Ingham County Circuit Judge Rosemary Aquillina ordered on Friday that Detroit’s bankruptcy be withdrawn, citing a concern that government employees’ pensions would be endangered by federal bankruptcy proceedings, The Detroit News reports.
“It’s cheating, sir, and it’s cheating good people who work,” the judge told assistant Attorney General Brian Devlin on Friday, adding that she will ensure that President Barack Obama gets a copy of her order. “It’s also not honoring the president, who took [Detroit’s auto companies] out of bankruptcy.”
At the same time, Aquillina voiced her confidence that Obama would ensure that pension guarantees were protected and honored.
“I know he’s watching,” she said.
In 2008, the Bush administration began and the Obama administration continued a bailout of the auto industry in the Midwest, including Detroit, that cost taxpayers nearly $85 billion, although only $44 billion had been approved for the project.
Detroit filed the largest bankruptcy case in U.S. history on Thursday after declaring an emergency March 1. Retiree pensions could face significant cuts — since they compromise approximately $9.2 billion of the city’s $11.5 billion in unsecured claims.
Although defined-benefit pensions have all but vanished in private sector employment, they continue to pile up for government employees. Nationwide, state and local governments have built up nearly $3 trillion in unfunded pension liabilities, a figure that continues to grow.