A plan to cut pension benefits previously thought sacrosanct for 30,000 workers and retirees may tip Detroit into bankruptcy as Emergency Manager Kevyn Orr negotiates over $17 billion in debt and obligations.
Getting dispassionate bondholders to take partial payment will be easier than wresting retirement cuts from unions, said Ken Schneider, a Detroit bankruptcy lawyer. He said Orr’s June 20 meeting with unions and creditors meant to frame the talks may presage the largest U.S. municipal bankruptcy.
Detroit’s Recovery Plan Dips Into Pensions to Keep City Afloat Bill Pugliano/Getty Images
People protest before the start of a public meeting with Detroit Emergency Manager Kevyn Orr, not seen, at Wayne State University Law School in Detroit.
People protest before the start of a public meeting with Detroit Emergency Manager Kevyn Orr, not seen, at Wayne State University Law School in Detroit. Photographer: Bill Pugliano/Getty Images
“It’s one thing for union leaders to say, ‘This was forced on us by a court,’ and something else to say, ‘We agreed to this,’” Schneider said in a telephone interview. “That’s a harder sell to your members.”
Orr’s plan will test retirees’ contention that Michigan’s constitution protects vested pension benefits. No such shield exists, the state-appointed manager’s advisers said June 14 when they unveiled his plan to restructure Michigan’s largest city, a former auto-manufacturing powerhouse that lost one-quarter of its population since 2000. Orr has said that if he doesn’t get what he wants, Chapter 9 bankruptcy would be a last resort.
Detroit missed a $39.7 million payment on debt issued to bolster its pensions that was due June 14, its first failure to repay bondholders. The city has about $1.5 billion of such obligations, which Fitch Ratings cut yesterday to D, its lowest credit grade.
Notice how anti-American Republican Teabaggers like registered .democrat are? They have nothing but a lousy life and a computer to sit and spread their misery with and wish that everyone would end up just like them so that they'll have nothing to look forward to but another day of posting.
But with that being said, they seem to forget that a person never really loses their pension. It is shifted over to the PBGC where (taxpayers) then have to foot the retirees retirement and then it's as good as gold.
Salaries and pensions were contracted by unions that elected gov't reps to pass such benefits.
As the old saying goes, "When the hogs feeding at the trough can tell the farmer what kind of slop to feed, we are in big trouble". People we are in big trouble.