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

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

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

Republicans are killing democracy

OK: I admit, that is a pretty strong statement in the title of this post. With the recent Supreme Court decision that treats corporations as individuals, moneyed interests will buy the future and buy the votes. It is so hard for me to believe that 48% of Republicans are Republican. Walk into any trailer park and I'll bet you will find significant majorities voting Republican. Why? I understand the top 2% of the Republican party voting Republican, but don't tea party folks realize that the Republican leadership wants to strip them of social security and their medicare benefits.

For you middle class Republicans, you have to realize that it is the Democrats that have fought for better lives for all citizens. The private sector has some great people providing jobs throughout this country (people of both parties), but in the end, every American needs to be worried about their future. Social Security and Medicare are easily fixed by raising taxes only slightly on the rich in this nation. Hell - During the Eisenhower administration, citizens making over $1 million per year were taxed at a 91% rate. World War II had to be paid for. All Obama is asking is for the wealthiest in our society to pay 39% instead of 36% of income (Clinton level taxation). Bush pushed the tax cuts for the middle class and the rich but this long ugly experiment simply has failed. Government needs to raise revenue just like any business. Our wars need to be paid for and with the wealthiest calling the shots, they need to pony up.

I would ask Republicans to join "Patriotic Millionaires For Fiscal Strength" and I would also urge everyone to read "Bush era tax cuts the largest contributor to the public debt."

I could never be more eloquent on this issue than a former Supreme Court Justice:

"We can have democracy..... or we can have great wealth concentrated in the hands of a few, but we can't have both". Justice Louis D. Brandeis

With the current Republican intransigence, I ask you; are Republicans killing democracy?

tomtoak

The Catholic Church and Justice

I had a really great night last Thursday, May 13, when I was invited to attend a reception for Governor Tim Kaine of Virginia, the Chair of the National Democratic Party. That story is going to take a back seat to what I want to talk about now! Apparently, a Catholic nun has been rebuked by the church in Phoenix, Arizona for allowing a severely ill women to have an abortion at 11 weeks in order to save her life. This story unfolded at a Catholic hospital. The rebuked nun did the right thing; we can only guess how many times the wrong thing was done at the expense of the mother within these Catholic hospitals.

This story is nothing new. There has been a standard practice by the Catholic Church for years to kill off the mother in favor of the fetus. What a tragedy!! What bothers me most about this story is the ability of the Catholic Church to escape prosecution for what is truly manslaughter. So what if the mother in question has x young children at home that need her? She just needs to suck it up and die!!!! Funny thing; it is always men that are making these decisions.

Why no prosecutions for willful neglect leading to an unnecessary death? The Catholic Church has a magic pass in this country. How many Jehovah's Witnesses have been arrested and convicted of manslaughter for refusing medical treatment for their children because they do not believe in medicines, blood transfusions and other more invasive medical treatments? There are over 900 court cases of parents that refused to consent to life saving blood transfusions for dying children because of their personal religious beliefs.

How long will this society put up with manslaughter based on an antiquated religious hierarchy of men (the Catholic Church)? The fact is that abortion is legal in this country. A woman denied an abortion to save her life is murder. That's right, Bishops of the world, I said murder!!! If the women decides to give up her life for the fetus, so be it. If a life saving abortion is performed; that is legal and absolutely appropriate. If you deny the abortion because of your stupidity, you are a murderer and you should be appropriately dealt with through the legal system. Bishops that are calling the shots should be charged with conspiracy to commit manslaughter or even murder!!

Of course we can't forget that Catholic priests are use to escaping the rule of law when it comes to raping little boys. How many priests have actually been incarcerated for their disgusting crimes against children? Not many!!!!

I have always supported prosecutions of parents that deny children medical treatment based upon some religious voodoo. The next time some poor Jehovah's Witness gets collared for following their beliefs - we need to take a step back and look at the medieval practices of the Catholic Church. Why are Jehovah Witnesses going to jail and Catholics excused?

Hopefully my next post will be about the reception for Governor Tim Kaine, right here in Rhode Island. I just had to get this story out of me because this kind of manipulation from the Catholic Church needs to stop.

tomtoak

Kelo v. City of New London Revisited

Do you remember the landmark Supreme Court case of Kelo v. New London, Connecticut when the court ruled that lands taken by eminent domain could be transferred to other private concerns? In this case 7 homeowners had their property seized for commercial development. David Souter was the deciding vote in a 5-4 decision.

Well; after the court ruling and the destruction of all property, the land was cleared for the construction of a new Pfizer pharmaceutical plant. Yesterday the pharmaceutical giant backed out of the deal. New London is left holding a vacant lot without any consideration of the "public good". Truth be told, the confiscation of this land was never going to be in the public best interest. Contrary to popular belief, when commercial and industrial development occurs, the taxes of citizens in the community always goes up. While jobs may be good for some people, the benefit to the community as a whole is negative.

I think it unfortunate that the lawyers for the plaintiffs in this case did not have their hands on the tax study done by the Southern New England Forest Consortium, Inc. and the Trust for Public lands in Connecticut's case. Please view my April 15, 2009 post that graphically presents the case against the public good when commercial and industrial development occurs. That post was my tax day protest. The studies conducted clearly show that as the commercial and industrial taxable value increases in any community, the effective tax rates for residents always go up.

Yes, there may be good for some; however, the "public good" should be considered as this requires that everyone benefit. Private transfer of land to private concerns does not meet that simple litmus test. There is a clear and direct correlation between growing your commercial and industrial base and the subsequent increase in property taxes. Those unaffected by the development are damaged when their property tax increases. Taking lands by eminent domain requires that everyone benefit, not a corporate giant.

You may recall that there was a movement in New Hampshire to take away David Souter's cabin in the woods by eminent domain to build a rustic hotel and vacation destination. It's too bad that never happened. For those of you that believe that this is a liberal thing, think again. This action was taken because of corporate greed. I stand with the homeowners that had their life crushed by the hands of government and blame conservative thinking for this disaster of public policy. I sincerely hope that the landowners get their property back and succeed in pursuing further legal action against those involved. It's too bad you can't sue the Supreme Court. It's not often that such a bad decision becomes so painfully obvious so quickly. I hope there is a lesson in this for everyone. I was steaming when it happened and I'm still steaming over the injustice to the individuals in this case.

tomtoak

"Sing a little song for me"??

While there is a lot of news to talk about, I want to talk about the outrageous jury decision in the Joel Tenenbaum case. If you have not read the story, Tenenbaum was fined in civil court, $675,000 for downloading and sharing 30 songs over the Internet. While I believe in the absolute right of individuals and corporations to protect their copyright, I believe that the punishment must fit the crime.

How the hell can Tenenbaum be liable for $675,000 worth of damage by downloading 30 songs? Can you envision some 75 year old grandma sitting on the jury and subjecting this graduate student from Boston University to a life-long debt? What the hell is wrong with these people? Are recording artists starving to death?

Tenenbaum was wrong and violated copyright law, but the penalty should fit the crime. If I were on the jury, I would have awarded $30 for the violation, court costs and legal fees for the plaintiffs. The total fine should approximate $5000. This action reminds me that spilling coffee on my lap can be very lucrative. The music executives pursuing this case are disgusting.

If I were Joel Tenenbaum, I would follow through with his plans to file bankruptcy, but I would not stop here. I would connect with individuals that were similarly charged and I would lay the groundwork for a boycott of the music industry that would send a chilling message to stop the "bull shit". Do you realize how connected the high school and college community is? A planned boycott that would send the message to industry to, "stop the shit", would go viral in days. I would suggest boycotting all music purchases for 2 months (November and December). I would then outline my concerns that the music industry must address before the next year. If the industry did not adapt to the changing world, I would press the boycott the following year.

Joel Tenenbaum did not do $675,000 worth of damage to the music industry. The music industry is doing $670,000 worth of damage to Joel Tenenbaum. A controlled boycott that did not put the retailers out of business is a sound strategy for making music executives sweat over their next payment on their 65 foot yacht.

College students - It's time to step up and fight the corporate greed! You need to understand the power that is within your hands.

tomtoak