Arthur Schaper: Speaker Fox In The Hen House
Friday, October 25, 2013
In 2011, though, the Rhode Island General Assembly had to get tough on the pension crises hitting the state, and they passed massive reforms.
Big government and shrinking business
In a January 2012 interview, shortly after passing the reforms, Speaker Gordon Fox buffered the Ocean States’ 10.8% unemployment with remarks like “I am so frustrated.” Yet the state continues to frustrate commerce. Even Massachusetts reported better job numbers. It’s unfortunate that Speaker Fox wants to be competitive with Massachusetts. Why not shoot for a higher goal, like Texas? That would mean real reforms, though, something that the anti-Democratic hypermajority in Providence has no real interest in accomplishing. While the Assembly Speaker claims that the state must create a business friendly environment, at the same time resorting to government programs has only grown the government, while shrinking business interests and assistance.
Reporter Tim White questioned the state legislature’s “lack of imagination” to deal with the economic problems in Rhode Island. This lack of imagination is exactly what we need. The less that government tries to do, the more that private interests can thrive once again. People have imagination, not governments, and definitely not Speaker Fox.
A convenient distraction
It’s 2013, and Rhode Island is still going bankrupt, yet Fox decided to bankrupt the state further by moving on gay marriage. The ceremony to celebrate the passage of this law was anything but gay. Why tie the knot when you cannot tie up your debts? The singers were off-key, the presentation was out-of-step, and the state is still out of money. “I now pronounce thee indebted and bankrupt.”
After a few festivities, Fox faced off against the looming pension crises once again.
On September 13, 2013, Fox was defending his uneasy legislative session this past year.
First, he hammered Representative Karen MacBeth from Cumberland, who refused to “eat cake” because her constituents have no bread to eat (because they can’t earn any).
Fox clamored that Cumberland was out of order. Fox has been out of integrity ever since he entered office.
This is a democracy right?
“Will Fox continue to rule the rostrum?” The WPRI announced overhead before the segue to Ted Nesi and associates. I have to ask: since when did Assembly speakers rule in a representative democracy? The people rule, right?
Nesi wanted to avoid recapping 38 Studios, but the issue is intractable and insatiable. Video games that spell “Game Over” for an entire state should end Fox’s tenure, too.
Fox came out swinging, but the reporters only hounded him for more information.
Because Speaker Fox signs off on investigatory subpoenas, one should suspect why Fox would allow anyone to investigate him. Fox’s answer was even better for how bad it was:
“It’s pursuant to the rules.”
Why not recuse yourself, Speaker? “I could”, he responded, sharing that he was only interested the decision-making on the loan.
He then refined (rather distorted) oversight to mean “overlook”, as in he hoped that investigators, both within the judiciary and from the Securities Exchange Commission, will look at what happened and make sure that the financial debacle never happens again.
We want to avoid this rush to “subpoena people,” Fox acquiesced. He compared calling witnesses to theater, and then diminished it as a mere fact-finding tool. He must think that everyone in Rhode Island is a fool to fall for such legislative folly.
He then shared that he was reluctant to go through reams of documents to find out who knew what, but the counters with his desire for robust oversight. He thinks that it’s premature to go through all the documents.
You can’t change facts
Yet the fact remains: Fox had ties to the 38 Studios deal, and he handpicked the chairman of the oversight committee.
Why not set up an independent investigation, just for the sake of perception? Nesi asks.
“Are you ever going to satisfy the perception?,” Fox fired back.
Another representative, J. Patrick O’Neill of Pawtucket, outlined that Fox and Curt Shilling took a lot of time working out the 38 Studios deal.
Fox accused O’Neill of being self-serving, then dressed up the whole revelation as everyone making Fox “the epitome of evil and wickedness”.
Perhaps he’s right.
From the State House to the Big House
So, the Fox will still look over the hen house and make sure that future foxes never steal away the chickens or the eggs before they are hatched ever again.
Perhaps Ocean State residents should be asking the same question that another Speaker, John Boehner of the US House of Representatives, had asked following revelations of partisan attacks by the IRS:
“Who knew what? And who’s going to jail?”
Will someone rue the day that the Fox was let into the GA hen house? Perhaps it’s time for Rhode Islanders to put Fox in another house: the state pen!
Arthur Christopher Schaper is a teacher-turned-writer on topics both timeless and timely; political, cultural, and eternal. A life-long Southern California resident, Arthur currently lives in Torrance. Follow him on Twitter @ArthurCSchaper, reach him at email@example.com, and read more at Schaper's Corner and As He Is, So Are We Ministries.
Timeline - Rhode Island Pension Reform
GoLocalProv breaks down the sequence of events that have played out during Rhode Island's State Employee Pension Fund reform.
Governor Don Carcieri makes pension reform a top priority in his emergency budget plan. His three-point plan included:
1. An established minimum retirment age of 59 for all state and municipal employees.
2. Elimination of cost-of-living increases.
3. Conversion of new hires into a 401(k) style plan.
See WPRI's coverage of Carcieri's proposal here.
Rhode Island's state administered public employee pension system only held 48% of the assets to cover future payments to its emplyees.
"This system as designed today is fundamentally unsustainable, and it is in your best interest to fix it" - Gina Raimondo
Check out Wall Street Journal's coverage here.
Gina Raimondo defeats opponent Kernan King in the election for General Treasurer of Rhode Island using her platform to reform the structure of Rhode Island's public employee pension system. She received 201,625 votes, more than any other politician on the 2010 Rhode Island ballot.
Raimondo leads effort to reduce the state’s assumed rate of return on pension investments from 8.25 to 7.5%.
Her proposal includes plans to suspend the Cost of Living Adjustment (which allows for raises corresponding with rates of inflation for retirees), changing the retirement age to match Social Security ages, and adding a defined contribution plan.
Raimondo releases “Truth in Numbers”, a report detailing the pension crisis and offering possible solutions. She continues to work to raise public support for her proposal.
"Decades of ignoring actuarial assumptions led to lower taxpayer & employee contributions being made into the system." - Gina Raimondo (Truth in Numbers)
Read GoLocalProv's analysis of the report here.
Read the Truth in Numbers report here.
Governor Lincoln Chafee and General Treasurer Gina Raimondo present their pension reform legislation proposal before a joint session of the General Assembly.
“Our fundamental goal throughout this process has been to provide retirement security through reforms that are fair to the three main interested parties: retirees, current employees and the taxpayer…I join the General Treasurer in urging the General Assembly to take decisive action and adopt these reforms.”- Gov. Lincoln Chafee
Head of Rhode Island firefighters’ union accuses Raimondo of “cooking the books” to create a pension problem where one did not exist. Paul Valletta Jr. states that Raimondo raised Rhode Islanders’ assumed mortality rate to increase liability to the state, using data from 1994 instead of updated information from 2008, and lowered the anticipated rate of return on state investments.
“You’re going after the retirees! In this economic time, how could you possibly take a pension away?” Paul Valletta Jr (Head of RI Firefighters' Union)
Read more from the firefighters' battle with Raimondo here.
Check out the New York Times' take on RI's pension crisis here.
November 17, 2011
The Rhode Island Retirement Security Act (RIRSA) is enacted by the General Assembly with bipartisan support in both chambers. RIRSA’s passing is slated to reduce the unfunded liability of RI’s pension system and increase its funding status by $3 billion and 60% respectively, level contributions to the pension system by taxpayers, save municipalities $100 million through lessened contributions to teacher and MERS pension systems, and lower the cost of borrowing.
Read more from GoLocalProv here.
November 18, 2011
Governor Lincoln Chafee signs RIRSA into law. According to a December 2011 Brown University poll, 60% of Rhode Island residents support the reform. Following its enactment, Raimondo holds regional sessions to educate public employees on the effects of the legislation on their retirement benefits.
Read about how Rhode Islanders react to RIRSA here.
Raimondo hosts local workshops to explain the pension reforms across Rhode Island. She also receives national attention for her contributions to the state’s pension reforms. The reforms are given praise and many believe Rhode Island will serve as a template for other States’ future pension reforms.
Read about the pension workshop here.
Read Raimondo's feature in Institutional Investor here.
March - April 2012
Raimondo opposes Governor Chafee’s proposal to cut pension-funded deposits. She continued to provide workshops on the pension reforms.
December 5, 2012
Raimondo publicly opposes Governor Chafee’s meetings with union leaders in an effort to avoid judicial rulings on the pension reform package. In response, Chafee issues a statement supporting the negotiations.
Read more about Raimondo's opposition here.
Read about Chafee's statement here.
Led by the Rhode Island State Association of Fire Fighters, unions protest the 2011 pension reform outside of the Omni Providence where Governor Lincoln Chafee and General Treasurer Gina Raimondo conduct a national conference of bond investors.
Read about Raimondo's discussion of distressed municipalities here.
The pension plan comes under increased scrutiny as a result of the involvement of hedge funds and private equity firms. Reports show that $200 million of the state pension fund was lost in 2012.
"In short, impressive educational credentials and limited knowledge of investment industry realities made Raimondo ideally suited to champion private equity’s public pension money grab." - Ted Seidle (Forbes)
Read GoLocalProv's coverage of the State Pension Fund's losses here.
Read Ted Seidle's criticism of Raimondo in Forbes.
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