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Truce in the Pension Wars
A Win for Rhode Island’s Pension Reform

Pension reformers in Rhode Island saw a victory this week as the state government reached a settlement with unions that have brought a suit against the state’s pension reform. The NYT reports on the win for the state’s Democratic governor Gina Raimondo, who was the prime mover behind the original reform:

The $14.8 billion pension system, on the brink of collapse, was overhauled in 2011 and again in 2012. The legislature created a hybrid plan that split direct contributions between the state and employees. It also suspended cost-of-living adjustments and raised the retirement age by five years, measures intended to save $4 billion over 20 years.

But the changes infuriated the public employee unions, which challenged the overhaul as unconstitutional and worked against Ms. Raimondo’s candidacy last year for governor. She eked out a victory anyway and is widely seen as having established a template for other states and municipalities to follow as they face their own fiscal issues.

The NYT reports that “six of the nine unions that sued the state agreed to the settlement,” which softens some of the provisions of the original fix.

Though Democrats and their allies have often been more inclined to defend what we call the blue model,  some Democrats, like Rhode Island’s Raimondo, have responded to the collapse of that model with important reforms, and varying degrees of success. For “reforming Democrats,” as opposed to true-blue believers like NY Major Bill de Blasio, fixing the pension crisis is an important priority. As the blue model continues to collapse—and the pension crisis worsens—watch for the split in Democratic party between the “blue lemmings” and the reformers to grow.

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  • ljgude

    Good to see Democrats exercise common sense. I see myself as a recovering liberal largely because of Blue Lemmings in most policy areas, not just pensions. Not that there are not Red Lemmings too – which for me is just another way of describing lobotomy by ideology.

  • Boritz

    Union reform battles are the only remaining example of the use of unconstitutional (the word without quotes) by the left. For some reason the constitution as a living and malleable document goes out the window. Or maybe state constitutions are special in a way the US constitution just isn’t.

  • Dan Greene

    Since red states rely on the reallocation of tax revenue from blue states to them, it will be interesting to see how the red states are affected by the collapse of the blue model.

    • fastrackn1

      “Since red states rely on the reallocation of tax revenue from blue states to them”

      Dan, can you elaborate a bit? I have never heard that before.

      • Dan Greene

        I was referring to the fact that blue states have tended to get less money back from the federal government than they send to Washington in taxes. Red states have tended to be the reverse. This has been a complaint made by California during its budget crisis. So, as the “blue state model” declines, that presumably means there will be less money for this kind of transfer via the federal government, disproportionately to red states.

        • Tom

          Of course, a lot of that has to do with the fact that red states tend to be home to military bases, et. al.
          For example, the Dakotas, Wyoming, and Montana are home to America’s nuclear silos. While there are many bases in blue states–particularly on the West Coast–most of them are in red states, due to a combination of cheap land and long-serving senators,

          • Dan Greene

            Yes, that’s part of it.

        • fastrackn1

          I’ll research it a bit. I am sure there is more behind the numbers than appears on the surface. Many red states have small, sparse populations, so that may have something to do with some of it.

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