David Sirota has a good piece juxtaposing yesterday’s Detroit bankruptcy ruling – which greenlights the city to renege on pension commitments – with the full speed ahead plan to spend Michigan taxpayer money on another boondoggle sports arena.

As Sirota writes, Detroit faces a 30-year pension gap of roughly $3.5 billion. This, according to state-appointed Detroit city-manager Kevyn Orr, is simply unaffordable.

But Michigan spends billions of dollars a year in direct and indirect tax breaks and subsidies to businesses, including $440 million in annual taxpayer subsidies to corporations – dwarfing the roughly $100 million a year that it would take to plug the pension gap. As it happens, $400 million is roughly the size of the taxpayer subsidy slated to support the building of a new hockey arena in Detroit. Orr himself, a booster of the new project, can’t really make a compelling argument for the larger economic benefits of such spending.

But we know one person who will benefit – Red Wings’ owner Mike Ilitch, with a net worth somewhere north of $1.5 billion.

Meanwhile, Detroit municipal workers, whose average pension is $19,000 a year, hardly a king’s ransom, could be taking a significant hit.

The workers who will be potentially deprived of their pensions are slated to receive $19,000 a year, hardly a king’s ransom. And bear in mind that career municipal workers typically don’t receive social security. This is in the context of a nationwide move in the past three years to exaggerate greatly the supposed pension crisis facing states and municipalities, all while government policy on the city, state and national level continues to direct enormous gifts to the wealthy and well-connected.

As Sirota points out, Detroit provides a particularly apt and depressing encapsulation of that larger dynamic.



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