WASHINGTON (AP) -- Detroit's historic bankruptcy filing is a major setback for public employee unions that have spent years trying to ward off cuts to the pensions of millions of government workers around the country.

If the city's gambit succeeds, it could jeopardize an important bargaining tool for unions, which often have deferred higher wages in favor of more generous pensions and health benefits.

It also could embolden other financially troubled cities dealing with pension shortfalls to consider bankruptcy, or at least take a harder line with their unions in negotiating cuts.

"This is essentially the union's worst nightmare, said Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass. "It means that the most sacred of sacred things they've negotiated for, the pensions of their retired members, are going to be severely cut."

Detroit's bankruptcy filing comes on the heels of some public unions losing most of their collective bargaining rights in Wisconsin. At the same time, the unions have shed thousands of members as state and local governments shrink public payrolls. The crisis of underfunded public pensions could further erode union clout.

From Chicago to Cincinnati to Santa Fe, N.M., dozens of cities and counties are struggling with massive debt linked to pension liabilities. Critics say state and city employees won generous defined benefit pensions and lifetime health care from elected officials trying to curry favor with public sector unions.

Unlike private employers that must fund such defined benefit pensions under the Employee Retirement Security Act, government employers are not covered by that statute. As a result, many elected officials approved such plans, leaving the financial consequences for future leaders to handle.

If cities such as Detroit can use bankruptcy or other tactics to reduce pension obligations, government employees could become less interested in union membership, said Charles Craver, a George Washington University law professor specializing in labor relations. That would be another dose of bad news for the steadily shrinking labor movement, especially because public employees now make up over half of all union members.

"Union leaders should go to the bargaining table and try to address this issue through negotiations, but they fear being thrown out of office if they agree to any cutbacks," Craver said, referring to pensions.

Detroit's financial woes were aggravated by widespread corruption, financial mismanagement, the auto industry collapse and a dramatically shrunken tax base as people moved out. The city has long-term debts of at least $18 billion, including $3.5 billion in unfunded pensions and $5.7 billion in underfunded health benefits for about 21,000 retired workers. The rest is owed to bondholders and other unsecured creditors.

About 7.3 million government workers belong to a union. The union membership rate for public sector workers is about 40 percent, much higher than the 6.6 percent rate in the private sector.

The fallout from Detroit could lead to more acrimonious contract negotiations between cities and union, said John Beck, a professor of labor relations at Michigan State University.

"If I'm a union and bargaining, where I used to be willing to defer wages in form of pensions, I'm going to bargain for what I can get right now because I can't be sure whether those future wages are going to be protected," Beck said.

Unions, led by the American Federation of State, County and Municipal Employees, have launched a furious legal challenge to the Detroit's bankruptcy petition, arguing that Michigan's constitution law does not allow public pension obligations to be diminished. But a federal bankruptcy judge dealt a blow to that tactic last week, halting any state lawsuits that would interfere with the bankruptcy proceeding.

"Government entities declaring bankruptcy, it's really a government going to war with its own people," said Steven Kreisberg, director of collective bargaining for AFSCME. He said trying to reduce pensions is unfair to those who worked for years in good faith and expected to depend on those benefits in old age.

The average pension for retired city employees other than firefighters and police officers is quite modest, Kreisberg said, at about $19,000 annually. Retired fire and police get about $30,000 in pension benefits, higher since they are not part of the Social Security system.

While other cities in financial trouble might be willing to follow Detroit's lead, Kreisberg said the stigma of bankruptcy and its long-term damage to a city's financial future make that unlikely. But if there is a national epidemic of pension defaults, it could change what unions would demand in terms of funding levels.

"We may seek legislation to guarantee that employers are making their payments," Kreisberg said.

The AFL-CIO has called on President Barack Obama and Congress to offer immediate financial aid to Detroit. The labor federation also wants any federal aid to be matched by the state of Michigan.

"As the nation emerges from the worst of the Great Recession, it is time for Congress and the White House to make it clear they will not turn their backs on our urban centers," said Lee Saunders, president of AFSCME and chairman of the AFL-CIO's political committee.

But the White House appears reluctant to intervene. White House spokesman Jay Carney has said the city's insolvency should be resolved by local leaders and creditors and that the Obama administration has no plans to provide a federal bailout.

Carney said the administration was ready to provide other forms of assistance, such as investment opportunities or help for blighted neighborhoods hit hard by the recession.

Its a setback for every working man and woman in Detroit. Detroits troubles are not a labor issue only a fool would think such.

http://thepeoplescube.com/peoples-blog/socialism-in-one-city-goes-bankrupt-t11408.html

yep,the Glorious World Of Next Tuesday (TM)

I know, it's Bush's fault.

or,maybe,you all didn't expect the Well to run dry,hm?

Mr Conrad your thought process is so agenda driven its laughable.

What ails Detroit and most of the world was the "cure" from the republicans and neocons.

cut taxes on the rich, slash wages and lopsided trade agreements.

Now you think you can blame the victims.

Like pavlove's dog you salivate at an imaginary bell.

The well never ran dry Mr Conrad the rich are richer than ever, they just stopped paying taxes and a liveable wage.

As Margret Thatcher said "the problem with socialism is you eventually run out of other people's money".

well,Son,it sure ran out in Detroit,and the Aquifer of the Nation is at a Dangerous low,all thanks to those unsustainable demands from the Entitlement-Crowd,really doesn't matter on what Side of the Isle they are sitting on!

Yep,your own Politicians made them richer by stealing from the Productive Citizens,and Big Labor received quite a bit of the Loot!
Might not have trickled down to your Level,but ask yourself how your trusted Union-Leaders became Millionaires,and some even Billionaires!
Ask yourself this question tonight after you said your Going to Bed-Prayers,before you drift off to sleep!
Sleep might evade you for a bit!

if Socialism is so great...why does it have to be mandated and forced on people?

“Do not blame Caesar, blame the people of Rome who have rejoiced in their loss of freedom who hail him when he speaks in the Forum of more security, more living fatly at the expense of the industrious. – Cicero

Of course the mouthpiece of the elite would mouth such and absurdity and the lapdog corporate media would give the old wench a free pass, we thinking people know better. When america was great hard work was enough to make a living under Reagonism and Thaterism hard work only keeps one from starving to death, forget about healthcare for yourself and children that's an "entitlement" Forget about a pension that's socialist.

I do not know about you Mr Conrad but I have a pension and healthcare that I work six days a week for, yes time and a half on Saturdays.

I know if your kind had its way I would work 80 hours a week for straight time with no pension or benefit.

hope it is still there after the Maggots get through with it!
You really think it will be there!
They will eventually loot it as well!
Yeah,the People you trust!
The Union gives,and the Union taketh away!

I don't usually post vids but... this one will enlighten those who fall victim of short sightedness. Bankrupt state and governments don't happen over night, It has taken decades in many cases. I am retired and live well. It is the younger ones that I hope will not forget history and make the same mistakes .

http://unionwatch.org/government-unions-and-the-bankrupting-of-america/


Oh, and while your there watch the Chris Christie video too.

when unreasonable demands and lazy attitudes bankrupt your financier

who is to blame for your loss of finances

http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market

1. Authoritarian Capitalism (Fascism) and Liberal Capitalism (the Free Market)

What is sometimes referred to as "authoritarian capitalism," or fascism, is in fact a variety of statism, specifically socialism, the system of political economy in which the prerogatives of ownership over the means of production and distribution are vested in the state. Under the fascist economic system, private capitalists are nominally regarded as the owners of the means of production, meaning that they hold property titles to these assets and are referred to as "owners" of these assets. However, this so-called ownership is merely illusory. The actual prerogatives of ownership are vested, not in the private capitalist, but in the state and its bureaucracy.[1] It is the state that tells the private capitalist how he must use "his" property, under the threat of confiscation or even imprisonment. In the words of economist Ludwig von Mises, it is "socialism in the outward guise of capitalism."


This is a very different political-economic system from "liberal capitalism," also known as "free-market capitalism." Free-market capitalism is an authentically capitalist system, in which the prerogatives of ownership over the means of production are vested in private citizens, not in the state. Under this system, the means of production are genuinely privately owned, and the private-property owner holds, not just a property title, but, more importantly, the actual prerogatives of ownership and ultimate control. In the system of free-market capitalism, the private-property owner is regarded as having property rights (i.e., an enforceable moral claim to the prerogatives of ownership) that must be respected by all others, including the state and its functionaries.


In their purest forms, these two systems of political economy are fundamentally different in kind; in fact, they are polar opposites. However, this opposing nature stems from the degree to which the prerogatives of ownership of ostensibly private property are arrogated to the state — i.e., the degree of state intervention. On the one extreme we have the free market, in which there is no — or at least little — state interference with private-property ownership (which is therefore genuine); on the other extreme we have fascism, in which there is plentiful or total state interference with private-property ownership (which is therefore illusory).


Since fascism and the free market are distinguished by state intervention we can therefore see that the two systems are separated by a connecting bridge of interventionism through the system of the "mixed economy." The fascist system can be viewed as a system of hyperinterventionism, accruing when state interference with private-property rights is so extensive that the alleged private ownership of property becomes a mere farce, and the state may properly be regarded as the de facto owner of the means of production and distribution — i.e., there is de facto socialism. For this reason, the analysis of fascism and its long-term viability is very similar to the analysis of interventionism in the mixed economy, and the same kinds of economic and political insights apply.


2. Fascism and the Fusion of Business and State

Fascism is unlike other forms of socialism. Its expropriation of the means of production is done without overt nationalization and is not directed toward an egalitarian goal. It is far more subtle than this, and far more insidious. Fascism can arise by revolution, but it can also arise by gradual measures toward state control in the mixed economy. While noting the similarities between fascism and communism, philosopher Roderick Long observes that

there is a difference in emphasis and in strategy between fascism and Communism.… When faced with existing institutions that threaten the power of the state — be they corporations, churches, the family, tradition — the Communist impulse is by and large to abolish them, while the fascist impulse is by and large to absorb them.[3]


......................lots more at the Link!

"Socialism is a philosophy of failure,the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery."-Winston Churchill

Michael Moore: As long as there is anyone with money to shake down, this country is not broke