Detroit Gives Pensioners a Sleight of Hand

City increases assumptions for investment returns based on 2013 returns, buys peace with unions by reducing cuts to monthly pensioner checks.

Detroit doesn’t have any money. Rather, it doesn’t have enough money: It cannot both pay its debts and run the city. That’s why the city filed for bankruptcy some months back, over the outraged protests of pensioners who stand to lose a big chunk of their monthly checks.

Today, those pensioners are breathing a little easier. The city seems to have struck a deal that will leave their pensions in better shape than previously feared. Instead of cutting those monthly checks by as much as a third, the city will trim them by less than 5 percent.

About the Author

Megan McArdle, Bloomberg View

Megan McArdle, Bloomberg View

Megan McArdle is a Bloomberg columnist who writes on economics, business and public policy. Her book, "The Up Side of Down," was published by Viking.

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