Don Carcieri’s epic
economic fail of investing in 38 Studios may have a silver lining for the local
conservative movement he once led. And both Republican candidates for governor
are for it, while the Democrats are opposed.
The Providence Journal points out that
gubernatorial candidates are split along party lines when it comes to repaying
the 38 Studios bond.
Allan Fung said the
warnings from Wall Street about fiscal repercussions are overstated and Ken
Block, who never met a opportunity to issue a press release he didn’t exploit,
railed against “the threats coming from Wall Street insiders of dire
consequences for the state if they fail to make good on the 38 Studios bond,” according to the ProJo.
Leading Democratic candidates were equally united that the bond should be
repaid and Sam Howard wrote about why the
bond payment should be made in a recent post.
The gamble failed in
spectacular fashion when 38 Studios went bankrupt in 2012. Because we took a
moral obligation bond rather than a general obligation bond, there is no legal
responsibility to pay the bond, though not paying would likely make future
borrowing more expensive.
That may be a bad
outcome for Rhode Island, but that’s not necessarily a bad outcome for the
Grand Old Party in Rhode Island.
Best known for espousing 40 years of
Democratic failure and seeking to shrink the size of government, damage to the
state’s credit rating as a result of not paying the 38 Studios bond would serve
both these conservative political objectives. It would also make it more
expensive to repair aging infrastructure, which would give the construction
industry a nice boost.
These are policies pushed by local Democratic candidates
that Republicans generally don’t care for.
Rhode Island is the
only state in the nation with a law that stipulates bond holders will be paid
prior to other obligations when it comes to municipal financing. The general
assembly passed that law at the expressed interest of protecting city’s and the
state’s credit ratings. Maybe the General Assembly should consider legislation
that would prevent Republicans from damaging our credit rating too?
Bob Plain is the
editor/publisher of Rhode Island's Future. Previously, he's worked as a
reporter for several different news organizations both in Rhode Island and
across the country.