You know something is a big deal when the New York Times editorial page weighs in, so officially consider Detroit's bankruptcy a big deal.
The Gray Lady's editorial board says the Chapter Nine restructuring process should be careful not to harm pensioners who spent their adult lives working for the city.
New York Times : But city officials should resist the idea of cutting the pension payments for the city’s public workers, which averages $19,000 a year. Unlike the situation in other troubled cities where government officials made lavish pension promises and workers gamed the system to inflate their benefits, Detroit’s are quite modest. Moreover, city employees have already had their pay and benefits reduced significantly in recent years. Slashing the meager fixed incomes of retirees will also hurt the city’s weak economy because they are more likely to spend most of the money they receive in local businesses.
It's too bad no one was advising city officials to "resist" cutting pension payments when they were deferring those payment while keeping current with other creditors, but the Times' overall argument is solid. And they really hit the nail on the head when they say bankruptcy must be followed by re-thinking how local government is organized in Michigan
New York Times: Even if the city is able to wipe out much of its debts in bankruptcy court, officials in Detroit and at the statehouse will have to develop a much more comprehensive and far-reaching plan to deal with the city’s problems. They will have to, for instance, say how they intend to deal with neighborhoods filled with abandoned homes and businesses. Detroit’s decline is not just bad for its residents, it also hurts the surrounding suburbs. One way state officials could aid Detroit is to urge the consolidation of some public services that are currently provided separately by Detroit and other cities in Wayne County.
Yes, please.
