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Michigan AG to defend Public Pensions in bankruptcy

No, I am aware how pension plans are supposed to work. What I am saying is that the city entered into bankruptcy because current revenues are unable to maintain current city services and pension plan payments; nor meet city deficits and debt balances. Something has to suffer.

Trying to meet pensions, existing deficits, and debt paymens in bankruptcy means cutting already reduced city services to the bone and beyond. How can the city continue to function if the bulk of revenue is going to go everywhere but where it is truly needed?

That is a good question. I would say two things
1- return to the previous revenue sharing formula that the State has now canceled costing Detroit hundreds of millions of dollars.
2- go to a graduated state income tax like three of the four surrounding states have and earmark a portion of the revenues to shoring up pension stability.
 
Can you tell us how the constitution of MI works in this situation. A city says it cannot pay, does the state step in a pay the pensions?

I know of no case where this has happened with city pensions here.

I do know that the State has indeed taken over city services and school districts and has assumed management of then and that includes both revenues and expenditures. So there is precedent for the State getting involved in local expenditures.
 
That is the way it was for a long time Maggie. Then residency was stripped from the city by the State Legislature in Lansing.

Now you live in Chicago - or at least the vicinity - so tell me something. We go to the city about once a year and always stay downtown near the Miracle Mile. I realize some neighborhoods are very different. We always had the impression that white people in Chicago did not do the wholesale abandonment that they did here in Detroit.

Is that accurate to any degree?

Oh, they absolutely did not, Haymarket. Of course, one reason for that is that anyone who works for the City of Chicago OR as a public school teacher must live within the city limits...there's also no city income tax. I was very surprised to hear that Detroit had one. I've never heard of that before.
 
If we can bail out the auto industry... we can protect the earned and deserved pensions of some of the most vulnerable in our society, the elderly.

You do realize auto industry bailout bailed out the pensions as well. UAW in the GM bailout got $23 billion because the pension was given special treatment. ;)
 
You do realize auto industry bailout bailed out the pensions as well. UAW in the GM bailout got $23 billion because the pension was given special treatment. ;)

Yes, GM pensions... we're talking about gov't pensions.
 
Do you operate under the impression that the City of Detroit has to pay the entire bill for pensions at one time and their current shortfall between income and expenses will prevent them for ever honoring their incurred contractual obligations which are backed by the Michigan Constitution?

You can look at it your way.. which you are right.. not all of the pension cost is due at once.

But here is my view, the problem comes when Pension costs are taking up more and more of the government budget (this case Detroit). 25% of your yearly budget is a huge chunk of your budget. It hurts, not on paper but in reality. Detroit can't pay for good basic services which causes more and more people to move out of the city. So you can't fix the exodus without fixing your budget. You can't cut services because that's what's causing the exodus.

Detroit has only two good choices if it wants a future.
1) Federal Bankruptcy as that's the only place it's gonna end up if the State of Michigan forces a haircut to bond holders without touching the pensions.
2) A fair plan that leaves most of the "pain" in two areas.. Bonds and Pensions. Tell bond holders to take a 10 or 20% hair cut (10 to 20 cents on the dollar) and have the General Pension fund (Detroit's largest and most underfunded) take a 5% to 10% hit (if it's 10%, I'd say bond holders would need a 15% to 20% cut).

Btw..Detroit could cut it's funding to the new hockey arena but that still wouldn't cover the shortfall for this year.
 
I disagree with the underlined. Especially when it comes to Government employment.



That said ...
Pensions should be separate from the employer.

i agree with the second part, but that will require higher wages.

as for the first, government employees enjoy better salaries and benefits than some in the private sector now, but this has not always been the case. for those who are retired now and for those who are retiring soon, they could have made a lot more privately, and the pension made up for a bit of the difference. my parents were teachers, and weren't paid what they were worth for most of their careers. the pension was deferred salary. reducing it after the fact is unfair, and it's basically breach of contract.
 
Yes, GM pensions... we're talking about gov't pensions.

And your words said it was for bonuses. GM's bailout was for GM's pension (UAW). Wasn't about saving GM, rather saving UAW.
 
And your words said it was for bonuses. GM's bailout was for GM's pension (UAW). Wasn't about saving GM, rather saving UAW.

Yes, because there can't be more than one reason for an action. The fact remains that bonuses were paid for failure, mostly with the banks... meanwhile everyone else and their children and children's children get to pay the price for those failures. Bonuses at all are incredibly insulting.

I also find it incredibly naive to think one of the reasons for the bailout was not to save the auto industry as a whole. Stock holders, executives, labor... the whole shebang.

Either way, we're still talking about gov't pensions.
 
Yes, because there can't be more than one reason for an action. The fact remains that bonuses were paid for failure, mostly with the banks... meanwhile everyone else and their children and children's children get to pay the price for those failures. Bonuses at all are incredibly insulting.

I am against all bailouts, so let's get that straight first.. Banks and Auto Industry should have gone through normal bankruptcies. But 9 of those banks who took TARP were forced to take it because Uncle Sam didn't want people to know who had the bad balance sheets. If all take it, less chance of a bank run.

I got a bonuses and they aren't paid out based on performance alone. I can have a ****ty year in total returns on investment but I brought in more clients. So I gave a net positive to the Bank. CEOs could justify their bonuses because despite what you think, money from TARP is realized as INCOME.

I also find it incredibly naive to think one of the reasons for the bailout was not to save the auto industry as a whole. Stock holders, executives, labor... the whole shebang.

Saving something means it stays the same. Like I saved you from falling off a cliff.. you are alive and in one piece. That didn't happen in the Auto bailouts. Rather Stock holders were taken to the wood shed and lost EVERYTHING. Bond holders lost 90% of their investment in GM. Dealerships were closed (total of 2,000 of them or about 100,000 jobs lost). While UAW got 93% of the money they were owned by GM at time of the bailout.

So who did it help? Sure as hell didn't help all those elderly GM bondholders, didn't help car dealerships, didn't help stock holders or even Detroit..but it did help the UAW.

Either way, we're still talking about gov't pensions.

There is no difference between GM pension plan and city pension plan. It has to be funded the same way, except city pensions have absolutely no protections under Federal Law. So it's a haircut or nothing at all for them despite Michigan "law". Federal > State.

Michigan AG can look pretty while campaigning for future Senator but he's gonna get his ass handed to him in Bankruptcy court and the Supreme Court. Bankruptcy is a federal issue and has been since 1789. Welcome to reality.
 
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Oh, they absolutely did not, Haymarket. Of course, one reason for that is that anyone who works for the City of Chicago OR as a public school teacher must live within the city limits...there's also no city income tax. I was very surprised to hear that Detroit had one. I've never heard of that before.

Thank you for that information.

Detroit is not alone with a city income tax in Michigan.

Albion, Battle Creek, Big Rapids, Detroit, Flint, Grand Rapids, Grayling, Hamtramck, Highland Park, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Saginaw, Springfield and Walker all have city income taxes.
 
You can look at it your way.. which you are right.. not all of the pension cost is due at once.

But here is my view, the problem comes when Pension costs are taking up more and more of the government budget (this case Detroit). 25% of your yearly budget is a huge chunk of your budget.

So in your opinion what is the magic number?
 
I am against all bailouts, so let's get that straight first.. Banks and Auto Industry should have gone through normal bankruptcies. But 9 of those banks who took TARP were forced to take it because Uncle Sam didn't want people to know who had the bad balance sheets. If all take it, less chance of a bank run.

I got a bonuses and they aren't paid out based on performance alone. I can have a ****ty year in total returns on investment but I brought in more clients. So I gave a net positive to the Bank. CEOs could justify their bonuses because despite what you think, money from TARP is realized as INCOME.

Sure, on the books you couldn't enter it any other way. It's still a failure. You can spin it any way you want. Not bonus worthy. The fact that you display that arrogant and aloof justification shows a truly disconnected rational.



Saving something means it stays the same. Like I saved you from falling off a cliff.. you are alive and in one piece.

So saving a life means nothing unless they are unscathed? A person paralyzed in a wreck, but pulled out before burned to death isn't a save... Gotcha! You are truly twisted.


That didn't happen in the Auto bailouts. Rather Stock holders were taken to the wood shed and lost EVERYTHING. Bond holders lost 90% of their investment in GM. Dealerships were closed (total of 2,000 of them or about 100,000 jobs lost). While UAW got 93% of the money they were owned by GM at time of the bailout.

So who did it help?

How about all the vendors and suppliers, the small, often privately held companies that support local economies? Did the execs get to keep their jobs? SAVE! Are they once again accruing stock options? Yup! Do they stand to make more from the new stock options than the old ones? Yes.

You are profoundly myopic.

There is no difference between GM pension plan and city pension plan. It has to be funded the same way, except city pensions have absolutely no protections under Federal Law. So it's a haircut or nothing at all for them despite Michigan "law". Federal > State.

ONLY in matters of interstate commerce. Fed does NOT trump States on matters not enumerated within the constitution. Sorry, dead wrong.

Michigan AG can look pretty while campaigning for future Senator but he's gonna get his ass handed to him in Bankruptcy court and the Supreme Court. Bankruptcy is a federal issue and has been since 1789. Welcome to reality.[/QUOTE]
 
No, I am aware how pension plans are supposed to work. What I am saying is that the city entered into bankruptcy because current revenues are unable to maintain current city services and pension plan payments; nor meet city deficits and debt balances. Something has to suffer.

Trying to meet pensions, existing deficits, and debt paymens in bankruptcy means cutting already reduced city services to the bone and beyond. How can the city continue to function if the bulk of revenue is going to go everywhere but where it is truly needed?

Yeah, well the fact they don't have any money is highly questionable at best. Gov.Snyder wrote a letter to Orr and the state treasurer approving the bankruptcy being rushed through behind the back of the unions who were more than willing to negotiate. Basically he said in order to continue to put money toward restructuring the city for their grand private-public partnership the pensioners will have to sacrifice. And, I quote, "The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations." Detroit files for bankruptcy protection - World - CBC News
 
So in your opinion what is the magic number?

Depends on what you are looking for. 15 to 20% is okay, 10 to 15% is great when dealing with pension costs. The two major costs in Detroit's budget is wages and pensions, roughly 52% of the budget. Wages could be cut by 2 or 3%, as in no increases because firing people cost more in the long run. Having Pension pay outs cut of 5% would help as well. That's 8% in savings which isn't gonna "kill anyone". Then throw on bond cuts or renegotiation and you could save up to another 10%.

So 18% in total budget savings or roughly $400 - $450 million. This covers the short fall and leaves them in then black by $50 to $100 million. That's money into a rainy day fund or to clean up neighborhoods which brings people back.
 
sure, on the books you couldn't enter it any other way. It's still a failure. You can spin it any way you want. Not bonus worthy. The fact that you display that arrogant and aloof justification shows a truly disconnected rational.

I am giving contractual and law definition. Change that first then call me arrogant and aloof. :lol:

So saving a life means nothing unless they are unscathed? A person paralyzed in a wreck, but pulled out before burned to death isn't a save... Gotcha! You are truly twisted.

And this gets into philosophy which is something rather pointless but do you know that person wants to live paralyzed? I think it's truly twisted to justify saving someone for the sake of saving someone despite you have know prior knowledge A) they want to be saved and B) their quality of live is equal or better prior to the saving.

Doctor's have a do no harm clause. If someone is dying of cancer they don't poke and prod them for the sake of trying to save them but rather they give them palliative care.


How about all the vendors and suppliers, the small, often privately held companies that support local economies? Did the execs get to keep their jobs? Save! Are they once again accruing stock options? Yup! Do they stand to make more from the new stock options than the old ones? Yes.

Vendors and Supplier which have 12% less employees then they did in 2008? Hmm.. GM execs lost all stock from pre-2009. The stock options they are getting today are the new stock (issued in 2010 at $33 a share) which are fixed options at the strike price for the day of payment. Today the stock is trading at $36. So everything issued from 2010 to 2013 to GM execs is not a real money maker.

Ford on the other hand which didn't get a bailout who was trading at a low of $5 a share in 2008 is trading at $17 a share today.. That's 300% return. :cool:



You are profoundly myopic.

To be myopic requires one not to see the big picture such as bailing out anybody does cause moral hazard and this isn't the first or last time the US auto industry (GM) will be bailed out again or the fact GM stock will have to trade at $90 something a share for the US Government to break even.



Only in matters of interstate commerce. Fed does not trump states on matters not enumerated within the constitution. Sorry, dead wrong.

Seriously? Check out Article 1, Section 8.. you'll find this little dandy in there..

To establish a uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States

Immigration is an undisputed Federal issue and so is Bankruptcy.

Game, Set, Match.
 
I am giving contractual and law definition. Change that first then call me arrogant and aloof. :lol:

You can speak legally all you want... I'll call it what it is. Anyone that needs to shield their morality (or lack thereof) behind a law, has no morality worth speaking of. Law is not morality... it's justice... and there is an ocean of difference. It is the definition of arrogant and aloof. Again, I call it what it is.

GM execs lost all stock from pre-2009. The stock options they are getting today are the new stock (issued in 2010 at $33 a share) [/QUOTE]


These were all stock options. Part of a BONUS package. They invested NOTHING

Now, the new conservative bat to swing is "merit". Let people get payed according to their merit. These are not victims, they are the primary reason the stock lost 90% of it's value... and even then they cashed in. I can't think of a better award for that merit than to lose all of it. And guess what? Now they get reissued stock worth only 1% less than the former issues peek. Pretty freakin sweet deal if you ask me.

despite you have know prior knowledge A) they want to be saved and B) their quality of live

1st in bold... is this legalese? Second.... are you high? What kind of grammar is that?

You're a eugenicist aren't you?

Tell you what... let's spare them the agony of burning alive first... then let them decide from there.
 
You can speak legally all you want... I'll call it what it is. Anyone that needs to shield their morality (or lack thereof) behind a law, has no morality worth speaking of. Law is not morality... it's justice... and there is an ocean of difference. It is the definition of arrogant and aloof. Again, I call it what it is.

Morality is subjective and useless without consensus. Thus law is what is acceptable to the "majority" of people and those we trust to define it. Meaning the people find that law or way of business is morally okay.

Law doesn't equal Justice. Law only equals what is morally acceptable at that very moment in time. All you have to do is look at Civil Rights, Human Rights and such to see this.


These were all stock options. Part of a BONUS package. They invested NOTHING.

I never said they invested anything. Stock Options are payment packages. Bonuses aren't this or that. Most bonuses are given despite performance. These aren't bonuses but rather total salary. It's bit of a black art of figure out what's a real bonus and what's described as a bonus do to legalese. Couple of examples:

You can have incentive pay that a CEO is given short term goals to reach by the Board. It's not a "bonus" but it's counted as a bonus because it's only paid when those goals are reached.
or
You can have incentive pay based on long term goals. These types of bonuses are stock awards and option awards.

GM's Daniel Akerson and Edward Whitarce took their positions after Bankruptcy. They had certain goals given to them by US Government and the Board. They met those goals. So they got stock options (it's know as stock salary) as incentive pay. That put their salaries for the year around $9 million.



Now, the new conservative bat to swing is "merit". Let people get payed according to their merit. These are not victims, they are the primary reason the stock lost 90% of it's value... and even then they cashed in. I can't think of a better award for that merit than to lose all of it. And guess what? Now they get reissued stock worth only 1% less than the former issues peek. Pretty freakin sweet deal if you ask me.

First off.. GM cleaned house of it's top executives during bankruptcy. So the people getting issued stock salary weren't there in 2000-2008. But you can try and blur the lines.

I never said they were victims and secondly, I never said anything about merit. I am talking about performance and stock salary (which is salary, not a bonus). I have no problem with them losing it all just as long as you think everybody in the company should as well.



1st in bold... is this legalese? Second.... are you high? What kind of grammar is that?

Nah, my screw up.. I was dog tired by the time I got to this crap.

You're a eugenicist aren't you?

Nah, I am not a liberal. :lol:


Tell you what... let's spare them the agony of burning alive first... then let them decide from there.

You can save them from agony many different ways then saving them. Lame horses are put down all the time. Pets are euthanized and in some states it's legal in the US for Doctor's to give drugs to patients to kill themselves. Doctors also have to respect the wishes of people who have DNRs or a family's wish to pull the plug (so to speak).

So "saving" is subjective.
 
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