Perhaps I’m misreading this. But the private sector - government sector argument is a little too simple in this case. The reason for that is because there are very, very, very few private sector companies still offering defined benefit plans - pensions - in the same way that the government sector does.
So when a large private sector company has to make cutbacks, it either fires people or reduces costs in other ways such as reducing its contribution to the 401k, or reducing its contribution to healthcare premiums, etc. What it cannot do is take the employee’s 401k or tell the employee that it will only receive 10 cents on the dollar from its 401k, which is what could happen to Detroit public employees under bankruptcy.
No doubt the public unions clamored for as many benefits as they could get. But the real bad guys here are the Detroit politicians who failed to say No. The clerks, administrators, janitors, etc. who were promised a pension and made career decisions based in part on that contractual commitment are hardly to blame and in all fairness should not bear the brunt of the bankruptcy. But of course they will.
I’d sure like to see a judge tell the city it won’t allow pensions to be stripped but in return there will be no more collective bargaining on anything but wages. Bondholders would get screwed, but then they certainly had an opportunity to read the prospectus.
public employees view pensions as free money and a program to be scammed to the maximum self benifit.
I have a defined benefits pension plan, although my company does not offer it to new hires. By law, a pension must be funded in an “actuarially sound manner”. Basically, that means the assets in the fund must cover something like 80% of expected future claims. This goes back to the Rheingold Brewery closure in the 1970’s, when employees were left out in the cold. The resulting Javits Law required private (but not public!) pensions to actuarially sound.
” The clerks, administrators, janitors, etc. who were promised a pension and made career decisions based in part on that contractual commitment are hardly to blame and in all fairness should not bear the brunt of the bankruptcy. But of course they will.”
The idiots voted again and again for the liberal commies that promised bloated pensions that could never be paid. The idiots deserve to live with the result of their actions!
This is why pensions should be fully funded.
Of course there are innocent victims. This is always the case when a big enterprise fails. In the private sector, companies go bankrupt every day, and employees lose expected benefits. Even if the PBGC steps in, people still take a severe haircut. Public employees should be no different.
In addition to imprudent and unsustainable promises, Detroit's finances are riddled with fraud. In the private sector, senior managers would go to jail. I wonder how many Detroit pols will face criminal charges? Not many, I would wager. Public sector privilege. Too bad.