Welcome to 'Unsteady States of America'
'Economist' magazine sees Detroit as warning signal to nation
By John Johnson, Newser Staff
Posted Jul 26, 2013 11:25 AM CDT
The Detroit skyline.   (AP Photo/Carlos Osorio)

(Newser) – The Economist has a cheery new nickname for the US: "the Unsteady States of America." In an editorial that accompanies a cover story on Detroit's bankruptcy, the editors argue that other cities and states will make a huge mistake if they dismiss this warning. Yes, Detroit is unique in some ways—its long reliance on the auto industry is one example—but not in one very important way: "Many other state and city governments across America have made impossible-to-keep promises to do with pensions and health care," the editors write. "Detroit shows what can happen when leaders put off reforming the public sector for too long."

Consider that when realistic rates are applied, state pension funds are only 48% funded, a "terrifying" statistic. Something has to give, and the whole mess is sure to wind up in the Supreme Court. Among the long-range fixes: Public employees will have to work longer, and "states should accelerate the shift to defined-contribution pension schemes, where what you get out depends on what you put in." It won't be pretty, and the federal government will likely have to help public sector retirees in the interim. "Taxpayers should not bail out feckless local governments or investors who should have known the risks," say the editors. "But they should help pensioners left stranded through no fault of their own." Click for the full editorial.

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joeyextra55
Jul 29, 2013 1:46 PM CDT
Obama-Care Is The Veterans Association For Civilians. Take A Look At The Care The Veterans Are Getitng
joeyextra55
Jul 29, 2013 1:42 PM CDT
Does Anybody Know Who Sharpens Hillarys Nose. Is It Huma?
joeyextra55
Jul 29, 2013 1:38 PM CDT
If Those Mental Midgets Think Obama-Care Is Going To Bale Detroit Out. They Need Their Own Sit-Com. The Only Solution To This Problem Is To Combine Progressive Programs. All They Need To Do Is Add An Amendment To The Immigration Bill. This Will Consist Of Rounding Up15,000,000-22,000,000 Illegal Immigrants Charge Them A 100.00 Fine And Give Them Abandoned Property In Detroit. The Fine Is Affordable And Will Pay Off The Debt. At The Same Time It Would Repopulate The City And Restore The Tax Base. I Call It The Illegal-Immigration Homestead Act.