By William Boardman -- Reader Supported News
"Through its provisions, Public Act 436 establishes a new form of local government, previously unknown within the United States or the State of Michigan, where the people within local municipalities may be governed by an unelected official who establishes local law by decree."
-- Complaint for Injunctive Relief, Phillips et al. v. Snyder, U.S. District Court for Eastern Michigan
"We are a country of law.... The government cannot just abrogate contracts."
-- Obama economic adviser Larry Summers, quoted by Matt Taibbi discussing the sanctity of contracts in "Looting the Pension Funds"
"Pension benefits are a contractual right and are not entitled to any heightened protection in a municipal bankruptcy."
-- U.S. Bankruptcy Court Judge Steven Rhodes speaking from the Bench on December 3, and contravening the Michigan Constitution while granting Detroit federal bankruptcy protection
Detroit's recent bankruptcy eligibility was achieved in part by the Michigan governor defying a court order, the Detroit czar defying a court order, and a federal bankruptcy court telling other federal and state courts that their orders and the cases before them challenging the constitutionality of state law and state actions simply don't matter.
Since December 3, the dominant media narrative following Judge Steven Rhodes's bankruptcy court ruling suggests, in over-simplified form, that Detroit's one man government can dispose of most of the city's estimated $18 billion debt and long term liabilities by defaulting on pension contracts and selling off its art collection. This is essentially false as an overview, and false in most of its details.
It would be more accurate to say that Detroit is the victim dishonest politicians colluding with banks and other corporate predators, and we are now witnessing the late stages of an extended municipal lynching that is the natural expression of contemporary American capitalism. That this is essentially true as an overview, and in most of its details, is supported in the question and answer format that follows.
But first, here's the sanitized frame for the consensus narrative reliably delivered by American pack journalism -- in this instance, the New York Times of December 4, under the headline "Detroit Ruling Lifts A Shield on Pensions" (duplicated verbatim in the Boston Globe and Houston Chronicle):
"In a ruling that could reverberate far beyond Detroit, a federal judge held on Tuesday that this battered city could formally enter bankruptcy and asserted that Detroit's obligation to pay pensions in full was not inviolable."
You would not know from coverage by the Times and most other outlets that this and other issues involving Detroit are under widespread court challenge, or that the current situation has been created by officials taking actions that would, in ordinary circumstances, be considered contempt of court.
So what's wrong with the Times' summary here?
Speculation is hard to criticize, since any ruling "could reverberate far beyond Detroit," but most probably won't. Another, equally valid speculation here would be that the judge's ruling raises the stakes in an already bitter power struggle over pensions, ignores state litigation that would bar the bankruptcy filing, and supports the one-man rule in Detroit, all of which portend a long legal battle unlikely to be resolved until it reaches the United States Supreme Court.
The Times' framing implies a false dichotomy, a polarized fight between the city and the pension funds. That is only one axis in a much more complicated struggle in which other powerful players include the Republican governor, a Republican-dominated state legislature, an unelected city czar with near-dictatorial power, and major banks (at least one of which was a client of the czar's law firm). The city (insofar as that means the elected mayor and city council), can only watch from the sidelines as others compete to pick it clean. Under state law, the Mayor and City Council lost their salaries upon appointment of the city czar (he later reinstates their pay in full in his first official act).