The Detroit decision canceling the city’s pension obligations is likely legal but it violates a social contract going back to Hamilton and LIncoln who understood that the US had to honor debts to its citizens during our two revolutionary wars.The problem goes deeper than the current decision. In our system politicians, not financial officers with fiduciary responsibilities, handle city, country, school district debt. There is no control over what these politicians do since they serve even shorter terms than corporate executives and both get to leave debts they generate behind to be paid by the corporate or civil persona.
A good start might be to create a national bank, patterned after social security trust fund, that would insure civic debt. In effect this would put US binds behind anything a politician wants to guarantee as long as the city/town/state could demonstrate the solidity needed to earn the guarantee.
Hamilton would understand, the Repricans will not,