A scathing article in Rolling Stone by investigative journalist Matt Taibbi, entitled “Looting the Pension Funds,” takes a harsh look at how “all across America, Wall Street is grabbing money meant for public workers.”
The piece explains how the small state of Rhode Island was used as a testing ground for an eventual-nationwide push to slash pension benefits for public workers.
“In the final months of 2011, almost two years before the city of Detroit would shock America by declaring bankruptcy in the face of what it claimed were insurmountable pension costs, the state of Rhode Island took bold action to avert what it called its own looming pension crisis,” writes Taibbi. “Led by its newly elected treasurer, Gina Raimondo – an ostentatiously ambitious 42-year-old Rhodes scholar and former venture capitalist – the state declared war on public pensions, ramming through an ingenious new law slashing benefits of state employees with a speed and ferocity seldom before seen by any local government.”
“What few people knew at the time was that Raimondo’s ‘tool kit’ wasn’t just meant for local consumption,” continues Taibbi. “The dynamic young Rhodes scholar was allowing her state to be used as a test case for the rest of the country, at the behest of powerful out-of-state financiers with dreams of pushing pension reform down the throats of taxpayers and public workers from coast to coast.
“In state after state, politicians are following the Rhode Island playbook, using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops – not bankers – as the budget-devouring boogeymen responsible for the mounting fiscal problems of America’s states and cities.”
Taibbi writes about how Raimondo transferred wealth from local retirees to Wall Street tycoons while one of her biggest supporters, former Enron executive John Arnold, worked closely with the Pew Charitable Trust to drive home the message that state employees’ pensions were to blame for the state’s money troubles, steering all attention away from Wall Street bankers.
“The state’s workers, in other words, were being forced to subsidize their own political disenfranchisement,” says Taibbi. “The bottom line is that the ‘unfunded liability’ crisis is, if not exactly fictional, certainly exaggerated to an outrageous degree. The idea that these benefit packages are causing the fiscal crises in our states is almost entirely a fabrication crafted by the very people who actually caused the problem.”
Click here to read the article in its entirety.