Something
needs to be made clear about the Detroit bankruptcy:
The
chapter 9 filing is not the fault of the city's pensioners nor is it
the fault of the unions representing Detroit's worker bees.. Detroit
has not fallen because 'greedy pensioners' are sucking up the money
as America's wingnuts and their allies scream. IAccording to news
reports the average pension in Detroit is some $19000 per year and
the average social security benefit is about $14000 per year.
There
are lots of people and institutions who are indeed responsible for
the disaster that is Detroit but it is not the fault of the unions
and it is not the fault of the pensioners. To say otherwise is simply
not true and another example of lies being told in the GOP war
against workers and poor people. These misstatements whether
intentional or not are just examples of the class war being waged
against people by other people working for vultures feathering their
own nests.
The
public employee unions represented the workers toiling for the City
and its inhabitants negotiated labor contracts with the City. No
one overpowered the City or otherwise took advantage of the City
regarding pay, benefits and working conditions. These contracts were
approved by both the workers and the City fathers through the City's
legislative body elected by the citizens of the City. The result is
there was created a contract binding both sides: the workers worked
and the City paid a fair wage and agreed to pay money into the
pension funds created by the contract. That should have been the end
of the matter but it wasn't.
Several
things coincided in time over the last decade or so to cause this
bankruptcy:
The
city fathers decided for whatever reason that they were not going to
fund their portion of payments into the pension fund. These are
called by the euphemistic term “unfunded pension liabilities”. In
plain English the City government breached the labor contract.
The
tax base of the City eroded because of a combination of things. Motor
City was dependent upon the auto industry and the auto industry
demanded and received special rights in the form of tax benefits
which decreased significantly the funds available to the City to run
the local government and to fund the pensions. The American auto
industry began to falter due to competition from foreign auto
industries in Europe and in Asia. The auto manufacturers and other
industries dependent on the auto industry such as parts manufacturers
left the City for other places where they could negotiate better
deals for themselves and their equity holders and basically abandoned
the City and abandoned their plants in situ to become
Detroit's problem. As a result taxes were not being paid by the
industry to the City. None of this of course happened overnight but
these results accumulated over time. The net result was a decrease in
the City's cash flow. Cash flow became a trickle.
The
City needed to continue operating and to do that it had to borrow
money and those loans were obtained on the strength of the tax value
of the real property located in the City. The City borrowed this
money from Wall Street banks and banking institutions generally
referred to now as Banksters. The obligation to repay these loans
were secured by tax levies and the consequent revenue stream now
flowing very slowly. The value of real estate in Detroit plummeted
and the tax receipts were no longer sufficient to support the City
neither in its day to day operations, nor it obligation to maintain
and repair or replace infrastructure nor its obligations to repay the
Wall Street banks. The City's credit rating plummeted as well and
for for the simple reason that the lenders were nervous and feared
they would end up holding the bag. This started a ball rolling
downhill and the City struggled to refinance its debt and meanwhile
the City stopped making contributions to the pensions. Detroit made a
habit of robbing Peter to pay Paul. The debt was refinanced and
interest payments deferred to allow the City breathing room. The
refinance documents tied the new obligations of the City to the
City's credit rating as determined by the banking industry's allies
in the credit rating industry. The banksters and the credit rating
industry were and still are linked at the hip. Under the deal signed
on to by Detroit and its bankster creditors if the City's credit
rating decreased further which it did all bets were off and the
deferred interest payments became due and payable not over a period
twenty years but now. Due dates were accelerated just banks do with
individual credit card users
The
state of Michigan which had an obligation to pay to Detroit some
forty seven million dollars annually for some mandated activities
failed to make those payments and thereupon reduced the City's cash
flow even more. Everyone it seemed had a straw in Detroit's revenue
stream with an obvious result.
Michigan
has a law that is pretty much unique to Michigan. It is called the
Emergency Manager Law and is codified as Public Act 4 enacted and
signed into law in its present form by GOP governor Rick Snyder. It
allows the governor of the state to impose upon distressed \local
governments and school districts a super bureaucrat called an
Emergency Manager who after appointment runs all of the affairs of
the city and converts the elected government into an a dictatorial
government run by that manager. That manager reports to the governor
and becomes in effect both the City's legislature and the City's
executive. The elected government is magically turned into a group of
political eunuchs with no legal authority to do the jobs that the
citizenry elected them to do. It effectively overturns elections. The
emergency manager is responsible only to the governor and are
analogous to viceroys who were responsible only to the kings who
appointed and anointed them. It was the Emergency Manager who
initiated the bankruptcy that is now threatening the paltry pensions
of Detroit's retired workers.
To
say that the City's pensioners or the Union representing City workers
are responsible for this bankruptcy is total unmitigated nonsense.
The fault lies with Detroit's city council and other elected
officials, the state legislature which defunded Detroit, the greed
exhibited by Wall Street Banksters, the governor, the emergency
manager and the credit reporting firms hired by the banksters. The
destruction of the domestic automobile industry bears some
responsibility. Currently it is the plan that Detroit's retirees are
going to make up the shortfall by decreases in the payments the
retired workers will receive. The banksters as is the usual case will
get paid in full on he backs of poor and middle class people.
Remember
that un-restrained capitalism is an upward wealth redistribution
scheme in which the rich get richer and the poor become poorer and
middle class destroyed. That my friends is what is going in Detroit.
If there is a conspiracy it must be laid at the feet of the financial
industry.
