Op/Ed: Michigan’s Torrid History of Promises Made Not Kept: Why Retirees Should Vote NO on the ‘Grand Bargain’

Photo Credit – Paul Sanoya – AP Images

“Supporting the narrative. This type of action is easy to do. Think about if a majority of friends, family or associates declared as a individual, you must perform a task. Usually, standing alone against a sea of pressure — the person would be inclined to join the majority. 

For the purposes of this Independent Underground News & Talk Op/Ed – we will discuss why as a City of Detroit Retiree, you stood shun actions the chorus is demanding. Why? Frankly, life and security as you’ve known depends on it. Trust must never be given to those who’ve proven not worthy of it.”

An estimated 48,000 City of Detroit Retirees across the nation will take a vote. The purpose of their vote will keenly focus on cutting a earned benefit – annuity based pension income.

Long after Detroit’s Emergency Manager Kevin Orr is moved on to greener pastures, current City Mayor Mike Duggan is the C.E.O. of another Corporation and Governor Rick Snyder returns to the Corporate Raider business performed previously with Gateway Computers – retirees will be forced to live with the long-term impact of their vote.
If retirees vote in the affirmative to cut an annuity pension monthly benefit guaranteed by the State of Michigan Constitution in Article 9, Section 24 – they will set legal precedent. Hereby confirming language contained within Michigan’s founding document is null and void.
The impact is earthshaking.

Not only would an affirmative vote impact City of Detroit Retirees futures, but could turn morph into a government mandated annuity benefit cut for all State of Michigan, county and municipal pensioners plus others across America with similar language in State Constitutions nationwide — similar to the Ebola virus for workers who honored sacred commitments, but were fooled by the Robber Bartons in return. 

Nearby, lawmakers in the State of Illinois are desperately seeking ways to grossly reduce or eliminate pensioners monthly earned income. A vote in the affirmative by City of Detroit retirees could easily result in government elected officials in Illinois following the legal precedent set in stone by retirees in Detroit.

“It’s bad. No question,” Eric Zorn- Journalist for the Chicago Tribute wrote in a Op/Ed on May 18 about Illinois Pension crisis. 

“But, setting aside for another day the question of whether the pension reform law is the best or only way for the state to dig its way out of this hole, let’s look at how (Illinois State) Attorney General (Lisa) Madigan (D) describes the crisis as virtually an act of nature: 

“The causes of this underfunding included, but were not limited to, significant unforeseen and unanticipated events,” says the filing. These include: “1) prolonged and unusually poor investment results … due to systemic, severe market downturns, including in the wake of the worst financial crisis since the Great Depression; 2) historically low rates of inflation; 3) significant increases in life expectancy; and 4) other changes in actuarial assumptions.” 

Yes, but. 

Those who have followed the detailed coverage in our pages of Illinois’ staggering, worst-in-the-nation pension crisis know that the problem is largely the result of irresponsible leadership — pension holidays and sweeteners, unreasonable projections and the exhibition by lawmakers of a blithe willingness to spend tomorrow’s money on today’s programs and projects. 

If I had a can for every time the cliche about “kicking the can down the road” has been appropriately invoked to describe this situation, I could put my twins through college by cashing in at the recycling center.”

By happenstance the FEAR factor has arisen its ugly head into this life-changing decision for City of Detroit retirees. Detroit Free Press Pulitzer Prize winning journalist penned the following headline in Sunday’s widely circulated internet newspaper, “Pensioners should step up — for themselves, for Detroit — and vote yes on deal“.

The open question is – what was crafted in dark rooms by Michigan’s Governor Rick Snyder (R) and Emergency Manager by force on Detroit Kevyn Orr really amounts to the “best deal” ever for pensioners?

“The deal that’s on the table for the city’s retirees today — a grand bargain that will flood their underfunded pensions with more than $800 million in private, philanthropic and government money to soften the blow they’ll take in bankruptcy — is as good as it will get,” Henderson wrote.

Technically, the paragraph above is a deception at its finest. The optimal RIGHT City of Retirees should receive is what’s guaranteed by Michigan’s Constitution — Article 9, Section 24 stating in whole:

“The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.

Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities.”

Shall not be impaired. The words “shall not” means in just will not. Likewise, the word impaired means according to Webster’s Dictionary, “being in a less than perfect or whole condition”.
If Detroit Retirees vote to allow the State of Michigan and City to cut pension benefits to less than PERFECT or WHOLE condition, to be candid they are agreeing not only to slashing their earned monthly income, but by extension ending any future grievances if promises made in the Grand Bargain are not kept.
Retiree Michael Mulholland, acting President of AFSCME Local 207, in a comment left on Deadline Detroit described the true perils fellow City of Detroit pensioners face by voting yes on the “Grand Bargain”.

This deal is not guaranteed. If the DIA or corporate foundations don’t make good on their pledges, if pension funding level drop below 80% or if investment returns drop below 6.75%, our pensions will be cut again, without a vote.

This is more than a 4.5% cut. It is more like 35-50%. Almost half of the General Fund retirees who planned for our retirement through the annuity savings plan will see a total pension cut of up 20%. That’s my situation. We are not even allowed to pay back what Kevyn Orr calls “excess interest” in a lump sum. The 20% cut will continue for my entire life.

Since I opted for a reduced pension so that my wife could have financial security after I die, the 20% cut will continue for her entire life, long after the “debt” is repaid. The state’s $194 million contribution is a small portion of the revenue sharing they owe Detroit. Annuity savings participants are being extorted for at least $240 million, or more if we live too long.

Elimination of cost of living allowances will cost us and our beneficiaries 2.25% per year. Medical insurance cuts add up to an additional 30% loss, especially for those who are not old enough for Medicare. I am on Medicare, yet my monthly drug costs increased 400%.

Pioneers of the union and the civil rights movements faced threats and repercussions. But they took the risk, and changed history. As always, the experts say that this is “the best we can get”, that the cuts are merciful, and that resistance is futile.

The same arguments will be used to impose the “Detroit blueprint” on pensions throughout the nation. We are told that if we vote NO then even more punitive cuts will be imposed on us. But it has been our experience that whenever injustice is tolerated for the illusion of security, more demands soon follow.

If we vote yes, we lose right to sue.”

Retirees losing any future rights to sue is exactly what the “Grand Bargain” is crafted upon. The future is not guaranteed on if the State of Michigan, donors associated with Detroit’s Institute of Arts, Unions or the chorus of other entities adjoined with this “deal” will follow though with promises.

The State of Michigan promised Detroit millions of dollars in shared revenue from tax collections still owed to the City with a “Deal” lobbied for by then Governor John Engler and former Mayor Dennis Archer in 1998. Neither Engler nor Archer are available in the present to fall on the sword or broken promises not kept.

From Bridge Magazine March 15, 2013:

“It seemed a reasonable deal when Gov. John Engler and Detroit Mayor Dennis Archer shook hands on it in 1998. 

The state of Michigan would give Detroit $333.9 million annually for nine years in revenue sharing funds — if the city would ratchet down its highest-in-the-state city income tax rates. 

All was going well, until the economy tanked, dragging the state’s tax collections and budget down with it. Detroit wound up getting far, far less than it was promised. 

By one calculation, the city could have gained $700 million in additional funds in the period – for a city that has run repeated deficits (about $300 million this year alone) and piled up billions in debt to compensate. 

And far more than money vanished – Detroit’s leaders and residents have never forgiven the state for how they were treated. And this ill will is affecting ongoing efforts to get Michigan’s largest city back on a financial even keel. 

“The state of Michigan broke its promise to Detroit,” says Kenneth Cole, the city’s longtime lobbyist”

As both Engler and Archer have long since “retired” from holding an elected office.

Ten years from now its’ highly doubtful any State Legislators Republican and Democrat voting “Yea” on the “Grand Bargain Deal” in Lansing one week ago, will answer retirees’s calls if the funding levels drop below 80% as AFSCME Local 207 retired President Mulholand alliterated. State imposed Legislative office term limits ensure today’s elected officials of Michigan’s House and Senate will be private citizens or holding another office of less accountability on a local level.

Emergency Manager Kevyn Orr in a decade from now, would have long left Detroit. Likely well settled into his former profession as a high-level Bankruptcy Attorney with Jones Day or another large corporate legal firm.

Richard D. Snyder, Michigan’s current Governor, picture will be still in place at Lansing’s Capitol Rotunda building. Ironically, this will likely would be the last image Detroit Retirees would’ve for expressing disappointment for promises made yet not kept yet again with the “Grand Bargain” of 2014.

Retirees meanwhile will be forced to live with actions taken today, for many tomorrow’s by voting to cut their earned annuity pension benefit — for life. Well after all today’s players in the game are gone.

Thus, voting to end your “Right to Sue” is not a vote to take in your best interest. Stand Strong in Solidarity and Vote NO on the “Grand Bargain”. 



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