General Discussion
Showing Original Post only (View all)A Very Bad Idea Coming Soon to a City Near You [View all]
What if Congress voted tomorrow to cut your Social Security check in half? How would you feel? What would you do?
Retired firefighters and policemen in Central Falls, Rhode Island know how they would feel, because it has happened to them already. They have agreed to sharp cuts in their retirement pensions. They have no choice. If they dont agree to accept half, the city says it will file for bankruptcy under a new plan that will allow it to decide which of its creditors get shafted and which get paid. Bondholders will not see a loss on their investment, but retirees could see their pension contracts voided. And the city retirees do not have Social Security to fall back upon. Here is the NYT article:
http://www.nytimes.com/2011/12/20/business/pension-deal-in-rhode-island-could-set-a-trend.html?_r=1&ref=politics
How can a city tell its retirees Sorry, we are broke while telling investors Great news! We are flush with cash!? You tell me. A contract is a contract. But in the U.S., contracts to pay investment brokers apparently count for more than contracts to support the folks who put out our fires and capture our criminals. That is because the banks are too big to fail while American workers are disposable.
If this trick works in Central Falls, it will be copied by cities all across the country. What a boon for local governments! It will be like getting free money! Cities that do not opt to place their pensioners out on ice floes will find themselves unable to sell municipal bonds. We will hear mayors claiming If you want us to put out your fires now, you better let us stop paying the folks that used to put them out.
And once local government workers are without a pension, it will be quite easy for the federal government to say It isnt fair that retired firefighters and police carry the burden for our bad economy. All retired workers must do their part. At which point, your Social Security check will be cut in half---and the feds will tell you Just be happy we dont take all of it.