Retirees face reality

Posted on July 13, 2013 by

From Market Ticker:

(Reuters) – With the threat of a city bankruptcy looming, Detroit city workers and retirees are pushing back against the state-appointed emergency manager, filing lawsuits to limit his options and refusing to accept demands to keep details of their discussions secret.One lawsuit, filed in Ingham County Circuit Court in the state capital Lansing, seeks to stop Governor Rick Snyder from allowing the emergency manager, Kevyn Orr, to file Chapter 9 municipal bankruptcy. That lawsuit claims Orr’s plan to significantly cut vested pensions would violate strong protections in the Michigan constitution for retirement benefits of public-sector workers.

“So let’s say you win the lawsuit. What good does it do you?

There’s no money.

See, this is the problem at its root. The unions bargained in bad faith, either knowing factually or being in possession of enough information to know that what they were asking for couldn’t be provided. It was fiscally impossible given the projected increase in cost over the retiree lifetimes.

They didn’t care and they bludgeoned the city and its people into approving these “contracts” anyway.

The problem is that the only remaining options are to take some fraction of the original amount which can actually be paid or get nothing. And the longer they wait and the harder they push the closer to zero their recovery becomes, as the cost of litigation takes from the recovery and in addition the city continues to decay and will keep doing so until it is fiscally restored to a sound foundation with its taxes and spending brought both into balance and to a competitive level.”