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Tue Dec 20, 2011, 12:26 PM

A Very Bad Idea Coming Soon to a City Near You [View all]

What if Congress voted tomorrow to cut your Social Security check in half? How would you feel? What would you do?

Retired firefighters and policemen in Central Falls, Rhode Island know how they would feel, because it has happened to them already. They have agreed to sharp cuts in their retirement pensions. They have no choice. If they don’t agree to accept half, the city says it will file for bankruptcy under a new plan that will allow it to decide which of its creditors get shafted and which get paid. Bondholders will not see a loss on their investment, but retirees could see their pension contracts voided. And the city retirees do not have Social Security to fall back upon. Here is the NYT article:

http://www.nytimes.com/2011/12/20/business/pension-deal-in-rhode-island-could-set-a-trend.html?_r=1&ref=politics

How can a city tell its retirees “Sorry, we are broke” while telling investors “Great news! We are flush with cash!”? You tell me. A contract is a contract. But in the U.S., contracts to pay investment brokers apparently count for more than contracts to support the folks who put out our fires and capture our criminals. That is because the banks are too big to fail while American workers are disposable.

If this trick works in Central Falls, it will be copied by cities all across the country. What a boon for local governments! It will be like getting free money! Cities that do not opt to place their pensioners out on ice floes will find themselves unable to sell municipal bonds. We will hear mayors claiming “If you want us to put out your fires now, you better let us stop paying the folks that used to put them out.”

And once local government workers are without a pension, it will be quite easy for the federal government to say “It isn’t fair that retired firefighters and police carry the burden for our bad economy. All retired workers must do their part.” At which point, your Social Security check will be cut in half---and the feds will tell you “Just be happy we don’t take all of it.”

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Reply A Very Bad Idea Coming Soon to a City Near You [View all]
McCamy Taylor Dec 2011 OP
badtoworse Dec 2011 #1
RC Dec 2011 #3
Igel Dec 2011 #10
bhikkhu Dec 2011 #15
jtuck004 Dec 2011 #29
Nuclear Unicorn Dec 2011 #4
saras Dec 2011 #6
Nuclear Unicorn Dec 2011 #9
RickFromMN Dec 2011 #16
badtoworse Dec 2011 #20
joeglow3 Dec 2011 #32
Nuclear Unicorn Dec 2011 #27
RickFromMN Dec 2011 #36
treestar Dec 2011 #25
Odin2005 Dec 2011 #2
stillwaiting Dec 2011 #12
Odin2005 Dec 2011 #13
we can do it Dec 2011 #5
aquart Dec 2011 #8
aquart Dec 2011 #7
wiggs Dec 2011 #11
Zalatix Dec 2011 #14
a2liberal Dec 2011 #17
pacalo Dec 2011 #18
whathehell Dec 2011 #19
onethatcares Dec 2011 #21
mmonk Dec 2011 #22
NNN0LHI Dec 2011 #23
fasttense Dec 2011 #24
DeathToTheOil Dec 2011 #26
lumberjack_jeff Dec 2011 #28
NNN0LHI Dec 2011 #30
lumberjack_jeff Dec 2011 #34
NNN0LHI Dec 2011 #35
Earth_First Dec 2011 #31
Marrah_G Dec 2011 #33