On 18 July, a Chapter 9 bankruptcy petition was filed for the city of Detroit, Michigan – the largest city ever to find itself in such a predicament. (Chapter 9 is a special kind of bankruptcy reserved only for municipalities. You don't need to know more than that for this post – I won't be getting into the legal weeds.)
As Huffington Post and other news organizations reported,
”...pensions and health benefits for the city's 9,500 current employees and 21,000 retired workers account for $9.2 billion of the city's total debt [of] $18 billion. The city also owes money on more $1 billion in bonds it took out to pay into its pension when it could not afford the money.”
This is not the kind of news story I usually pay close attention to. I don't live in Detroit and it's bound to get – well, weedy (see first paragraph). But even a cursory reading raised one, big, fat, red flag for me:
What will happen to the pensions of Detroit's current and future retirees?
Here is how it is being answered:
”Kevyn D. Orr, the city’s emergency manager, has called for 'significant cuts' to the pensions of current retirees...”
But you knew that was coming, didn't you? Even if you have been following the news about Detroit's bankruptcy only vaguely, you know certain people want to fix every fiscal difficulty including Detroit on the backs of the poor and old people. It's always that way.
As to amounts of “significant cuts,” Steve Rattner in The New York Times tells a terrifying story:
“The city has suggested that it cut [pensions and health care] by 90 percent. Although retirees don’t have a lot of legal rights in the bankruptcy process, it is difficult to imagine — on either a human or a political level — an exit from bankruptcy that would include reductions of this magnitude.”
Talk about understatement. And remember, too, these pensions are all the retired police, firefighters and others of Detroit have – they don't get Social Security - and the average annual pension for city workers in Detroit is under $19,000.
So the city is suggesting that people currently living on $19,000 a year, do so in the future on $1900 a year. This is cruelty as extreme as I have ever heard. From another Times story:
“Retired city workers, police officers and 911 operators said in interviews that the promise of reliable retirement income had helped draw them to work for the City of Detroit in the first place, even if they sometimes had to accept smaller salaries or work nights or weekends.
“'Does Detroit have a problem?' asked William Shine, 76, a retired police sergeant. 'Absolutely. Did I create it? I don’t think so. They made me some promises, and I made them some promises. I kept my promises. They’re not going to keep theirs.'”
Cast your mind back to 2008, following the horrendous crash of our entire economy. Recall, if you will, that in the city of Detroit, the federal government bailed out Chrysler and General Motors for billions and billions of dollars and today, sales are solid. The companies are back on the feet.
Yet, yesterday afternoon following the president's speech in Illinois, a White House spokesperson apparently dismissed the idea of a federal bailout for retirees in Detroit. The difficulties there, the man said, are between that city and its creditors.
Really? If it was important to save two car companies, it is vital to help workers whose retired compensation is modest and who had nothing to do with Detroit's failure. It would be morally reprehensible to not bail out the city retirees.
So you don't live in Detroit and you think this has nothing to do with you. Think again. The forces that want to take 90 percent of Detroit retirees income are gunning for your Social Security too.
Richard Eskow of Campaign for America's Future lays it out, saying the suggestion for pension cuts “has all the markings of larger game.”
”The heavy doses of symbolism in the sell-offs and pension cuts serve a number of purposes,” he continues, “and one of the biggest is to reinforce the idea that the United States can no longer afford the financial security of its middle class.
“Next stop, Social Security. The same myths used to push pension fear – changing demographics and worker-to-retiree ratios, 'greedy geezers' – will have been subliminally 'verified' by these pension cuts.
“That opens a door that should remain closed, for sound economic reasons as well as ones of basic fairness.”
Which is why you and I need to pay attention to what is happening with pensions in Detroit and do what we can to resist those unconscionable cuts. We are all at risk.
At The Elder Storytelling Place today, Marcy Belson: The First Camping Trip