Democrats Take Detroit to Greece Style Bankruptcy
On January 29 Bloomberg reported Bing Races to Beat Michigan Deadline for Union Detroit Deal
Deal Reached?Democratic Mayor Dave Bing is racing to wrest concessions from 48 bargaining units to erase a $200 million deficit in the home of General Motors Co. and the cradle of the U.S. auto industry.
Otherwise, the city of 714,000 dominated by Democrats may face a Republican-appointed manager with authority to sell assets and nullify contracts. State Treasurer Andy Dillon has said Detroit will run out of cash by May, and called for concessions by early February.
This week, Bing began firing 1,000 of Detroit’s 11,300 employees. The mayor also proposes a 10 percent cut in payments to vendors and doubling the 1 percent tax on corporations.
Bing, 68, has said the city must trim annual employee benefit and pension costs, which have risen since 2001 to $35,000 per employee from $18,000.
“We are meeting, not daily but more than weekly, and there are sidebar conversations every day,” said Al Garrett, president of AFSCME Council 25, which represents about 3,000 employees. “I’m not sure an emergency manager would be any more Draconian than what the city itself is asking, but it’s a real possibility.”
Mayor Bing is taking his script straight from Greece where a deal has been "close" for days, weeks, and now months.
Today's Bloomberg headline does not match the facts presented. Please consider Detroit Reaches Pact With City Unions to Avoid Takeover, Detroit News Says
Mayor Dave Bing and a majority of city employee unions have reached tentative agreement on concessions aimed at avoiding a state takeover.
“This agreement is the first meaningful step in achieving the necessary concessions and structural changes,” Bing, 68, said via Twitter.
The deal, but no details, was confirmed by Al Garrett, president of AFSCME Council 25. The agreement covers about 6,500 of the city’s about 11,000 employees, not including police and firefighters who have resisted a demand for a 10 percent wage cut, he said.
The city and unions must agree to concessions early this month to avoid state action, such as the appointment of an emergency manager with broad powers to cut spending, said state Treasurer Andy Dillon. Dillon is leading a review of city finances, after a preliminary review found it will run out
Mike Shedlock
Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.Join the Debate
4 Comments So Far
Can any Republican here explain to me how allowing young people to opt-out of social security into their own private plan helps relieve the coming entitlement crisis?
Allowing young people to opt-out means that there is less money to pay people who are retired or are nearing retirement. This opt-out change doesn't help to relieve the social security spending burden until the young people who have paid into it, retire, like 40 years from now. For those collecting social security checks the next 40 years, there is less money in the pay-out pool.
1.) If we do nothing to fix social security, retirees will have a 20% cut in benefits.
2.) And if we allow some young people to opt-out of social security, then retirees will have a 30% cut in benefits for the next 40 years.
Now go to a retirement community near you and pose this above scenario and see how many seniors are 'in favor' of allowing young people to opt out of social security.