Guaranteed losers in a bankrupt city: Detroit's promised pensions in doubt

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In 1963, citizens in the state of Michigan thought that public pensions were guaranteed.

In 2013, citizens discovered in life there are few guarantees. On this Tuesday, Detroit once again made history as it became the largest municipal bankruptcy in the history of the United States of America. Amid state wide pension issues in Illnois and similar concerns in the city of San Jose, Calif., Detroit became the waterloo of the progressive movement as Gov. Rick Snyder finally prevailed in his attempt to side step the state constitution.

After the Snyder appointed emergency manager Kevyn Orr preemptively filed for bankruptcy protection, attorneys representing Detroit’s 23,500 retirees argued in court that a clause in Michigan’s constitution protecting pension benefits would insulate them from cuts. In fact, this had been the prevailing wisdom in the state of Michigan. However, in a move that may signal a new political trend, Judge Steven Rhodes said the Supremacy Clause of the U.S. Constitution trumps Michigan’s constitution.

There is a lot of speculation about what bankruptcy in Detroit means for the future, however, it is clear that both retiree pensions and the Detroit Institute of Arts holdings will have a turn under the Snyder Administration to be hanged, drawn and quartered. With around 35 percent of the residents of Detroit on some type of public assistance and no viable plan to jump-start a dwindling tax base a few things are clear.

It is clear that the unemployment and short-term revenue problems in Detroit may remain unaddressed.

It is clear that the cycle of senseless violence and poverty in Detroit will continue to be ignored.

It is clear that the reality of life for the majority of people who actually live in Detroit will go unacknowledged.

This truth makes the words of Kevyn Orr seem a bit like make believe. In a Tuesday press conference, Emergency Manager Kevyn Orr said, “We remain concerned about the need to adjust the city debt, to improve the level of services for citizens and to prepare for the city to exit this receivership in a fashion that restores democracy to the city.”

Little is guaranteed in the future of bankrupt Detroit except that some will win and some will lose.

Kevyn Orr’s comments are the stuff that nightmares are made of indeed. On the ground, we know a few things about the city of Detroit. First, Detroit has a revenue problem not a spending problem. Kevyn Orr kept highlighting the $18.5 billion in long-term debt the city owed. This number remains in dispute, but the truth is that the city of Detroit has a cash flow problem.

In the long term this problem was caused by changes in trade policy and by the 2007-2008 recession. In the short term this problem was caused by Keyvn Orr’s boss governor Rick Snyder and his unwillingness to give the city of Detroit it’s legally mandated share of state collected tax revenue.

Keyvn Orr’s claim about improving city services seems like double talk. The Orr administration is apart of a movement to downsize the city of Detroit. Their strategy involves paring down services and not repairing services so that citizens who live in less privileged areas of the city of Detroit will be forced to move if they want to receive city services.

An estimated 40 percent of Detroit’s 88,000 streetlights don’t work. The Orr administration says they want to fix them. They will borrow $160 million to upgrade the streetlights and reduce the number of streetlights by 53 percent from 88,000 to 46,000. This move will create more debt and leave citizens in the city of Detroit in the dark.

Keyvn Orr’s promise about restoring the city to democracy seems fanciful. A statewide Democratic movement repealed the so-called emergency manager law, which would have made Keyvn Orr impossible in Michigan. However, his boss Gov. Rick Snyder ignored the will of Michigan citizens and simply had a mirror law, Public Act 436, enacted.

So much for respecting democracy! Since Orr’s tenure began the mayor and city council have been obsolete. This seems to be the trend in spite of the fact that a new mayor has been elected.

Whatever Judge Steven Rhodes, Keyvn Orr and Gov. Rick Snyder say in the press or in public most of the citizens who live in the city of Detroit know the truth in private – most of us are guaranteed to be losers in a bankrupt city.

D. Alexander Bullock is pastor of Greater St. Matthew Baptist Church. He is also the founder and national spokesperson for the Change Agent Consortium (CAC) – a coalition of faith, labor, civil rights organizations and active citizens. CAC combines the best of the protest tradition (direct action) with economic empowerment, community development and community organizing to effect real change and real solutions. CAC believes that authentic social change must combine the power of grassroots protest (direct action), public policy and local projects that help communities discover themselves, determine themselves and develop themselves.

Follow D. Alexander Bullock on Twitter “@DAlexanderB”