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Detroit’s Retired City Workers in the Crosshairs

With Detroit’s finances looking increasingly dire, the city’s creditors are beginning to face off with one another, each trying to minimize their losses. The city’s pension fund, which supports retired city workers, has found itself in direct conflict with a formidable opponent, the bondholders, individuals and institutions that gave the city money in order to enjoy the interest on the loan.

Kevyn Orr, the emergency manager put in charge of resolving the city’s finances, has already indicated that “painful sacrifices must be shared.”

Bondholders are insisting that they must be paid in full, or at least should be granted highest priority in repayment. Otherwise, they argue, cities across the country will be forced to pay much higher interest rates when they borrow money, since municipal bonds will be judged less secure. And they point to the “full faith and credit pledge” that underlies the issuance of bonds and is supposed to make them more secure.

But, according to The New York Times, many of the city’s retirees are already in poverty, which is becoming the new norm for retirees among the 99% across the country. And as the president of one of the affected unions correctly pointed out: “This is on their [bondholders] balance sheets. But this is our lives.”

As inequalities in wealth continue to create an ever-widening chasm between the rich and the rest of us, the concept of “shared sacrifice” is becoming increasingly ludicrous. On the one hand, people are struggling to put food on the table and hold on to their houses after working hard all their lives. On the other hand, bondholders want a handsome return on their investment without doing any work at all.

It is the duty of unions to protect their members. The AFL-CIO should immediately make its highest priority the defense of the retired city workers of Detroit, bringing all its resources to the city in order to mobilize massive numbers of people in the streets so as to galvanize public support around the retired city workers. The unions should insist that taxes be raised on the rich in order to resolve the city’s finances and protect the city’s workers. Such a gesture would bring tremendous prestige to the unions and reignite interest in a labor movement that has been on a downhill trajectory for decades.

In fact, on June 22, the NAACP and United Auto Workers (UAW) are planning a Freedom Walk to commemorate the 50th anniversary of Dr. Martin Luther King, Jr.’s original Freedom Walk in Detroit, where he gave his initial version of the “I Have a Dream” speech. The AFL-CIO should throw all its support into this demonstration and encourage that the focus of the demonstration be the plight of the retired city workers. And by bringing the court of public opinion to bear on the struggle in Detroit, it can possibly influence the outcome.

In addition to the June 22 demonstration, the Southern Christian Leadership Conference (SCLC), among others, has called for a march on Washington on August 24 to commemorate Dr. Martin Luther King’s speech. The AFL-CIO has endorsed this event. It should take advantage of the occasion and again mobilize massive numbers of working people in order to demand an end to the austerity measures that have been imposed on working people across the country ¾ not just workers in Detroit ¾ ranging from cuts to social services, cuts to pensions, cuts to jobs, cuts to education, salary cuts, and now threats to cut Social Security and Medicare. And it should demand that the federal government initiate a massive jobs program financed by raising taxes on the rich.

By going all-out to support the workers in Detroit, the AFL-CIO could succeed in protecting these workers and at the same time help itself, because it is also in dire straits and in need of a rescue as workers across the country have been urging and waiting for it to act.

Ann Robertson is a Lecturer at San Francisco State University and a member of the California Faculty Association. Bill Leumer is a member of the International Brotherhood of Teamsters, Local 853 (ret.). Both are writers for Workers Action and may be reached at sanfrancisco@workerscompass.org.

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