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’Bail-in’ Strikes Pensions in Detroit and Illinois
4 December 2013
(LPAC)—The Empire tried to further twist the "bail-in" knife into the heart of America yesterday. In Detroit, a Federal bankruptcy judge gave the go-ahead for the city to enter Chapter 9 bankruptcy and, explicitly, to eviscerate public sector retirees’ pensions, which he falsely said were no different from other debts. In Illinois, the legislature approved a labyrinthian bill to cut pensions and raise the retirement age of state employees. Both Michigan and Illinois have embedded in their constitutions provisions that absolutely protect pensions. But what of that? The simultaneous attacks bear witness to the validity of Lyndon LaRouche’s comments to the LPAC National Policy Committee yesterday: "....First of all there is a general breakdown crisis, reaching a point of what’s called ’bail-in,’ and we’re about to reach the bail-in level, around the world essentially, but especially in certain troubled areas, such as Europe and the United States. The United States is going to have to deal with a bail-in threat. That means that we’re going to have to cancel Wall Street, essentially, and what Wall Street represents in most parts of the world.... We’re headed for a fundamental change which is already under way...." Watch LaRouchePAC Policy Committee member Bill Roberts statement on the Detroit Bankruptcy. Wall Street speculators destroyed the once-advanced industrial base of Detroit, and turned the city of nearly 2 million, with the highest household income in the country, into a depopulated hulk of a ghetto, burdened with some $18 billion in debt and long-term liabilities. Right-wing Gov. Rick Snyder imposed technocrat Emergency Manager Kevyn Orr on the city, taking all real power out of the hands of elected officials. Orr led the effort to put the city through Chapter 9 bankruptcy, to which, after much toing and froing, Judge Steven Rhodes gave his oral blessing today, with his 140-page ruling to follow. During the course of his 90-minute oration today, the Detroit Free Press reports: "Despite the criticism of Detroit’s negotiations, Rhodes said moments later that negotiating in good faith was ’impracticable’ for the city because its financial crisis was growing worse, and creditors filed several lawsuits that could have derailed a bankruptcy filing." That Orr’s operatives haven’t negotiated in good faith is one of the primary contentions — aside from the whole process violating the state’s constitution — of lawyers representing unions and retirees, whose current average annual pension is $20,000. Rhodes admitted that Orr hasn’t negotiated in good faith, a basic requirement for bankruptcy, but approved the bankruptcy filing anyway! Orr’s plan is expected to include cuts to unsecured creditors as well as asset sales, the latter including privatization of the water and sewer department, and the possible sale of exhibits of the Detroit Institute of Arts. Lawyers are already appealing the judge’s decision that has made Detroit now the largest municipal Chapter 9 bankrupt in the nation’s history, one that other cities in dire straits throughout the country may try to follow further into hell. - And, in Illinois - In Illinois, the leaders of both houses of the legislature are pushing the plan that will purportedly trim an accumulated $100 billion deficit in the state employees’ pension funds. The plan is also backed by Democratic Gov. Pat Quinn. WLS-TV in Chicago reports that debate on the bill began Tuesday afternoon, even though most lawmakers had not been given a copy of the bill until Monday. State Rep. Mike Tryon noted that the state constitution explicitly prohibits public pensions from being diminished or impaired. "You can’t just prepare a solution on public policy regarding pensions and throw the constitution out," said Tryon. But that didn’t prevent nine of the 10-member bipartisan pension conference committee from signing off on the deal late Monday. Tuesday evening, the Senate voted it up 30-24, and then the House by 62-53. Wall Street’s credit-rating agencies have downgraded Illinois to the lowest rating of any state in the country. Its annual pension payments have grown to about one-fifth of the state’s general funds budget. The plan that the financiers want pushed through would raise the retirement age for workers ages 45 and younger, on a sliding scale. The current annual 3% cost-of-living increases for retirees would be replaced with a system that only provides the increases on a portion of benefits. Some workers would have the "option" of freezing their pension and starting a 401(k)-style defined-contribution plan. Beancounters make the laughable contention that the plan would save the state $160 billion over 30 years and fully fund the pension systems by 2044. Other public employees not directly affected by the plan, such as Chicago school teachers, are mobilizing against the bill, recognizing that once it were rammed through, their pensions will be next on the block. (FHB) |