This should not be the look of retirement for teachers and fire fighters.
There's a lot of competition for scariest economic trend, but attacks on pensions of long-time public workers are in the running. You take people who've worked for years, planning their retirements around a pension, pensions that in many cases replace Social Security—and then, late in the game, you cut or eliminate those pensions. Talk about a recipe for elder poverty. But thanks to a judge's decision that the pensions of Detroit public workers are on the table in the city's bankruptcy, this could be
the wave of the future
The ruling by Judge Steven W. Rhodes, who is presiding in Detroit’s bankruptcy case, that public pensions are not protected from cuts could alter the course of bankrupt cities like Stockton and San Bernardino, Calif., that had been operating under the assumption that pensions were untouchable.
Stockton’s bankruptcy case, for instance, is further along than Detroit’s, and until Tuesday it seemed likely to leave public pensions fully intact.
So what happens when you leave retired people without the retirement income they'd based their financial plans on? People are going to lose their homes. They're going to be forced onto government assistance because the money they earned as deferred wages over years has been taken from them. And this now sets the precedent that the promise of pensions as deferred wages, even given the strongest contract, is worthless
. For everyone who thought they had it:
Bruce Babiarz, a spokesman for the Detroit Police and Fire Retirement System, was blunt in his assessment. “This is one of the strongest protected pension obligations in the country here in Michigan,” he said. “If this ruling is upheld, this is the canary in a coal mine for protected pension benefits across the country. They’re gone.”
Meanwhile, in Illinois
, the state legislature passed a bill cutting public pensions.
In Detroit—where the debt crisis is being seriously exaggerated to begin with—what this means is that a city suffering in part from unemployment and poverty is about to be hit with more poverty. Nationwide, every public worker has to know that their contracts have been declared worthless and their pensions fair game. It's a logical extension of three or four decades of corporations and politicians chipping away at workers' ability and right to make a decent living, but it's a terrifying threshold to cross in that long war.
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