The best lede of the day may be this: “Someday, Detroit’s bankruptcy may well be seen as the start of an era of broken promises.”
Written by Mary Williams Walsh of The New York Times, the paragraph sets the table for a story about the biggest losers in municipal decline: city workers and pensioners. The story continues:
For years, cities have promised rock-solid pensions without setting aside enough money to pay for them, aided by lax accounting practices, easy borrowing and sometimes the explicit encouragement of labor unions.
Officials were counting on rich investment gains to fill the holes; unions and their retirees were counting on legal provisions — like Michigan’s Constitution — that said pensions were unassailable and that benefits would always be paid, whether through higher taxes or budget cutbacks elsewhere.
But a bankruptcy judge, Steven W. Rhodes, threw a wrench into that thinking on Tuesday, ruling that pension benefits could be reduced in a bankruptcy proceeding. The decision recast the landscape and gave distressed cities leverage to backtrack on their promises.
Williams’s story doesn’t lay blame for Detroit’s bankruptcy on a single source. While other writers exploit their op-ed pages, blogs, and social-media accounts to cast blame and pursue political agendas, Williams leaves room to find a broader truth. Detroit’s demise is the result of the systematic failure to adapt to wrenching economic change, of corrupt and incompetent politicians, of rigid institutions (including the auto industry, labor unions, and school systems), and of chronic debt and racism. As I wrote in July, these are the things that bankrupted Detroit, morally and fiscally, and they’re an exaggerated reflection of the nation’s challenges.
Which brings me to the best speech of the day—the one President Obama delivered on social and economic inequality as Rhodes’s ruled on Detroit. Like he did two years ago in Osawatomie, Kan., Obama stirred echoes of the Gilded Age, when vast economic transition at the turn of the 20th century threatened to suffocate the concept of social mobility, the central promise of American exceptionalism.
“We know that people’s frustrations run deeper than these most recent political battles. Their frustration is rooted in their own daily battles, to make ends meet, to pay for college, buy a home, save for retirement,” Obama said. “It’s rooted in the nagging sense that no matter how hard they work, the deck is stacked against them. And it’s rooted in the fear that their kids won’t be better off than they were.”
Covering the speech for The Washington Post, Zachary A. Goldfarb wrote, “Obama acknowledged that his administration has not arrested two stubborn trends: widening income inequality and declining mobility, where lower-income people have a harder time finding a path to the middle class.”
These are existential trends (I’d call them crises). Our political and business leaders can choose to address them, as we did a century ago, or use them as wedge issues, which is the habit today. My hometown Detroit is a sad example of what will happen to other cities, counties, states, and even the nation as a whole if we dither and blame.
One more point about blame and dithering in Detroit. There is one group of people who did not bankrupt the city: its municipal workers and pensioners. Police, firefighters, ambulance medics, sewage workers, garbage collectors, and the like—these men and woman work hard for modest pay and the promise of a modest pension. Now they face drastic cuts, and will stand in line behind banks, bondholders, and other modern-day robber barons for meager shares of Detroit’s bankruptcy payout.
Take it from the son of a retired Detroit police officer, city workers don’t get rich. If you don’t believe me, visit my hometown. Ask an ex-cop or a current firefighter what it’s like to live so lazy and fat. I dare you.
What We're Following See More »
"Former FBI Director Robert Mueller has been cleared by U.S. Department of Justice ethics experts to oversee an investigation into possible collusion between then-candidate Donald Trump's 2016 election campaign and Russia." Some had speculated that the White House would use "an ethics rule limiting government attorneys from investigating people their former law firm represented" to trip up Mueller's appointment. Jared Kushner is a client of Mueller's firm, WilmerHale. "Although Mueller has now been cleared by the Justice Department, the White House may still use his former law firm's connection to Manafort and Kushner to undermine the findings of his investigation, according to two sources close to the White House."
Senate Intelligence Committee chairman Richard Burr (R-NC) and ranking member Mark Warner (D-VA) will subpoena two businesses owned by former National Security Advisor Michael Flynn. Burr said, "We would like to hear from General Flynn. We'd like to see his documents. We'd like him to tell his story because he publicly said he had a story to tell."
At an open hearing of the House Intelligence Committee, former CIA chief John Brennan said he saw information on Trump-Russia contacts that were worth a further look. "Having been involved in many counterintelligence cases in the past, I know what the Russians do. They try to suborn individuals," Brennan said. "And they try to get individuals, including U.S. persons, to act on their behalf, whether wittingly or unwittingly. And I was worried by a number of the contacts that the Russians had with U.S. persons, and so therefore by the time I left office ... I had unresolved questions in my mind."
"President Trump is moving rapidly toward assembling outside counsel to help him navigate the investigations into his campaign and Russian interference in last year’s election, and in recent days he and his advisers have privately courted several prominent attorneys to join the effort. By Monday, a list of finalists for the legal team had emerged, according to four people briefed on the discussions."
"President Trump asked two of the nation’s top intelligence officials in March to help him push back against an FBI investigation into possible coordination between his campaign and the Russian government, according to current and former officials. Trump made separate appeals to the director of national intelligence, Daniel Coats, and to Adm. Michael S. Rogers, the director of the National Security Agency, urging them to publicly deny the existence of any evidence of collusion during the 2016 election."