Where would a Detroit bailout end?

posted at 12:01 pm on July 23, 2013 by Ed Morrissey

Even after Detroit’s announced bankruptcy — stalled momentarily in the courts — there has been surprisingly little appetite in Washington or anywhere else for a bailout.  The Detroit Free Press’ editors made that explicit in their editorial on Sunday, even before Governor Rick Snyder appeared on Face the Nation to oppose it — not even a bailout from the state of Michigan.  “And there’s no obvious relief on the way from Lansing,” they wrote, “which (for better or worse) seems unlikely to build the necessary statewide support for a bailout or to change laws to permit new tax levies for Detroit or anywhere else.”

If the state of Michigan — which has more to lose in a collapse of Detroit than any other stakeholder other than the city itself — isn’t interested in a bailout, why should Washington step up to the plate? Washington has its own problems, Detroit native Ron Fournier writes, including some of the same problems that felled Detroit. See how familiar some of these descriptions are to the rest of us outside of Motor City:

Economy: Detroit failed to adapt to the global economy and to diversify for the post-industrial era. “Sometimes the losers from economic change are individuals whose skills have become redundant; sometimes they’re companies, serving a market niche that no longer exists; and sometimes they’re whole cities that lose their place in the economic ecosystem,” wrote economic columnist Paul Krugman in today’s New York Times.  Sometimes, the victims are whole countries, a fact that seems lost on Washington, where the leadership is polarized and smart ideas go to die. …

Bad government:  “The city’s operations have become dysfunctional and wasteful after years of budgetary restrictions, mismanagement, crippling operational practices and, in some cases, indifferences or corruption,” Detroit’s emergency manager Kevyn Orr wrote in May.”Outdated policies, work practices, procedures and systems must be improved consistent with best practices of 21st-century government.” It would not be a stretch to apply Orr’s words to the federal government.

Broken promises: The group most at risk in Detroit’s bankruptcy may be the city’s 20,000 retirees (including my father as well as many friends and family members). Of Detroit’s overall debt, about half represents pension and health benefits promised to retirees, according to the Washington Post. This is because city leaders borrowed against pension funds and mortgaged the future – not unlike what Washington’s leadership is doing to Social Security and Medicare.

Rigid institutions: Government agencies, businesses, schools, churches, the media, and virtually every other city institution failed to help residents weather the tumult of the last four decades of the 20th century. In particular, Big Labor never managed a second act after anchoring the rise of the American middle class in Detroit. Union membership and influence has declined in Detroit and elsewhere, considered by many to be more of an obstacle than solution.

I’d disagree with the last point, at least in part.  Public-employee unions have remained very influential in Detroit and other large urban centers, and drive public policy through union dues turned into political campaigns and contributions that oppose reform of big-spending policies.  That’s why they’re seen as an obstacle now rather than part of the solution.

Still, this is a disaster for the residents of Detroit, and likely for its workers, who relied on contracts and promises for pensions.  There is simply no escaping the fact that the retirees will be the most vulnerable players in the drama that will unfold over the next several months, and that the resources they put into those pension plans will most likely be severely damaged, if not almost utterly destroyed.  That would explain the impulse for a federal bailout if and when it materializes — but it’s not likely to happen.  In my column for The Week, I explain that the problem isn’t just Detroit, and the solutions won’t be found in dodging the real issues for state and local governments:

Governor Snyder hits the mark when he notes that a federal bailout won’t fix the underlying problems, at least not without drastic reform. It also would send a bad message to investors, who have poured money into Detroit bonds despite its performance over the last decade. “Basically, Detroit hasn’t had a positive fund balance since 2004 in its general fund. 2004,” Snyder emphasized to Bob Schieffer on Face the Nation. “If you were lending to the city of Detroit in the last few years, didn’t you understand there were major issues and problems?” In other words, investors looking for premium returns on municipal bonds allowed local politicians to paper over the collapse — so why should they get a bailout on their bad investment?

That points to the much larger danger in a federal bailout. If Detroit were a singular event, a collapse from uniquely incompetent management or corruption, then in isolation the federal government might be tempted to step in. That’s not the case, though, as the escalating numbers of Chapter 9 filings attest. More cities, counties, and states teeter on the brink of insolvency, thanks to the same kinds of structural problems and the failure of political leaders and voters to address them. For instance, Stanford University warned three years ago that California’s unfunded pension liabilities amounted to a whopping $500 billion — 100 times that of Detroit and six times the state budget for FY2010. A year later, a former Orange County treasurer put the total at $884 billion. A Boston College study estimates that the total of all state and local pension liabilities is $3.8 trillion, with $1 trillion unfunded, which is almost certainly a conservative estimate.

Federal bailouts will not solve this problem, nor the other problems of urban mismanagement and incompetence. Bailouts would obscure them, as well as the need to fix the structural and political issues that have led to the collapses already in motion, and those to come. Politicians and citizens who want to avoid the unpleasant duty of reform have already put off these issues for far too long. The White House can send a strong signal for responsibility by refusing to rescue cities and states from their own folly, starting with Detroit.

We can’t afford to bail everyone out, nor would that address the underlying structural issues that created the crises in the first place.  At some point, Detroit has to take responsibility for Detroit, just as California will have to take responsibility for California.  And a lot of other state and local governments had better learn that lesson quickly, or else we’re not going to have any more buckets for any kind of bailouts at all.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Woudn’t

trs on July 23, 2013 at 12:03 PM

It would end in another bailout, and another, and another…..

NOMOBO on July 23, 2013 at 12:03 PM

Wouldn’t not Woudn’t

trs on July 23, 2013 at 12:04 PM

Oh, and….Second!

NOMOBO on July 23, 2013 at 12:04 PM

Where would a Detroit bailout end?

Nationalize?

nobar on July 23, 2013 at 12:06 PM

We can’t afford to bail everyone out, nor would that address the underlying structural issues that created the crises in the first place. At some point, Detroit has to take responsibility for Detroit, just as California will have to take responsibility for California. And a lot of other state and local governments had better learn that lesson quickly, or else we’re not going to have any more buckets for any kind of bailouts at all.

Will bailout number #1 lead to bailout number #2?

It could lead to situation local, schools, and states don’t care what they spend knowing they will just get a bailout by the federal government. This is a akin to the banks not taking their medicine a few years ago.

If people get burned they will learn their lesson.

Oil Can on July 23, 2013 at 12:07 PM

“In Chicago, Bakersfield, New York City, Los Angeles, Denver, Miami, San Diego,….” — Dr. Howard Dean

Schadenfreude on July 23, 2013 at 12:07 PM

Read this, for your children.

Schadenfreude on July 23, 2013 at 12:08 PM

Wouldn’t not Woudn’t

trs on July 23, 2013 at 12:04 PM

We knew what you ment. :-)

Oldnuke on July 23, 2013 at 12:09 PM

With a Craig’s List ad offering to sell or trade America for a gently used third world nation?

trubble on July 23, 2013 at 12:10 PM

It would end in another bailout, and another, and another…..

NOMOBO on July 23, 2013 at 12:03 PM

That’s the biggest danger in a Detroit bailout. If they get one, then why wouldn’t California? Or Illinois? And so on and so forth. While $20 billion for Detroit may be a drop in the bucket for a big spender like Obama, even someone as delisional as him would have to wonder where the money for a California bailout would come from.

Doughboy on July 23, 2013 at 12:10 PM

What’s another several billion when you’re already $200+ trillion in debt?

/Leftard

ShainS on July 23, 2013 at 12:11 PM

What exactly would we bail Detroit out with? Last I heard, we don’t have money to conduct White House tours.

Bitter Clinger on July 23, 2013 at 12:11 PM

It can’t end. There is no tax base worth discussing. There never will be with these corrupt Democrats in charge. The only population growth is Muslim immigrants, many illegal, and all hate America, Americans, taxes and the rule of law.

pat on July 23, 2013 at 12:11 PM

There is nothing that a simple disincorporation of the city as an entity won’t solve. All the land reverts back to the county. If anyone wants a new small town of Detroit, they can organize and vote for that… but the city is dead and has been a zombie for a decade or more. Put it out of its misery.

ajacksonian on July 23, 2013 at 12:11 PM

A bailout of Detroit would fast make the city a permanent welfare recipient. There would be no incentive to again become solvent; I don’t think any policies or practices would change. Once they ran through whatever Washington gave them, they’d be back with their hand out telling us they ‘inherited’ such big problems from Republicans it’ll take decades to fix them.

Liam on July 23, 2013 at 12:12 PM

Somehow or another I can’t get away from the feeling that it will end in my pocket.

Cleombrotus on July 23, 2013 at 12:13 PM

It’s all intentional.

Obama and his adherents destroy the US, apace.

Schadenfreude on July 23, 2013 at 12:13 PM

The Rs let them and are, thus, more culpable.

Schadenfreude on July 23, 2013 at 12:14 PM

It seems all that matters now is what honors the wishes of the president, so yeah there’ll be a bailout. Again and again.

smfic on July 23, 2013 at 12:16 PM

That’s the biggest danger in a Detroit bailout. If they get one, then why wouldn’t California? Or Illinois? And so on and so forth. While $20 billion for Detroit may be a drop in the bucket for a big spender like Obama, even someone as delisional as him would have to wonder where the money for a California bailout would come from.

Doughboy on July 23, 2013 at 12:10 PM

The answer – “Why we borrowed $5 of every $11 we spent in our heyday, so we can do it again.”

Steve Eggleston on July 23, 2013 at 12:17 PM

There is nothing that a simple disincorporation of the city as an entity won’t solve. All the land reverts back to the county. If anyone wants a new small town of Detroit, they can organize and vote for that… but the city is dead and has been a zombie for a decade or more. Put it out of its misery.

ajacksonian on July 23, 2013 at 12:11 PM

Which, not-at-all-ironically, what the liberals want nationwide – a larger tax base to suck from.

Steve Eggleston on July 23, 2013 at 12:18 PM

It ends when the city is taken over by REAL capitalists (which is not the same thing as Republicans), or the city is liquidated into a “cecession of existence.”.

listens2glenn on July 23, 2013 at 12:20 PM

I live about 30 mins by freeway north of Detroit.
I say let it die so it can be reclaimed and rebuilt.
No bailout. EVER!

mechkiller_k on July 23, 2013 at 12:21 PM

Dearborn may have some solutions in mind, and may know some people willing to spend some big bucks. How does Detroit as a city based on sharia law sound?

a capella on July 23, 2013 at 12:21 PM

Well if Detroit gets a bailout then every state, every municipality, hell everybody should get a bailout. You know full failth an credit, equal protection and all that.

bgibbs1000 on July 23, 2013 at 12:24 PM

Dearborn may have some solutions in mind, and may know some people willing to spend some big bucks. How does Detroit as a city based on sharia law sound?

a capella on July 23, 2013 at 12:21 PM

It’s pronounced “Dear-born-a-stan”

mechkiller_k on July 23, 2013 at 12:24 PM

Still, this is a disaster for the residents of Detroit, and likely for its workers, who relied on contracts and promises for pensions.

A disaster that those residents voted for.

I only wish we could construct a wall around the city to keep them in so they don’t spread to other cities and towns.

PackerBronco on July 23, 2013 at 12:25 PM

Bone It-Own It.

How about moving every O’care supporter there..every single one of them and convert it into a medical community…then we can truly get an accurate count of how many folks truly back it as well as a centralized govt…

hillsoftx on July 23, 2013 at 12:27 PM

Without a bailout the only hope for Detroit is for the arsonist thats been working over the place gets busier.

docflash on July 23, 2013 at 12:27 PM

The tidal wave is coming in…Boomers are retiring in droves every year now. Those unfunded pension obligations are coming due and within 5 years at least two other top 10 cities will probably be in a similar situation as Detroit.

Robert_Paulson on July 23, 2013 at 12:28 PM

Its about time we had the conversation. Where the unions that have been fluffing their democrat mayors and councilmen have schemed to promise huge pensions. That aren’t funded. That have unrealistic fixed interest rates that haven’t been paid on non-existent funds all these years.

They have broken the promises of the fake pensions plans they haven’t been funding. We didn’t do that. They did and they have the employees to thank as well.

This is why Nancy Pelosi quit talking about privatizing 401(k)s just weeks before the 2010 elections.

DanMan on July 23, 2013 at 12:32 PM

I’d disagree with the last point, at least in part. Public-employee unions have remained very influential in Detroit and other large urban centers, and drive public policy through union dues turned into political campaigns and contributions that oppose reform of big-spending policies. That’s why they’re seen as an obstacle now rather than part of the solution.

Just another reason why public employee unions should be banned. None of us care if a union destroys a private company, that’s just the nature of competition. But allowing unions to destroy a city is disgraceful.

Still, this is a disaster for the residents of Detroit…

Detroit is like the Lord of the Flies, Ed. The vast majority of the population is already at the bottom.

NotCoach on July 23, 2013 at 12:38 PM

This “we can’t let the pension plans fail, too many people are depending on them” BS has to stop.

How stupid would I be if the government told me that they would take care of all of my medical needs for eternity, and I failed to make any alternate preparations for those medical needs? Come to think of it, we’ll be dealing with that exact problem shortly.

NOMOBO on July 23, 2013 at 12:39 PM

Just print more money!!

tommer74 on July 23, 2013 at 12:41 PM

I think I can speak on behalf of all white people in apologizing to all blacks for the appalling living conditions in Detroit. But mere apology is not nearly enough. I believe that all whites (at least the ones who are not racists)would agree to hefty tax increases imposed on them in order to rebuild not only Detroit, but over 100 other cities totally destroyed by blacks as restitution for slavery which ended only 148 short years ago.

MaiDee on July 23, 2013 at 12:41 PM

..reheated storyline from about six months ago. Ominous, portentous, and imminent for all of our festering burghs:

25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head.

The money quote:

All over this country, there are hundreds of state and local governments that are also on the verge of financial ruin…

“Everyone will say, ‘Oh well, it’s Detroit. I thought it was already in bankruptcy,’ ” said Michigan State University economist Eric Scorsone. “But Detroit is not unique. It’s the same in Chicago and New York and San Diego and San Jose. It’s a lot of major cities in this country. They may not be as extreme as Detroit, but a lot of them face the same problems.”

A while back, Meredith Whitney was highly criticized for predicting that there would be a huge wave of municipal defaults in this country. When it didn’t happen, the critics let her have it mercilessly.

But Meredith Whitney was not wrong.

She was just early.

Detroit is only just the beginning. When the next major financial crisis strikes, we are going to see a wave of municipal bankruptcies unlike anything we have ever seen before.

And of course the biggest debt problem of all in this country is the U.S. government. We are going to pay a great price for piling up nearly 17 trillion dollars of debt and over 200 trillion dollars of unfunded liabilities.

All over the nation, our economic infrastructure is being gutted, debt levels are exploding and poverty is spreading. We are consuming far more wealth than we are producing, and our share of global GDP has been declining dramatically.

We have been living way above our means for so long that we think it is “normal”, but an extremely painful “adjustment” is coming and most Americans are not going to know how to handle it.

So don’t laugh at Detroit. The economic pain that Detroit is experiencing will be coming to your area of the country soon enough.

The War Planner on July 23, 2013 at 12:41 PM

But allowing unions to destroy a city is disgraceful.

yep, and “independent school districts” too. We have one failing district being swallowed by a larger one here in Houston.

DanMan on July 23, 2013 at 12:43 PM

MaiDee on July 23, 2013 at 12:41 PM

..lawdy! One sure hopes there’s a missing sarc tag in there somewhere. If not, please avail yourself of one below:

/////////////////////

The War Planner on July 23, 2013 at 12:44 PM

While $20 billion for Detroit may be a drop in the bucket for a big spender like Obama, even someone as delisional as him would have to wonder where the money for a California bailout would come from.

Doughboy on July 23, 2013 at 12:10 PM

No problem. There are still plenty of wealthy capitalist middle classers to tax, and when they dry up there’s the printing presses.

NOMOBO on July 23, 2013 at 12:44 PM

“The White House can send a strong signal for responsibility …”

BWAHAHAHAHAHAHAAH!

WitchDoctor on July 23, 2013 at 12:47 PM

Bailouts for all in The Hildabeast’s 2nd term in the early 2020s. Massive inflation accompanies the Too Big To Let Fail, More Free Stuff. Hope the Death Panels get me before then.

philw1776 on July 23, 2013 at 12:50 PM

No bail out? I’ll believe it when I see it.

After Sharpton moves his attention from Zimmerman to Detroit there will be a bailout. 20 Billion is “chump change”, will be the argument. There is no way that a 90% black city of 800,000, voting Dem for 60 years will not be getting the money. Oh sure there will be 1000′s of pages of supposed rules and regs to prevent fraud and abuse but it will simply be a smoke screen for a blank check delivered straight to Detroit–not the state which is Repub controlled.

I freely admit that if Detroit was a white Repub city, are there any, they would not be bailed out and the press would celebrate their failure.

patrick neid on July 23, 2013 at 12:51 PM

yep, and “independent school districts” too. We have one failing district being swallowed by a larger one here in Houston.

DanMan on July 23, 2013 at 12:43 PM

Same issues here in Michigan. The Buena Vista and Inkster school districts ran themselves right out of business.

NotCoach on July 23, 2013 at 12:53 PM

Public Auction of the city, its assets and liabilities. Maybe China will out bid Saudi Arabia.

meci on July 23, 2013 at 12:54 PM

I freely admit that if Detroit was a white Repub city, are there any, they would not be bailed out and the press would celebrate their failure.

patrick neid on July 23, 2013 at 12:51 PM

According to certain members of the press, Detroit’s failure is because of Republican policies. You see, it’s been Democrat run for over half a century but Republicans and stuff.

WitchDoctor on July 23, 2013 at 12:54 PM

As long as Uncle Ben keeps printing, BHO will keep bailing.

JimK on July 23, 2013 at 12:55 PM

Dearborn may have some solutions in mind, and may know some people willing to spend some big bucks. How does Detroit as a city based on sharia law sound?

a capella on July 23, 2013 at 12:21 PM

Sure let’s fill it with muzzies and let them get money from Iran and Saudi Arabia to built the town. then HID can come along and in the name of diversity move everybody around.

davidk on July 23, 2013 at 12:57 PM

HUD

davidk on July 23, 2013 at 12:57 PM

Bone It-Own It.

How about moving every O’care supporter there..every single one of them and convert it into a medical community…then we can truly get an accurate count of how many folks truly back it as well as a centralized govt…

hillsoftx on July 23, 2013 at 12:27 PM

The socialists in the Democratic National party may do that for the ‘little people’ – and make sure they know only enough to blame the GOP, but they would not dare experience their own failures.

Galt2009 on July 23, 2013 at 12:58 PM

These places are too big to fail. But not the country as a whole.

davidk on July 23, 2013 at 12:58 PM

According to certain members of the press, Detroit’s failure is because of Republican policies. You see, it’s been Democrat run for over half a century but Republicans and stuff.

WitchDoctor on July 23, 2013 at 12:54 PM

Yeah, it’s Republican’s fault for not keeping the juvenile delinquents under control, or something.

NotCoach on July 23, 2013 at 12:59 PM

Where would a Detroit bailout end?

Bankruptcy for all!

Socialism = redistributing the wealth until at last everyone is equally miserable.

CJ on July 23, 2013 at 12:59 PM

Public Auction of the city, its assets and liabilities. Maybe China will out bid Saudi Arabia.

meci on July 23, 2013 at 12:54 PM

China has enough empty cities, and they look a lot better then Detroit does.

NotCoach on July 23, 2013 at 1:00 PM

If the state of Michigan — which has more to lose in a collapse of Detroit than any other stakeholder other than the city itself — isn’t interested in a bailout, why should Washington step up to the plate?

Speaking as somebody who used to live on the other side of the state, I’d argue that MI taxpayers have been bailing out Detroit, Flint, and other rat holes for years. I got sick and tired of seeing my tax dollars going to programs and projects that only benefited Eastern MI with Granholm then turning to the rest of the state hands holding out empty pockets and telling us that there just wasn’t the funding for road improvement or other investments.

I say let Detroit burn. I’ll even bring the match!

BTW where is the headline Obama to Detroit: Drop Dead!

Happy Nomad on July 23, 2013 at 1:08 PM

A bailout of Detroit would end with the Shutting down of Washington DC due to lack of taxpayers to rape!

Delsa on July 23, 2013 at 1:10 PM

*Since 1962 the city of Detroit has been controlled by Democratic mayors and BEFORE that by Democratic-run unions.
*Since 1974 the city has been governed by black mayors.
* union pension plans and featherbedding helped bankrupt the city.
* high black crime and property destruction and ruinous taxes imposed by Democratic mayors forced the tax-paying base to flee the city.

And yet some total idiots are suggesting that Republicans are to blame. IS EVERYBODY CRAZY????

MaiDee on July 23, 2013 at 1:14 PM

Draft a new Residence Act and give it to the Federal Government… Make it the new Capital…

equanimous on July 23, 2013 at 1:16 PM

The Buena Vista and Inkster school districts ran themselves right out of business.

NotCoach on July 23, 2013 at 12:53 PM

A few years ago, Grand Rapids “leaders” had a different tactic. They wanted to dissolve individual school systems to create a Kent County school system. Unspoken in that is the fact they wanted to foist massive debt and a failing set of schools on much better suburban schools and the taxpayers living there.

Memphis, TN, did much the same thing. They just closed down Memphis city schools and demanded Shelby County educate their kids.

These are cautionary tales. Failing cities and states with no forthcoming bailout will get very creative in how to spread the results of their spendthrift ways.

Happy Nomad on July 23, 2013 at 1:19 PM

And yet some total idiots are suggesting that Republicans are to blame. IS EVERYBODY CRAZY????

MaiDee on July 23, 2013 at 1:14 PM

Given that Detroit was killed by union greed, I say Dave Bing should go to the UAW, MEA, and other labor organizations and get them to fund the bailout.

Happy Nomad on July 23, 2013 at 1:20 PM

Steve Eggleston on July 23, 2013 at 12:18 PM

Yes, that is their desire – but if they keep losing state houses like they are, they have very little they can do to make it come true. Look what Illinois is doing. I think they are now competing to be the state with the most businesses fleeing. Chcago is losing population and is probably just about 10-15 years behind Detroit assuming interest rates don’t explode in the meantime. Their downtown area has always been better than anything Detroit could offer and holds younger people around. But this has a shelf life.

Smart states will quarentine cities like Detroit so as to stop the problem from expanding. I can move – so can just about everyone else who wasn’t just stupid – including buying or building houses too big for their income that have trapped them with mortgages more than the current value of the house itself. Most of this was just being greedy or blind. Not all of course – but quite a bit of it.

Zomcon JEM on July 23, 2013 at 1:23 PM

Detroit doesn’t need a bailout.

What it needs is capitalism and the free market.

Real estate values for residential and commercial properties are at pennies on the dollar compared to other U.S. major markets.

This should make businesses drool. But, Detroit has burdensome taxes, burdensome regulations, and of course, high crime. The last is going to be a detriment to wooing business relocation, and there’s little that can be done about it quickly. But the first two can be eliminated with the stroke of a pen.

Make Detroit a haven for free marketeers, and most of its problems will vanish practically overnight. That includes poverty, and crime rates are related to poverty, despite what the left will tell you.

Now, I will admit that this solution would have been far easier 10 years ago. Now, Detroit also has a significant charisma problem. It looks like a city in ruins, because it is. And no matter how free market friendly it becomes, that’s going to be a problem. Who wants to relocate to a ruin? Perhaps it’s an insurmountable problem. But if, indeed, it is insurmountable, then a bailout isn’t going to help either.

Chris of Rights on July 23, 2013 at 1:23 PM

Happy Nomad on July 23, 2013 at 1:19 PM

Tried that in Indianapolis a decade or so ago and almost had a civil war break out.

Zomcon JEM on July 23, 2013 at 1:25 PM

Chris of Rights on July 23, 2013 at 1:23 PM

Just unincorporate as someone noted. Make it all the County. That wipes out every city regulation on the book.

Zomcon JEM on July 23, 2013 at 1:26 PM

Let it burn…

Khun Joe on July 23, 2013 at 1:29 PM

Last week Greg Gutfeld on The Five suggested that Detroit be handed over to the much touted entrepreneurial illegal immigrants cum US citizens lock, stock & barrel. See how they put their vaunted net positive economic value to use. Somehow I don’t think the outcome would be pretty…

in_awe on July 23, 2013 at 1:36 PM

Let’s just move the location of our Federal Government from DC to Detroit.

Detroit is more centrally located anyway.

weaselyone on July 23, 2013 at 1:39 PM

Still, this is a disaster for the residents of Detroit, and likely for its workers, who relied on contracts and promises for pensions.

You know, my give-a-d*** is starting to tire of this. Anyone under 50 and at all aware knows this is exactly what is going to happen to nationwide when we hit our “golden years” and try to get our “promised” Social Security benefits.

Detroit has been going bankrupt for decades, just like SS. If you didn’t do whatever you could to prepare for that, shame on you.

CJ on July 23, 2013 at 1:42 PM

Taiwan Video Mocks Detroit Bankruptcy…

mechkiller_k on July 23, 2013 at 1:44 PM

Maybe Leslie Gold and his brood (the “Hardcore Pawn” gang) have some ideas.

Gene Hunt on July 23, 2013 at 1:51 PM

Detroit is the first, and probably the worst, of the dominoes to fall. It will be followed by Cleveland, St. Louis, Philadelphia, etc.

Bailing out Detroit would establish a precedent that no one – not even Obama – wants to set.

bw222 on July 23, 2013 at 1:55 PM

Repeal and replace the “Residence Act”! Give Washington D.C. back to Virginia and Maryland.

I am betting Michigan would give up 100 sq. miles (10 miles x 10 miles) to form a Federal District encompassing Detroit.

To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States

weaselyone on July 23, 2013 at 1:57 PM

Repeal and replace the “Residence Act”! Give Washington D.C. back to Virginia and Maryland.

weaselyone on July 23, 2013 at 1:57 PM

Virginia got its piece back in 1828.

Gene Hunt on July 23, 2013 at 1:59 PM

Repeal and replace the “Residence Act”! Give Washington D.C. back to Virginia and Maryland.

weaselyone on July 23, 2013 at 1:57 PM

Virginia got its piece back in 1828.

Gene Hunt on July 23, 2013 at 1:59 PM

I’m all in favor of giving it back to DC…

CJ on July 23, 2013 at 2:06 PM

Where would a Detroit bailout end?

Stanley Kurtz writes about, if not where it ends, where it’s leading to: A draconian assault on suburban and rural areas to “nudge” people and resources into cities.

Spreading the Wealth: How Obama is Robbing the Suburbs to Pay for the Cities by Stanley Kurtz (Aug 2, 2012)

Now Kurtz reveals new evidence that the administration’s talk about helping the middle class is essentially a smoke screen. Behind the scenes, plans are under way for a serious push toward wealth redistribution, with the suburban middle class—not the so-called one percent—bearing the brunt of it.

Drawing on previously overlooked sources, Kurtz cuts through that smoke screen to reveal what’s really going on. Radicals from outside the administration—including key Obama allies from his early community organizing days—have been quietly influ­encing policy, in areas ranging from edu­cation to stimulus spending. Their goal: to increase the influence of America’s cities over their suburban neighbors so that even­tually suburban independence will vanish.

In the eyes of Obama’s former mentors—fol­lowers of leftist radical Saul Alinsky—suburbs are breeding grounds for bigotry and greed. The classic American dream of a suburban house and high quality, locally controlled schools strikes them as selfishness, a waste of resources that should be redirected to the urban poor.

The regulatory groundwork laid so far is just a prelude to what’s to come: substantial redistribution of tax dollars. Over time, cities would effectively swallow up their surround­ing municipalities, with merged school dis­tricts and forced redistribution of public spending killing the appeal of the suburbs. The result would be a profound transforma­tion of American society.

Also, a recent article on Kurt’s thesis at Breitbart.com:

Stanley Kurtz Exposes Obama’s War on the Suburbs: Ideological Key to Obama’s Past, Present, and Future

Under the guise of what they euphemistically refer to as “regionalism” or “regionalization,” Kruglik and Obama intend to help troubled cities seize control of the suburban tax base, as well as ending local control of education and other services. The goal, ostensibly, is to help poor and isolated groups left behind in the inner city–though their commitment to radical redistribution of wealth, and federal government power, is the real motivation.

Also, at NRO, Kurtz notes how the regime is making federal aid of all kinds conditional upon meeting population density standards, thereby defunding suburban infrastructure and development and redirecting the funds to cities like Detroit:

Obama’s Plans for the Suburbs: And How to Stop Them

To put it plainly, the “built environment” report lays out strategies the federal government can use to force development away from suburbs and into cities, supposedly for the sake of reducing carbon dioxide emissions given off by all those suburban commuters. The Obama administration wants to force so-called smart growth policies on the country: get out of your car, stay out of the suburbs, move into small, tightly-packed urban apartment complexes, and walk or take public transportation instead of driving.

The Department of Energy’s built environment report lays out a scenario much like the one I described in Spreading the Wealth: How Obama is Robbing the Suburbs to Pay for the Cities. The report highlights two policy options most likely to increase dense, Manhattan-style urban development, without exceeding the traditional limits of federal authority. Those options are eliminating the home-mortgage interest deduction and conditioning future federal aid of all kinds on local adherence to “smart growth” principles. Of these, I think the second is the most likely to be implemented. The built environment report also says that the most convenient bureaucratic channel through which to manage such federal pressure is the Partnership for Sustainable Communities.

The built environment report acknowledges that conditioning federal aid on population density would be political dynamite. And this, of course, is why Obama loudly touted his plans for an energy security trust fund, while downplaying the DOE’s report release. Essentially, the built environment report suggests that federal funding on new schools or roads might be held to population density criteria that would starve projects in suburbs in favor of those in cities. I’ve argued elsewhere that these so-called smart growth policies are about a lot more than greenhouse gases. The global warming issue serves here as a justification for wealth redistribution on a grand scale.

petefrt on July 23, 2013 at 2:13 PM

The basic problem in these cases is that it was always possible to push unpleasant solutions to critical problems into the future. A future, hopefully, when those currently in charge were retired. So a bail-out, by itself, is not a solution. It’s simply the cause of the problem writ by different hands.

Until the city changes its ways this crisis will not end well. Our choices are either to push everything into the future (again) when it will be an even bigger headache or solve the problem now by having the city live within it budget.

Fred 2 on July 23, 2013 at 2:22 PM

The basic problem in these cases is that it was always possible to push unpleasant solutions to critical problems into the future. A future, hopefully, when those currently in charge were retired. So a bail-out, by itself, is not a solution. It’s simply the cause of the problem writ by different hands.

Until the city changes its ways this crisis will not end well. Our choices are either to push everything into the future (again) when it will be an even bigger headache or solve the problem now by having the city live within it budget.

Fred 2 on July 23, 2013 at 2:22 PM

One point of order: Detroit is not currently led by its elected officials. An emergency financial manger has been appointed to fix the stupidity of the elected officials. While this will not last forever hopefully the policies he puts in place, and the example he set, will have a meaningful impact on future Detroit leaders. And maybe also future Detroit leaders will strive harder to avoid the embarrassment of having their city taken from them.

NotCoach on July 23, 2013 at 2:30 PM

Repeal and replace the “Residence Act”! Give Washington D.C. back to Virginia and Maryland.

weaselyone on July 23, 2013 at 1:57 PM

Virginia got its piece back in 1828.

Gene Hunt on July 23, 2013 at 1:59 PM

I’m all in favor of giving it back to DC…

CJ on July 23, 2013 at 2:06 PM

Virginia (specifically what is now Arlington County and part of what is now Alexandria) was handed back in 1846. And yes, Arlington County could easily be a few more wards in the District. Every single elected official is a filthy liberal Democrat. County Council meeting are an echo chamber in stupidity.

Happy Nomad on July 23, 2013 at 2:39 PM

Where would a Detroit bailout end?

Long Beach? El Centro?

Blaise on July 23, 2013 at 3:51 PM

Where would a Detroit bailout end?

Long Beach? El Centro?

Blaise on July 23, 2013 at 3:51 PM

Guam.

hawkeye54 on July 23, 2013 at 4:01 PM

How scary is it in Detriot, just ask this man.

http://www.youtube.com/watch?v=Ny4a-oxOndo

Destroit is misspelled on purpose.

banzaibob on July 23, 2013 at 7:18 PM