The Saturday Morning Post: Quick hits on politics & more in RISeptember 28th, 2013 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site, The Saturday Morning Post
1. Shutdown or no shutdown, the single biggest expansion of the U.S. welfare state since the 1960s will begin Tuesday when enrollment in the new Obamacare insurance exchanges starts. Many of those marketplaces have had to delay crucial functions because of technical problems – but not Rhode Island’s, built by consultants from Deloitte LLP with $84 million in federal money. “We are going to be fully operational on 10/1,” HealthSource RI spokesman Ian Lang told me Friday. “People will be able to experience the entire system. We’re ready to go.” Lang admitted there may be some glitches once they flip the switch, but he said multiple rounds of testing have revealed no issues on the scale of those in Washington, D.C., where subsidies are being calculated wrong. HealthSource RI’s marketplace for small businesses will also let employees choose between plans right off the bat, unlike the federal ones, a particular point of pride to exchange chief Christine Ferguson. A smooth rollout would be good news for Lincoln Chafee, who made the exchange a priority even before last year’s U.S. Supreme Court decision and whose aides have surely prayed it wouldn’t become another DMV-style fiasco. ”We’re not sitting here thinking, ‘Oh my God,’” Lang said. “We’re confident it’s going to work, and we have contingency plans in place if we need them. … There are not many private-sector companies that would agree to bring up something of this magnitude in nine or 10 months or a year, and we’ve been able to pull it together.”
2. Matt Taibbi’s big Rolling Stone article taking aim at Gina Raimondo and other pension reformers reads like a preview of the message the treasurer’s opponents will be pushing next year if she seeks the governor’s office. (Former state Rep. David Segal also made the case for the prosecution.) The critique is a broad one, casting Raimondo as too sympathetic to the financial sector – a similar argument to the one liberals used to derail Larry Summers’ nomination to lead the Federal Reserve. Notably, there are two policy changes by Raimondo at issue. The first is, of course, the 2011 pension law, which was passed with overwhelming support from the General Assembly and after a lot of public discussion. The second is the State Investment Commission’s decision to invest $1 billion of pension assets in hedge funds, something that happened much more quietly. The two aren’t directly related – Raimondo could have invested the pension money in hedge funds with no benefit changes at all – but they are feeding the same narrative. Yet as RIPR’s Ian Donnis notes, “we’re still a very long way from prime time and Raimondo’s superior fundraising firepower has yet to come into play. … A campaign, like baseball, is a marathon, not a sprint.”
3. Our weekly Saturday Morning Post dispatch from WPRI.com reporter Dan McGowan: “Tuesday’s Ethics Commission vote to investigate House Speaker Gordon Fox for not disclosing income from legal work performed for the Providence Economic Development Partnership (PEDP) came exactly 23 months after I first reported on the taxpayer-funded small-business loan fund’s extremely high default rate. At the time, I wanted to learn more about a single loan to a Ward 9 City Council candidate who never repaid the city for his failed sneaker shop. That turned into more than 30 original stories over the last two years, ranging from a failed loan to a former David Cicilline campaign volunteer to a scathing HUD report that led to wide-scale changes within the agency under Mayor Angel Taveras. The PEDP’s ‘reckless use of federal taxpayer money’ was even highlighted in Oklahoma U.S. Sen. Tom Coburn’s 2012 Wastebook. It’s not over yet. While HUD has credited the Taveras administration with helping address the agency’s woes, PEDP was forced to pay back $618,000 in improper expenses earlier this year and is likely to have to pay more thanks to a few loans to organizations that weren’t considered eligible recipients by the federal government. All that said, it is worth noting that HUD does not believe Fox had a conflict of interest for his role as both a closing attorney for PEDP and the registered agent for several loan recipients. Of course that review had nothing to do with the Ethics Commission, who could still slap Fox with a penalty if it determines he should have reported his income on his annual financial disclosure form. We should learn more from the nine-member panel within six months.”
4. U.S. Sens. Jack Reed and Sheldon Whitehouse are both putting the blame for Congress’s dysfunction on the Tea Party wing of the Republican Party. “Just simple contemplation of these [moves] by the extremists in the Republican Party suggest they are not interested in government, in growth or in helping people,” Reed argued Friday in an interview with Tim White. “They have a much more focused agenda, which is to undermine government.” Both senators say the urgent question – for both the shutdown and the debt ceiling – is how House Speaker John Boehner manages his fractious caucus. Whitehouse compares the GOP’s political situation to the one the Democrats faced in the 1970s and 1980s, before Bill Clinton restored the party’s fortunes. “I think they’re looking at a crushing presidential election in 2016 unless they can sort themselves out,” Whitehouse said on this week’s Newsmakers. “If we put up Hillary and they put up Ted Cruz, it’s going to be a burial. So they’ve got some real thinking to do about what the Republican Party is supposed to be mean.” (Oh, and as for Whitehouse: he’s backing Hillary for 2016.)
5. Moody’s upgraded Providence’s financial outlook from negative to stable this week, offering some independent affirmation that the capital city has emerged from the fiscal ICU. The report from Moody’s included this noteworthy factoid: “The city’s combined debt service, pension ARC and pay-as-you-go OPEB costs claimed a significant 26.3% of expenditures in fiscal 2012.” (OPEB is “other post-employment benefits,” mostly retiree health care.) Put another way, 26 cents out of every $1 Providence spent in 2011-12 went to three fixed costs: bondholder payments, pension-fund deposits, and health care for retired workers. That left only 74 cents on the $1 for all the city’s current operating costs, including active personnel. The burden may have eased somewhat in fiscal 2013 – we won’t know for sure until the city’s annual audit is published – but high fixed costs are going to be a continuing challenge for the next mayor.
6. Speaking of retiree health care, Business Insider’s Josh Barro picked up on my story about the possibility public-sector retirees eventually could be moved to the HealthSource RI Obamacare exchange. As Josh points out, such a move nationwide would mean the “transfer of hundreds of billions of dollars in liabilities to retired public employees from state and local governments to federal taxpayers.”
7. Harry Truman was still president the last time Providence did a start-to-finish update of its city zoning ordinance. Now the Taveras administration is kicking off a yearlong process to overhaul the code, and the result could have a big impact on the state’s economy. Should the city eliminate all parking minimums and let the market decide how much space cars need? Should taller buildings and denser development by allowed in some of the city’s 25 neighborhoods? In a region with some of the nation’s most restrictive zoning regulations, loosening up the rules on real estate could offer a low-cost way to spur economic growth. To learn more, check out the city consultant’s report and this week’s deep-dive into zoning on Executive Suite.
8. A special congratulations to our former WPRI 12 General Manager Jay Howell, who was promoted this week to vice president of television for all of LIN Media, our Providence-based parent company. As I said when Jay first moved up the ladder to LIN HQ, I’ll always be deeply grateful to him for offering the chance to experiment with something new in Rhode Island media, and I still turn to him for guidance. LIN’s 43 TV stations are in good hands. A fond farewell as well to Scott Blumenthal, who’s retiring after many years of service to the company.
9. If you missed them the first time around, now’s your chance to check out some of the items Dan McGowan, Tim White and I published this week: Rhode Island unions are organizing to spread the word about a pension settlement … Providence’s school bus problems date back decades … Brett Smiley hired Checkmate Consulting to help with his mayoral bid … Rolling Stone and a liberal think-tank take aim at Gina Raimondo … the PEDP mess entangles Gordon Fox and has cost $470,000 in legal fees … the shutdown and the debt ceiling worry Sheldon Whitehouse and Jack Reed … and a chart showing how much you need to make to afford a house in every Rhode Island community.
10. Set your DVRs: This week on Newsmakers – U.S. Sen. Sheldon Whitehouse. Watch Sunday at 10 a.m. on Fox Providence. This week on Executive Suite – a in-depth look at Providence’s zoning overhaul with Bonnie Nickerson, the city’s long-term planning chief, and Grow Smart Rhode Island’s Scott Wolf; PBN’s Patrick Anderson joins me on the panel. Watch Saturday at 10:30 p.m. or Sunday at 6 p.m. on myRITV (or Sunday at 6 a.m. on Fox). See you back here next Saturday morning.
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