Detroit Offers Plan to Crawl Out of Bankruptcy

The roadmap includes cuts to pensions and creditors to reduce the city’s $18 billion in debt

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Joshua Lott / Reuters

A man uses his cane to navigate a snow covered road in Detroit, January 2, 2014.

Detroit revealed its plan Friday to find its way out of the largest municipal bankruptcy in American history by cutting pensions and slashing payments to creditors while making small investments in city services.

The announcement marks a major step in Detroit’s effort to come out from under an estimated $18 billion in debt.

At the heart of the plan proposed by Detroit’s state-appointed emergency manager, are a 34 percent cut to the pensions of general city retirees and a 10 percent cut to police and fire retirees, plus cuts to bondholder payments, the Detroit Free Press reports. The city of 700,000 will also invest $1.5 billion over 10 years in city services, like the police force, and a plan to dramatically ramp up its demolition of abandoned homes from 114 a week today to about 450 a week.

Most of the particulars of the plan are still being negotiated with stakeholders and court challenges are likely before any final bankruptcy comeback plan is put into action.

[The Detroit Free Press]

14 comments
Openminded1
Openminded1

White emergency manager and new white mayor and the city is heading in the right direction, there maybe hope for Detroit after all but it will take some time.

lion65
lion65

The perception is that these retired union members are free from blame. However, they supported politicians who agreed to offer these very generous benefits. These same politicians who led to the ruin of Detroit.

Also many union members have played the pension game to their advantage. During their working careers they amass unused sick and vacation pay. And in their final year on the job they work mega overtime. This combination of payout of unused sick and vacation days and overtime and leads to a massive final year's salary. This is called Salary Spiking. Union pensions are based on their last year's salary.

Union Labor has been relativity insulated from the forces of global competition because many union jobs need to be done locally: you can't hire a Chinese factory worker to put out fires or to apprehend a criminal.

Yet the people who pay Union salaries and retiree benefits, the taxpayers, often have non-union jobs in the private sector. And private sector workers have experienced first hand, in the form of stagnant and falling wages, the result of global competition. As a result it is unfair to expect non-union labor to prop up the salaries and benefits of union labor.

BarryButtBoy
BarryButtBoy

I love watching cities run by democrats collapse.. calf is next.. yea for dum asses..they are finally exposed for being the incompetent morons like the neggers in detroit and the big negger in DC

Tommy34684
Tommy34684

@lion65 Wake up and study how union pensions are calculated. You have no clue/

Tommy34684
Tommy34684

@BarryButtBoy Detroit is surrounded by Republicans that took all the money from Detroiters either through pay day loans, selling them goods and services, or other means.

IbcinguToo
IbcinguToo

@BarryButtBoy So nice of you to be concerned about you fellow Americans.  Losers like you are why this country is so screwed up. 

JasonDruthers
JasonDruthers

Like watching the World Trade Center in a country controlled by Republicans collapsing?

Openminded1
Openminded1

@JasonDruthers  That was done by f-inking no good muslims, it would not have mattered who was in the white house.

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