Talk of Detroit is all the rage these days, and not because their American League baseball team is far superior to ours.
It's the talk because it's the largest U.S. city to have declared bankruptcy and the rest of the nation should be watching to see how that all turns out.
Every citizen, and especially every citizen who is a public worker, should be following this drama closely.
Chicago is no Detroit. And states like Illinois cannot file for bankruptcy the way cities like Detroit and Stockton, California can.
Let me repeat that for people who keep calling for Illinois bankruptcy: States do not have bankruptcy as a legal option.
Still, what ultimately happens to Detroit's public worker pension system because of the bankruptcy filing could ripple across the lake and around the nation.
Meredith Whitney, a financial analyst and author of "Fate of the States," wrote last week in the Financial Times that Detroit is not alone in its problems and its financial effects on public workers and on bondholders.
"Officials could raise taxes further and cut social services deeper but leaders are finding these once 'go-to' measures to be counterproductive," she wrote.
"There are five more towns like Detroit in Michigan alone. There are many more municipalities across the country in similar positions," (and states, we would add.) "Detroit's decision last week paves the way for other elected or non-elected officials to make decisions to save their cities and towns," Whitney concluded, "decisions that probably involve politically unpopular actions that may secure their long-term viability."
The Wall Street Journal also published an analysis with parallels to Illinois, Chicago and many other communities with pension debt problems.
David Skeel, a bankruptcy law professor at the University of Pennsylvania Law School, noted that immediately following the Detroit filing, a circuit court judge tried to intervene because she was concerned the bankruptcy would alter city workers' pensions in violation of the state constitution.
But a federal bankruptcy judge and appellate panel already stayed the circuit judge's orders. Michigan's constitution, like ours, states that pensions are contracts that cannot be "diminished or impaired." But Skeel notes that federal bankruptcy law will supercede the state constitution and argues that the point of bankruptcy powers is to help along the adjustment of debt.
"Chapter 9 requires that a restructuring of obligations be in the best interests of creditors -- including the retirees," Skeel writes. "This suggests that sacrifice must be shared among all of a city's general creditors, bondholders as well as public employees.
"As the pension issue goes, so goes Chapter 9," Skeel continues. "If Detroit can make at least modest adjustments to its pensions, and restructure its other obligations as well, the city and other municipalities in dire financial straits may have a fighting chance," he concludes. "If not, the downward financial spiral of too many American cities is likely to continue."
And what of the chances of the state with the nation's worst pension debt?
The Economist's take on Detroit tosses around some intriguing numbers. Residents there would have to fork over $27,000 each to cover its debt. As we've noted repeatedly, the nonpartisan group, Truth in Accounting, says every taxpayer in Illinois would have to pay $31,600 each to cover our debts right now.
And how's this for a new way to think about our debt? "The hole in Illinois's pension pot is equivalent to 241 percent of its annual tax revenues," the Economist notes in its piece, entitled, "The Unsteady States of America."
Illinois cannot simply ignore its bills forever. Something -- or a lot of someones -- are gonna have to give.
Are you fed up with our Illinois debt? Sign our pension reform petition here.
Our 2024 Coverage Needs You
It's Another Trump-Biden Showdown — And We Need Your Help
The Future Of Democracy Is At Stake
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
The 2024 election is heating up, and women's rights, health care, voting rights, and the very future of democracy are all at stake. Donald Trump will face Joe Biden in the most consequential vote of our time. And HuffPost will be there, covering every twist and turn. America's future hangs in the balance. Would you consider contributing to support our journalism and keep it free for all during this critical season?
HuffPost believes news should be accessible to everyone, regardless of their ability to pay for it. We rely on readers like you to help fund our work. Any contribution you can make — even as little as $2 — goes directly toward supporting the impactful journalism that we will continue to produce this year. Thank you for being part of our story.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
It's official: Donald Trump will face Joe Biden this fall in the presidential election. As we face the most consequential presidential election of our time, HuffPost is committed to bringing you up-to-date, accurate news about the 2024 race. While other outlets have retreated behind paywalls, you can trust our news will stay free.
But we can't do it without your help. Reader funding is one of the key ways we support our newsroom. Would you consider making a donation to help fund our news during this critical time? Your contributions are vital to supporting a free press.
Contribute as little as $2 to keep our journalism free and accessible to all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you'll consider contributing to HuffPost once more.
Support HuffPostAlready contributed? Log in to hide these messages.