Tuesday, November 26, 2013

Apparently, Shared Sacrifice Means Sixteen Cents on the Dollar [Detroit]

I have no idea what these retirees are supposed to do (boldface mine):
Allen and his colleagues are among 30,000 Detroit city workers, past and present, who are about to learn what will happen to their pensions and healthcare if the city is allowed to file for a historic bankruptcy – the largest of its kind in history…
The affected workers are owed about $3.5bn, in total, in pension payments, and another $6bn in healthcare benefits. The average Detroit pensioner gets $19,000 a year; a deal that gave 16 cents to the dollar would cut the benefit to $3,040.
Most aren’t eligible for Social Security either (they didn’t pay into it).
Mike the Mad Biologist
Apparently, Shared Sacrifice Means Sixteen Cents on the Dollar
(h/t Clonal)


Ryan Harris said...

McDonalds and Walmart might pass some innovative ideas to the unions that represented city workers. They might be able to do food drives for one another and help each other apply for various forms of welfare and public assistance, for example.
Maybe MMT could help city workers across the nation insist their municipalities pay for pension guarantees from the sovereign sponsored enterprise that backs pensions for a small premium.

Clonal said...

From my e-mail to Tom

"These are people, because they contributed to the city pension plan, are not even eligible for social security. This a ridiculous state of affairs. The Federal government should basically take over the liabilities of the "bankrupt" governments a la the Federal Reserve and the banks. The contributions of the city employees to the city pension fund should be taken as contributions to Social security."

Ryan Harris said...

Moral hazard issues must be contended with before federal government can back all pension funds. There has to be regulation, risk based premiums and prosecution of corruption and notices to city employees that their benefits will be cut when politicians promise more than tax payers are willing/able to pay for. How many elections are won by promising public employee unions impossibly large payments?