Nothing happens in a vacuum, especially Detroit’s bankruptcy. If we apply a Richter scale-like measurement to the aggregate condition of the fiscal state of our governments at all levels (local, state, and federal) and define the maximum shock to the system as a 9.0, then what happened in Detroit last week is at best a 1.0 tremor. But it is most definitely a precursor, of the big one to come.
The municipal employees in Detroit are going to take a haircut to their current, and promised retirement benefits. That’s a given; it’s just a question of how bad it’s going to be. (And they can completely forget their medical benefits in retirement; the Detroit Obamacare exchange will be a very busy placed in the near future. Good luck with that.)
And with several hundred cities, counties, and yes, a few states around the country just as bad off as Detroit, you can bet that a great many people are feeling very nervous, and starting to ask a lot of very difficult questions, questions which have no answers.
Samuel Johnson was correct: “Nothing concentrates the mind like the prospect of being hung at dawn.” Do all those present or future California government employee retirees really sleep soundly at night, trusting in Jerry Brown’s pronouncement that California is in GREAT shape financially..the biggest problem is how to wisely spend the (make-believe) budget surplus. All those correction officers who think they will get their $100,000 year pensions, and immediately move to Florida, to avoid paying the state income tax..well, not so fast.
Detroit’s the first, and, like Ryan Braun, it won’t be the last. But remember, over the past decade, every time Republicans brought up the idea of reforming/privatizing Social Security?
The screaming, bleating, and caterwauling from Democrats, the left, the whole gang…can basically be summed up as: “it’s too risky, the market is dangerous, working people need stability, financial security, yada, yada, yada….”
How’s that working out for you now, Detroit?
I suspect that in the not to distant future, one of the happy, and totally unintended consequences of Detroit’s bankruptcy will be the privatization of Social Security for younger workers.