Even as officials in Washington pledged to cut domestic spending, the city of Central Falls, R.I., landed in bankruptcy court on Monday, a stark reminder that some American cities have debts so overwhelming that no amount of belt tightening can set things right.
Central Falls got into trouble, above all, by promising its police and firefighters generous retirement benefits without setting aside enough money to pay for them.The conundrum of Central Falls in dealing with its debt is much like the one in Washington and Europe: how far to extend the principle of shared sacrifice, and how much pain, if any, to inflict on various stakeholders, including workers, retirees, taxpayers and investors.
“There were a lot of red flags raised,” said Ms. Canavan, a lifelong resident. Her pension is provided by the state, which is also contemplating changes to get its costs under control. “The whole issue is mismanagement of funds and spending beyond your means. In the private sector, smart people see it coming and make adjustments. If they don’t, they go under.”
terça-feira, 2 de agosto de 2011
O futuro próximo já hoje
Small City, Big Debt Problems, no New York Times de hoje: