Cries of Betrayal as Detroit Plans to Cut Pensions
Source: New York Times
Detroits pension shortfall accounts for about $3.5 billion of the $18 billion in debts that led the city to file for bankruptcy last week. How it handles this problem of not enough money set aside to pay the pensions it has promised its workers is being closely watched by other cities with fiscal troubles.
Kevyn D. Orr, the citys emergency manager, has called for significant cuts to the pensions of current retirees. His plan is being fought vigorously by unions that point out that pensions are protected by Michigans Constitution, which calls them a contractual obligation that shall not be diminished or impaired.
Gov. Rick Snyder of Michigan, a Republican who appointed Mr. Orr, signed off on the bankruptcy strategy for the once-mighty city, which has seen its tax base and services erode sharply in recent years. But the governor said he worried about Detroits 21,000 municipal retirees.
<snip>
On Sunday, Mr. Snyder fended off the notion that the city needed a federal bailout. Its not about just putting more money in a situation, the governor said on Face the Nation on CBS. Its about better services to citizens again. Its about accountable government.
Read more: http://www.nytimes.com/2013/07/22/us/cries-of-betrayal-as-detroit-plans-to-cut-pensions.html?pagewanted=all
Skittles
(153,164 posts)anyone who cannot see they are actively gunning for pensions now is very naive
Major Nikon
(36,827 posts)It's bad enough when a private sector employee loses their pension through bankruptcy. Many of these employees were not contributing to Social Security because they were exempted by federal and state rules. So you're talking about people with even less of a safety net than private sector employees who are now getting the big "fuck you" from the city.
I can see now why people used to bury their money in mason jars in their back yard.
Live and Learn
(12,769 posts)Bandit
(21,475 posts)and guess which Party most Public Union members belong to.......
Igel
(35,317 posts)Nobody's going to let the pensioners starve. Corporations have their pensions taken over by a federal entity, that might happen here.
However the first thing to do is not let the crisis go to waste. The city has, for years, done foolish things. Perhaps less often recently, perhaps more often. But this has been coming for a long time and the steps taken to minimize the problems that would hit weren't taken. There was no incentive to take them. They played kick the can. They relied on their rich uncle to step in when things got bad. They've run out of street for kicking the can. The rich uncle is sending back the letters asking for help marked "return to sender."
If we had an immediate bailout, it would be a return to status quo. Foolish things would probably continue.
If we had no bailout at all, it would be a disaster.
Think of this as an intervention. Don't promise help. Make it look like there is no help. Make them come up with the best solution they can. If the PTB think that it's still foolish, tell the city that it's either make harder choices or court disaster--and they've already been introduced and even set up a first date. Only when there's been progress do you start discussing bailout.
The problem is that if you start talking bailout immediately the city, left to its own, might play chicken and say, "Bring on the disaster, then--and we'll duck responsibility with our voters."
"The city" is my weaselly term in for one of the following terms: city manager, city politicians, city electorate.
Squinch
(50,950 posts)Lonr
(103 posts)of the city's meager treasures at fire sale prices, pay off the bankers and screw the little guy. Unbridled capitalism at its finest.
ReRe
(10,597 posts)Yeah, right. Bullshit. It's theft. Period.
All Young People you are forewarned now: Figure out how to save for your retirement on your own, where no money-grubbing state or Corporation or Wall Street Stock Exchange can get their fingers on it.
abelenkpe
(9,933 posts)Why is it OK that we live in a society where working and saving is not enough to earn retirement, where everyone HAS to gamble on the stock market and win in order to be able to retire. it's not enough to just save (of course with a savings rate of .25 it impossible, but even a healthier 5 percent wouldn't do the trick.) 401ks are a joke. Pensions are no longer safe. And serious people tell us we need to cut future social security.
Pensions should never be allowed to be stolen to appease bankers private or public.
daleo
(21,317 posts)woo me with science
(32,139 posts)That's *exactly* what it is.
ReRe
(10,597 posts).... let's call it what it really is: fascism.
Civilization2
(649 posts)George Carlin nailed it.
"They want your pension money, they want it back,. So they can give it to their criminal friends on Wall St."
This is a fire sale by design. They have pilfered all they can out of the city,. and now they are attempting to shake the last crumbs from the pensions of the firefighters and cops. These brady banksters have not souls,. .
cap
(7,170 posts)All city managers knew pension funds have not been making the return necessary to fund obligations for a very long time. No one wanted to raise taxes and/or increase contributions. So when the banksters came a calling with toxic assets with outsized returns, the pensions snapped up the CDOs and CMOs. You can't fund a pension on safe assets making 1-3% with adding more money to the pot. There was a lot of funny math on all sides: the actuaries of pension funds, the folks valuing toxic assets, the rating agencies. Funny thing is that most of the underlings doing the funny math in the financial sector ain't got no retirement either. You need about $700,000 to fund a retirement of $30,000 if you want to retire at 65 and live to 90 like my MIL (that is excluding the value of your home).
The sad thing is that American capitalism can't get outsize returns because it isn't doing much that is really that remarkable. The good but hard way of making money is to sell a product that people need that you can produce efficiently. We knew we had this problem when Jimmy Carter gave his speech about the malaise of American capitalism. We voted for Reagan and the rest is history.
People in Michigan know they have a problem and they voted for Snyder. The people to get better services are the 1%. The rest are thrown back on their families.
Snyder hasn't asked how he is going to provide better services with a labor force that is already paid less than the private sector. The pension and stability was supposed to make up for that. Who is going to take risky governmental jobs like police work or firefighting without some guarantees?
How are you going to give better services to people without some major investment?
You are going to cut pensions and cut food stamps at the same time? Good morning, Calcutta! Someone selling water on the street corner to make a living is what they do on the streets of Calcutta.
Oh yeah, and there is this little thing called race. You are having some white financial manager come in and strip what's left of a black middle class/working class in the city. This is being done in the context of a community feeling a bit bruised from the Trayvon Martin trial.
Absolutely delusional.
We are going to sit and wonder why there is violence and riots. Delusional.
cvoogt
(949 posts)they won't proceed with this, since it's clearly Michigan-unconstitutional, right? Phew, had me worried for a moment.
Lasher
(27,597 posts)July 19, 2013
A circuit court judge has ruled that Detroit's bankruptcy filing violates the state's constitution and laws, and must be withdrawn; Michigan's attorney general has already appealed the decision.
Judge Rosemarie Aquilina made the ruling on Friday, a day after the city became the largest municipality in history to declare bankruptcy under federal Chapter 9 rules.
<snip>
Aquilina said the Michigan Constitution bars any action that would reduce public pensions. She said that Gov. Rick Snyder and Kevyn Orr, Detroit's state-appointed emergency financial manager, violated the constitution when they filed for bankruptcy because they were aware that the result would be reduced pension benefits.
Attorney General Bill Schuette's office says it's already appealed the decision:
"In addition, the Attorney General filed motions to stay the trial court rulings and any future proceedings while the appeals proceed," spokeswoman Joy Yearout said. "Later today, we expect to file additional motions seeking emergency consideration."
http://www.npr.org/blogs/thetwo-way/2013/07/19/203696417/michigan-ag-appeals-court-order-blocking-detroit-bankruptcy
former9thward
(32,016 posts)Federal law trumps a state constitution. The circuit court judge was making a political statement not a legal ruling. That is why she ordered her decision to be sent to President Obama.
Lasher
(27,597 posts)So thanks for the insight. I wondered why Lafaive claimed, "...federal law trumps state law in this case." (NPR article I linked upthread) I should have understood his assertion then.
But if this is the case, I wonder if there has to be something specific in Federal law that contradicts the provision of the Michigan Constitution. It appears the case is to be handled in Federal bankruptcy court, but I don't think State law can be ignored where Federal law does not speak.
former9thward
(32,016 posts)Based on state law, state constitution, etc. But ultimately the decision will be made by a federal bankruptcy judge and the bankruptcy code gives the judge supreme power to do what they need to do to get the bankrupt party out of their predicament.
happyslug
(14,779 posts)Original Chapter IX was ruled to be unconstitutional for it interfered with HOW a state could set itself up. Later on a highly modified Chapter IX was approved by the US Supreme Court, once Congress made it clear that the State had to agree AND THAT SUCH AGREEMENT MUST COMPLY WITH STATE LAW.
Thus the Governor just can not agree to the Bankruptcy, State law must permit the State to agree. If State law does NOT permit it, then the filing is unconstitutional for it interferes with how a state forms itself and its municipalities.
This is the chief reason they have been only 500 municipal bankruptcies since Chapter IX (Now Chapter 9 of the Bankruptcy Code) passed in 1934.
former9thward
(32,016 posts)You know my views and I know yours.
warrior1
(12,325 posts)and they elected a republican to fix it, it just got worst.
Now with a democratic and the wheel we are seeing the recovery.
Lasher
(27,597 posts)And he just replaced Detroit's elected representatives with an ideological hit man.
Big_Mike
(509 posts)but I think it is simply luck and the turn around occurring in close proximity to one another. One discouraging sign is that the idiots in Sacramento are rushing to spend the money coming in and are not constructing statutory guidelines to smooth the rollercoaster highs and lows into something sustainable.
I blame myself for some of our problem. When Davis granted Oracle a no bid billion dollar contract and didn't straighten out other financial issues, I voted for his removal. It allowed Schwarzenegger to move in when I voted for Peter Camejo. The problem is that I don't see anyone trying to fix anything, other than their hopes for re-election. Sigh.
Dreamer Tatum
(10,926 posts)There isn't enough to go around. People are howling about cuts to services. Now people are howling about possible cuts
to pensions.
There isn't enough money to go around. FOREVER. Not right now, not this summer - forever.
So, where should the money come from, and who should get it first?
(I know, I know..."TAX THE RICH"!!! But the rich don't have $18B to tax. What else you got?)
xtraxritical
(3,576 posts)Dreamer Tatum
(10,926 posts)snagglepuss
(12,704 posts)Dreamer Tatum
(10,926 posts)repatriate it, and give it to Detroit.
Please.
Tell me how you square up telling, say, Apple that they need to repatriate a few billion for the purposes of doing something
that doesn't directly benefit Apple.
Please. Be specific and realistic.
I'll let you off the hook by reiterating: you have nothing.
(Do you have any money anywhere? Send it to Detroit. Pass it on. Pretty much the same thing.)
woo me with science
(32,139 posts)This is a classic, really pathetic propaganda tactic. Attempt to imply that funding of a certain project is simply impossible due to complexities of government funding streams that, of course, you are aware of and your opponent isn't.
Demand that your opponent produce a detailed plan for transferring money from an arbitrary specific pot you identify, as though pragmatics of funding, rather than will to fund, were the problem, and as though you have special information about how the particular route of funding you arbitrarily imply will be necessary is impossible. Then crow victory when the bait is not taken.
All funding is by choice. All policy is by choice. This county is funneling billions to the already obscenely wealthy one percent, to blood wars for profit, and to a massive police and surveillance state targeted at its own citizens, while allowing the stashing of trillions overseas. You have run the gauntlet here on Bush talking points from "There's not enough money to go around!" to suggesting that citizens who want their cities funded are stealing from the rich.
I suggest you stop now before you embarrass yourself further.
Dreamer Tatum
(10,926 posts)All I asked you to do is sketch out a way to take from X and give to Y in a legal way. In response I get bullshit about Bush and surveillance. Adults will figure it out, don't worry.
neverforget
(9,436 posts)cap
(7,170 posts)Developing countries have been dealing with this problem for a long time. Well documented in world bank and IMF reports
adigal
(7,581 posts)You pay full freight on every penny you make in sales
Lasher
(27,597 posts)You want to know where I would like the money to go? I would like it to go to the underfunded pension plan so that we don't betray Detroit's retired civil servants.
You say the rich don't have $18B to tax. That's just ridiculous. The Bush tax cuts for the wealthiest 5% alone cost us almost $1T during the first 10 years. Obama's 2 year extension from 2011 to 2012 cost another $229B. A proposed 2013 - 2021 extension would cost another $2T.
And what of the Bush/Obama endless wars? The cost of involvement in Iraq and Afghanistan has cost us $1.5T since 2001, and that doesn't take into account the rest of the ridiculously overfunded Pentagon budget.
I don't think my priorities bear much resemblance to yours.
Dreamer Tatum
(10,926 posts)and send it to Detroit.
Why not my favorite city? Why not my favorite cause?
(Do you see where this is headed?)
Lasher
(27,597 posts)Or your favorite city. But it all might all be required to perpetuate your favorite cause, particularly if you think we can keep doing the same neoliberal things we've been doing for the past 30 years to achieve a different outcome.
And FWIW, I have identified only a portion of the revenue we are foolishly wasting.
cstanleytech
(26,293 posts)Obama has been slowly withdrawing the troops, true it wasnt as fast as alot of us here hoped for but it is a fact that it is being done.
Next is the military spending as that needs a drastic cut however they cannot just cut it because first it would actually hurt the economy if they did and 2nd is congress controlled by the republicans wont agree to it as to many of them (both democrat and republican) take money from the defense companies.
What its going to take is a major shift in who controls congress first and then hopefully I hope they cut the defense budget while upping the budget for the nations highways, schools and other essential programs.
woo me with science
(32,139 posts)Dreamer Tatum
(10,926 posts)If you want to arbitrarily confiscate wealth from people and/or companies to benefit a single entity, you'll have to have take care of amending that little document called the CONSTITUTION first.
Hey, I have an idea: California has a surplus all of the sudden. Why not make them give it to Detroit? Boom, problem solved.
Oh, wait. People who pay taxes to CA might have a problem with that.
There's bullshitting on a message board, and then there's effecting actual public policy that would WORK. 99.9999% of the commentary surrounding Detroit is plain old bullshitting on a message board.
woo me with science
(32,139 posts)That's the richest piece of irony I've seen yet from the corporate defenders.
Five Facts About America's Pathological Wealth Distribution
http://www.commondreams.org/view/2012/12/03
I suppose as the F.U. from the top gets more brazen, so does the propaganda...but I thought you guys were still at least *pretending* to care about the same things as Democrats.
Dreamer Tatum
(10,926 posts)Now tell me how to get it from THEM to DETROIT and NO ONE ELSE.
That last part might prove a little tricky, which is why you won't address it.
woo me with science
(32,139 posts)Last edited Mon Jul 22, 2013, 08:19 PM - Edit history (1)
http://www.democraticunderground.com/?com=view_post&forum=1014&pid=545361
Dreamer Tatum
(10,926 posts)cap
(7,170 posts)Back then the rich thought it was a patriotic thing to do. Well at least some of them. The rest hollered bloody murder but they did pay up
cstanleytech
(26,293 posts)I mean from control of those that provide them? We have seen story after story over the decades of x company going under and the people losing their retirements so why dont they make it so that the retirement fund isnt run by the employer and the employer (the city of Detroit in this case) cannot even touch it ever even if they declare bankruptcy?
quadrature
(2,049 posts)that have not gone bankrupt.
almost as good, Detroit could
turn itself into a moose preserve.
KamaAina
(78,249 posts)and we've got a lot of them in CA, many with D's after their names,
is that yes, pensions are generous. But they got to be that way through decades of bargaining in which, time and time again, unions were pressured to take pension rather than salary increases. Now the chickens are coming home to roost.