Bob Plain is the editor/publisher of Rhode Island's Future. Previously, he's worked as a reporter for several different news organizations both in Rhode Island and across the country.

2 responses to “Roads, bridges sacrifice for pensions; income taxes spared”

  1. leftyrite

    It seems to me that the handwriting is on the wall for pensioners. Discussion of their benefits will always be framed with some other cost or some other deficit within the state economy. Pensioners vs. poor people. Pensioners vs. road repair, etc.
    We haven’t even gotten to the next retrenchment: stronger public pension fund vs. weaker pension fund, not to mention older pensioners and those in the pipeline for vastly reduced benefits. It’s all ripe for propaganda and manipulation. A field day for the consultant class.
    This all will end up making the parable of the Octomom look like the wisdom of Marcus Aurelius. And it’s going on all over the world, in the name of austerity.
    These poison lessons will have their effects. We’re already seeing them. That’s why, among other reasons, we don’t have much privacy left. Someone has to keep an eye on us.
    Do you think that all of this stuff might have some kind of cummulative effect upon people? 
     

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  2. Randall Rose

    I have to disagree with Bob Plain here, and I’ll mention some facts that support a different picture.  Bob mentions the effort to remove the 38 Studios bailout from the state budget, and says: “Either this was a ridiculous thing to debate at the 11th hour, or it was being used as a political tool against House Speaker Gordon Fox. Perhaps both!”  Unfortunately, debating “at the 11th hour” was what Rhode Islanders opposed to the bailout had to do.  A bill against the bailout had been introduced as early as March (H5888), but was not allowed to proceed to a vote in committee.  The only way rank-and-file legislators are allowed to debate and vote on the bailout is by amending the budget.  If the Providence Journal’s online poll is correct, most Rhode Islanders oppose the 38 Studios bailout.  I don’t believe it’s because they all hate Speaker Fox, I think they oppose the bailout itself.  The 38 Studios bailout is recognized as a very significant issue.  I think, as do many others, that it’s much more important than whether this or that politician gets to be Speaker.  I know many of the people heavily involved in the anti-bailout effort, and my strong impression is that they care about stopping this expensive bailout rather than opposing Fox.  It would have been great if Fox chose to take a position more in line with the public about this bailout, and it would be nice if he decides to encourage a better process for resolving the issue.  But in the end, he’s simply one of the people with clout who are backing the bailout, and he’s not the main issue.
    One other point where I disagree with Bob: He writes “I just can’t conceive of a sound argument for not funding something that could damage our ability to borrow money when worst case scenario is it costs every Rhode Island $2.50 (or just the richest among us $250 each!) to effectively buy an insurance policy against a downgrade.”  Well, there are good arguments against a bailout.  One detailed one is here.  But it’s important to realize that the bailout is even more expensive than advertised.  Bob’s figures of $2.50 per Rhode Islander are based on just the initial payment of $2.5 million included in this year’s budget. But the total direct cost of the bailout to taxpayers is expected to be $89.2 million, minus whatever the EDC gets in its lawsuit against Schilling and others, and the rest of that $89.2 million is slated to come up for a vote in future budgets.  We sometimes see bailout fans arguing that we should go ahead and spend $89 million — they say it’s affordable, they point out that the bailout is the only way to keep Wall Street from retaliating against us, and they give speculative projections about how Wall Street retaliation might cost us a little more than $89 million.  Their speculations about huge Wall Street retaliation, while scary-sounding, are very much open to question.  But they also ignore a further problem. 
    In fact, this $89 million bailout is not an isolated event.  38 Studios is only the latest in a long series of failures of “moral obligation” bonds.  Rhode Island’s first moral obligation bond, for Fairmount Foundry in the 1970s, failed and was bailed out by taxpayers; so was Alpha-Beta in the 1990s.  After each of these moral-obligation failures, people say that this kind of financing is too risky and we’ve got to stop. But state leaders never stop.  They just keep making these deals and having taxpayers bail out the bad ones.  Since insiders get to make these deals and leave us to pay, they have no incentive to stop doing it.  Our state has developed a reputation as a place where insider deals can be made and taxpayers can always be called on to pay, and shedding that reputation is the only way we can stop these shaky expensive deals from being made.  That’s the extra advantage of rejecting the bailout.  It shows that dealmakers can’t count on taxpayers to foot the bill for shady deals in future, and it’s the only way to end the pattern of expensive failures.  The true cost of the bailout is not just the $89 million that’s going to 38 Studios lenders, but also includes the cost of all the other bad deals that taxpayers will be stuck with in future if we go along with this bailout.  Rhode Island is being held back by the culture of shady deals made by insiders, and the $89 million for 38 Studios is only one part of it.  Some on Wall Street may retaliate against us if we reject these shady deals, but their ability to retaliate is limited.  If we’re willing to say no, we not only save the millions on 38 Studios, we also start to remove a dead weight that’s burdening Rhode Island’s economy and quality of life.  That’s the big picture, and what we gain on a large scale by rejecting the bailout is more than Wall Street retaliation can take away. 
    I’m glad that RI Future is a good place to look at these big-picture issues, and I’ll have more to say in a followup piece.

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