Too risky for me but not for thee?

I’ve found our new General Treasurer, Gina Riamondo, to be very open and honest about our pension problems, as shown in last weekend’s article in the ProJo. However, her honesty also provides a glimpse at some underlying biases.

She considers 401(k)-style plans — widely offered in private industry — too risky. She favors a defined-benefit plan but one that is “sensible.” It’s not reasonable, she says, to expect to retire at age 62 with 80 percent of your pay, compounded by annual cost-of-living increases that will double the pension of a retiree who lives into his or her 80s. (emphasis added)

Riamondo thinks that the retirement vehicle that just about every0ne in the private sector uses is “too risky” for public employees.  Does Riamondo think public employees are not smart enough to handle their finances like those of us in the private market?  Or does Riamondo have more concern about the public sector workers (and the powerful union political machine they fund) than she does about the taxpayers who pay the bill.  Either way, this attitude won’t get us to where we need to be.


‘There are lies, damn lies – and statistics.’

‘There are lies, damn lies – and statistics.’

The difference between lies, damn lies, and statistics, is that the first two are attempts to convince, while the last is an attempt to deceive.  You got a great example of this in today’s paper.

Saturday’s OpEd, Taxophobic’ dubious claim about R.I., psychologist and “liberal” activist with the George Wiley Center, John J. Colby, defended the status quo, and indeed proposed more taxes for those creating jobs, by claiming that Rhode Island is NOT losing people and businesses because of our onerous tax structure.  He writes:

Data from the U.S. Internal Revenue Service show that over the last decade more taxpayers living in Massachusetts moved to Rhode Island than Rhode Islanders moved to Massachusetts.

The population of MA is 6.5 million.

The population of Rhode Island is 1 million (and has the second lowest growth rate in the nation – on this link you will also find rebuttal to other points Colby made in the article).

Doesn’t it make sense that “more taxpayers” would be moving from MA than from RI simply because they have 6.5 times more people than we do?

I’m not sure if Mr. Colby doesn’t understand how statistics should be viewed, or if the thinks the rest of us won’t get the slight of hand he is attempting, but it certainly shows the mentality of advocacy on the left.

From our friends in the US House


*  Staffs continued to work through the night to bridge existing gaps.  No agreement has been reached and talks will continue this morning.

*  The major reason no agreement has been reached: spending.  The need for substantial spending reductions is at the core of the disagreement.  For the most part policy riders are close to resolution.  The Speaker has been adamant that a bill that fails to include legitimate and substantial reductions in spending will negatively impact job growth by sending the signal that Washington is still not serious about dealing with its spending addiction.  Both the size and the composition of the spending cuts are still unresolved.

*  The troop funding bill passed Thursday by the House is noncontroversial and the president’s veto threat is petty, partisan and evidently intended to shut down the government.
There’s nothing in the House-passed troop funding bill that won’t largely be encompassed in a final package.

OSPRI Suggests Alternative Before Rushing Through Health Insurance Exchange Legislation

OSPRI Suggests Alternative Before Rushing Through

Health Insurance Exchange Legislation


Speculation Surrounding Federal Law Should Give Lawmakers Pause

Providence, RI – April 7, 2011 The Ocean State Policy Research Institute (OSPRI) cautions RI legislators to consider all factors and options before rubber-stamping the health insurance exchange legislation that is currently working its way through the General Assembly.


The RI House of Representatives will soon debate a very important issue regarding health care for our citizens; the formation of a health insurance exchange, as provided for in the Obama administration’s controversial Patient Protection and Affordable Care Act (PPACA). A bill to create such an exchange in Rhode Island  has already breezed through the RI Senate, without any serious opposition, and will soon be taken up by the House.


According to OSPRI’s Executive Director, Mike Stenhouse, there is a better path for legislators to consider, “All Rhode Islanders want to see more options and lower prices for health insurance. Instead of conforming to a massive, federal government controlled system, Rhode Island should consider Health Insurance Compacts, which will allow free-market competition to reduce prices and consumers to have more choices.”


Health Insurance Compacts are agreements between states that authorize out-of-state insurers to compete for business, in much the same way that auto and property insurance are purchased.


“The insurance compact model would create larger markets, more competition, more choices, and lower prices”, continued Stenhouse. OSPRI will be publishing a comparison of the two systems within a few days. “With regard to the PPACA model, the federal law is in a very unstable political and legal state. As recently as April 5 Congress passed changes that rewrote the way health exchange subsidies will be paid for; and more changes to the law are expected. Why should RI rush into creating a new, costly infrastructure that is based on a controversial federal law that is in such a state of speculation?


There are many arguments why this particular government-controlled system should not be implemented at this time in Rhode Island:


  • Federal policy is in a precarious state of flux: Even President Obama recently announced that he favored significant changes to his health care reform, and there is much uncertainty about what future changes might come down the road from Washington. PPACA is also under attack by conservatives in Congress, with strong threats to deny funding. There is a real fear that if RI implements an exchange in the PPACA mold, that the federal government, being the unreliable financial partner, would never be able to provide the federal funds that our legislators may anticipate.


  • Federal health care reform legislation may be unconstitutional: PPACA has been ruled unconstitutional by federal courts in Florida and Virginia. This legal uncertainty underscores the danger or RI taking the time, expense, and risk of implementing an exchange system based on federal legislation that could be thrown out as unconstitutional. While these decisions are currently being appealed by the Obama administration, if a new administration were to be elected in 2012, it is almost certain that the new Department of Justice would drop its appeals, meaining PPACA would remain “unconstitutional”.


  • Impact on businesses. Has our General Assembly evaluated how businesses will react? OSPRI has spoken with many business owners who honestly believe that PPACA will increase health care premium costs to the point where it may be more prudent for them to dump health coverage for their employees and pay the federal fine. How would this make RI a more competitive state for business? We are not aware of any local studies that have looked into this important part of the issue.


  • Federal Strings. The RI legislature is chasing federal funds, which of course means a multitude of federal regulations and mandates. Given all the uncertainty surrounding the PPACA, it would be unwise for RI to implement one of its major components at this time, especially when the funding – or the law itself – could dry up at anytime. Furthermore, it is highly likely that additional federal guidelines will evolve about how these exchanges should operate in order to be compliant with this volatile federal law. As recently as April 5, 2011 Congress passed changes that rewrote the way health exchange subsidies will be paid for.


  • Lawmakers should avoid painful and pointless votes. With all of the other problems our state confronts, and the multitude of choices our General Assembly must make in the coming months, why would we risk wasting debate on an issue that could have profound positive or negative effects on so many people, where federal funding may never be provided, and while there is so much uncertainty.


  • Government vs Free Market: the very idea of a government controlled exchange is antithetical to our nation’s historical and more effective free-market principles, which is the only proven way to consistently deliver a quality service at the lowest possible rate. A true free-market “is” an exchange in itself! If we simply allowed open competition via interstate compacts, a wider variety of affordable plans would be available for consumers and businesses. There is not a universal consensus that PPACA would achieve the savings it portends … many believe it could actually raise health care costs.


“If Rhode Island wants an effective insurance exchange, we should craft our own interstate compacts, based on free-market competition, with no federal strings attached, and utilize our own funds so that we have some form of self-ownership and free ourselves from all the uncertainty and errors caused by the hasty passage of the federal health care reform in the first place,” said Stenhouse.


If pressed by advocates of immediate action on health care reform, lawmakers and concerned citizens should ask: Why – for something this important – shouldn’t we make these decisions only after the uncertainty around PPACA has played itself out and interstate compacts are thorouhgly investigated as a potential viable alternative?


OSPRI does not believe that RI should risk wasting the valuable time of our General Assembly and the health of our citizens, while such legal, financial, and legislative risks are inherent. We should not risk jamming tens of millions of additional liabilities into our already strained state budget.


“Right now, PPACA is presenting major problems for the Obama administration. Our lawmakers should take all precautions to ensure that it does not become Rhode Island’s problem as well,” concluded Stenhouse.


The Ocean State Policy Research Institute (OSPRI) is Rhode Island’s leading research and educational institution promoting free market solutions for our state’s critical issues.


OSPRI is grateful to Dan Greenberg and our friends at the Advance Arkansas Institute, which provided valuable research for this brief.

For more information, go to or contact the Institute at 401.228.6691 or

If RI citizens were Red Sox fans!

Why don’t we demand a winner?

Rhode Island is a last place team. The Red Sox (for the time being) are a last place team. Most of our RI citizens are resigned to doom. Red Sox nation is outraged. If only RI citizens were like Red Sox fans.

In the race for people, wealth and business, RI simply is not competitive with other states. Yet we find little leadership from our elected officials and far too few jeers from the public. Most reform advocates debate less important issues. Nobody seems to be focused on winning!

With the budget debate in RI and the Red Sox season now under way, we can clearly see why RI never improves its standing. The contrast is stunning.

The current tax reform policy will actually make Rhode Island LESS competitive. In RI, we debate balancing our budget and how to raise enough revenues to do so. We debate the merits of trading this tax rate for that tax rate. We debate whether we should keep funding this promise or amend those rules and regulations. We keep debating everything as a one-off item, yet we do not have a master plan or a strategy to win. And we always seem to end up in the same place … last place.

We all know that RI ranks at or near the bottom in far too many areas when it comes to education and economic outlook. Our perpetual poor rankings indicate the utter failure of the status quo team. But, we cling to what we have, we put the same players back on the field with the same rules, and we seem pleased with ourselves if we can just figure out how not to worsen the situation.

But we are indeed worsening the situation. OSPRI’s revealing “Leaving Rhode Island” study proves that our current collective, oppressive tax structure is driving people and wealth out of our state. Recent headlines about our education are equally disturbing. To build a sustainable economy, we need educated, productive citizens as well as capital. To successfully compete with other states, we need more of both. Maintaining the status quo means we will continue to hemorrhage even more of these valuable resources.

Even the Governor half-agreed with our study’s findings on a recent television show, stating that raising taxes on the wealthy would cause them to move. True. But our study also showed that non-rich Rhode Islanders will also go to other states if they are over taxed. The same is true, I’m sure, with businesses and consumer purchasing.

Raising taxes – any taxes – in order to balance our state budget will only server to make us LESS competitive!  We will continue to lose citizens and money;  and we will squander yet another opportunity to improve our chance of winning. Balancing the budget is the wrong game.


Are Red Sox fans settling for a last place team? Would they be mollified if the team could only balance its books? Would they really care how much players were paid? Would they be satisfied if the manager merely shuffled the same old lineup? Would they accept increased ticket prices for a perpetual last place team? Nothing else would matter much if the team were a winner. But this is exactly what our public officials want us to accept about the state of our state.

In RI, little else should matter unless we grow the economy and reform education for the prosperity of our citizens and the future of our children. The primary standard should be whether or not we are improving our competiveness with other states … not balancing the budget.

As long as we continue to play by rules that decrease our competitiveness, and because we lack a clear vision from our leadership, RI will continue to be a cellar-dweller, even if our economy recovers to some small degree.

In the sports world, where competition and free market principles mainly prevail, a last place team will embark on a “rebuilding” strategy, where it’s “out with the old” and “in with the new”. This may mean a few years of potential struggles here and there while the “new” takes hold, but when it does, if the plan is designed properly, the situation will improve.

Trouble is, in our ocean state world, we don’t seem to have many strategic thinkers with the courage to admit that long term reform can only happen with some near term pain. And you won’t hear much from our state’s ‘fans’ (we the citizens). Nor do we find cutting commentary from the media demanding a better team or an improved standing. Imagine the Boston Globe endorsing a perennial last place Red Sox team that refused make wholesale changes.

Red Sox nation demanded a winner and the Red Sox successfully broke its “curse” by winning two world championships! It took the vision of a young and talented GM. The state of RI must do the same … but we are left to wonder where we will find that kind leadership and that kind of public outrage.

How do we bring out the Red Sox fan inside each of us?

Mike Stenhouse is Executive Director of the Ocean State Policy Research Institute

Call to action

As you may know, after the PUC decision to approve the Deepwater Wind project the RI Attorney General, Torray Plastics, PoliTop, and the Conservation Law Foundation, filed appeals with the RI Supreme Court, along with amicus briefs filed by OSPRI and the RI Manufacturers Association.

Tomorrow, the RI Supreme Court will hear oral arguments on the issue of “standing” in this case.

These litigants participated with OSPRI before the PUC
with the withdrawal from the case by the new AG, the court has decided of its own accord to examine whether  CLF or Toray have interests allowing them to appeal.

Regardless of what you think of the substance of the case, if significantly affected businesses, like Toray and PoliTop, and public policy institutions, like CLF and OSPRI, are denied access to the courts, all Rhode Islanders will suffer from this lack of accountability.

While Toray and PoliTop seem clearly to  have standing, with millions of dollars and the jobs they provide on the line, both they and CLF will also argue that this is a compelling public policy issue meriting a “prudential” grant of standing.  One way the court will know this is a critical issue of public policy, is if the gallery is full of “the public.”

Please make time to  attend the hearing tomorrow at 9:30 AM at the Supreme Court Building, 250 Benefit Street, Providence, RI 7th floor – supreme court chambers.

McConnell nomination leaves Dupont settlement unsettled

OSPRI Press Release

McConnell Nomination Leaves DuPont Settlement Unsettled

The Ocean State Policy Research Institute (OSPRI) continues to pursue the truth in regards to the behind-closed-doors negotiations between then Attorney General Patrick Lynch, DuPont and Obama nominee for the U.S. District Court, John J. McConnell whose controversial nomination cleared the Senate Judiciary Committee today in a pitched 11-7 vote.


In an environment of mass torts where billions of dollars are at stake and the office of Attorney General can essentially be auctioned to trial lawyers, why has OSPRI’s Founders Project doggedly pursued the allocation of a paltry couple of million dollars? Because the lack of candor surrounding this affair hints at the deeper problem of conflicts arising when an entire state citizenry can be scooped up as clients without their approval.

In a recent answer to questions from the U.S. Senate Judiciary Committee, Attorney McConnell emphasizes his own confusion on this topic by calling Attorney General Lynch “his client”. This epitomizes the inappropriate perspectives attending contingency fee arrangements where lawyers see their responsibility as to the decision makers awarding the contracts rather than the citizens they represent.

This reference is only the first questionable answer that McConnell recently delivered to the Senate Judiciary Committee. In defending the gerrymandering of funds from the DuPont Deal to cover a pledge of his law firm to the Brigham and Women’s hospital, McConnell has suggested that the moneys were tantamount to a fee.  They weren’t a fee he says, but a fee would have been due if his firm did not waive it.

“We disagree that a fee was due” said Brian Bishop for the Founders Project. Attorney McConnell misstates his contract with the state in his recent responses to the Senate. He says: “My law firm entered into an agreement with the State of Rhode Island that set forth the attorney fees as 16 2/3% of any recovery obtained as a result of the litigation.” In fact, the contract says: “In the event the litigation is resolved, by settlement or judgment, under terms involving the provision of goods or services, equitable relief, or any other in-kind payment, the parties hereto agree to seek . . . compensation for [Contingent Fee Counsel]”

“The fee agreement is triggered by “Settlement or Judgment”, neither of which occurred in the DuPont Deal by the testimony of both Dupont and Attorney General Lynch and, in any event it is an agreement to seek fees, not to obtain them”, said Bishop.

Senator Grassley also asked:  “Was DuPont aware of your firm’s pledge to Brigham & Women’s Hospital? If not, was it ethical to withhold this knowledge from DuPont and/or its counsel?”

Attorney McConnell responded: “Yes”.

“Yes what? Were they aware; or is he saying it was ethical if they were not?” Bishop continued, “The public record is replete with statements from DuPont indicating they were not aware of this relationship and objected to their donation being credited to McConnell’s firm. We think it an ethical blind spot if this answer should instead be taken to suggest it was ethical to dupe opposing counsel rather than openly insist on a fee.”

Finally, when asked if it was made public that the DuPont monies were used to fulfill the firm’s pledge, McConnell says it was and points to information revealed in an investigative report over a year after the DuPont Deal was announced.

“If this were so above board and already known to other counsel why wasn’t it made public when the deal was done?  We think that says all that needs to be said about the inappropriate lack of transparency here. It is not for us to say whether this is disqualifying for a seat on the federal court, but it certainly doesn’t reflect qualities we would wish to see displayed there,” said Bill Felkner, Founder and Director of Policy for the Institute.