A federal bankruptcy judge in Detroit ruled that public employee pensions were not protected from a federal bankruptcy filing, even though the Michigan Constitution expressly protects them.
This ruling -the first of its kind- is disturbing and the impact will be catastrophic to persons who labored for years in reliance on the guarantee of a pension.
More scary, this decision may prompt other public employers with financial problems largely of their own doing to do the same.
The ruling is just the latest example of bankruptcy law changes in the late 1970s that we’re pushed through Congress by business lobbyists, and criticized by Hedrick Smith in his best selling book, “Who Stole the Amerivcan Dream?” The answer: wealthy businessmen who care more about short term profits rather than the employees who made their businesses successful.
For more information on pensions read Mary Williams Walsh’s article in The New York Times.