8 Aug. (LPAC) Both “Mussolini Mike” Bloomberg and Wall Street Journal editor Steven Moore demanded in Aug. 6 statements that municipal pensions and healthcare benefits be cut across the nation immediately, claiming that this would avoid “the fate of Detroit” threatening every American city.
Mussolini Mike, speaking at an event in Brooklyn, said “New York City is headed toward the same bankrupt fate as Detroit, unless the incoming mayor tends to municipal union issues and curbs soaring pension costs right away,” according to the Washington Times’ report. “Avoiding the hard choices is how Detroit went bankrupt,” he said, and justified Chicago’s just having laid off 2100 teachers as a consequence of unpayable pensions. “Chicago is far from alone,” Bloomberg said. “Cities across the country all face the prospect of pension costs swallowing more and more of their budget, and New York is no exception.” He made the patently absurd claim that New York’s 1975 layoffs of tens of thousands of employees, under Felix Rohatyn’s Municipal Assistance Corporation dictatorship, was caused by pension costs!
As for why New York City, in Bloomberg’s narcissistic view, is doing so well now? It’s because, when its industrial base collapsed, it turned to Wall Street’s “financial sector” and was saved. Detroit, he concluded, failed because it didn’t do the same.
In an anti-pension attack distributed by NewsMax, WSJ editor Moore claimed that “20 cities are poised to follow Detroit” into bankruptcy because of their retiree costs. He cited the accounting-claptrap figure of $118 billion in unfunded municipal pension liabilities, which is primarily a mathematical consequence of Bernanke’s Fed’s zero-interest-rate policy, combined with impacts from the financial crash of 2007-08. Moore implied that the “20 cities” include Chicago, Los Angeles, and New York; but when he listed them, they were all much smaller cities and counties flirting with or in bankruptcy, and with three exceptions, pension costs had played no role.
Cities and counties are, however, beginning to pay the costs of Detroit “emergency manager” Kevyn Orr’s dirty work for UBS, Bank of America, and their ilk, in steadily rising municipal bond interest rates. Orr said in an early interview that he “didn’t care” what impact his actions had on municipal bond rates, as long as he made the cuts in Detroit. Already, four Michigan counties/cities have had to withdraw bond issues in the past week: Genessee County (A2 rating), $53 million issue; Saginaw County (Aa3 rating), $60 million issue; Battle Creek (AA) $16 million school bond issue; and Hamtramck, a school bond issue. All were contemplating exorbitant rates of 6% or higher. Chicago’s treasurer announced on Aug. 6 that the city’s annual interest cost estimates have risen by $2 million in past two weeks.