Bankrupt Detroit: A restructuring must deal fairly with pensions

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A federal judge’s decision that Detroit is eligible for bankruptcy was not surprising. The city is $18.5 billion in debt, and it would have run out of money long ago if it had continued to pay its bills.

The once-mighty Motor City can no longer legally increase taxes. It now provides such a wretched level of services that police may take an hour to respond when called.

But Judge Steven Rhodes raised concern when he ruled that cutting the pensions of retired municipal workers would be legal as part of a city restructuring plan. The judge also seemed to leave open the possible sale of some treasures of the Detroit Institute of Arts — a move that could bring the city hundreds of millions of dollars, but would destroy a major cultural resource.

Nobody denies that Detroit’s creditors have valid grievances, but how much should the city’s long-suffering citizens endure?

If pensions must be cut, they must be cut fairly. It may make sense for a healthy 53-year-old retiree to be asked to part with a portion of his pension. It would be unconscionable to ask a frail 90-year-old to give up any of hers.

The problem could be solved if Michigan Gov. Rick Snyder were to ask the legislature to extend the state’s guarantee of public-sector pensions to city of Detroit workers, in the interest of fairness.

Detroit is unlikely to be the last American city to wind up in receivership. Everyone needs to hope that a new Detroit will emerge from financial ruin, free of debt and with an opportunity to be viable and even prosperous again.


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