Beyond Pensions By Shea Howell – Week 61 of the Occupation of Detroit

Thinking for ourselves

By Shea Howell

Beyond Pensions

Week 61 of the Occupation of Detroit

June 3, 2014

shea25The dictatorial running of our city distorts our ability to think and discuss the kind of future we want for ourselves and our children. Currently, we engaged in an outrageously brutal, sham process of public decision-making.

Across the country more than 32,000 individuals are receiving ballots to vote on the future of their retirement plans. This vote is complicated, misleading, unclear, and mismanaged.

First, there is no “No.” Voting against the plan does not stop the bankruptcy process. Nor does it protect pensioners from cuts. It is a forced choice among bad alternatives. Some changes, like reductions in health care benefits, have already taken place, regardless of the vote.

Secondly, pensioners are told voting No is not an option. EM Orr reiterated in Mackinac his long held position that the current offer to pensioners is the best there is. He said. “If we do not get this plan through, if we have to go back to the drawing board, the cuts will be severe, and we will not be able to be as compassionate, which is what we want to do.”

Orr’s credibility is nil. His compassion is hollow and his take it or leave it stance, is like that of a schoolyard bully.

He was sent back, twice, by the court to re-negotiate with the banks because he offered them too much money.  It is difficult to believe him when he says this is the best deal in town.

On a deeper level, it is not so much Orr’s credibility, but his lack of perspective that erodes any public confidence in his pronouncements.

Orr has not taken any responsibility to provide means for thoughtful, open discussion of the issues involved. Even the special advisor to the court had to fight for information. Reporters, who admit to being daunted by the obscure language and mass of materials, have taken the task of informing people of issues involved.

Nor could the EM get the ballot mailing right. They now admit to an error that will cost the city $15 million. While Orr seems unfazed by this as a small amount to pay for a mistake, we should remember that he gave away Belle Isle because $6 million was too much money for us to sustain.

Nor has Orr provided any public space to consider the unique and difficult questions raised by the process of municipal bankruptcy. With more than 120 cities across the country facing this possibility, the Detroit experience raises important questions.

Prime among these is the legal double standard embedded in bankruptcy law. Banks are protected, while costs are pushed onto the most vulnerable.

Bankruptcy can help individuals, car companies, or banks get a fresh start, but there has been very little public discussion about how it applies to municipalities.

The New York Times explained that the law defined pensioners as though they were any other creditor, but banks, as creditors, are given special protections. If we can protect banks from the cost of bad faith and often-illegal practices, why can’t we protect pensioners who bargained in good faith, trusting in public promises?

The Times reports, “Under Chapter 13 of the bankruptcy law, a section heavily influenced by the financial industry, lenders cannot be forced to rework most residential mortgages in bankruptcy.

“That is where the legal double standard comes in. In Detroit’s bust, even pensioners have to negotiate new terms; in the housing bust, big banks did not have to negotiate, leaving many homeowners in the dust.”

This double standard is a political choice. The Times concludes, “Ultimately, however, Congress must change the bankruptcy law.”

One change would be to protect pensions as sacred covenants between generations. The language for such legislation is already in our state constitution.

Appointed dictators distort and destroy public thinking about our collective future. We have the responsibility and challenge to create new public spaces.