Public pensions a big casualty in Detroit's bankruptcy: Their fight is all worker's fight

Their fight is all worker's fight -- And the support from MI Attorney General Bill Schuette is good news. --See below.

From Yahoo News:

Detroit bankruptcy another setback for unions

WASHINGTON (AP) -- Detroit's historic bankruptcy filing is a major setback for public employee unions that have spent years trying to ward off cuts to the pensions of millions of government workers around the country.

If the city's gambit succeeds, it could jeopardize an important bargaining tool for unions, which often have deferred higher wages in favor of more generous pensions and health benefits.

It also could embolden other financially troubled cities dealing with pension shortfalls to consider bankruptcy, or at least take a harder line with their unions in negotiating cuts.

"This is essentially the union's worst nightmare, said Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass. "It means that the most sacred of sacred things they've negotiated for, the pensions of their retired members, are going to be severely cut."

Detroit's bankruptcy filing comes on the heels of some public unions losing most of their collective bargaining rights in Wisconsin. At the same time, the unions have shed thousands

. . . Click here for more of the Yahoo News article

Michigan attorney general backs pensioners in Detroit bankruptcy

Michigan's Attorney General Bill Schuette, a Republican, said on Saturday he would defend retirees who risk losing public pensions because of Detroit's bankruptcy, putting him at odds with the city's emergency manager appointed by fellow Republican Governor Rick Snyder.

Schuette, an elected official, said the Michigan state constitution is "crystal clear" in stating that pension plans are a contractual obligation that may not be diminished or impaired.

 . . . Click here for more of the Yahoo News article

Car insurance's skew of Detroit voter registration rolls

Detroit made news with its bankruptcy last week. The politics of who is able to vote of course has a big impact on who does vote in Motor City. Note the quoted person in this Yahoo Business article, Vincent Keenan, executive director of a voter education project, "It is effectively a poll tax." Detroit has very high insurance rates, preventing many residents from actually registering their cars, or their voter registration, in the city of Detroit. (See Laura Clawson's report in DailyKos, or analysis linked at this page on how to prevent future Detroits.)

The city where no one has car insurance

By Barbara Marquand ,Yahoo Business, July 23, 2013

As executive director for Publius, a voter-education nonprofit in Michigan, Vincent Keenan got well acquainted with an odd phenomenon in his hometown of Detroit: A troubling number of residents aren't registered to vote in the Motor City.

The reason has nothing to do with citizen apathy.

Instead they are registered to vote in the suburbs, where car insurance is cheaper. They use an address outside the city to renew their driver's licenses and register, then report that address to insurers.

"It's an amazingly pervasive piece of information about living in the city of Detroit that people pick up on incredibly quickly," Keenan says. "It is effectively a poll tax."

The impact on voter registration is just one of the consequences of the city's sky-high car insurance rates. Another: Lots of folks don't buy insurance.

Michigan has one of the highest uninsured driver rates, with an estimated 19 percent of motorists going without insurance, according to the latest Insurance Research Council study. But estimates for the uninsured rate in Detroit are even higher.

In a commentary for the Coalition Protecting Auto No-Fault, Melvin Butch Hollowell, former Michigan insurance consumer advocate, put the number at 60 percent.

Good driver? $4,000 a year
While Michigan's car insurance rates are already high compared with other states, Detroit's are in another league.

Keenan, who's now running for City Council, knows firsthand. About 10 years ago he moved just one block from outside the city limits to inside Detroit. His car insurance premiums tripled.

In the most expensive areas of Detroit, according to an analysis of rates from six major car insurance carriers, the average rate for a 40-year-old driver with full coverage on a 2012 Honda Accord is about $4,500 a year. Move a ZIP code or two outside the city and those rates drop by half or more.

And that's for a driver with a clean record. Poor credit or violations would drive that number up considerably. Only some areas of Brooklyn, N.Y., can rival Detroit for whopping car insurance bills.

No wonder some Detroiters fall for fake insurance scams or make the decision to go without.

But getting caught means a fine of up to $500 -- and also much higher rates when they finally do buy insurance. Failure to pay means a suspended license, and in turn higher rates again because of the suspension.

Why so high?
Michigan is the only state that guarantees unlimited, lifetime personal injury protection (PIP) benefits for someone injured in a car accident.
Click here to read the rest of the Yahoo Business article on insurance in Detroit, "The city where no one has car insurance."

Alliance for American Manufacturing's Paul: No More Detroits

Scott Paul has written an important essay arguing that America part from its no help to the industrial sector ideological-economic orthodoxy. Correctly, he draws the parallels to European and East Asian countries that are thriving because they have industrial policies that help their domestic industries. If America can violate free market orthodoxy to help the farming sector then it can certainly do the same to help the manufacturing sector. In writing "No More Detroits" he was responding to the Detroit's declaring bankruptcy, this past Friday, July 19, 2013. He appeared today on Ed Schultz's radio show.

As The American Prospect argued in December, 2009, big business and Washington had the chance to do the right thing in the 1970s with manufacturing and industrial policy, but it failed to. See Jeff Faux, Industrial Policy: The Road Not Taken.

Scott Paul

President, Alliance for American Manufacturing

No More Detroits

The city of Detroit's bankruptcy is an American tragedy and an entirely preventable one. The downward spiral began decades ago when deindustrialization led to depopulation, crime and declining public revenues. Corruption and mismanagement may have exacerbated the problem, but they weren't the root cause. The gravest mistake we can make today is to believe that Detroit is an anomaly. It isn't. The economic threats that brought down Detroit are present in other great American cities. The question is: Will we learn our lesson and prevent future harm elsewhere?
Deindustrialization -- in Detroit or elsewhere -- is neither desirable nor inevitable. But as any physician will tell you, an ounce of prevention is worth a pound of cure.
I believe that same maxim applies to economies. With smart public policies, cities, states, and nations can maintain diverse, sustainable economies that may bend with the business cycle but will never break.
Nations with a manufacturing strategy ("State of the Union A Comprehensive National Manufacturing Strategy") have a greater percentage of their economy and employment in industry than we do in America today.

. . . What do they know that we don't? Manufacturing matters.
As I point out in our new book, ReMaking America, the idea that deindustrialization in America is nothing to worry about has been conventional wisdom for several decades. Thought leaders often tell us why we should be so lucky that America can just design while leaving it to the developing world to produce.
But they ignore vital examples like the high-wage German economy with its sizable manufacturing sector. They say cheap imports are great for our economy, a slogan that ignores the fact that one's buying power is limited, even at Wal-Mart, when they can't find a job. We hear that outsourcing is a good thing, which fails to take into account that a day may come when America can't supply its own troops. And we're told that trade deficits don't matter, except that they, too, have to be financed somehow and that this obligation has cost the middle class its jobs and wealth.
. . .

Paul makes some policy recommendations to restore American jobs, American wealth:

1. Cut the trade deficit in goods in half over the next three years. This means more exports, and fewer subsidized imports from China and Japan that dislocate workers in cities like Detroit. It does us little good to double exports, as President Obama stumped for during his re-election campaign, if imports are rising at an even greater rate.
2. Restore the balance of power between the industrial park and Wall Street. Financial deregulation in the late 1990s made the financial sector the master of manufacturing. That, along with the creation of CDOs and other get-rich-quick "innovations," was a huge mistake. Ensure that our small- and mid-sized manufacturers have access to affordable, patient capital.
3. Rebuild the connection between innovation and production. Our tax dollars fund research that helps create amazing products -- that are made overseas and sold back to us. We should insist that federally supported R&D is channeled into the design, engineering, and productions of goods in America. Congress should fund the $1 billion proposed by the Obama Administration to create a network of national innovation institutes.
4. Adopt policies to boost demand. That means infrastructure investment and tax policies geared towards higher levels of production and consumption of domestic goods. Even with automation and productivity, higher demand means we'll be supporting more manufacturing jobs. Don't allow Wall Street and retailers to hijack corporate tax reform when only manufacturers face real global competition.
5. Scrap the "strong dollar" policy that helps U.S. businessmen find cheaper hotel rooms overseas in favor of a competitively valued dollar that will boost our exports. The Institute for International Economics estimates that the dollar is overvalued, while China's and Japan's currencies are undervalued. We should insist those governments end policies that deliberately lower the value of their currencies.
6. Adopt smart energy policies that will position the United States as the global leader in renewable energy equipment manufacturing and boost our emerging energy cost advantage. Exporting loads of domestic natural gas to countries that subsidize their own industries makes little sense.
7. Encourage small-scale manufacturers to embrace "urban manufacturing," the "cloud," and additive manufacturing. This will localize manufacturing, reduce imports, and establish a new generation of makers.
8. Rebuild our system of vocational education. Creating a seamless system of training from high school, to community college, and on to the factory floor for a new generation of manufacturing workers will boost American manufacturing's competitiveness and provide a viable career path for millions of Americans.

Make no mistake: This isn't about rebuilding manufacturing the way it was in America, but rather about how we can restore American manufacturing leadership in this century. We need to get smart. With the right policies -- including those above, which are outlined in great detail in ReMaking America -- manufacturing can see a new dawn in Detroit and all across America. We can see renewed wealth and growth opportunities necessary to keep the American dream alive. And we'll certainly see fewer headlines like we had on Friday.

ReMaking America authors: Richard McCormack, Eric Garfinkel, Leo Hindery, Sridhar Kota, Harold Meyerson, Harry Moser, Scott Paul, Irene Petrick, Carl Pope, Stacey Jarrett Wagner.

Ed Schultz outlines his four step plan to save Detroit

Ed outlines his four step plan to save Detroit

Ed Show staff

11:00 AM on 07/22/2013

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Republicans have given up on the city of Detroit, they want to wipe the slate clean and start privatizing city assets, and in the process, city workers are in danger of losing their pensions.

Ed Schultz outlines his four step plan to save Detroit. Lansing, Michigan Mayor Virg Bernero and Michael Eric Dyson join Ed to discuss.

Detroit bankruptcy on hold, Snyder admin. smacked down by judge for "cheating good people who work"

FRI JUL 19, 2013 AT 01:09 PM PDT

Detroit bankruptcy on hold, Snyder admin. smacked down by judge for "cheating good people who work"

byEclectablogFollow

Yesterday afternoon, Detroit Emergency Manager Kevyn Orr, with the blessing of Governor Rick Snyder, filed bankruptcy paperwork for the city at 4:06 p.m. An emergency hearing by attorneys representing city pensioners was scheduled for 4:00 p.m. in the court room of Ingham County Judge Rosemarie Aquilina. The attorneys were asked by the legal team for Governor Snyder and Kevyn Orr for a five-minute delay on the 4:00 p.m. meeting. In that time, the bankruptcy paperwork was filed, making the emergency hearing moot.

The State lawyers literally tricked the legal team representing people receiving pensions from the City of Detroit so that they could file their bankruptcy paperwork.

An attorney for the pension funds who was seeking a temporary restraining order in Ingham County to block the historic bankruptcy filing said he felt blindsided because he agreed to delay an emergency hearing by five minutes at the request of attorneys for Snyder.

During those five minutes, he said, attorneys filed the bankruptcy petition in Detroit, which generally results in a stay in all other pending lawsuits involving the city. Ingham County Judge Rosemarie Aquilina later issued a temporary restraining order preventing further actions to cut pension benefits, but said she would have issued one to stop the bankruptcy filing altogether, if given the chance.

The judge said the bankruptcy filing was made at 4:06 p.m., five minutes before her emergency hearing began.

A furious Ronald King, a lawyer representing Detroit’s General Retirement System and the Detroit Police and Fire Retirement System, said he agreed to the five-minute delay that he now believes was not requested in good faith.

The basis for the emergency hearing was a pending lawsuit claiming that the bankruptcy is illegal because public employee pensions are protected by the state constitution. And they are:

Title IX § 24 - Public pension plans and retirement systems, obligation.
The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.

Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities.

Judge Aquilina is furious. In a hearing today, she put an immediate halt to the State's effort to take Detroit into bankruptcy:

Ruling that the governor and Detroit’s emergency manager violated the state constitution, an Ingham County Circuit judge ordered Friday that Detroit’s federal bankruptcy filing be withdrawn.

“It’s absolutely needed,” said Judge Rosemary Aquilina, observing she hopes Gov. Rick Snyder “reads certain sections of the (Michigan) constitution and reconsiders his actions.” [...]

Prior to her ruling on Friday, she criticized the Snyder administration and Attorney General’s Office for what appeared to be hasty action to outflank pension board attorneys.

“It’s cheating, sir, and it’s cheating good people who work,” the judge told assistant Attorney General Brian Devlin. “It’s also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy.” […]

Aquilina said she would make sure President Obama got a copy of her order.

“I know he’s watching this,” she said, predicting the president ultimately will have to take action to make sure existing pension commitments are honored.

There's more:

“I have some very serious concerns because there was this rush to bankruptcy court that didn’t have to occur and shouldn’t have occurred,” Aquilina said.

“Plaintiffs shouldn’t have been blindsided,” and “this process shouldn’t have been ignored.” […]

Aquilina said the Michigan Constitution prohibits actions that will lessen the pension benefits of public employees, including those in the City of Detroit. Snyder and Orr violated the constitution by going ahead with the bankruptcy filing, because they know reductions in those benefits will result, Aquilina said.

“We can’t speculate what the bankruptcy court might order,” said assistant Attorney General Brian Devlin, representing the governor and other state defendants.

“It’s a certainty, sir,” Aquilina replied. “That’s why you filed for bankruptcy.”

Tea party Attorney General Bill Schuette has now involved himself and is appealing the Judge's rulings to the Court of Appeals.

While I am still in support of the City of Detroit going through a managed bankruptcy, this sort of childish "Neener, neener, I win!" stunt to file paperwork before a hearing could take place is insulting on so many levels. If the governor and his Detroit overseer are within their legal rights to file bankruptcy, they should let the legal process play out. There are real people's lives at stake here, people who rely on their pensions to survive and have no other income outside of government assistance. They must be protected. They should be seen as Too Important to Fail.

Instead, Governor Snyder and his administration seem intent on playing whatever games are necessary to keep them from being heard.

I'm embarrassed that our state government is playing games like this with people's lives and you can be very sure that as Election Day 2014 roles around, you will hear about this stunt again and again at Eclectablog.

When they said that Detroit was under an "excessive heat warning" today, they most certainly were NOT kidding.

Stay tuned. This is very far from over.

P.S. This week is our 3rd Quarter fundraiser at Eclectablog. If you'd like to help support citizen journalism in its purest form, stop by and drop some folding money or couch change in the tip jar. Thanks!

ORIGINALLY POSTED TO ECLECTABLOG - ECLECTIC BLOGGING FOR A BETTER TOMORROWON FRI JUL 19, 2013 AT 01:09 PM PDT.

ALSO REPUBLISHED BY MOTOR CITY KOSSACKS, YOUR GOVERNMENT AT WORK, ANDMICHIGAN, MY MICHIGAN.

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