Dec. 3 may prove a landmark day in the history of the pension crisis hammering local and state governments around the United States. A federal bankruptcy court judge ruled that pensions of Detroit’s employees can be reduced to help Michigan’s largest city stabilize its finances. Previously, struggling local governments had assumed that pensions couldn’t be touched because they were given strong protections in their states’ legal codes or constitutions, as is the case in Michigan and in California. But Judge Steven W. Rhodes held that federal bankruptcy law trumps state law, and that under federal law, all the creditors of a bankrupt government must be treated in “fair and equitable” fashion. Thus, the contracts governing retirement benefits are as subject to dissolution as other government contracts.
So the Jim Crow system in California is illegal. Darrell Steinberg will need to secede if he wants his oligarch preserved.
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