The Attack on Detroit’s Pensioners and its Root Causes

The Attack on Detroit’s Pensioners and its Root Causes

Detroit’s bankruptcy is probably going to affect its pensioners in a negative way and that is a very bad, unfair thing.  There are, in my opinion, two root causes for this situation.  The first goes back to the 95 Th Congress in 1978.

In February of 2006, Elizabeth Warren, former Harvard Law Professor, Bankruptcy expert and current Democratic Senator from Massachusetts, gave an interview in which she explains that the US Congress rewrote the federal bankruptcy code in 1978.  This “rewrite” put pension holders at the back of the creditor line in a US bankruptcy.  This aspect was opposite to bankruptcy laws of many other countries in the world.  In 1978 both Houses of Congress (the 95 Th Congress) were dominated by the Democratic Party and Jimmy Carter was President.  In fact, the Democratic Party held a filibuster-proof 60% super majority in both the Senate and House chambers in 1978.

In Elizabeth Warren’s own words: ” If we start to cheat America’s employees, … we start to hollow out the middle class. The middle class is what makes America. It’s what makes us strong economically; it’s what makes us strong politically. … It’s the engine. … And when you start saying to hardworking middle-class people … who played by the rules, “They lied to you, and your government is going to back them up. You are not going to have any protection in your declining years; you’re going to be dependent on your children, your grandchildren. In fact, maybe you will drag them down financially,” … then America isn’t America anymore. …”

The second cause is the reckless policy of excessive pension and health care costs brought about by a “quid pro quo” arrangement between public sector unions and corrupt politicians.  Through sixty years of collusion between these two groups, an unsustainable level of cost has emerged.

We can only hope that the legal process will not be too harsh on Detroit’s good and hardworking employees that were merely pawns in this unfortunate six decade long failed experiment.

Bob Cushman

Northville, Michigan