The Looting of Detroit's Pensions

A federal judge has ruled Detroit’s public employee pensions are “on the table” as part of the city’s multi-billion-dollar bankruptcy. The response from public employee unions — and, to be honest, the initial response I had — was that Detroit’s main pension plan, the General Retirement System, was reasonably well-funded and played no role in the city’s fiscal woes. Detroit’s workers had done their part, paid their contributions, and played by the rules. And so, it seemed, Detroit’s workers didn’t simply need to be paid their pension benefits to forestall poverty. They deserve these benefits, in a way that a Wall Street bond buyer who knowingly purchased Detroit’s risky debt doesn’t.

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