Weekend Economists American Bad Boys Part 1 July 12-13, 2014

[Demeter]

43. Crucial bankruptcy debt-cutting plan reportedly being approved by Detroit retirees

WE WILL SEE....THIS COULD BE TO PSYCH OUT THE PEOPLE...


http://www.mlive.com/news/detroit/index.ssf/2014/07/crucial_bankruptcy_debt-cuttin.html

Detroit retirees appear to be approving the so-called "grand bargain" as part of a $7 billion debt reduction plan that is seen as crucial to the city exiting its Chapter 9 bankruptcy proceedings The Detroit Free Press reports that police and fire pensioners appear to have given the deal while citizen retirees are locked in a closer vote. Votes from the city's some 32,000 retirees on the debt adjustment plan were due at 5 p.m. EST Friday.

Detroit Emergency Manager Kevyn Orr issued this statement shortly after the deadline passed:

“As voting has come to a close on the Plan of Adjustment, the City will now tabulate and check the results. Once that process is completed, the City’s vote administrator will prepare an affidavit that will be filed with U.S. Bankruptcy Court for the Eastern District of Michigan attesting to the voting results by creditor classes. The City expects that affidavit to be filed on July 21, which is the date the court has stipulated that the voting results be submitted.”

The grand bargain includes an upfront payment from the state, approved by the legislature last month, of $194.8 million to minimize pension cuts for retirees and future legal costs for the state. It sends money from the Michigan Budget Stabilization Fund, commonly known as the "rainy day" fund, to Detroit pensions. The state would replenish the fund with tobacco settlement revenue over the course of the next two decades and require creation of a long-term financial oversight commission to monitor city budgets and contracts. Philanthropic foundations and DIA benefactors have pledged another $466 million to protect prized art from a potential fire sale.

Even with the grand bargain, retired city employees are poised to suffer some losses in federal bankruptcy court, where Judge Steven Rhodes has ruled that a state constitutional provision prohibiting pension cuts does not apply. General retirees would face a 4.5 percent cut in their monthly pension checks and lose all cost-of-living adjustments going forward. Police and Fire would see cost-of-living increases scaled back by 55 percent.