So what am I missing?

This conclusion of a piece by Megan McArdle was confusing:

Those victims should not be abandoned -- no American should be allowed to starve in retirement. But the federal government should not step in to guarantee those false promises, any more than it should attempt to re-create the vulnerable housing developments that were washed away by the storm.

The context is that of the Detroit bankruptcy, where retirees are getting 16 cents on the dollar.  There is also issues with health care that I am not clear about, but I am presuming that these people are eligible for Medicare (they are not eligible for Social Security since they did not participate in the contributions).

What I don't understand is what the path forward being proposed is?  We cannot recover the money from past administrations, and the issues with the pension are complex.  Fault is very hard to assess.  So the choices seem to be: short other creditors, default on pension obligations, or find another source of funds.  Unless the suggestion is that the state should backstop these obligations, I am unclear what the source might be? 

I am hoping that further information makes this situation seem less dire.