Detroit Bankruptcy and Pensions


I just posted a piece Katherine Sciacchitano wrote for us about pensions and Detroit’s bankruptcy, The Pension-Busters’ Playbook. We asked Katherine to write an addendum to her excellent cover story for our annual labor issue last year, Making Labor Pay, to be included in the new edition of our book Real World Banking and Finance, which is coming out shortly. But the addendum turned out to be a stand-alone article, and very timely (unfortunately, since the  recent ruling allowing Detroit’s bankruptcy to go forward is really bad news).

Besides Katherine’s piece, here are two links about the ruling: one solid, the other kind of ridiculous:

  • John Nichols of The Nation, Detroit Bankruptcy Bankrupts Democracy, which makes the essential point (among others) that the city of Detroit did not file for bankruptcy–the emergency manager did: “As retiring Detroit City Council member JoAnn Watson reminds us: The city of Detroit did not file for municipal bankruptcy. ‘The emergency manager (EM) filed the bankruptcy petition, and he is an appointee of the governor of the state of Michigan based on Act 436—a law formerly known as PA 4—which was repealed by 2.3 million Michigan citizens statewide on Nov. 6, 2012,’ explains Watson. ‘The EM is only accountable to the governor, the EM only answers to the governor, and the EM can only be ‘checked and balanced’ by the governor.'”
  • The kind of ridiculous comes from Media Matters for Democracy, in a blog post that also went out on their email newsletter and Twitter feed: Knowing, Deliberate Lies, “Detroit” Bankruptcy Edition. They make a big deal of the fact that Fox News and other right-wing outlets are playing “gotcha” with Obama, because in the last presidential campaign, Obama criticized Romney for having said in a NYT op-ed in 2008 that “Detroit” (meaning the auto industry) should be allowed to go bankrupt. So Fox now gets to say that Obama is a hypocrite because he said in 2012 that Detroit should not be allowed to go bankrupt.  And Media Matters for Democracy gets to say that Fox is misunderstanding what “Detroit” refers to.  But the supposedly “progressive” organization Media Matters for Democracy can’t bring itself to criticize Obama for, um, letting Detroit go bankrupt. I guess for some people and groups, “progressive” means pro-Dems and pro-Obama.

Ok, that’s it for now.

–Chris Sturr

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