By now, you may have heard that a federal judge ruled that Detroit’s pensions may be cut during bankruptcy proceedings, even though the Michigan state constitution expressly protects them.
What you may not know is that the average pension is $19,000 a year.
David Sirota is outraged.
Michigan officials say there is no money to pay the $100 million pension gap yet the state can afford $6 billion each year for corporate subsidies.
Nor is anyone deterred from paying more than $400 million in public funds for a new hockey stadium for Detroit.
As Sirota wrote:
“Every now and again there’s a piece of crystal clear evidence left at the scene of a complex financial crime that shows, beyond any reasonable doubt, what went down.
“If future generations want to understand why the current era is sometimes referred to as a new Gilded Age, they need look no further than Detroit. The city’s financial troubles have far more to do with deindustrialization, destructive trade policies, population loss, political mismanagement and Wall Street’s shady municipal rip-off schemes than it does public pension liabilities.
“Yet, as you might have heard, a judge yesterday handed down a landmark ruling allowing Michigan officials who took control of the city to violate the state’s constitution and slash the average $19,000-a-year pensions of Detroit’s municipal retirees. This ruling is already being touted as a precedent setter for places like California, where a pension-slashing ballot initiative campaign is already underway and where some cities are trying to get out of paying the pension promises they made to retirees.”
Maybe the impoverished retirees can sell soda and popcorn at the new hockey stadium.
What bothers me the most is the fact that Detroit has money for a hockey stadium, but not to keep a promise to their former workers. Are these fellows nuts? I just hope no one goes off the deep-edge and threatens these officials. It would just be another unnecessary expense.
Juan Cole, Informed Comment
Cole writes: “The big question is whether Detroit’s bankruptcy and likely further decline is a fluke or whether it tells us something about the dystopia that the United States is becoming. It seems to me that the city’s problems are the difficulties of the country as a whole …”
READ MORE
The hockey stadium is only part of the problem: here’s the real nub: bondholders will likely be made whole while retirees get a “haircut”: that is MAYBE 10 cents on the dollar. It’s a complicated problem that, alas, requires a politician to say raising taxes is OK. I blogged on this yesterday: http://waynegersen.com/2013/12/04/bondholders-over-pensions/. The bottom line: Detroit may be the proverbial canary in the coal mine.
This is happening this week in Illinois as well — the governor (Democrat, no less, w. a Democratic legislature) is about to sign the “Pension Theft Act” while the legislature is concurrently passing corporate welfare bills for Archer Daniels Midland, Office Max, & Office Depot.
Poor elderly people don’t make campaign “contributions,” so they don’t matter.
I read stuff like this, and I look at what is happening to the GINI indices, and I think, “We’re beginning to look like prerevolutionary France.”
Those elderly–let them eat Ramen noodles and Spam, or if they can’t afford that, they can go to work scavenging in municipal dumps like the elderly poor in other parts of the industrialized world ruled by corrupt toadies of the oligarchy.
Robert, I too have wondered how much people will take before unrest unleashes itself. It is scary to think about.
It is. In the past few years, since the crash of 2007, I have noticed an interesting phenomenon–working class folks who were always very, very patriotic who have now lost everything–their homes, their jobs–and who now no longer believe that they live in a democratic country–who think, “The fix is in.” The oligarchs have NO CLUE, because of their isolation in protect enclaves, how prevalent this view now is, how much discontent there is. Or, perhaps they do, and perhaps that is why they are taking such measures as stationing a U.S. army brigade on U.S. soil and giving it the mission of “civilian crowd control”–something that has never before been done in the history of our country.
Be careful, Robert, you know too much. I wonder how many people know about that brigade and its mission, 5%??
are you two talking about the brigade from 2008?
The thing is that the unrest is MUCH greater than the politicians and plutocrats think that it is. But it is diffuse–it takes the form of lots and lots of PRIVATE grief on the part of a growing number of the voiceless. But it is, indeed, scary.
The wealthy in the United States increasingly live very isolated lives. Their kids go to a few schools not attended by the rabble. They live in gated communities. They go from these to their pristine workplaces. The keep their money in bank accounts overseas. During the whole of the recession, makers of luxury goods saw not only no decrease but an INCREASE in their sales. To the wealthy, stats on child poverty and elderly poverty and declining home ownership and declining prospects for young college graduates are just abstractions. And stats on soaring food stamps costs sound, to them, like just further proof of the wastefulness of the welfare state and not like a sign of widespread private desperation that no one wants to experience. To the wealthy, things have never been better. Their kid goes to Phillips Andover and then to Harvard and then to McKinsey and Voila!, a few years latter, he or she is running a startup chain of charter schools and making a mint. Life is one big Norman Rockwell/Mitt Romney family Christmas. And the essential cluelessness of this class is reflected in things like Romney’s comment that all one has to do is to “borrow money from a relative and start a business.”
Time for a third party. Time for all of us to run.
Robert, you are so correct. This is exactly the climate that preceded the French Revolution…let ’em eat cake. Our governement however has been perfecting unbelievable modern weapons to use against their own outraged and activist citizens. No one can say they do not plan ahead.
Quietly, during the Occupy Movement, and only for a few weeks, they revealed a heat throwing device that could be aimed into a crowd from the distance of a football field, that would burn people to a degree of discomfort that they would immediately disperse, and flee in pain.
And this weapon, I believe part of the D of D, was manufactured during a Dem administration. I have, after a lifetime, changed my voter registration to Declines to State. Oligarchs all wear the same golden cloth and live in the same golden tent despite political titles.
Many elderly are already suffering…and as we educators all know, so are half the nation’s children who live in poverty.
(My choice for Prez and VP are Elizabeth Warren and Bernie Sanders, in case anyone cares.)
Ellen
And yes as to the stationing of the troops in American cities.
Obama had promised to revise the Military Commissions Act of 2006, which used troops in New Orleans after the Bush era flooding (for the first time since the Civil War), but instead he reinforced this Act which now allows American troops to aggressively take charge in cases such as Occupy. America now could look much like Egypt…but in Egypt this week, they made new rulings about their Army killing their rioting citizens.
It is a cruel and ruthless world and one would hope that the Tea Party believers would be getting the message that their government does not always, actually rarely, works in their behalf.
Ellen
Be careful about Elizabeth Warren, she is pretty deep in herself. Are you sure you know what she stands for?
Jen…I would welcome your thoughts on Liz Warren. I do know the ALEC, Middle East, and religious connections of Hillary, so if Warren were to run against her, I would choose Warren.
I have come to be suspect of any Harvard Law grads with Ted Ruiz and Larry Summers, et al, but Liz hopefully has a broader perspective.
So please do give us your info.
Warren appears strong on a lot of matters, but many of us have serious concerns about her because she wrote a book about a decade ago in which she stated that she supported vouchers in public education.
My concerns about Elizabeth Warren are that she is one of the co-sponsors of S. 1094, the Strengthening America’s Schools Act. This bill would make a National Curriculum legal (it is currently illegal, although it is happening in spite of this), and give actual Federal control to the DOE of all Public Schools (as opposed to the sneaky way they did it with RTTT). Also includes lengthening the school day and school year, Promise Neighborhoods, 21st Century Community Learning Centers, education from birth, and more. It is a long doc but I suggest researching it a bit before throwing her support. I have read the Title IV section which is a lot of the meat of it. If you have ever seen Arne Duncan’s interview with Charlie Rose and heard his vision for Education, this bill makes that vision a reality. I was surprised to see her on it, but careful screening needs to be done of anyone seeking office.
OMG, Sanders is listed on the bill, too: https://www.govtrack.us/congress/bills/113/s1094/text
I haven’t had a chance to read the entire bill yet, but what Jen B described is extremely alarming.
When you read the Bill, many of those who carried it are liberals such as Harkin, Tammy Baldwin, Al Franken, and of course Sanders and Warren. I think since so many respected liberals signed on to this, there is far more here to investigate.
Thanks Jen for getting this going…I am doing due diligence and hope many others here do as well.
Please Jen, stay in touch on this issue, and you can find me at
joiningforces4ed@aol.com
Ellen Lubic
Just curious: has anybody read Simon Schama’s Citizens? It’s a great accessible take on what actually caused the French Revolution. The world we live in has a lot of similarities…
Can you say “Shock Doctrine”?
I remember, as a kid, watching Detroit burn on the news.. is that about to happen again?
We can argue whether or not the state of Michigan should pay $6 billion in corporate subsidies each year, but that ignores the underlying question: Why should the state, and, hence, taxpayers from all across Michigan, pay for the financial malfeasance of the city of Detroit?
It wasn’t just the financial malfeasance of the City of Detroit. This has been set up over a number of years by the very people profiting off it now. In fact, I’d wager that whatever amount of graft has contributed to the situation is small potatoes compared to the billionaire boys’ club and their machinations.
Are you saying that the state had a direct hand in Detroit’s current predicament?
Are you saying this article is not about “a federal judge” ruling that “Detroit’s pensions may be cut during bankruptcy proceedings, even though the Michigan state constitution expressly protects them.” ? Funny, that’s what I’m reading about….
I would say that Rick Snyder has eased the way for the billionaires, yes.
So…in a city that has been run by the democrats for 60 years, you heap blame on the current republican governor.
No, I don’t “heap” blame on anyone – there’s plenty to go around. Like these guys, for instance: http://www.rollingstone.com/politics/blogs/taibblog/another-batch-of-wall-street-villains-freed-on-technicality-20131204?utm_source=dailynewsletter&utm_medium=email&utm_campaign=newsletter
Agreed…heap was too strong…but, at least in your comments here, you’re focusing on the billionaires and not the people who actually ran the city and made (very bad) decisions that led to this point.
Thirty auto plants closed in 1979 in Detroit, thirty! And that doesn’t begin to quantify the spin off effect of those plant closures. The small parts plants, the groceries, the dry cleaners, etc. etc. Detroit’s story is one of a loss of revenue, not a bunch of two- bit politicians, though we have those too. And yet today worker productivity is at an all time high, and the smallest percent ever of the U.S. population is employed, only 62.8%.
The state did cut-off payments to Detroit that it had once promised. Not all problems are the states but it certainly has an interest in seeing this city thrive. The metro area has almost half the pop. of the state. The idea that a mutli-billionaire gets subsidies for a new arena so he and his rich athletes can make more money makes me sick. It is a scam. The location of the hockey stadium will move but it will bring no new jobs.
One of the things that concerns me the most about this bankruptcy is the auctioning off of the holdings of the art museum. I know that retirees are (rightly) more concerned about being able to live, and that’s definitely the greater short term concern, but the art just reminds me of the pillaging of the treasures in Iraq during our early invasion – priceless cultural and historical treasures lost to the public for generations, if not forever. I sure wish there were a way that they could (or would) stipulate that the art will only be sold to other public venues like museums, or at least stipulate that any private buyers will have to make it available to the public.
We’ll start seeing more and more of this, in every major city in this country, if this isn’t stopped.
We’re going to start seeing more and more of this if we don’t stop this in its tracks in Detroit. I’ve often wondered if the same thing is destined to happen to our national treasures–selling off our state and federal parks, or selling off items in the Smithsonian. It boggles the mind, doesn’t it?
Just yesterday the city manager clarified that they are not planning to auction off any art. They will try to derive revenue from it, either as collateral for a loan, charging other museums to display it, or selling it permanently but only with the caveat that it remain at the museum in perpetuity.
(I’ve also found that private buyers are usually willing to make their art available to the public–that’s what makes up the overwhelming majority of museum collections, after all.)
Yes, Naomi Klein got it right in Shock Doctrine……………..
Dettroit is the latest and greatest bankrupt city. Here is a list of California pending bankrupt cities. San Bernadino and a few other cities are already in this descending economic vise. As a public policy educator, I follow all this carefully, and as a PERS pensioner, I too worry about the future.
Please read some of the reports listed below.
————————————————————–
california bankrupt cities
89.3 KPCC …
Phil Matier: Detroit Bankruptcy Case Has Major Implications For California
CBS Local – 18 hours ago
Cities in California are watching how the bankruptcy case plays out in Michigan, and whether it might affect their own proceedings in California.
ruling in Detroit bankruptcy could be felt in California
89.3 KPCC (blog)
Many more US cities to go bankrupt: Analyst
Press TV
Bankrupt Cities, Municipalities List and Map – Governing
http://www.governing.com/…/municipal-cities-counties-bankruptcies-an... – Similar to Bankrupt Cities, Municipalities List and Map – Governing
Our map tracks municipal bankruptcy filings throughout the country.
How Rare Are Municipal … – Municipal Bankruptcy State Laws
San Bernardino Becomes 3rd California City to Get …
http://www.governing.com/…/gov-judge-awards-san-bernardino-bankruptcy- pr…
Aug 29, 2013 … The ruling, which makes San Bernardino the third California city to get bankruptcy protection, could serve as a guide for other cities like Detroit …
[ More results from http://www.governing.com ]
The Tales of Three Bankrupt Cities | National Review Online
http://www.nationalreview.com/…/tales-three-bankrupt-cities-michael-barone
Aug 13, 2013 … In the industrial midwest, the city government of Detroit went into bankruptcy in July. Out in California, the city governments of Stockton and San …
These California cities could be next in bankruptcy – USA Today
http://www.usatoday.com/story/news/…/05/…california-cities…/2076... – Similar to These California cities could be next in bankruptcy – USA Today
May 15, 2013 … These 10 California cities are facing the kind of serious financial stress that has already sent several other cities toward bankruptcy.
California’s Desert Hot Springs Holds Short of Bankruptcy – …
http://www.bloomberg.com/…/california-s-desert-hot-springs-holds-short-of- bankr…
Nov 13, 2013 … The City Council in the resort town of Desert Hot Springs, California, … Two other California cities are in bankruptcy: San Bernardino, with a …
(do your own googling to find out more)
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Folks,
Everyone must do homework to see where your city stands in this domino situation brought about by the banksters and super rich oligarchs who refuse to raise the mandated limit on Social Security payments upward from the cutoff of $113,000 . If this was increased to $1M there would be a safe lockbox of retirement insurance in perpetuity. But the Waltons, the Kochs, and their greedy cohorts prefer to see most of America diminished to live at or below poverty level.
All the California cities currently at bankrutcy level, are defending against CalPERs which is fighting to save pensions of hospital personnel, service workers, and even university professors from public sector. My son is the lawyer for CalPERS so I can see even more issues than get published, and a huge pension default is in the making in my state which has a vast economy as the 7th largest in the world, beyond most nations. I personally could lose my pension after working as a university educator and educational researcher for over 40 years.
This onslaught by the ALEC denizens is going to pauperize us all, for if so many cities fail, and so many pensions are lost or are denigrated to a pittance, then the ecomony will completely fold, even worse that the Great Depression, since so many Americans will have NO money to spend.
Put this pension loss together with the Right Wing push to downgrade Social Security, and the situation will be dire enough for major civil strife. If you have nothing to lose, you are motivated to take to the streets…as with Jean Val Jean.
Education is only one part of the Vanity of the Bonfires world that is America today.
Ellen Lubic
wgersen – Your assertion that bondholders will be made hold is ridiculous. Bondholders will take a huge haircut.
The Michigan Constitution is irrelevant here as the US Constitution explicitly gives the Federal government the power to establish a uniform code of bankruptcy.
Detroit has been ruled for over 40 years by a collection of crooks and buffoons all belongiing to the Democratic party. This is the end result.
Funny–the state, whose governor belongs to the Republican party, seems to be taking this action. Go figure…
And all hail to the Republican governor and his appointed city manager for selling out the city and pensioners to the highest bidders?
Many are culpable on both sides of the aisle. Our country is being run by an oligarchy due to bipartisan alliances.
Wow. The city is run for 60 years by democrats, but since a republican is currently governor your get to say there is culpability on “both sides of the aisle”? Whatever “bipartisan alliances” there are across the country, this bankruptcy is wholly owned by the democrats who ran Detroit into the ground. You may disagree with the governor on the handling of it, but its genesis can be found in decades of corrupt democratic rule.
SC Math Teacher – you’ll understand what’s happening in this country a lot better as soon as you understand that the Democrats and the Republicans are the same party, both wholly owned by the billionaires, who are the ones who profited most from Detroit’s bankruptcy (and who hope to repeat the process in a city near you).
BINGO! Once again I am with you Dienne.
Ellen
Where did the Detroit businesses go? overseas? Where do you think the policies came from that helped companies move overseas and outsource?? Republican legislatures, Bush Sr, Clinton.
Thousands of the jobs are still here, but now low pay and long hours, limited benefits. Johnson Control is a good example that today does alot of auto work, is even UAW, and yet gets paid nothing, 12 hour days. Even Ford, GM, and Chrysler employ more and more of the low second tier workers, as they force out the older higher tier workers. And of course more and more automation.
This is just so upsetting. What are these people suppose to do? I saw the mayor on tv and his response was “I’m sorry”. Really? Sorry? How is sorry going to help them? He and his cronies havent lost anything. The injustice is just too much to handle.
Having a country that admits the State as different than the Public is not a Republic.
On the other hand we get what we vote for.
Latest Gallop Poll reflects 6% approval rating for Congress, yet over 90% of incumbents returned to office.
Expecting the “State” to reform itself is proof of Einstein’s maxim of insanity: repeating the same action incessantly expecting a different result.
JustCaresAlot
Thje Republican party may have many things to answer for but Detroit is not one of them. That disaster is totally owned by the Democratic party under whose rule Detroit went in less than half a century from the wealthiest city on earth to a third world hellhole. There are few cases in history, excluding wars, earthquakes and volcanos, where a great city declined so rapidily and horribly.
Of course, deindustrialization – the shipping of our manufacturing base overseas for cheap labor – had nothing to do with it, right?
Exactly, Dienne, regarding both of your comments in this thread.
As lifelong Michigan resident Michael Moore put it yesterday on Twitter,
“What happened? The car factories closed. Why did they close? Because the Big 3 made cars people didn’t want. Who decided 2 build those cars?”
and
“Detroit — coming soon to your town”
Jim
Your fixation on Democratic mismanagement may be a bit misplaced. Far be it from me to EVER defend the Democrats (or the Republicans for that matter), but take a look at this article before you settle your mind: http://thinkprogress.org/economy/2013/08/02/2408081/detroit-pension-explainer/
“But the size of the pension shortfall is in dispute. Before Kevyn Orr was appointed emergency manager, the pensions were well funded. The police and firefighter fund had assets worth 99.9 percent of its liabilities in 2011, and the general retirement fund was 82.8 percent funded.”
This isn’t to say that any politician is off the hook. No doubt Detroit’s Gangster Mayor Kwame Kilpatrick was only a bad thing for the city. But I hope you are not asserting that if republicans had been in charge of Detroit for 60 years that industry would be flourishing, pensions would be flowing, and wages would be rising. I wouldn’t be surprised to learn that the defacto leaders of Detroit (the Big 3 Auto Makers) held very Republican/Even farther then right-wing views (Tom Monaghan from Ann Arbor/Dominoes Pizza immediately comes to mind). Apologies if I am wrongly inferring from your arguments. I wonder if there was ever a time in which the Big 3 fought very hard to stay in Detroit, but the corruption of the Democratic party simply made it impossible for them to operate there? I would suspect not, but I would be happy to be proven wrong.
Orr is a hack and his housing, etc is paid for by Snyder’s NERD fund. We have no idea who the donors are.
In the CNN piece from July that Sirota selectively quotes from, there is commentary from one of the nation’s most renowned experts on the local economic impact of sports franchises and stadiums. As he (and most other experts) usually say there isn’t much impact and that using taxpayer funds is a waste, I was surprised to see that he endorses the project and says it will result in a net direct injection of $1 billion into Detroit’s economy.
The taxpayer subsidies are coming in the form of bonds and cash from a downtown development organization that is primarily funded from a 1 mill property tax on the geographically small and overwhelmingly non-residential core of downtown Detroit. There’s quite a difference between 30-year bonds and having the actual cash on hand to operate schools and pay pensions. The stadium deal is meant to be paid off in time down the road while spurring development here and now. The hope is that the development quickly leads to increased revenue to pay those operational expenses and initiates a positive feedback loop.
The situation in Detroit is a mess, and the ability of the governor to seize control of cities in Michigan is abhorrent to me. However, I don’t think it’s entirely accurate to portray this as the rich stealing from the poor to build a sports stadium. And on the issue of unpaid pensions, this Times piece from three years ago makes for some really interesting reading: we are likely still only seeing the tip of the iceberg when it comes to municipal bankruptcies. http://www.nytimes.com/2010/12/23/business/23prichard.html
This is a verysimple and straightforward example of wealth redistribution: STEALING from THE POOR to fatten the RICH.
This is a very shameful time for ALL AMERICANS.
Sorry, but your explanation is complete; please consider adding:
Stealing from the middle class to fatten the rich.
Stealing from the newly created poor who just slipped from the middle class to fatten the rich.
Oops. . . I meant “incomplete” . . .
So the contract with public employees can be spat upon, torn up, declared null and void. This is disaster capitalism and the shock doctrine all rolled into one. How dare those public peons have defined benefit pensions, they must be punished.
From economist Dean Baker: “But in 21st century America, contracts and the rule of law apparently don’t mean anything, at least not if the people at the other end are ordinary workers. So, rather than inconvenience all those rich folks at the Chicago Board of Trade or other highly successful businesses with a larger tax bill, the plan is to stiff the firefighters, the schoolteachers, and the people who collected garbage for 30 years.
It may turn out to be the case that the rich and powerful can just rewrite the rules as they go along. But at least the people should know that theft is now in style when it’s their property at stake.”
http://www.michaelmoore.com/words/mike-friends-blog/pension-theft-class-war-goes-next-stage
Pension benefits are deferred compensation for work already performed, not merely contractual duties to be performed in the future. Failure to pay already earned benefits is theft, plain and simple.
I agree that pensions should be respected, but this ruling may not have as much significance as you think. The judge has indicated that he will cut pensions only if he can find no other option. If he does try to cut them it will be appealed, he overruled Michigan’s constitution so there are significant state/federal issues without any legal precedent-law school profs will love this case. Even if the ruling stands on appeal there may be limited applicability to other jurisdictions since Detroit’s declining population and tax base make generating additional revenue from taxes difficult.
One thing I have not seen discussed is the possibility of Michigan courts forcing the state to provide the money.
The biggest danger would be Congress changing bankruptcy laws.
http://www.forbes.com/sites/danielfisher/2013/12/04/detroit-bankruptcy-ruling-good-news-for-muni-bonds-insurers/
Since there are more bills to pay than money going in, who would the folks recommend not be paid?
Why is there not enough money going in?
Interesting question. I think part of the answer can be found in this short article: http://www.remappingdebate.org/article/detroit-consigned-unnecessarily-bleak-future?page=0,1
According to the comment thread at the Sirota article, there’s a fatal flaw in the logic of the article– the stadium is paid for by the property taxes of the local corporations, which money is not under the purview of the bankruptcy court.
The larger question, to me, is the fate of the US auto industry, obviously the elephant in the room. And what of TARP monies that bailed out GM & Chrysler & indirectly helped Ford? Those monies have been mostly paid back– why does none of that help the pensioners? (don’t know, just asking…)
Why didn’t the bailout funds that followed upon the subprime mortgage and credit default swap debacle go to the strapped homeowners who would then pay their mortgages up and maintain their equity? Same sort of question. And the answer is the same–because ordinary citizens do not have paid wind-up toys in congress. The oligarchs do.
My questions were:
1) The teachers had a binding contract with the state, not Detroit, so how can a judge determine it null and void?
2) What about the teachers in the rest of the state?
3) Doesn’t seem fair to penalize one subsection. Are they going after police and firemen, too?
4) This can’t be the final answer. Aren’t the unions going to appeal this decision?
We are living in difficult times with the potential for LOTS of litigation. The lawyers will be laughing, all the way to the bank.
Bankruptcy did not affect teachers, rather city employees. Snyder’s emergency manager law does affect teachers. Many of the affected communities have fired all teachers and gone charter. Detroit though has the EAA, and is now 50% charter. Long story. See what’s happening in Illinois with pensions right now for next challenge to “guaranteed” pensions. ALEC on a roll!
I’m horrified! What a mess. I feel sorry for the laid off teachers – I hope they’re getting unemployment. I also feel sorry for the charter school teachers – they have an impossible job. Are the parents happy? If not, I hope they’ll support the teachers.
As a retired teacher in NYS, which has a dedicated pension system funded at 125%, it’s hard to understand this sorry state of affairs in other states. Even so, we are scared. Take nothing for granted!
FYI: I just read an article in the Buffalo News that almost 500 students have left area Charter Schools to come to the Buffalo Public Schools. (Even though our schools are “failing”). And it’s only December. Where do they go in Detroit if the charter schools fail the students?
To Ellen from Ellen….no one will get unemployment insurance in a few weeks. We still have no Federal Budget, so that means starting Jan. 1, 2014, there is not only no unemployment insurance (for which we all pay), but no food stamps, and other necessary help for the unemployed. And the weather is fiercel cold. In LA last night it went down to 20 degrees and our LA homeless number over 57,000 people who slept, or died, on the streets last night. Today is even colder and rain too is predicted.
And this is American Exceptionalism!
We will soon be like India where they sent the trucks each day to pick up those who die in the the streets. So let’s all thank and bow down to ALEC for promulgating this effective way to deal with American poverty.
Ellen Lubic
Ellen, it’s like pulling the rug out from under someone than beating them up after they’ve fallen. I can’t believe this has happened. It doesn’t sound like America. Where are there civic organizations? The churches? Why aren’t people across the country doing something to help? It’s like a National Disaster.
In Buffalo, they provide extra shelters for the homeless if the temperatures drop. We don’t leave them out to die. We also have numerous soup kitchens which provide lunch. My woman’s group (plus many others) provide 100 sandwiches once a month. There are also food banks that the churches stock. Many restaurants donate food as well. In Buffalo we make sure our poor are fed, clothed, and have an opportunity for shelter. NYS also has programs in place.
Not to have unemployment insurance or even food stamps available after being laid off, is beyond belief. Especially since their salaries and taxes have been paying for these programs. There should be a law against raiding, what should be, dedicated funds. In the business world that would be called embezzlement.
I am so sorry. The story keeps getting worse.
To http://jhaines6.wordpress.com/2013/12/03/patricia-a-reader-shares-that-detroit-is-not-bankrupt-heres-why/#comment-211873
By Walter Burien:
Per Detroit, pay special attention to the following: If you take a look at why they say they are broke, what they are doing is extending the pension and other liabilities out 30-years as if a liability to be paid in full today. They funnel off much of their “annual” budgetary funds to meet 100% funding today and is why the buzz word of “in debt” and “pensions short”. ** They only project out their income 1-year and project liabilities out 30.
And they do so to create the largest base of investment funds on all levels at their disposal.
Every investment fund large or small is a “Power Base”. Where those moneys are invested determines who’s real-estate; corporation’s venture; or cash loans are funneled into, domestic “or” internationally. “Collectively” between all local and federal, they are sitting on 110-T + as of 2007. http://cafr1.com/wealth.html
Why are states not held to the same ARC funding obligation for pensions that private organizations are – and – why are they not insured the same way that private organizations are?
In many places, by taking money out of people’s paychecks for pensions, and then NOT making those payments, how is this anything other than theft? How can it be called a contract when the workers PAID the CITY – this is not just about their contract to work – it’s about the money they gave to the city in the good faith that it was being put toward their benefits where it was then squandered?
This is very much the case for NJ starting with Whitman, and several other municipalities.
The other thing this case doesn’t address – and why it’s a very poor predictor for California, is that a state pension fund is very different from a municipal pension fund.
The teachers were not harmed in this debacle because their pensions were with the state. Calpers is the pension fund for the state of California. It is not at all clear that a state can declare bankruptcy (I don’t think a state has ever tried…) – and if it did – it would mean both balanced and unbalanced municipalities would have to suffer heavily.
Whereas Detroit is indeed the largest bankruptcy yet, the implications of a bankruptcy on the scale of an entire state is hard to contemplate nor is there a place approaching that.
What we do need, is for our politicians to grow a spine and force all municipalities and states to pay their ARC, which WILL make them feel the pain of their pension promises today, and, puts the pensioners in a much better place to recoup what they invested.
A pension should at LEAST have the security of a bank in the principal – it is not right that pensioners could walk away with 15% of what they put into the city and was stolen from them. These other creditors (bond holders) may have put money into the city, but their claims include interest and not just the principal and were never interpreted to be a financial gamble by those who were expecting the city to hold that trust.
Pensioners are unique in that in order to become one, you have to dedicate a lot of time, work, and money to your city. Other bond holders put in money in hopes of getting more back. Holding the pensioner to the same yardsticks as the bondholder simply because the city dipped into its pensions and there are more of them and it was readily accessible interest free cash, does not mean they should suffer the same fate.
From what I understand, the very essence of bankruptcy is that the bankruptcy trumps all contractual, unsecured debt EXCEPT federal tax liens and federal student loan debt. So the reason this is a bummer is because of the bankruptcy—not that the pension contracts were not given exception. My understanding is that no judge would separate out pension contracts from the rest because of what bankruptcy directs in the law.
I am not minimizing the sadness of Detroit’s fate, but thank goodness there is social security for the retired workers. And Medicaid will be fulfilling its purpose.
Medicare, rather
A high percent of Detroit’s retirees (police and fire) are NOT in the social security system, so these unexpected cuts are especially pernicious.
Why aren’t they?
It’s not just Detroit. Many government municipalities have workers not in SS system. There are 44% not in SS system in Detroit. Also all retirees had health insurance canceled, and are being given $125 a month to buy their own health insurance in the market. Even people hurt on the job.
JB,
many of us work for districts that opted out of SS decades ago.
No SS – bad decision. I’m collecting my pension and when I reach 62 I plan on getting the Social Security I paid into for all those years.
You may save a few bucks at the time, but it isn’t worth being old and destitute. I hope they all have successful children.
This is what it looks like when the ruling class riots and begins looting everything in sight.
This is what a plutocracy looks like. I’m wondering how much the judge’s salary is and what his pension will be.
Sad and outrageous as it is, I fear there won’t be sympathy from much of the public who saw their pensions disappear in private industries. Same crooks, but new target. They go where the money is, just like Jesse and his gang…
A little girl, mistletoe, and destroying capitalism. http://jonrappoport.wordpress.com/2013/12/05/a-little-girl-mistletoe-and-destroying-capitalism/
One wonders: What is the point of a written Constitution. And, as mentioned subsidies for the big corporations plus the carbon corporations which poison our planet do not even pay income tax and sometimes even get money back because of tax write offs.
Makes one proud of our politicians does it not? I wonder why Congressional approval rate is now 9%.
How do ya’ll account for the relative success of cities in places like Texas versus Michigan? I mean you’d think with the business-friendly climate in Texas all their cities would have gone bankrupt long ago.
To the folks above who asked about the bond holders, and the order of payment to creditors, if any, here is the answer from a news report.
Detroit, Michigan, Downtown
A federal bankruptcy judge on Tuesday ruled that Detroit could move ahead with the largest municipal bankruptcy in U.S. history, providing the city with protection from its creditors and allowing Detroit to begin preparing a plan for restructuring an estimated $18 billion in debts.
U.S. Bankruptcy Judge Steven Rhodes issued his ruling after hearing about 10 days of testimony spread out over several weeks.
“This opportunity gives us a chance to move forward,” Detroit Mayor Dave Bing said at a press conference following the ruling.
Michigan officials, led by Detroit’s state-appointed emergency manager Kevyn Orr and Governor Rick Snyder, have argued that bankruptcy protection is needed in order to stabilize the city’s finances while a restructuring plan is developed.
Orr has said providing funding for maintaining essential city services – public safety and infrastructure maintenance — is his top priority. Paying off creditors comes next. According to some reports, about 40% of the city’s streetlights do not work and thousands of abandoned building scar the city’s landscape.
At a press conference Orr said the ruling will allow Detroit to “move forward” by freeing up money to pay bills that help it run, rather than paying down its “crushing debt burden,” which Orr said amounted to about 40 cents on every dollar spent by the city.
“We have to relieve the city of that burden,” Orr said, “that would be the clean slate.”
Public employee unions, bond holders and other creditors oppose bankruptcy protection, fearing the pension cuts and losses on investments that are likely to be a critical part of any restructuring plan.
Had the judge ruled against bankruptcy, municipal unions could have revived lawsuits against the city seeking to block pension cuts and bond holders could have initiated lawsuits seeking to seize city property
Ultimately, these laid off teachers should find a job in another state. Las Vegas is hiring.
All the financial garbage and debt liabilities in Detroit give me a headache. As I said, the lawyers will fight it out in court and it looks like the current judge is trying to sort things out to the best of his ability.
In the meantime – pick up and move somewhere else. If you are living in a desert that is sucking you dry, move to where there’s water. If Detroit can default, so can you.
And retirees with reduced pensions, move to Buffalo. You already know cold and I’m sure you’ve seen snow. Even if you can’t find work, we have a decent welfare plan and housing allowance. We also have a bunch of Walmarts that might need greeters. And we’ve got chicken wings.
Detroit – yes, you make Buffalo look like the promised land.
Bankruptcy or Bunko? The Right’s War on Detroit’s Public Pensioners
Douglas Jamiel, Truthout: The purposeful, ideologically driven assault on democratic government orchestrated by ALEC and forces in Michigan’s Statehouse has starved already-ailing Detroit of revenues. Through the emergency financial manager, they will continue to redistribute public assets to corporate pockets.
Read the Article