Detroit to renege on pensions? CA next?
June 16, 2013
By John Seiler
California’s finances are overflowing today. The Legislature just passed a $96.3 billion budget, although Gov. Jerry Brown still will have its say. It reminds me of the Detroit of my youth in the 1960s, called the “Arsenal of Democracy” because it built the guns, bombs and planes that crushed Hitler and Tojo in WWII. Not just rich people lived well, but the middle class was solid. Millions, black and white, flowed in from the American South and Europe to work high-wage factory jobs.
In an omen for California, Detroit just was declared insolvent by Emergency Manager Kevyn Orr, who said, “We are tapped out.” Bankruptcy is expected in 30 days.
As with California, pensions are a big part of the problem:
“Orr recognizes the state constitution protects retiree pensions but wants to negotiate anyway – or possibly change the law.
“ ‘We might need legislative relief,’ he said. ‘This is the culmination of years and years of kicking the can down the road and borrowing from wherever they could.”
“Instead of the current health-care system, retirees would be offered a new program that relies heavily on Obamacare and Medicare, Orr said.”
Effectively, Orr is saying the city could default on its pensions, but might have to get the Legislature to change the state constitution. Given that the state doesn’t want to pick up the tab, that well could happen.
As to changing Detroit’s medical system for retirees, that’s only fair. The unions have been big supporters of Obama and Obamacare. So their union retirees, instead of enjoying gold-plated retiree health care, should get the same socialist Obamacare and Medicare as the rest of us.
Orr’s attitude toward the Michigan Constitution is important, because the California Constitution supposedly has a similar clause protecting pensions. But if there’s no money, then that will just have to be changed. People simply will not put up with half or more of their local taxes going to pensioners who no longer work for the people, thus mandating massive cuts in city services.
If government just sends out pensions checks, why even have a government at all?
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RE–Orr recognizes the state constitution protects retiree pensions but wants to negotiate anyway – or possibly change the law.
“ ‘We might need legislative relief,’ he said. ‘This is the culmination of years and years of kicking the can down the road and borrowing from wherever they could.”
“Instead of the current health-care system, retirees would be offered a new program that relies heavily on Obamacare and Medicare, Orr said.”
Sounds like the ‘heart of the matter” now. If it can be made into law–it can be revisited, no???
I hope CA is watching closely as contrary to its bragging–CA is really broke.
The RAGWUS has spawned a bevey of fools, with a few posting their lies on this blog.
California will end in a very poor manner because of the greed of public parasites. 🙂
Donkey as usual boring……Jerry Brown says California is an upswing….so says Perez and Steinberg…..believe Donkey…believe.
I doubt the MI or CA laws (or Constitution) need be changed. In a Bankruptcy, it’s become quite clear that Federal Bankruptcy laws supersede State laws and Constitutional guarantees. The Judge can simply approve a Plan that reduces these pensions, and if the City won’t come up with such a Plan, then the Judge won’t them out of Bankruptcy.
Even if the Legislature was able to refer a measure to propose a constitutional amendment, that measure could not be applied retroactively, impairing existing contractual relationships.
In any event, if one set of contracts is on the table, all sets of contracts, including corporate contracts and bonded debt will be on the table. Also, note that Detroit has significant assets that Orr wants to keep . . . not happening.
Like the Vallejo bankruptcy, Stockton’s bankruptcy will trim not a penny of its public pension debts:
“Under the deal with some 1,100 retired employees – Stockton’s largest group of unsecured creditors – the city will pay a lump sum of $5.1 million to reflect the loss of their health benefits in retirement and leave their current pension benefits intact.”
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20130613/A_NEWS/306130321
The camels’ back is getting closer and closer to breaking!
“GREED” has consequence.
And so does “Ignorance”.
Ignorance is what the RAGWUS is all about!! This is going to end rather badly for the feeders!! 🙂
” Mo Town ” Is A Sewer !!! This Situation has been brought to ” Mo Town ” by Thieving DemoRats and Criminal Unions !!! It’s Pay Back Time; Baby !!!