Detroit's bankruptcy: An object lesson
By The Tribune-Review
Published: Sunday, Dec. 8, 2013, 9:00 p.m.
With a federal bankruptcy judge green-lighting Detroit's Chapter 9 bankruptcy filing, similarly strapped cities nationwide will get an object lesson in the effects of government bowing repeatedly to organized labor's demands.
The judge also ruled that the pensions of Detroit's 23,000 retirees won't be protected in the bankruptcy process, finding that federal law trumps the Michigan Constitution's express protection for them. Yet he also said those pensions — which carry $3.5 billion in unfunded liabilities among Detroit's $18 billion total debt — will be treated just like other unsecured debt, and the court will carefully consider any reduction in pension checks, according to The New York Times.
Union demands' pernicious effects on Detroit's finances have been magnified by decades of essentially one-party municipal government — by Democrats far more beholden to organized labor than to the taxpayers who elected them. “Detroit officials have ... made a habit of convincing unions to accept pension sweeteners — shorter terms of employment required, more generous multipliers, or a ‘13th check,' essentially an annual bonus — rather than pay increases,” the Detroit Free Press editorialized in July.
Such irresponsible, taxpayer-shafting giveaways to unions often occurred under the guise of “buying labor peace.” But whatever peace was bought is long gone — and Detroit's remaining taxpayers are about to learn just how heavy a price they'll really pay for the Motor City's union-driven financial folly.
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