If you follow the rule in life to follow the money, the money trail increasingly is leading to a union pension, a union wage or a union contract. And it’s putting America’s cities out of business.
As more municipalities begin to eye bankruptcy proceedings as a way out of their financial mess, many believe that one great advantage of bankruptcy proceedings is that it will allow the nullification of fat union wages, pensions and other benefits that taxpayers in the private sector don’t get.
But if the example of Stockton, California serves as a guide, city officials would rather screw taxpayers and bondholders than take the union-led public employees off the state-sponsored tit.
And of course they would.
Public employee unions make public campaign contributions to politicians precisely for the exigency when taxpayers’ interest conflict with the interests of public employees.
Follow the money.
“The debate centers on Stockton, California, the largest city in the nation to declare bankruptcy,” reports Bloomberg. “In its initial proposal to creditors, the city would fully fund its pension system while walking away from $124 million in debt from pension-obligation bonds [Editor’s emphasis] it floated in 2007.”
So they are defaulting on the money they borrowed last time to get out the pension mess that they didn’t fix when they had the chance the first time.
Now they are contemplating a kind of municipal bankruptcy with none of the messy benefits of long-term financial relief.
Stockton couldn’t meet its financial obligations to pay for enhanced pension benefits five years ago, so it borrowed the money [Editor’s emphasis]. Rather than cut unsustainable benefit levels while it has the chance to do so now, officials there would rather default on the $103 million it owes Assured (AGO) Guaranty.