Robert Reich: The Bankruptcy of Detroit and the Division of America - Truthdig
Detroit is the largest city ever to seek bankruptcy protection, so
its bankruptcy is seen as a potential model for other American cities
now teetering on the edge.
But Detroit is really a model for how wealthier and whiter Americans
escape the costs of public goods they’d otherwise share with poorer and
darker Americans.
Judge Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern
District of Michigan is now weighing Detroit’s plan to shed $7 billion
of its debts and restore some $1.5 billion of city services by requiring
various groups of creditors to make sacrifices.
Among those being asked to sacrifice are Detroit’s former city
employees, now dependent on pensions and healthcare benefits the city
years before agreed to pay. Also investors who bought $1.4 billion worth
of bonds the city issued in 2005.
Both groups claim the plan unfairly burdens them. Under it, the 2005
investors emerge with little or nothing, and Detroit’s retirees have
their pensions cut 4.5 percent, lose some health benefits, and do
without cost-of-living increases.
Downtown Detroit. Shutterstock
