JAISAL NOOR: Welcome to The Real News Network.
I’m Jaisal Noor in Baltimore. On Tuesday, a federal judge ruled that Detroit
is insolvent, making it the largest city in U.S. history eligible to claim bankruptcy.
In the ruling, Judge Stephen Rhodes said Detroit can cut pensions and retiree benefits to help
pay off its $18 billion debt, adding, quote, “pension benefits are a contractual obligation
of a municipality and not entitled to any heightened protection or bankruptcy”. Two
major Detroit public pension holders have said they will appeal the decision. Now joining us to discuss this is Frank Hammer.
He’s a retired General Motors employee and former president and chairman of Local 909
in Warren, Michigan. He’s lived in Detroit for 35 years. Thank you so much for joining us again, Frank. FRANK HAMMER: Thank you very much, Jaisal. NOOR: So, Frank, we wanted to get your response
to this ruling today. And there’s been some critics of people who have said that pensions
will be cut, and they pointed to other instances where cities have declared bankruptcy and
pensions did not ended up being cut. And also your response to the fact that supporters
of bankruptcy argue that tough cuts need to be made. HAMMER: Yeah. I think that this feels to me
like the quote that came from a major back during the Vietnam War that said that we have
to destroy the city order to save it. I believe that this is sort of what’s going on here
in the city of Detroit. Rather than, you know, weapons or a military arsenal, it’s financial.
And this is what’s happening to the city. The attack on pensions is, as you said, unparalleled,
and, I think, practically immoral. But I think that it’s immoral for not only the devastation
that the retirees are going to experience, but also because they’re not the cause of
this crisis, and they’re being made to bear the brunt of it. It’s very clear that it’s not long-term debt
that’s the issue. The issue is short-term flow of cash. And this is due to the decline
of revenue for the city and not an increase in obligations, which is what’s been put out
in the media. So, for example, revenues to the city have been down 20 percent since 2008.
Unemployment in the city has increased by 53 percent since 2000. The state’s cut revenues. And there–the city has continued to have
to give out tax cuts to corporations who want to do business in Detroit. And most recently,
GM tried to get subsidies. You’ve also heard of the Red Wings’ new stadium getting subsidies. So all these revenue losses is what explains
the bankruptcy. In fact, the only–what’s up is the financial
cost to the city for bad debts that the banks dragged the city into. The banks are acting
like predators here, much in the same way that they did with housing, giving new mortgages
and new loans that were impossible to pay. And that’s what’s happened to the city on
the scale of an urban center the size of Detroit. NOOR: And, Frank, talk about the emergency
manager. It’s played a central role in this bankruptcy proceeding. And critics have said
Detroit’s emergency manager refused to renegotiate the pensions until bankruptcy, and that this
kind of led to this crisis we’re seeing today. HAMMER: Well, in my recollection, the city
workers previous to 2013 have actually engaged in multiple rounds of negotiations where they
made concessions in order to prevent–in a good faith effort to prevent the bankruptcy
from going forward. And so, surely, Kevin Orr, the emergency manager, came back, and
the judge agreed that, well, he didn’t quite negotiate in good faith, but he sort of said
it didn’t matter anyway. And it’s clear that the city workers and the city unions were
trying to defend the interests of the workforce that had already been making concessions.
And I think that the appointment of the emergency manager, Kevin Orr, indicated the state’s
direction from the very beginning, because what was he? He wasn’t somebody that could
operate a city; he is somebody that could manage a bankruptcy. NOOR: And, Frank, what will the impact be
on the grassroots groups and citizens and pensioners that have been opposing this proceeding?
And finally, what lesson will come out of this for other cities that are on the brink
of bankruptcy or may be a few years down the line? I’m speaking to you from Baltimore right
now, which perhaps will be going through a similar thing in just a few years. HAMMER: Yeah. I think that the consequences
for the municipal workers, the retirees, are obviously devastating in their own right,
depending on what the ultimate negotiations or what the judge, Rhodes, decides as to what
reductions they’re going to experience. He said he would be careful. The new mayor-elect
is saying, well, we should be fair. Well, if anything was fair, it would be respecting
the Michigan State Constitution, which in fact respects–protects the pensions of the
municipal workers. But that’s being disregarded. You know, going forward, it’s going to be
a negative consequence to the city’s long-term recovery, because many of the pensioners live
in the city. They will no longer be able to afford to stay in their homes, so that in
fact we’re going to create more foreclosures, more home vacancies, and put the city in even
deeper straits. So there are different approaches that are
being taken. The municipal unions are challenging in court the actions of the emergency manager.
And in the streets there are the workers who have been affected. And there are progressive
groups that are saying that what needs to be done, the solution, is for the banks who
issued these predatory loans to cancel the debt to the city. Among other things, the
state should also revive the revenue-sharing that had existed before the crash and so on.
There are other solutions that would get Detroit through the cash-flow problem. What is being proposed is really not only
a raping of the retirees’ pensions, but the raping of city assets. And really, if you
go to the Mackinac Center for Public Policy, you’ll see that that was the intention all
along. That was the right-wing think tank that engineered this. NOOR: Frank Hammer, thank you so much for
joining us. HAMMER: Thank you very much, Jaisal. NOOR: You can follow us on Twitter @therealnews,
send me questions, comments @jaisalnoor. Thank you so much for joining us.