Sunday, July 21, 2013
It's all about the pensions
The city of Detroit is trying to declare bankruptcy. Despite the pious mothings, the Republicans currently driving Michigan into the ground, could not care less if Detroit faded back to the fur trading outpost of its beginnings. The municipality and other governmental organizations are the last bastion of defined benefit pensions for workers. What the REpuiblican stooges of the Oligarchs want is to end their pension obligations and get their hands on the vast pools of money stored in them for their members retirements.
The Detroit battle comes after a number of governors have gone to war with unions to limit public employees' collective bargaining rights or to require government workers to pay more for healthcare and pensions to ease state fiscal woes.This pension hunting by the 1% is doubly evil because many groups of workers covered by a public pension did so by forgoing their rights to SOcial Security and Medicare. And if any of the legal wrangling reaches the Supreme Court, we know they will rule in favor of the big swinging dicks and their corporations that want to loot the public pension funds as they did to the private funds.
In fiscal 2010, the gap nationwide between states' assets and their obligations for public-sector retirement benefits was $1.38 trillion, up nearly 9 percent from 2009, according to the most recent figures available from the Pew Charitable Trusts. Of that, $757 billion was for pension promises, and $627 billion was for retiree health care.
In Detroit the underfunded pension liability has been estimated to be $3.5 billion.
Experts say the Detroit battle could ultimately reach the U.S. Supreme Court.
"Detroit could be a step in destroying public pensions, though the law says you can't cut benefits," said John Logan, director of the labor studies program at San Francisco State University. "If they a find a way around that, it opens Pandora's box, and the battle on whether to dump bank loans or dump pensions may go all the way to the Supreme Court."
In California, CalPERS contends that its retirement system is "an arm of the state ... different than other creditors." Still, CalPERS chief counsel Peter Mixon expressed concern in a recent interview that municipalities could "seize on a 'bankruptcy solution' if they felt like the state laws ... could be avoided."
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