Fox Business
Expand
Browse All Video
Watch Live

You're watching...

Why Are Cities Going Bankrupt?

Details

  • Description

    Manhattan Institute’s Steven Malanga on cities in financial trouble, pension reform and employee pay.

  • Duration 5:29
  • Date

Clips

Also in this playlist...

Latest Video

Auto-advance: ON

Auto-advance
View All

Transcript

This transcript is automatically generated

C -- on this Ellison we've got three California cities that a file for bankruptcy just in the past month.

The most recent of course being San Bernardino surely it won't be the last so we -- -- find out what cities could be next joining us.

With a few possibilities -- the Melinda from a Manhattan institute also offer up -- shakedown.

Dividend hike and I want to bring -- -- kind of -- you can -- at the bit there that I.

I don't really want to get in on this conversation well -- Wanted to give us currency because those aren't the only numbers that are going in the wrong direction because of demographic changes for instance we have fewer people working relative to people retired in this country and Social Security than we've ever had before.

We've had we have fewer people are working in public in public sector pensions vs people who are retired all of those.

Ratios are changing honest.

Because of demographic changes and what we need to be doing is the exact opposite of what these welfare -- show when you have fewer workers to retirees.

Your workers have to be more productive instead.

Our workforce are getting less productive -- -- April this year retirees took -- 55 million but people working in this testimony put -- 22 million I mean those those kind of numbers can't be go on forever not only that.

One of the reasons Aberdeen is in trouble is because you know in California they require that the employee making contributions of the pension system to not just the employer.

Except -- San Bernardino years ago from contract negotiations said will pay your share to do so the employees aren't even making a contribution to there to the pension funds and that kind of thing only -- only happens when the surpluses.

And these governments around the market they never ever plan for the downturn it's always about well you know if there's a downturn some -- out.

Think it's so singularly the surpluses disappear right away.

That was -- -- right is that -- had some months scandals some fraudulent bookkeeping don't wanna live up thirteen of the sixteen years the city leaders thought that they were in the black.

Yeah we don't know that there's an investigation we don't know exactly what's going on the truth of the matter is a criminal investigations of this sort of -- was actually stealing money usually don't -- -- result indictments the fact of the matter is one of the reasons that cities across America are in trouble like this is because what's a politician and misled us.

New Jersey was cited by the securities and exchange commission for fraud right for -- municipal for for hiding their pension debt.

Nobody went to -- nobody was investigated did the SEC -- this is a civil action they didn't find anybody know politicians went you know we're we're brought up before the SEC so.

Politicians have been misleading -- that's why we're seeing this kind of a mess right now especially the pensions we've been misled across -- On the top of the politicians are there any out there that you like that are saying anything that can turn the tide because eight the one point talk about the demographic -- can't we can't change that overnight.

But certainly with can change these policies that are that are really making this -- while we sit in the states of course we've -- its stand no.

Mitch Daniels for instance.

And the collective bargaining completely -- you reorganizing the anti government right.

Created whole savings accounts for Medicaid recipients people on Medicaid rather than just saying.

You know go anywhere you want we're health savings account we're gonna -- you -- -- we're gonna election try to get to it to -- to take some responsibility.

Scott Walker obviously Chris Christie I think there armada Merrill Wisconsin mayor of New Jersey governor of governors of the FF Mayer I think what.

Here's the thing though it's the Stephen we've got other cities that are gonna continue to fall I mean you have -- -- -- you you -- -- -- -- three -- that may -- -- what -- the -- well here's -- -- Are actually up a whole bunch of cities and -- -- a big handfuls of either insolvent.

They're basically being kept alive by other states member -- cities in general just can't file for bankruptcy they have to have commission.

So whether they ultimately file sometimes comes out of state but we know for instance -- Harrisburg Pennsylvania tried to file for bankruptcy.

Right they were that the state should know you can't do it's a -- due to bankruptcy court kick them out however there the a monetary -- the fiscal monitor the statement plays just said.

-- Harrisburg is gonna run -- -- money again in October so unless the state continues to bail them out.

There in an insolvent Citi.

A Detroit is insolvent basically Detroit has not only this you longest budget deficit but they have all of these debts that they could not possibly pay off.

-- the state as a fiscal moderately -- but the unions.

And the corporation counsel are suing to get rid of the fiscal monitor they want to throw themselves in bankruptcy so its all of question how that plays out in court.

There's so many stories with these municipalities and mammoth lakes California they just lost a gigantic losses and that's -- it.

Through them my yeah so how do you you know is there a banned -- solution to this is -- Pixar and every story is really individual but -- well.

Except adding that if in in stock based in San -- -- in Scranton is Lou they're a big chunk of it is about employee pay their pension composition and the reason there isn't a quick mandates solution that these are things like pensions.

And health care for retirees these credits -- -- already -- aren't if not what we think there's a problem out -- let's just -- the even farther to go shake shake down and who's gonna -- what this is this is Jeff Arnett I love my original title when -- when when the publisher of the book he said you know you -- -- -- shake out and it just gets worse every day the revelations in the last two years that is exactly.

That it's about.

Government shaking down taxpayers and these are good examples -- While and -- if -- taxpayers and more more of the burden signaling that -- excellent --

Load More