Rhode Island Treasurer Gina Raimondo took 42 percent of the vote in a three-way Democratic gubernatorial primary Tuesday, highlighting one good measure of a politician's status as a Wall Street darling: when Very Serious People say you're a national star after you win a primary in a small state. And, of course, Raimondo's big new star status is all about the fact that, though she runs as a Democrat, she attacks workers like a Republican. That's what she's being celebrated for; for instance, according to a
New York Times piece
in the news, not opinion, section:
Analysts were already predicting that if she won in November, Ms. Raimondo could go on to become a national star in the party, showing fellow Democrats that responsible policy is not necessarily bad politics, although organized labor may choose to differ.
Let's unpack that, shall we? Of course there's the anointing of Raimondo as a star on the basis of a stint as state treasurer and a victory in a three-way primary, both in a small state. There's the implication that for Democrats, "responsible policy" (we'll come back to that) is usually seen as bad politics. There's the straightforward statement that unions are opposed to "responsible policy." That's quite a lot before we even get to the crux of the matter: Raimondo's signature "responsible policy" of turning Rhode Island's public pension funds over to high-risk, high-fee hedge funds while cutting worker pensions.
According to Matt Taibbi:
... part of Raimondo's strategy for saving money involved handing more than $1 billion – 14 percent of the state fund – to hedge funds, including a trio of well-known New York-based funds: Dan Loeb's Third Point Capital was given $66 million, Ken Garschina's Mason Capital got $64 million and $70 million went to Paul Singer's Elliott Management. The funds now stood collectively to be paid tens of millions in fees every single year by the already overburdened taxpayers of her ostensibly flat-broke state. Felicitously, Loeb, Garschina and Singer serve on the board of the Manhattan Institute, a prominent conservative think tank with a history of supporting benefit-slashing reforms. The institute named Raimondo its 2011 "Urban Innovator" of the year.
The state's workers, in other words, were being forced to subsidize their own political disenfranchisement, coughing up at least $200 million to members of a group that had supported anti-labor laws. Later, when Edward Siedle, a former SEC lawyer, asked Raimondo in a column for Forbes.com how much the state was paying in fees to these hedge funds, she first claimed she didn't know. Raimondo later told the Providence Journal she was contractually obliged to defer to hedge funds on the release of "proprietary" information, which immediately prompted a letter in protest from a series of freaked-out interest groups. Under pressure, the state later released some fee information, but the information was originally kept hidden, even from the workers themselves.
This, not any actual evidence that voters are thrilled with Gina Raimondo, is why she's getting the star treatment from the traditional media, why she's raising buckets of money from Wall Street. Meanwhile, as Taibbi reminds us, hedge funds underperform indexed funds, and sure enough, under Raimondo, Rhode Island's pension fund has
underperformed, with a rate of return that "significantly trails the median rate of return for pension systems of similar size across the country" and, combined with the high fees, has cost the state $372 million. But since that was achieved not just by handing a lot of money to Wall Street but by cutting retirees' cost of living adjustments, Raimondo will continue to be a Wall Street darling, and when you're a Wall Street darling, you're also a traditional media darling—as the
New York Times shows so clearly.