Share on Google Plus Share on Twitter
  5
Share on Facebook
  14
Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 19 Shares     
Printer Friendly Page Save As Favorite View Favorites View Article Stats
4 comments

OpEdNews Op Eds

A Federal Bailout For Detroit's Pensions?

By (about the author)     Permalink       (Page 2 of 3 pages)
Related Topic(s): ; ; ; ; , Add Tags Add to My Group(s)

View Ratings | Rate It

Headlined to H3 7/23/13

opednews.com

Gutting the city's employee pension plan would be a similar kind of ritual sacrifice, designed to break the public's belief in the social contract -- and to set a national precedent. Detroit's unusually severe financial circumstances make that seem more necessary than it is.

Deep cuts to Detroit's employee pensions, together with the public sale of its property and the privatization of its lucrative franchises, would serve an anti-government political agenda. Once this process has been imposed on the first major American city, the next one will be much easier.

The fiftieth city to be gutted will be a cakewalk.

Banks, not city workers, have misbehaved

Retired Detroit employees didn't cause the financial crisis of 2008, which hit the pension plan's investment fund hard. Yet they're being handled as if they were morally equivalent to the Wall Street creditors who did. As the New York Times reports, the unelected city manager's plan would "treat bondholders the same as retirees" and ask them both to sacrifice.

Many of those bondholders are banks and other investment groups. And many of their investments are insured, which could largely protect them from the impact of a default. But most retirees need their pensions to live on.

Bankers are the city's least deserving creditors. They deceived and bilked Detroit every time the city invested money or conducted a municipal bond offering. In fact, bankers deceived every city, through the LIBOR scandal.

There's also extensive evidence that bankers manipulating many bond offerings to benefit themselves at the benefits of the cities and states that were their erstwhile clients. Banks like JPMorgan Chase are hurting our communities by manipulating energy prices, while others like Goldman Sachs are hurting them by manipulating the cost of aluminum.

City employees did none of those things. And, as Dean Baker points out, Goldman's profits are on track to exceed Detroit's entire pension liability in less than a year. And yet our nation's fiscal debate is focused on employee pensions, not the excessive profits of lawbreaking institutions.

City employees kept their part of the bargain

Detroit's employees kept their part of the bargain. In return for their promised pensions some worked at very dangerous jobs, including jobs as police officers and firefighters. Again and again in contract negotiations, city workers agreed to accept lower wages in return for these pensions. And they put in their years on the job, often at backbreaking jobs.

There is no moral justification for treating retired employees the same way that Detroit's Wall Street creditors are being treated. None.

These pensions are good for Detroit's economy

The average Detroit city pension is slightly less than $19,000 per year. For police and firefighters, pensions are their only source of retirement income. (They don't have Social Security.)

Seniors typically depend on their retirement income for living expenses. That means most of this money is immediately recirculated back into the Detroit economy. It has an immediate and very real stimulus effect for Detroit. And we agree with Rob Wile: Detroit, like other troubled cities, can come back, if we're willing to believe in it and invest in it.

Pension cuts could trigger a death spiral

Next Page  1  |  2  |  3

 

http://www.huffingtonpost.com/rj-eskow/the-dumbest-bipartisa

Host of 'The Breakdown,' Writer, and Senior Fellow, Campaign for America's Future
Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

How to Fix the Fed: Dismiss Dimon, Boot the Bankers, and Can the Corporations

The Top 12 Political Fallacies of 2012

Pawn: The Real George Zimmerman Story

What America Would Look Like If Libertarians Got Their Way

"F" The Bureaucracy! The White House Can Help Homeowners Right Now

The Price of Evil at JPMorgan Chase

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
3 people are discussing this page, with 4 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)

Why should all Americans bail out with our tax dol... by Bill Johnson on Tuesday, Jul 23, 2013 at 8:12:08 PM
How much that city contributed to the war effort i... by BFalcon on Wednesday, Jul 24, 2013 at 5:49:24 PM
What would Jesus do? The people who created the me... by molly cruz on Wednesday, Jul 24, 2013 at 10:57:27 PM
As human technological inventiveness subsumes mech... by molly cruz on Wednesday, Jul 24, 2013 at 10:53:36 PM