If the unions win, it could lead to an implosion in the municipal bond market across the country as lenders realize that money lent to struggling cities may never be paid back. As Walsh notes, this outcome would upend standards that “such bonds are among the safest investments and that for ‘general obligation’ bonds cities could even be compelled to raise taxes, if that’s what it took to make good.” This would be disastrous for other cities, which would find it much harder to borrow money, and would likely need to pay exorbitant interest rates to do so.
If the unions lose, however, it would deal a major blow to support from their own members. Detroit’s pensioners would begin to wonder why they pay dues to a union that can’t guarantee the pensions or benefits they were promised. A similar dynamic all but destroyed unions in the private sector as striking union members saw their jobs shipped away to China.
James L. Salmon, Esq.
300 Pike Street
Cincinnati, Ohio 45202
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