Michigan Attorney General intends to intervene on behalf of Detroit pensioners

Jul 29, 2013

Last week, Michigan Attorney General Bill Schuette did something many found startling, especially those politically liberal. Schuette announced that in Detroit's bankruptcy filing he intended to intervene on behalf of those who have pensions coming.

It is widely believed that Emergency Manager Kevyn Orr will attempt to reduce pension and health care benefits for employees and retirees as part of a plan to balance the books.

Detroit is believed to have nearly twenty billion dollars in unfunded, long-term obligations, and Orr says there is no way the city can ever pay what it promised.

Schuette, who calls himself a very conservative Republican, nevertheless has waded into all this, saying he is obligated to do so in his role as, quote, “the people's attorney.”

The attorney general noted that the Michigan Constitution says that pension obligations for public sector workers may not be “diminished or impaired.”  He added that while the debt Detroit owes is staggering, “equally staggering is the financial uncertainty of pension benefits relied upon by Michigan seniors living on fixed incomes and anticipating a safe and secure retirement after a lifetime of work.”

Detroit retirees are facing a potential crisis not of their own making, Schuette added. While nothing about reducing their pensions has yet been proposed in bankruptcy court, the attorney general intended to file an appearance today so he could come in to defend their interests if it comes to that.

This prompted a number of my readers and listeners to ask just what is going on here. They noted that, as one said, Schuette has seldom ever met a right-wing cause he didn't like.

He supported right-to-work, has been a bitter opponent of President Obama's health care law, and, most notably, recently opposed a Michigan's circuit judge's contention that Detroit's bankruptcy filing violated the state constitution – at least partly because it infringed on the rights of pensioners.

What's going on here? Well, I talked to the man who held Mr. Schuette's job longer than anyone in history – former Attorney General Frank Kelley, who was the state's top lawyer for thirty-seven years. Kelley reminded me that in Michigan, the attorney general is obligated to defend the state constitution – and the interests of any state officeholder or employee.

But what happens when two sets of those folks are suing each other, or are in conflict? Kelley said he would often name two different teams of lawyers, one to argue on behalf of one set of client interests, the other the opposite.

And that may well happen here, since the attorney general is also obligated to defend the governor's interests. Most experts I talked with think that while the state constitution does in fact protect public sector pensions, the workers could still lose them.

That's because the bankruptcy filing is in federal court. Federal law always trumps state law, when they differ.

If U.S. Bankruptcy Judge Steven Rhodes says Detroit's bankruptcy requires pension cuts, that's likely to happen. So the matter is likely to be beyond the attorney general's jurisdiction. In the meantime, however, he has had a chance to stick up for Detroit's embattled pensioners.

And seeing that Schuette has to run for reelection next year, that probably won't hurt his chances.

Jack Lessenberry is Michigan Radio's political analyst. Views expressed in the essays by Jack Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, the University of Michigan.