Rod Meloni: The Grand Bargain vote

By Rod Meloni - Reporter, CFP ®

DETROIT - How nervous do you suspect the governor, Kevyn Orr, federal Judge Gerald Rosen [lead negotiator in the Grand Bargain] and every pol and person of power in Southeast Michigan are tonight?

Yes, the governor signed the two bills that took the uncertainty out of the state of Michigan's corner of the deal. There was a lot of glad-handing and more than a few "atta boys" passed out in the news conference punctuated with standing ovations. But there is so much more work to be done. It was just a happy respite from the financial marathon the city and the state is running.

You'll remember that if any one of the legs of this stool is knocked out, the whole deal collapses. You might also remember House Speaker Jase Bolger was against the Grand Bargain before he was for it [he took a big bow at the bill signing news conference today]. But for all the excitement over the success that has built on other unexpected success, that nearly a year after the bankruptcy was filed, funneled nearly a billion dollars into the effort to soften the bankruptcy landing for the city's active and retired workforce.

You would think that this is a no-brainer, that voting for the Grand Bargain only makes sense because it cuts the personal losses considerably from the "Plan B" Kevyn Orr has drawn up as the alternative. As it stands now, most retirees would take between a 5 and 15 percent cut in pensions depending on their individual circumstances, and their healthcare is dramatically reduced and in the general retiree system there is a claw-back of monies paid out in the employee annuity plan that was illegally operated. Be aware that these cuts are significant and will be painful and that's the good news! But Orr says if the vote goes the other way, should the retirees and active employees give the Grand Bargain thumbs down, they are looking at losing something on the order of 70 cents on the dollar they currently receive or can expect to receive. Again, this looks on its face a simple choice.

But, let's also remember Detroit is a different place, in that, what seems on its face an easy cost benefit analysis is anything but. This is the city where philanthropist Bob Thompson offered the destitute and broke city school system $200 million to build 15 charter schools. I was at the news conference when protestors said, and I quote for emphasis, "tell the slave-master to keep his money." Such was the commitment to union teachers at the time. This decision was so mind-bending, Time Magazine's Joel Stein, who would normally be openly sympathetic to Detroiters' plight, wrote a column decrying the utter insanity of the position. Yet it stood, until Mayor Dave Bing went hat-in-hand to Thompson and took some of the money to build charter schools.

We heard things today at the news conference like the well received speech by Retired Detroit City Employee Association President Shirley Lightsey about the Grand Bargain: "You cannot give that up, you let that money go it's off the table you will have no sympathy from anyone because they will look at you and say well they tried to give you a billion dollars and you turned it down."

Well, actually, yes they can.

Art Vardiman may be first in line. He is a retired bus driver who put in 32 years with the city. He also was a union local president for a long time. He looks at the situation in a dramatically different light. He told me today: "In all good conscience I can't vote yes." He has no trust in Kevyn Orr, Governor Snyder, or anyone involved with the bankruptcy. He is looking at pension cuts already, doesn't believe they are as low as those like Lightsey would have him believe, and he is operating out of the space that the city will come back with another, perhaps sweetened offer, if the Grand Bargain gets the thumbs down: "If you could send enough strong no sentiment that means there's something wrong here there's some gaps here. There's something terribly wrong here."

By voting yes, the retirees and actives are giving up future litigation, no appeals -- they lose a lot of benefits with no option to get a better deal down the road. He is willing to take the chance that something better is at the end of the tunnel

"I'd rather take my chances in court, ya know ... I may lose this thing but I would rather go down fighting than just voluntarily give it away because it simply doesn't make sense!" he said.

Spoken like a man who has negotiated with the city in the past and succeeded by holding out. In this atmosphere it's all about the principle of the thing.

There is one problem here though. After watching bankruptcies drone on for the past five years now I can tell you the light at the end of the tunnel usually is a long freight train. Any bankruptcy expert will tell you there are no second chances. Negotiating in this environment is not about a better, more lucrative contract. Instead it is exactly the opposite. Bankruptcy is a bitter battle over the leftover scraps. It is vultures picking away at a withered old carcass.

Let's face it there is not a lot of trust in some city resident who look out toward the suburbs or north to Lansing. There is still a strong contingent that believes "outsiders" are after Detroit's jewels. No doubt in years past the outsiders earned the scorn. But this is a new day. The fact that a billion dollars has been donated by those outsiders that, for what it's worth, stretch from coast to coast to ease the pain of bankruptcy appears of little solace to them.

This is no slam dunk. The governor and Kevyn Orr are well aware and know they have just three weeks to get everyone on board. They are concerned and justifiably so. They have printed up buttons with Shirley Lightsey's words on them: "You can't eat principles" and "uncertainty doesn't pay the bills."

We will see.

Copyright 2014 by All rights reserved. This material may not be published, broadcast, rewritten or redistributed.