a piece of my pension.

On top of the State House in Rhode Island is the statue of the "Independent Man". I think we need to put the "Independent Man" in the State House, and that is Lincoln Chafee. Mr. Laffey, you can move to Florida. I prefer to stay here, pay my taxes, spend my money in the community and help my State.

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Scapegoating of Public Employees Continues

A scapegoat is defined as a person or group made to bear the blame for others or suffer in their place. That's right, scapegoat. It's a strong word, but if you don't think that public employees are being demonized because of their benefits, you have been living in a bunker. The vitriol being thrown at public employees is everywhere. It starts right at the top with our inept Governor and follows through to newspapers, talk radio and now another biased study from the Rhode Island Public Expenditure Council (RIPEC).

As discussed in the Providence Journal yesterday, RIPEC has concluded that major changes are needed in the RI pension plan. I'm not opposed to changes, I'm opposed to the main conclusions that the plan needs to move from the defined-benefit plan to a defined-contribution plan. You can define contributions all you want, but I know that the only folks that will be required to contribute will be the public employees. Government will always play with their contributions to balance budgets. Why do you think the pension plan has problems now? Public employees have not missed a contribution.

Let me throw some things out and understand that I'm just going to be talking about the state employee side of the equation. State employees currently cost the state somewhere between $1.3 - $1.5 billion each year (salary, health, pensions and other fringe). The state's budget is approximately $7 billion. The cost of running the employee portion of our state is approximately 20% of the entire budget. This year, employees contributed approximately $90 million to the pension fund and the state matched with $133 million according to the RIPEC study. Now the state's share is more than dollar for dollar, but this is only because they have been stealing from the system to balance budgets for years. Is this the fault of the employees?

If dollar for dollar contributions were made every year, the state would be saving $43 million in this year's budget, the system would be sound and cost-averaging principles would be at work in the system. It's probably a good thing that the state is forced to overpay now because the stock market is so low (buy low, sell high).

The $133 million in state payment to the fund is around 1.9% of the entire state budget. If you roll in the cost of teachers, this grows to approximately 3.2% of the state's budget. Do you brickbats think that the state's fiscal crisis will be solved by attacking a budget area that is so tiny? Really, 3.2% is like the average family turning off the lights to save electricity.

Of course the Governor wants the state to go one step further and evolve into a 401K system for employees. This is so his cronies that work for the state a few years can get some kind of interest on their forced contributions. There is no dedication to public service here. Carcieri's folks have no intention of making public service a career. Hell, there's no money in it. And, imagine what state we would be in if there were no pension plan. The pension plan is a state asset that is a powerful economic tool if managed appropriately.

Do private workforce employees feel that when an employer matches their 401k money, that the money is all theirs? Yes, because it is. If the state matches employees dollar for dollar, is it the employees? What I'm trying to say is that the pension system is not taxpayer money. Maybe it's taxpayer money once removed, but the pension system belongs to the employees just like your 401K and the state employees earned it.

Also, in a study of states the U.S. Census Bureau reported in 2003 that Rhode Island ranked 21 nationwide in state employees per capita, the lowest by far in New England. I'm sure with the recent cuts to the ranks, Rhode Island has slipped further. We are not overwhelmed with state employees, in fact the opposite may be true.

State employees do have a healthy retirement, especially because they pay into Social Security in addition to the state retirement system. Yes they can retire and maintain a comparable income if they put in the time. This is great for the state because most will retire here. If you reduce their retirement, many more will move to states without an income tax and Rhode Island will be paying out but not taking in. This is the future that RIPEC proposes.

Stop scapegoating the public workforce. You will never solve the state's money problems here.

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