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Rhode Island’s astoundingly corrupt Democratic Party machine is quite frankly the best and longest-running performance in Providence, a burletta of buffoonery that has always seemed a pale imitator of the burlesques in Boston or New York. Raunchy, racist, and reprobate, it is emblematic of everything that is wrong with the larger national party and the public fresco that effectively immunized me from the charms of Bernie Sanders during the last election.
Yet in recent months we have witnessed locally a series of minor policy and PR productions in the news that to the knowledgeable eye reveals the deep inner mechanics of the post-2016 Clinton edifice. While local news outlets have carried them as innocuous and normal elements in the news cycle, they actually are the individuals clicks and cranks of gears in the machine.
The two rather dialectical players on the stage are named Gina Raimondo and Seth Magaziner. Both began their political careers by exiting the financial industry to become public servants.
Raimondo was a venture capitalist with a very spotty record of success who co-founded Point Judith Capital, backed by Tudor Investment Corp. and Paul Tudor Jones, in 2000 after having worked for Village Ventures, a firm backed by Bain Capital (Mitt Romney’s old outfit) and Highland Capital Groups.
Her husband Andrew Moffit, who currently is Director of Industry Learning at McKinsey & Company, has focused his energies on school district management. Ironically during the electoral contest that put Raimondo in office it was her Libertarian-leaning Moderate Party opponent Bob Healey who said in a debate “She tries to portray him as a schoolteacher, but he is involved in the movement to privatize the public schools… It’s more than pro-charter. He works for a company for the purposes of making money off [public schools].” Moffit’s LinkedIn profile reads: Andy is an Adjunct Lecturer at Harvard Graduate School of Education, he teaches Workplace Learning, Leadership Development & Technology, and at Brown University, where he teaches Strategic Management for School System Excellence, courses that he developed. His book, Deliverology 101: A Field Guide for School System Leaders(Corwin Press, 2010), written with colleagues Michael Barber & Paul Kihn, details a comprehensive approach to driving results in reform efforts.
Magaziner, son of longtime Clinton confidante and policy wonk Ira, was president of both the Brown University Democrats and the College Democrats of Rhode Island, and served on the Brown University Steering Committee on Slavery and Justice (I have previously made a film about how their final report fails to give proper acknowledgment and gravity to the connection between Brown and the slave trade). After college he went into the Teach for America corps deployed to post-Hurricane Katrina Louisiana. Having spoken with rank-and-file teachers as well as union officials in Providence, I have honestly heard mixed things. Leadership admits that, if the TFA corps member is dedicated to making a career out of teaching, those are legitimate members that they represent as a bargaining unit. On the other hand, the rank-and-filers point to TFA members being used in conjunction with legal technicalities, such as renaming a school building, to effectively work around tenure laws and bust the unions. Andy Moffit also did a stint in TFA. Seth went on from there to an associate at Point Judith Capital, the firm Raimondo founded, before going to Yale for his MBA. After that, he worked at Trillium Asset Management, “a Boston, Massachusetts based socially responsible investment firm, as a vice president and lead analyst for energy, banking, and diversified financial sector investment”, according to Wikipedia.
Raimondo’s jump from private to public sector was a case study in New Democrat/Democratic Leadership Conference identity politics marketing. She went out of her way to make appearances at all the right functions while on the campaign trail and was seen as the type of woman who would bring fresh air to the stagnant pool of nepotism in Treasury (her predecessor Frank Caprio, son of a colorful longtime judge with his own public access cable rip-off of People’s Court, infamously replied when Barack Obama refused to endorse 2010 his gubernatorial run to “take his endorsement and really shove it”). Elected to Treasury in 2010, she took office and quickly “reformed” the public pension system by investing it in high-risk high-fee hedge funds, which function as nothing more than collections of cash for corporate raiders like Trump adviser Carl Icahn and the treasuries for campaigns to privatize public resources, while transitioning new public workers to 401(k)-style defined-contribution plans.
Zero Hedge writes: About a decade ago, some liberals joined conservatives in pushing to expand charter schools. As the WSJ reports, those efforts received financial support from hedge fund managers including Dan Loeb, Paul Singer and Paul Tudor Jones, who together kicked in millions of dollars toward the effort. Some involved in the effort to push for the expansion of chartered schools portrayed public school teachers and their unions as obstacles to improving education, and thus the reputation of unions took a beating. Enter Randi Weingarten. Weingarten was elected president of the American Federation of Teachers in 2008, and her aim was to restore public trust in public school teachers and their unions. Weingarten’s federation represents about two dozen teachers unions whose retirement funds have a total of $630 billion in assets, a large portion of the more than $1 trillion controlled by all teachers unions according to the WSJ. Although the unions themselves control where the money is invested, Weingarten can make recommendations. Weingarten instructed investment advisers at the federation’s Washington headquarters to sift through financial reports and examine the personal charitable donations of hedge fund managers, focusing on those who want to end defined benefit pensions, and entities backing charter schools and the overhauling of public schools. In early 2013, the union federation published a list of roughly three dozen Wall Street asset managers it says donated to organizations that support causes opposed by the union, and the federation wanted union pension funds to use the list as a reference guide when deciding where to invest or not invest) their money. Said otherwise, if asset managers don’t support unions, the unions won’t invest with the funds. (Remember, Andy Moffit is in a position within the charter school industry to make a substantial amount of money off the privatizing of schools. Raimondo therefore invested the pension in hedge funds that finance those charter schools which would replace traditional public schools and perhaps peripherally employ her husband in the process.)
Could one envision something much more devious than a public school teacher seeing on their weekly pay stub a deduction that is quite literally directly financing the busting of their own union? One of the nastier elements of her “reform” heist was getting the legislature to pass a law that would freeze yearly cost of living adjustments (COLA) for pensioners until the fund returned to a benchmark of viability. But, owing to the outrageous fees charged the pension by hedge fund managers, this is next to impossible to see ever coming to pass.
Investopedia compares and contrasts mutual and hedge funds in the following way: First, the similarities: Both mutual funds and hedge funds are managed portfolios. This means that a manager (or a group of managers) picks securities that he or she feels will perform well and groups them into a single portfolio. Portions of the fund are then sold to investors who can participate in the gains/losses of the holdings. The main advantage to investors is that they get instant diversification and professional management of their money. Now, the differences: Hedge funds are managed much more aggressively than their mutual fund counterparts. They are able to take speculative positions in derivative securities such as options and have the ability to short sell stocks. This will typically increase the leverage of the fund. This also means that it’s possible for hedge funds to make money when the market is falling. Mutual funds, on the other hand, are not permitted to take these highly leveraged positions and are typically safer as a result.
From the outset financial experts were telling Raimondo that putting pension money into the hedge funds was a bad idea. Ted Siedle, the Florida-based forensic auditor at Benchmark Financial retained by retired teachers and local unions to analyze the pension fund and Raimondo’s impacts wrote the following about his findings: [She’s a] failed, short-term former venture capitalist who sold an underperforming fund she managed to the state pension for $5 million—a fund which lost 3 percent a year for ten years and which recently extended its life to avoid realizing far greater losses[.] [And she’s also] former Rhode Island General Treasurer who gambled over $1 billion of state pension money in hedge funds, despite dire warnings from experts such as legendary investor Warren Buffett, losing the pension approximately $500 million[.]
When Raimondo left Treasury for the Governor’s office, Seth’s pedigree and little more helped him parachute into the vacancy. While in office, he has been quietly trying to reverse the policies of Raimondo while placating her ego in public but ultimately is not as forceful as one would expect.
Another Raimondo backer who injected a significant amount of capital into her campaign finance war chest at several key moments was Enron alumnus John Arnold. A website created by public pension security and retiree advocates details this: Former Treasurer and current Rhode Island Governor Gina Raimondo made pension-gutting the centerpiece of her political career with help from John Arnold. Arnold donated hundreds of thousands of dollars to Engage RI, the PAC behind Raimondo’s campaign to cut benefits and move workers into a “hybrid” retirement system that includes a 401(k) component. The Arnold Foundation also helped finance a Brookings Institution report and an Urban Institute report trumpeting Raimondo’s pension cuts. Later, Arnold funded the American LeadHERship PAC, the Super PAC that supported Raimondo’s gubernatorial campaign.
This touches on the basic motivation for these slimy financial industry operators. They want to destroy public education and public pension systems so to reduce their corporate and property tax rates, the latter of which have historically been tied to public school funding. Recently Michael Riley, a columnist with GoLocal Providence, pointed out the following similarities between cash-strapped Puerto Rico and the Ocean State: A review of the Hedge Fund Vulture firms known as “the Ad Hoc Committee” that collectively refuse to negotiate with “PROMESA” for tomorrows largest Public Bankruptcy ever [in Puerto Rico], shows several Hedge Funds also owned by Treasurer Seth Magaziner and Gina Raimondo prior to Seth. Although it shows several familiar names, the particular investments made by Rhode Island may or may not be part of the “Ad Hoc Group” of hedge funds that seek to collect in full and plunge the Island into a humanitarian crisis. Either way, it is clear that Providence and the State of Rhode Island are on the same destructive path as Puerto Rico and somebody owns our bonds. Given our 2010 law they expect to be paid off before taxpayers or public retirees.
At the start of April, Magaziner moved a significant amount of money from Treasury into local banks and credit unions based on their level of lending to local businesses. His father Ira had been active in the New England cooperative movement back in the 1970’s so the idea of injecting capital into cooperatized banking does carry some relevance and perhaps an indication of desire to push the economy in a progressive direction. His Rhode Island Infrastructure Bank, created to finance green public projects, is a public banking system that has great potential. He also has recently delivered a report on debt throughout the various state and municipal agencies that, on the face of it, seems to suggest with some concrete firmness that future austerity and privatizations would be unwarranted.
But he also has offered to have municipalities turn their pensions over to the state for management, which raised red flags for everyone in the know. Why would anyone in their right fiduciary mind desire to inject more capital into the hedge fund industry? Why didn’t Magaziner decide to bite the bullet, divest from all the hedge funds first, and then go before the public to ask for the municipalities to help recoup losses caused by the exit fees that would be imposed on the pension fund? I have spoken to a variety of people who specialize on retirement planning and they agree that Seth has done some great things but he needs to be more bold in repudiating Raimondo. His refusal to create an old fashioned political firefight, typical of all good Democratic machine burlesques, is creating the space for Raimondo to continue her political ascent while any sane person would argue that her wings must be clipped.
One concrete instance of this can be seen in the case of Achievement First charter school in Providence. At the end of 2016, while the vast majority of the public was scrambling around like chickens with their heads cut off over the surprise results of the presidential election, Achievement First submitted an application for expansion, which had been expected, but with one tiny modification that would be catastrophic for the school system. It was assumed by many that the expansion application would be for some modest growth and in accord with Rhode Island law, which dictates that charters must not cause significant fiscal damage to their public school counterparts through loss of funds. But instead the application called for an expansion that would “break” the Providence Public School District, according to the analysis of one City Councilman. Education Commissioner Ken Wagner, who has an “open door” relationship with the Governor’s office, refused to acknowledge this and violated the law by approving the expansion. The immediate impact of such a drastic
In these preceding words, have you seen the name of Bernie Sanders appear once? That is exactly how much of an impact he is actually having on the Democratic Party despite his claims to the contrary. In a recent column at Inquisitr it is written “[Bernie] Sanders told [Dena] Takruri that he and other progressives are having some success in moving the party closer towards a grassroots party. Sanders pointed out that in California, progressives are gradually taking over the Democratic Party.” He says that that is what he is trying to do now, by working with the Democratic Party. Sanders admitted that he might not succeed if the resistance to progressive ideals is too strong within the party, but he feels it’s the best chance right now that he has to save the planet.
But when Tom Perez, a Brown ’83 alumnus, came to town in April, he was not boosting for Sanders. Instead he came back to Providence to throw his weight behind Raimondo’s newest PR gimmick, a free college tuition effort that will only become law if she is re-elected.
That is demonstrative of the overall failing of the Progressive Democrats today. When neoliberals co-opt their agenda for their own personal gain, Progressives conflate being robbed with “having some success”. Unlike their Communist Party USA forebears who rallied around the Progressive Party campaign of Henry Wallace, this generation does not have the same kind of militancy necessary to oppose the onslaught of finance capital as it ravages the welfare state. Flawed as CPUSA members were, they recognized the need for disciplined and principled stridency and militancy to oppose the forces behind Raimondo’s career. Seth Magaziner’s dearth in these regards will cause an ultimate hindrance unless he becomes more vocal of Raimondo.
This is quite important because such privatization efforts by the right wing of the Democratic Party will be rolled out with federal pensions and Social Security when they are elected to office again. I am personally not taken with verbiage urging readers to the barricades. But that is what is going to be required and here is why.
A few weeks after the election, I was sitting in a meeting with a few other local activists from rural Rhode Island, the part of the state that went for Trump at the ballot box. An older woman explained how she had queried a pensioner neighbor about why he voted for Trump.
He responded with a blustered outrage “Because Gina Raimondo took away my COLA!”