The future of Detroit's pensioners at stake

Updated: Saturday, August 3, 2013
The future of Detroit
KALAMAZOO, Mich. (NEWSCHANNEL 3) - It's a question financially troubled cities all over the U.S. are going to be paying close attention to, as Detroit tries to figure out who gets what in the wake of its declaration of bankruptcy two weeks ago.

What happens to the city's pensioners--those 23,000 people, with more to come--who rely on their monthly checks for survival?

Tom Van Howe has more in tonight's edition of Tom's Corner.


When we on this side of the state think about Detroit, it's all too easy to remember the excesses and the decades of perceived political obstinacy flaunted by its leaders.

From individual limousines for school board members to the costly criminal behavior of former Mayor Kwame Kilpatrick.

We tend to think, 'Well, you guys created the mess you're in; you let it happen. You fix it.'

And by virtue of the deafening silence from Lansing and Washington on the issue of bailouts, we aren't alone.

But none of the 23,000 former city workers who rely on pensions now, nor any of the 9,000 or more who will be retiring someday with pensions as a key ingredient to their plans for a secure retirement had anything to do with the mismanagement that resulted in where things stand today.

They were police officers, firemen, linesmen, secretaries and so on. They worked for the city and as part of the package was the promise of retirement income. And its not as though the payouts are exorbitant. Police and fire: $30,000 a year.

Other city employees: about $19,000. Not enough to live a life of leisure with exotic vacations three times a year. But, its enough to help them live their lives with dignity.

And more than anything else—it was promised to them.

So now the city of Detroit may try to take that promise back.

The city owes a mind-bending $20 billion. It's trying to find ways to settle those debts for pennies to the dollar, but it would be an ethical blunder to do the same to pension recipients.

Detroit's Emergency Manager, Kevyn Orr, says the long-term pension liability is about $3.5 billion. And according to news reports, the city was a hundred million dollars short on its contribution to the pension fund.

Last year alone. Again—that's not the fault of the pensioners.

Attorney General Bill Schuette has jumped into the fray pledging to  defend the pensioners' constitutional right, under state law, to receive what they have coming. If Schuette is successful in making that argument stick, he'll become a hero to lot of people who have, perhaps, never heard of him.

But whether it remains merely a moral obligation, or an ironclad legal one; it's crystal clear the city of Detroit doesn't have the money.

And that means its going to fall to us—to you and me—the State of Michigan, to help make good on a multi-billion dollar promise the city of Detroit, on its own, cannot keep.

Why? Because, at the bottom line, we're all in this together, and  it is the right thing to do.

In this corner...I'm Tom Van Howe.

Business News

Last Update on November 30, 2015 18:18 GMT


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The National Association of Realtors says its seasonally adjusted pending home sales index rose 0.2 percent to 107.7 last month. The index has increased 3.9 percent over the past 12 months.

Healthy job gains and low mortgage rates boosted sales for much of the year, but rising home values and limited inventories have limited further growth in the closing months of 2015.

The number of signed contracts advanced in the Northeast and West, while dipping in the Midwest and South.

Pending sales are a barometer of future purchases. A lag of a month or two usually exists between a contract and a completed sale.


NEW YORK (AP) -- Retailers are rolling out online deals today, the so-called "Cyber Monday."

But since shoppers these days are online all the time anyway, the shopping holiday is losing some of its luster. Still, today is expected to be the biggest online shopping day ever, with estimates that it will rack up over $3 billion in sales.

The head of the National Retail Federation, Matthew Shay, says, "It's no longer about one day but a season of digital deals."

Online shopping is taking its toll on brick-and-mortar shopping. Frenzied crowds seemed to be a thing of the past on Black Friday -- the busy shopping day after Thanksgiving. According to preliminary numbers from the research firm ShopperTrak, sales fell to $10.4 billion this year, down from $11.6 billion in 2014.

But as online shopping grows more popular on Thanksgiving and Black Friday, that's causing less of a frenzy on Cyber Monday, too.

Retailers have been touting online deals since the beginning of November. And they no longer wait for Monday to roll out Cyber Monday deals, either. Amazon started "Lighting Deals" on Saturday and Wal-Mart beginning all of its Cyber offers on 8 p.m. on Sunday.


NEW YORK (AP) -- Amazon is providing new details on its Prime Air drone delivery program. But the timeline is still unclear.

The retailer says Prime Air will one day deliver packages up to 5 pounds in 30 minutes or less using small drones.

The drones will fly under 400 feet and weigh less than 55 pounds, according to details posted on its website Sunday. It says it will use technology and automation to operate safely.

Amazon says the program will start once government regulations are in place to support it. It has development centers in the U.S., the U.K. and Israel.

The FAA currently bans commercial drone flights except for a few dozen companies that have been granted waivers. It has granted Amazon approval to fly drones for research.


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The Fed governors voted 5-0 Monday to downsize the Fed's emergency lending powers.

Only broad lending programs designed to revive frozen markets -- not loans to individual firms -- will be allowed. The Fed spent about $2 trillion on such a program to ease a credit crunch during the financial meltdown, aiming to spark lending to consumers and small businesses.

The 2010 law enacted by Congress overhauling financial regulation required the Fed to impose the restraints. Lawmakers of both parties had objected to the Fed's emergency aid to several big Wall Street banks and insurance giant American International Group.


WASHINGTON (AP) -- The International Monetary Fund says the Chinese yuan will join a basket of the world's leading currencies.

The IMF announced that the yuan "met all existing criteria" to be included with the U.S. dollar, euro, Japanese yen and the British pound as one of the currencies used for the global organization's Special Drawing Rights, which is used as the standard for dealing with its 188 member governments.

China is the world's second largest economy. Currency traders and economists say the move should encourage the government in Beijing to deliver on promises to make the yuan "freely tradable" and to open up its financial system.

The IMF's decision is set to take effect in October 2016.


PARIS (AP) -- President Barack Obama says the private sector needs to have a seat at the table as the world's governments attempt to curb global warming.

He says that governments will set the targets that nations will try to reach, but it will be scientists, private sector investors and workers who will largely determine whether those goals are met.

Obama's remarks come as part of an event in which at least 19 governments and 28 investors were announcing billions of dollars toward researching and developing clean energy technology.

Obama says Microsoft co-founder Bill Gates is correct in noting that improving energy efficiency will only help nations get part of the way toward reaching their targets. New inventions and technology will also be required.

He calls the partnership one of the most significant private-public partnerships even forged to accelerate energy innovation.

Washington Times