Detroit Bankruptcy Sets Stage for National Assault on Public-sector Pensions
By Jerry White
July 22, 2013
Last week’s bankruptcy filing by the city of Detroit is being used as a test case for a much wider assault on the pensions and health benefits of millions of state and municipal employees around the country.
The city’s emergency manager, Kevyn Orr, Michigan’s Republican governor, Rick Snyder, and Detroit’s Democratic mayor, David Bing, made this clear during appearances on nationally televised news talk shows Sunday.
On Fox News, Orr acknowledged that the city’s 31,000 current and retired city workers would see “some adjustments” to their benefits, declaring that federal bankruptcy laws would supersede Michigan’s constitutional protections against pension reductions.
Orr is pushing for brutal cuts in pensions and benefits. He wants to pay as little as 10 cents on every dollar of the $3.5 billion in unfunded pension obligations. He also wants to freeze all future payments into the pension fund and dump retirees onto Medicare or private medical insurance exchanges under the Obama administration’s health care scheme.
Orr—whose former bankruptcy law firm, Jones Day, represents many of the Wall Street banks holding the city’s debt—insisted Detroit’s 700,000 residents had to pay for the financial crisis, which he cynically blamed on an “addiction to debt.”
Asked what lessons other cities should take from Detroit’s experience, the financial czar said, “Delay doesn’t produce positive outcomes. Whatever the problems are, deal with them. Have the wherewithal and political will to deal with them—that’s exactly what we are doing.”