RI's Treasurer: Focus On the Math, Not the Politics
While politics on the national scene are a continual show of gridlock, politics, and fingerpointing as the economy struggles, the state of Rhode Island managed to cut its pension liabilities and save taxpayers $4 billion.
How did it do it? By putting aside politics and focusing on the math, state General Treasurer Gina Raimondo told CNBC Wednesday.
The state's fiscal crisis prompted a "tough set of choices" that had to be made because the pension was running out of money, said Raimondo, a Democrat who took office a year ago.
"What we learned in Rhode Island is the way to solve these complicated fiscal problems, whether on the national level or the state level, is to focus on the problem and leave the politics aside," she said. "What we’re learning everyday from watching Washington is politics isn’t solving anything. The only way we as a state or a nation can fix fiscal problems is to focus on the math and solve the issues."
The vote to pass a law that allowed cuts to state workers and teachers pensions, and gave bondholders more protection than retirees. Passing such tough legislation put a spotlight on the small northeastern state at a time when politicians in Washington have been fighting over "reforms" to entitlements, including Social Securityand Medicare , as a way of cutting the nation's budget deficit.
Raimondo said her office put out a report on the worsening budget numbers and "it sat out there." As more people read it and realized the magnitude of the problem "it became clear something had to be done." When consensus was reached, Raimondo's team put forth a bold and comprehensive solution, she said.
"We focused on accurate numbers," Raimondo said. "We didn't blame anyone, we didn't point fingers. We checked politics at the door."
Contrast that to the U.S. Congress, where political fingerpointing has caused massive gridlock — the latest example of which was the failure to pass an extension of unemployment benefits and the payroll tax holiday.
In a separate CNBC interview, Republican Sen. Bob Corker of Tennessee said he, unlike most of the Senate, did not vote for a bill extending the measures for another two months. Rather, he thought the House of Representative plan for a full-year extension was a better way to go.
Calling the Senate "the worst-run institution in America," he said the Senate measure is only a temporary fix that is bad for American small businesses that can't do any long-range planning as a result.
"It was very arrogant of the Senate to say, 'We passed a piece of legislation, take it or leave it.' The House is right on this, but is losing the public opinion battle," said Corker. "The best thing to happen is get it over with, one more public policy blunder, and move on."