There was an interesting Q&A on NPR’s All Things Considered the other day between NPR reporter Robert Siegel and Detroit Emergency Manager Kevyn Orr and it was quite obvious that these two gentlemen have two very different ways of characterizing and attacking problems.
First, here are some quotes from Mr. Siegel:
“And let’s start with that big chunk of Detroit’s debt that consists of unfunded pension liabilities. They are pensioners, as you say, they worked under contracts that guaranteed their benefits. Should they now assume that those guarantees are trumped by fiscal necessity?”
Regarding how much the pension benefits will have to be cut…“Is there any level that you would find outrageous? I mean, 50 percent cuts in pensions, is that out of the question, off the board?”
“You’ve said that there’ve been warning signs of Detroit’s demise for 60 years. Sixty years covers the working careers of most of the city’s pensioners. If they’d been told when they first went to work, you’ll have a pension, but maybe not, or maybe not as much as we say now, Detroit may not have had any employees all these years. Why can’t they say, look, I gave my labor, part of the deal was a pension and that’s the level we negotiated?”
“So you’re saying the residents of Detroit should be held accountable for the people they elected all those years, is what you’re saying?”
Now here are some quotes from Mr. Orr:
Regarding how much the pension benefits will have to be cut… “We don’t know yet. I mean, that’s part of the dialogue we have to have – are the calculations, and there are various ones that go into determining the value of a pension and what the liabilities are going to be in the future. But it appears it’s going to be the necessity for some level of adjustment. We just don’t know how deep.”
“I sort of have to divorce myself from any preconceived notion. I mean, it’s just a question of the math and dealing with the realities of where they are now. You know, over the past couple of years, you know, between the way the pensions were handled and some of the investment decisions that were made and frankly some underfunding by the city, we’re just left with a mess and that’s a whole bunch of people’s faults but that’s just a reality today.”
“So there were many times in that timeframe to adjust and to react, as you know, Robert, between – you know, economic cycles run seven to 10 years and you adjustments. And unfortunately, for a whole host of reasons, a number of people did not make appropriate adjustments and left us with the situation we have today.”
“No. I don’t want to be quite that harsh in my assumption. I’m just saying there were many indicators and warning signs that could’ve been corrected over a number of years. And I don’t want to blame the victim, in a sense, Robert. But I want to say it doesn’t really matter what happened in the past. I mean, a retrospect of looking behind us isn’t productive.”
“What matters is here’s where we are. In unfunded health care liability, we’re at 5.7 billion. In unfunded pension liability, we’re at about 3.5 billion. There’s not money. It doesn’t matter what I say. It doesn’t matter what we look back on. There’s just no money.”
To sum up Mr. Siegel’s position – People shouldn’t be held accountable for decades of voting for Democrats that borrowed from the future to give sweet heart deals to unions. It’s not fair to cut their pensions by so much. Before we go through the financial analysis we have to put a limit on the cuts right now that seem fair. We should spend more time assessing blame for the past 60 years than working to fix the problems.
To sum up Mr. Orr’s position – Elections have consequences and it’s up to the individuals to take responsibility for their actions in the voting booth. It was foolish for people to think the massive pensions could be funded in perpetuity and it’s not up to the Government to tell people they are acting foolish. Emotion has nothing to do with this problem, we have to use math to determine what has to be done. The truth isn’t mean, it’s the truth.
Bravo Mr. Orr!
And by the way, Mr. Orr is a Democrat!
Just goes to show you there are still some Democrats that still understand economics and math. I hope his approach spreads to higher levels in the Liberal DC elite.
Detroit is a city that hasn’t had anything BUT a Democrat Mayor in over 50 years. And since 1970, I believe they’ve only had ONE Republican member of the city council. IN SPITE OF THIS, I heard some Democrat spokesperson the other day say that Detroit’s problems were a result of failed Republican policies. Stunning. Expected….but still stunning.
We must put an end to the “cronyism” that is killing our economy. Deals are made with big business, and deals are made with unions. My problem with the union deals is that the politicians are BUYING votes with the PEOPLE’S money.
Now that Detroit has finally declared bankruptcy, prepare yourselves for a wave of similar actions from other cities (ALL of which will have the same history of political leadership over the past decades).
It was only about 50 years ago that Detroit was the 4th largest US city, and had the HIGHEST per capita income in the Country. THEN, the “D’s” made Detroit another amusement park for Liberalism. Welcome to the result, Detroit.
There’s got to be crime in what’s been done in Detroit. Many should be put on trial for the graft and corruption. But then there’s not money for pensions, probably not money for justice. It’s where the capital of my state is headed. Harrisburg.
We don’t have to have a system of government that actually encourages these destructive zero-sum strategies. We could adopt another election system, such as proportional representation, or even instant runoff voting (IRV), that allows for more than just two parties in the running without worrying about the “spoiler” effect. When there are more than two parties, simply doing whatever-it-takes-to-make-the-electorate-hate the incumbent isn’t a winning strategy.