“Detroit can no longer be ignored…Americans are swimming in debt…Go ahead and laugh at Detroit. Because you are laughing at yourself…at the end of the day, the Detroiter may be the most important American there is because no one knows better than he that we’re all standing at the edge of the shaft.”
–Charlie LeDuff, author of Detroit, An American Autopsy.
THE COLLAPSE
With an annual budget deficit of $380 million and $18 billion in debt, Detroit’s fiscal position had become untenable. It had no reasonable expectation of repayment; indeed, some borrowed funds have been utilized for operating expenses. The unemployment rate, which has almost tripled in the past thirteen years, is over 18% and its population has dived from 1,850,000 in 1950 to a mere 710,000 currently.Since the advent of the 21st century, over a quarter of its population fled .
The descent of what was once one of the world’s most prosperous cities wasn’t inevitable. “Detroit and its adjacent cities were to the early 20th century what California’s Silicon Valley is today,” notes the Wall Street Journal. “Today, 40,000 structures of land parcels sit vacant or empty…36% of Detroiters [live] below the poverty level…in 2012 Detroit had the highest violent crime rate for a city with more than 200,000.”
It’s cultural grip on the American imagination is significant. Once the fourth largest U.S. city, and one of the most prosperous, in the nation, It had the potential to continue its significant and healthy position within the pantheon of the nation’s great urban centers. Now, it may not be able to even keep its commitments to its 20,000 muncipal retirees.
WHAT HAPPENED
The simplistic reason for The Motor City’s financial demise is the reduced presence of the auto industry. But that industry shrunk its footprint for very real and substantial reasons. Its withdrawal was not unique. Even Motown Records has left.
With the reduced spending on defense, government contracts could not provide even a minor fallback to the loss of auto manufacturing. A plant building tanks for the U.S. armed forces was closed under President Clinton in 1996.
The United Auto Workers has been extremely successful in its representation of its members. But in driving salaries up to $70 an hour in wages and benefits, along with onerous work rules, it made American auto manufacturing in Detroit uncompetitive. Manufacturers had every incentive to move out.
Municipal services in Detroit have been abysmal. A Heritage report notes that it takes the police an hour to respond to calls. Rampant crime (The Washington Post notes that it has the highest crime rate of violent crime among the nation’s big cities) has chased many of the city’s most productive citizens out, as have schools that cater more to union members at the expense of the students. Uncollected trash abounds. 40% of its streetlights don’t work.
According to a Fox News analysis, the high labor cost, combined with inadequate service has added $15 billion to the city’s unfunded liabilities.
While services are extremely low, Detroit’s taxes are excessive. The CATO Institute notes that of the 50 largest U.S. cities in 2011, Detroit had the highest property taxes on homes, apartment buikdings, commericial buildings, and industrial buildings.
THE ROLE OF BAD GOVERNMENT
For over half a century, Detroit has been subjected to one party rule. More than just the fact that Democrats have dominated the government for that extraordinary stretch of time is the fact that the individuals elected have followed an economically radical path that clearly dissuaded businesses from investing in the once prosperous municipality.
A report by the Better Government Association has ranked Michigan 48th out of 50 in key areas or governance.
A collection of crooked and politically extreme politicians has abused and defrauded the people of this once prosperous city. Former mayor Coleman Young, who many believed exacerbated the issue, expended political capital defending his police chief, William L. Hart, who eventually was convicted of stealing $2.6 million from the city’s taxpayers.
The career of former mayor Kwame Malik Kilpatrick, widely known as the “Hip-Hop Mayor,” symbolizes this sad legacy. Kilpatrick’s reign was brought to a close after convictions for perjury and obstruction of justice in 2010. In March of this year, he was convicted of violating his parole, and in May he was convicted of 24 counts of mail fraud, wire fraud, and racketeering.
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“Kwame Kilpatrick wasn’t the first Detroit politician to milk the city. It had been going on for a hundred years. And it wasn’t just the politicians. It was union bosses and contractors and industrialists and receptionists who were nieces of the connected. Evrybody got their piece and that was all right when Detroit was rolling in money. There was always enough grease to hide the flaws.”
–Charlie LeDuff, “Detroit, An American Autopsy”
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During his trial, federal officials noted that Detroit suffered from an environment of extortion, bribery, and fraud. Indeed, it is not inappropriate to suggest that the government of Motown has been more an exercise in organized crime than civic leadership in the past half century. Is it any wonder that it fell into bankruptcy? In response to these charges, the city’s leaders scream racism. But how does that account for the fact that middle income blacks move out of Detroit–a city solidly under the control of black politicians– as fast as they can?
An emphasis by Detroit civic leaders on exploiting racial divisiveness rather than cooperation has been deadly. Former Mayor Kwame Kilpatrick has strongly emphasized racial issues.
A Daily Caller http://dailycaller.com/2013/08/24/in-detroit-racial-rhetoric-concealed-corruption/article noted:
“Playing on people’s sensitivities and fears distracts attention from holding elected leaders accountable. Detroit’s political class understand this, and regularly delivers racial division rather than doing the hard work of attracting investment in the city.”
A journalist for Forbes of India visited Detroit, and reported that he was shocked at the state of disrepair in the once great metropolis. “A wrong turn around 10pm had us in a typical Detroit neighbourhood. The streets were pitch dark and potholed. The only lights were from the headlights of our car. It seemed like the zombie apocalypse had finally arrived–we couldn’t get out of there fast enough.”
$18 billion dollars of liabilities have mandated the move to Chapter 9 bankruptcy of what was one of the world’s most prsoperous cities. Chapter 9 is a form of bankruptcy under federal law reserved for municipalities, established by Congress in 1937. The Pew Center notes that its core purpose is to insure that basic civic functions are maintained even during a severe fiscal crisis. In Detroit’s case, that bears a touch of irony, since it can reasonably be argued that those services were already largely absent.
Permission from the state government is required for the move. Since the legislation became law eight decades ago, over 620 municipalities have sought its protection, including Orange County, California and Jefferson County, Alabama. But the trend is accelerating, and Detroit’s failure is unprcedented.
Both the White House and Detroit have pursued the expansion of social programs at the expense of creating an environment in which private sector jobs can be maintained and created. It’s a suicidal course that has already led to disaster. Michigan’s Mackinac Center’s Director of Labor Policy calls it the “Detroitization of America.”
Major Garrett, writing in the National Journal, notes that “Detroit’s failings are many and its debts staggering. Obama did not cause them. But his economic remedies and intervention have achieved little.” Obama’s extensive bailouts to the auto industry only served to strengthen the unions without delivering any improvements to the city’s dire condition.
It’s not as though Michigan hasn’t provided assistance. Reuters reports that multiple state programs and tax provisions aide Detroit. “Revenue from special levies add $164 million annually to Detroit revenues…Michigan Treasury Department data show that for fiscal 2013 Detroit was slated to receive nearly $260 per person from the state, several times what other cities in the state receive..”
Analysts note that Detroit’s policies closely resemble those implemented or sought to be implemented by President Obama. According to Michael Tanner, writing in Bloomberg.com, “A few years ago, the nonpartisan Bay Area Center for Voting Research rated Detroit as the most liberal city in America. The city’s own choices…are really responsible for Detroit’s failure.”
It’s a trend that leaves observers puzzled but that closely resembles current White House policy. While Detroiters are desperate for employment and the city itself urgently needs business, the muncipal government, notes Tanner, engages in a pattern of anti-enterprise taxes and regulations. It also imposes stiff “Living Wage” rules that sharply discourage hiring.
From The Michigan Governor’s Office:
The Facts on Detroit’s Bankruptcy
Q. 1: Why was it necessary for Detroit to use a Chapter 9 bankruptcy filing to address its financial problems?
A.: Detroit is in a financial crisis. Without major changes, the city is expected to run out of cash by December 2013. The city can’t borrow any more money, as it has for nearly a decade, to pay its bills. It can’t raise taxes, since its tax rates are already at the legal maximums. The city has an obligation to provide for the safety and welfare of its residents and without a comprehensive restructuring of its obligations, the city’s ability to do that is compromised. That situation must change to improve the quality of life for Detroit’s 700,000 residents and to attract new businesses and jobs to the city. Six decades of mismanagement and ignoring financial realities have brought us to this point. It’s time to fix the problem. Negotiations with creditors weren’t successful, so a bankruptcy filing was the last viable option to fix the city’s finances and start to provide Detroit’s 700,000 people the basic public services they need and deserve. Bankruptcy is the quickest way to get Detroit on a sound financial footing so it can meet the needs of its residents and be able to grow and prosper in the future.
Q. 2: Why didn’t the negotiations work?
A.: Fixing the city’s finances will require sacrifices from investors and many others. We had hoped those sacrifices would be worked out in good faith negotiations. Unfortunately, it became clear that those negotiations wouldn’t be successful for a number of reasons. There was no guarantee all the parties would agree. There was strong disagreement about the restructuring plan. Detroit is in a crisis and we’ve got to get going on the solution. A bankruptcy filing was the last viable option to fix the city’s finances and start to provide Detroit’s 700,000 people with the basic public services they need and deserve.
Q. 3: What does Chapter 9 bankruptcy mean?
A.: A court-supervised Chapter 9 restructuring gives the city an opportunity to resolve its financial crisis by providing additional tools that are not available outside of a federal court process. It provides a breathing spell during which the city can focus on restructuring and begin the process of sorely needed reinvestment. In addition, it allows the city to continue to work toward agreements with its vast and fragmented creditor groups. In the absence of agreements, the bankruptcy process can be used to bind non-consenting creditors. Detroit will continue to pay its employees and its vendors for essential services. It will continue to provide essential services to its 700,000 residents.
Q. 4: Why couldn’t the city solve its financial issues on its own? How can a judge decide what is the best for Detroit?
A.: A court-supervised process is the best and most efficient way to secure a strong, viable future for Detroit. Financial mismanagement, a shrinking population, a dwindling tax base and other factors over the past six decades have brought Detroit to the brink of ruin, both financially and operationally. All other options to fix Detroit’s finances have been exhausted. Detroit and its residents deserve better and we think a court-supervised restructuring is the best way forward. In this process, the city still will be the entity to propose its own restructuring plan and negotiate that plan.
Q. 5: How long will the city be in bankruptcy?
A.: That is hard to predict because the process can be affected by a variety of factors. Kevyn Orr and his team remain committed to moving forward with the speed, discipline, and efficiency of a corporate restructuring.
Q. 6: How could the city file so soon after just presenting its plan a month ago? Was that enough time to negotiate in good faith?
A.: We have held a series of meetings and negotiations and exchanged a significant amount of information. It quickly became clear that the city could not achieve consensual savings from its major creditors outside of a court-supervised process for a variety of reasons. First, there are large groups of creditors, including retirees and bond holders, that are unorganized and unrepresented. Having a forum in which to organize those creditors so that negotiations may ensue and binding solutions be developed is necessary for the restructuring to conclude. Second, some of the creditors with whom the city has met have refused to consider any changes to the city’s obligations. Resolutions with those creditors would have to be supervised by a court.
Q. 7: Does this mean the city won’t pay creditors or contribute to pensions any more?
A.: Chapter 9 bankruptcy allows the city time to focus on restructuring and revitalizations. These obligations will be addressed as part of the restructuring process.
Q. 8: Will the city continue to pay employees, retirees and vendors?
A.: Current employees will continue to receive their paychecks without interruption and will maintain their medical benefits and vacation privileges. The city will maintain current vendor contracts for essential goods and services and expects to continue to pay suppliers of such goods and services during the bankruptcy proceedings on a regular basis.
Q. 9: What does this mean for union contracts?
A.: The city will work with its various unions to address employee issues as part of its restructuring so that the city has an affordable long-term cost structure.
Q. 10: Will the city continue to provide essential services (police, fire, trash pickup) to residents?
A.: Yes, it will. There will be no change in services. In fact, over time, as the process of reinvestment begins, we expect to provide an improved service, which Detroit’s residents deserve.
Q. 11: Will the city begin selling certain assets, such as Belle Isle or the art in the DIA?
A.: The city continues to evaluate all legal options to maximize creditor recoveries and to provide funds to reinvest in the city and regain its place among America’s great and vibrant cities.
Q. 12: Will Detroit’s bankruptcy filing impact the creditworthiness of other Michigan municipalities and the state itself?
A.: Detroit’s situation is unique and it should not affect other cities or the state.
Q. 13: What happens next?
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A.: Most importantly, the city intends to begin investing in its operational initiatives to improve services to Detroit’s residents and businesses. In addition, the city will continue to hold discussions with its creditor groups to seek consensual resolutions to obligations where possible.
Q. 14: What are the emergency manager and his team proposing?
A.: Kevyn Orr and his team presented a restructuring proposal to the city’s creditors on June 14. That proposal remains the basis for the city’s negotiations with creditors.
Q. 15: Won’t Detroit’s Chapter 9 filing have a negative impact on the city’s creditworthiness and reputation that will further impede Detroit’s ability to secure a strong, viable future?
A.: The filing was a decision we did not take lightly. However, it is the only viable option to secure a strong future for the city and its residents. The city had exhausted all other options. Detroit’s situation is well known and reasonable observers will recognize that the city had no other choice but to file for Chapter 9 protection. Longer term, we expect to have the processes and protocols in place to ensure that the reforms we make today will continue well into the future. In time, the short-term challenges we face today will yield to a brighter, more stable future for Detroit.
Q. 16: Wasn’t PA 436 and the process leading up to declaring a financial emergency just a pretense for filing Chapter 9. Wasn’t bankruptcy the goal all along?
A.: The goal is to create a strong, viable Detroit that can deliver basic essential services to its 700,000 people. That was the point of the consent agreement between the city and the state of Michigan that was entered into more than a year ago and which the city never implemented. That was the point for declaring a financial emergency in March. That was the reason an emergency manager was appointed and why a comprehensive city restructuring plan was proposed in June. The goal is a strong and viable Detroit. If this can be done in a negotiated way with creditors and stakeholders, the city will take that path. If not, then it will use other legal means to accomplish the goal. A bankruptcy filing was the last viable option to fix the city’s finances and start to provide basic public services to Detroiters.
Q. 17: Why the rush to file? Why not give more time for negotiations?
A.: It would be irresponsible not to file at this time. Detroit residents can’t wait for better services and safer neighborhoods. The emergency manager and the city’s restructuring team have worked for months to create a path to solvency. Together, they have held more than 100 meetings with stakeholders and negotiated in good faith with its creditors and unions. Those meetings have not put the city closer to a restructuring deal and it simply doesn’t have the financial resources to continue them without the structure provided by the Chapter 9 protection. Chapter 9 provides a process that can bring all of the city’s 43 unions, 53 creditors and other stakeholders to the table to arrive at a fair solution in an efficient and timely manner. At this point, without Chapter 9 protection, there is no likelihood that the city can reach a negotiated solution with its creditors and stakeholders.
Q. 18: This is the largest municipal bankruptcy in U.S. history and there has been speculation that it will have a big effect on the capital markets, especially on lending to public entities in Michigan. Did those factors have any influence on this decision?
A.: This decision was based on what’s best for the 700,000 people of Detroit and the state of Michigan. Filing for bankruptcy is the only viable option to provide the people of Detroit with the essential services that they need and deserve in a timely manner and to restore Detroit. Michigan can’t become a great state unless its largest city is healthy and strong. This filing puts Detroit on a path to have a solid financial footing. We won’t speculate about how the financial markets will react to this filing.
Q. 19: About 20,000 retirees from the city of Detroit are worried about their pensions and health care coverage. Can you give them any assurance that they’ll be protected in bankruptcy court?
A.: There’s the bankruptcy filing and other pending litigation against the state on this issue. Because of that pending litigation, it wouldn’t be appropriate to comment on that. We’re sensitive to the concerns of the retirees. While the pension funds do have assets, the challenge is that they have been underfunded and mismanaged. We are confident that all of the city’s creditors will be treated fairly in this process.
Q. 20. What about the claim from the retirees that the Michigan constitution protects their pensions? Do you agree with them?
A.: That’s a legal question that will have to be decided in the courts. Given that it’s already in the courts, it wouldn’t be appropriate to comment on it at this time.
Q. 21: What about a state bailout for the city or for the retiree pensions?
A.: The answer to that is “no.” That’s not an option. We don’t want to reward mismanagement. Keep in mind that we didn’t create this crisis. Sixty years of decline created this crisis. We’re making the tough decision to fix this problem so the 700,000 people of the city of Detroit get the basic public services they need and deserve and we can start to make Detroit great again.
Q. 22. So the state isn’t going to do anything to help Detroit and its 700,000 residents?
A.: The state has done a great deal to help Detroit and its people. There’s long list of things that the state has done to help Detroit over the past few years. Those include:
• Blight elimination. Detroit is one of five Michigan cities that will share in $100 million in federal funds to demolish abandoned properties.
• Economic development.
o Last year, the governor signed legislation to allow the 163-acre State Fairgrounds property to be used for economic development.
o Governor signed a bill that supports the development of a $650 million event center in downtown Detroit to be the new home of the Red Wings.
o The state is an active partner in revitalizing the Eastern Market, the Globe Building and the riverfront.
• Belle Isle offer: The state offered to lease Detroit’s treasured Belle Isle Park and handle restoration and maintenance, while allowing the city to retain ownership.
• Transportation
o The governor signed an agreement with Canada to build the New International Trade Crossing in southwest Detroit. That will generate 12,000 direct jobs.
o The state helped develop a regional transit authority to allow Wayne, Oakland, Macomb and Washtenaw counties to integrate all modes of public transportation.
o The state is partnering with community leaders to launch the M1 Rail, a proposed 3.3-mile rail line on Woodward Avenue that will benefit commuters, job providers, and help attract visitors.
• Children/Education
o In February 2013, the Michigan State Police and the Michigan Big Brothers Big Sisters Alliance formed a partnership to serve at-risk youth in Detroit and other urban areas.
o The Education Achievement Authority was created to provide a bold, innovative system of public schools that focus on the progress of each student.
The system opened in September 2012 with 15 of Detroit’s lowest-achieving schools.
Q. 23: What would you tell a Detroit retiree who’s barely getting by today and is worried about seeing a big cut in their monthly pension?
A.: We’re not going to speculate about what might happen with pensions, because this legal process is just starting. We’re sensitive to the concerns of the retirees. While the pension funds do have assets, the challenge is that they have been underfunded and mismanaged. We are confident that all of the city’s creditors will be treated fairly in this process.
Q. 24: How do you think Detroiters will react to this bankruptcy?
A.: We won’t speculate on how people will react. What they should remember is that their needs have been secondary in the city for too many years. That the focus was on gimmicks and tricks to kick the financial can down the road and not on making sure the police or fire department would come when people called or that their garbage would be picked up or that their streetlights would be on at night to improve their safety. They should remember that the emergency manager has a plan to invest $1.25 billion in the city services over the next 10 years. They also should remember that this process will give Detroit a fresh start, so it can grow and prosper in the future.
Q. 25: What is your response to municipal bond market experts who say that Kevyn Orr’s restructuring plan to treat holders of general obligation bonds the same as holders of riskier securities breaks the long-standing “faith and credit” assumption for municipal bonds in the market and if implemented could have major repercussions?
A.: We’re not going to speculate about that. Obviously, the bankruptcy judge will make the final determination.
Q. 26: There have been some reports about the city having to pay $100 million or more for the attorneys and consultants handling this for the city. Couldn’t those dollars be used for pensions or something else?
A.: This is a very complicated matter and it needs to be done right. The city and Kevyn and his team have brought in some of the top experts in the country to work on this and they’ve gotten discounts on fees. This is not a do-it-yourself project. These experts are working to solve a financial crisis 60 years in the making. They’re doing their best to put the city on a sound financial footing and position it to grow and prosper in the future.
Q. 27: Attorney General Schuette has issued an opinion that the art at the Detroit Institute of Arts can’t be sold off to help the city out of its financial problem. Do you agree with that or do you think art lovers should be worried about losing the DIA art?
A.: That’s a complicated issue. The city continues to evaluate all options to maximize creditor recoveries and to provide funds to reinvest in the city and regain its place among America’s great and vibrant cities. Since this is all in the courts than that.
MISGUIDED PRIORITIES
For over half a century, the “Motor City” has solidly adhered to a pattern of emphasizing public assistance at the expense of basic services. Despite this politically-motivated “generosity,” little was gained for the people of Detroit. The police force dwindled, fire trucks went unrepaired, and even fire hydrants were left to rot.
Misguided funding priorities, combined with high taxes, (residents endure one of the highest big city property taxes in the U.S.) the undue influence of union leaders, and a continuously scandal-plagued government made the downfall of this once great metropolis inevitable. The dramatically reduced presence of auto makers (whose departures, most argue, were due to those practices) certainly presented an enormous fiscal challenge. However, the reality is that no amount of funding would be adequate to make up for the misguided programs and outright theft that characterized the municipal administration.
Irrationally, as Detroit desperately needed more jobs and a larger tax base, it imposed regulations and taxes that drove those two vital commodities out of town. In the same manner, Washington has been hiking taxes and enacting copious amounts of new regulations.
National Review notes that “Detroit is evidence for the fact that the economic limitations on tax increases sometimes kick in before the political limitations do. The relationship between tax rates, tax revenue, economic incentives, growth, and investment is complex, to say the least, and deeply dependent on the historical and economic facts of particular places at particular times. We have theories of growth, but no blueprint. But Detroit was not reduced to its present wretched circumstances by historical inevitabilities or the impersonal tides of economics. It did not have to end this way, but it did, and understanding why it did is essential if we are to avoid repeating Detroit’s municipal tragedy on a national scale.”
DETROIT’S FALL NOT INEVITABLE
Detroit’s fall was not inevitable. Michael D. LaFaive of Michigan’s prestigiousMackinac Center notes that thirteen years ago, he warned city leaders that excess expenditures and pension obligations would bring the city down. He recommended:
1. The city should contract out for the operation of its busing system. Possible savings: $60 million annually. (Through 2010 the operating subsidy ranged from $70 million to $75 million).
2. Sell Detroit’s electrical power system to an investor-owned utility. Estimated revenue from private sale in 2000: $301 million to $501 million.
3. Sell Cobo Conference/Exhibition Center. When we published our 2000 MPR, Cobo was receiving operating subsidies exceeding $15 million. A 1991 issue of Detroiter magazine – 20 years ago – estimated a sales price of $50 million. At that price a private owner might pay $1.9 million in property taxes each year.
4. Sell the water system for between $1.775 billion and $2.285 billion or just contract out for its management ($47.2 million in annual savings).
5. Contract out for garbage collection. Savings: $6.4 million annually.
6. Privatize inspections for mechanical, electrical, plumbing or building permits and licenses. We estimated in 2000 that the possible savings for privatizing these positions could top $5.1 million.
7. Sell Bell Isle: $370 million in one-time revenue and up to $13.8 million in new revenue. In addition, the city would be relieved of its [then] annual appropriation to Island care of $6.6 million.
Similarly, the White House has dramatically expanded programs such as food stamps at the expense of national security and other vital areas of federal responsibility. Just as basic municipal services were allowed to diminish in that once great urban center, Washington now discusses cuts in basic services across the nation. Just one example: while more and more giveaway programs emanate from the White House, the federal government can barely afford to deliver the mail six days a week.
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“Having led us on the way up, Detroit now seems to be leading us in the way down. Once the richest city in America, Detroit is now Ameria’s poorest. Once the vanguard of America’s machine age–mass production, blue-collar jobs, and automobiles–Detroit is now America’s capital for unemployment, illiteracy, dropouts, and foreclosures. It is an eerie and angry place of deserted factories and abandoned homes and forgotten people. Trees and switchgrass and wild animals have come back to reclaim their rightful places. Coyotes are here. The pigeons have left. A city the size of San Francisco or Manhattan could neatly fit into Detroit’s vacant lots.”
–From Detroit: An American Autopsy by Charlie LeDuff
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Despite Detroit’s ominous example, the federal government over the past four and a half years has also trod the path of escalating taxes, undue union influence, and an increasingly nontransparent administration.
Union Influence Trumps Citizen Needs
Both the White House and Detroit’s municipal government have redirected spending from basic services to an emphasis favoring unions, which contribute heavily to the campaigns of those favoring ever-expanding government, and those dependent on government programs, who overwhelmingly favor big government candidates. Detroit has not had a Republican mayor since 1961; in the last election, 96% of its voters favored President Obama.
The city’s public schools point to the problems of emphasizing union influence over the needs of the people. Michigan’s Capitol Confidential reports that despite some of the nation’s highest per capita expenditures on students, the city’s pupils have among the worst scores in the entire state. In 2003, a philanthropist’s offer of $200 million to develop charter schools was rejected because union chieftains were angered that these institutions would not be unionized.
Like Detroit, the USA is falling deeper and deeper into debt. Similar to Motown politicians for the past 50 years, the president and his allies are deeply indebted to union chieftains who care little about imposing strains on the general economy as long as they can look good to their members–even if those temporary gains mean that their membership eventually will lose their jobs. The New York Observer notes that “In Detroit, the policies of candidates who posed as ‘friends of the unions’ have now bought enormous pain and fiscal woe to the very pensioners who trusted them. Killing the goose that laid the golden egg is not being a friend–it’s madness.”
Corruption, Incompetence, & Excuses
The collection of corrupt and incompetent politicians who have run what was once one of the world’s most prosperous cities into the ground continuously provide ridiculous and insupportable excuses. They point to the reduced presence of the automakers. What they fail to admit, however, is that their policies drove those automakers out of town.
They scream racism. But how does that account for the fact that the government of Motown has been solidly African American for decades, and that middle income blacks move out of Detroit as fast as they can?
Again, the similarities with the practices of the current White House are ominous. Attention to scandals including the failure to rescue America’s ambassador to Libya, the transfer of weapons in the “fast & furious” scandal, the abuse of the IRS to attack political opponents, the refusal to prosecute election misdeeds, and the surveillance of reporters is deflected by making a racial incident of the Trayvon Martin case.
New York’s Michael Bloomberg, The mayor of America’s largest city, noted that his constituents should pay particular attention to the lessons of Detroit. The policies that ruined Detroit are not isolated to that city–they are a harbinger of the end result of a course now being implemented on the national level.