If this stands – and it HAS already been appealed – this is, um, Things Go Boom Time.
U.S. Bankruptcy Judge Steven Rhodes ruled today that pensions of city retirees can legally be cut in Detroit’s bankruptcy — a decision that came as a significant surprise to people observing the case.
Rhodes emphasized he won’t necessarily allow pension cuts to be approved in the city’s final reorganization plan, called a “plan of adjustment.”
Rhodes previously signaled that he planned to decide the issue of whether the pensions can be cut later in the case. But today he said he changed his mind and decided ruling on the issue now would expedite the bankruptcy.
The judge’s ruling is that federal bankruptcy law trumps the Michigan state constitution, which should lead us to the mordantly entertaining sight of watching a bunch of liberal and Democratic groups argue strenuously for states’ rights. The real problem is that Detroit is $3.5 billion in the hole for unfunded pension obligations*, and Detroit doesn’t have the money. And yes, those pensioners were promised that money. Guess what? The (Democratic) politicians who ran Detroit into the ground lied to the pensioners.
And that’s pretty much where it ends. There’s no money. No, stop, the Left isn’t listening: there’s no money. Yup, it’s horrid. But there’s no money. And there still will be no money when the shouting, the threats, the primal screaming, the conspiracy theories, and the general freak-outs cease.
Sorry. Well, sort of: I didn’t do this.
*Opposing arguments give that number as ‘only’ $600 million. Wondering how two people can look at the same data and get such wildly diverging numbers? Welcome to government accountancy: here’s your accordion.