Pinching Pensions to Keep Wall Street Fat and Happy

[PETRUS]

<snip>

While media like to play the scary number game -- $20 billion in unfunded pension liabilities – this comes to about to about 0.5 percent of the city’s GDP over the next 30 years, the time period in which the shortfall would have to be made up. The city could of course raise this much revenue, but the current mayor Rahm Emanuel thinks it would be too inconvenient. And hey, these are just contracts with workers, not obligations to people who really matter.

Emanuel’s cavalier attitude toward contracts with the city’s workers apparently does not apply to its other contracts, for example its deal with Morgan Stanley to lease its parking meters for 75 years. The city arguably received less than half the market price for this long-term lease, but Emanuel apparently thinks the city can still afford to honor its contract with the huge Wall Street bank.

Contracts with Wall Street types always seem to draw more respect than contracts with workers. Folks may recall that when AIG was bankrupt and effectively a ward of the government, we were told by the Obama administration (where Emanuel was then chief of staff), that it had to pay out $165 million in bonuses to its senior staff. Many of the AIG employees, who had taken the company into bankruptcy, pocketed hundreds of thousands of dollars from these bonuses.

By contrast, the pensions for Detroit’s retirees average just over $18,000 a year. That means many AIG executives got a larger bonus from their bankrupt company in 2009 than Detroit workers will collect over their whole retirement...

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/pinching-pensions-to-keep-wall-street-fat-and-happy

[Squinch]

1. "That means many AIG executives got a larger bonus from their bankrupt company in 2009

than Detroit workers will collect over their whole retirement... "

...That is so freaking sick.

[MotherPetrie]

2. K&R

[Supersedeas]

3. thanks for the link