The pro-big business bill mill known as ALEC released a report this week that not only praises Gina Raimondo and local legislators for what they did to retirees in 2011, but also uses Raimondo’s Rhode Island model for why and how to downsize public sector pension plans.
The new ALEC overview even uses Raimondo’s emotionally compelling words as a visual graphic in its executive summary. Furthermore, the 45-page report is also the same exact game plan she used to sell the state on her plan.
“Legislators should move defined-benefit systems to properly designed alternatives, such as defined-contribution, cash balance, and hybrid plans,” suggests the summary. “They offer increased predictability for the employer and an increased likelihood for the employee that the money promised will actually be set aside.”
ALEC’s report is called “Keeping the Promise” and Raimondo’s legislation was called the “Rhode Island Retirement Security Act.” Both names imply that the effort is on behalf of the employee, but both ALEC and Raimondo are known for championing a much different demographic.
The crux of both is that a defined contribution plan, which is more management-friendly, is more sustainable than a defined benefit plan, which is more retiree-friendly. Rhode Island switched from a defined benefit plan to a hybrid plan.
Using the same pretense of being retiree-focused, the report also cites Central Falls fiscal problems as an example of why pension cuts can be needed.
More than anyone else, though, public retirees suffer from ill-funded plans. For example, in August 2011, the city of Central Falls, RI, filed for bankruptcy protection and went into receivership. As a result, some retirees saw their monthly payments cut in half.
It’s the second reference to financially-struggling cities benefiting from pension cuts. The first page of the executive summary says, “In the most extreme cases of fiscal distress induced by poorly managed pensions, some cities have had to go to court to seek bankruptcy protection and restructuring.”
National media briefly concerned itself with this same topic last summer when Joe Nocera of the New York Times wrote a column saying Woonsocket’s budget problems were more closely related to conservative government-shrinking efforts than to pension obligations. Josh Barro, a conservative columnist who then worked for Bloomberg, quickly fired back that pensions are to blame.
This is at least the second ALEC report to laud Rhode Island for its pension cuts. “Perhaps the biggest pension reform success last year came from Rhode Island,” reads ALEC’s 2012 Rich State Poor State report.
Another local connection to the two ALEC reports: Jonathan Williams, a contributor to the local ALEC-aligned small government group the Center for Freedom and Prosperity, is listed in the acknowledgements of this year’s report and was a co-author of the previous report.
Something else worth noting: Last year (when Raimondo was still known as a “pragmatic progressive” rather than a “Wall Street Democrat”) only RI Future published a report on ALEC’s thoughts on Rhode Island’s pension cuts. This year, it was covered by at least two TV stations, one radio station and the Associated Press. At least three local reports used the word “praise” to describe what ALEC thinks of Rhode Island’s pension cuts. None of the reports call the changes to state’s pension system a “reform.”
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