Government Spending

Detroit's Leaders Borrow a Page From Government Motors and Chrysler


Detroit Mayor Dave Bing has cooked up a true-and-tested scheme to rescue Detroit from its impending bankruptcy (which would have happened by now had the state not already given it a $137 million-loan on the state credit card). The scheme doesn't involve implementing his promised layoffs of city workers to bring the city's expenditures in line with its revenues. Nor a full-scale privatization of city services. Nor does it require persuading Detroit's bellicose municipal unions to renegotiate retiree contracts to lighten the city's legacy obligations that make up half of its accumulated $12 billion debt.

Bing's scheme is clean, simple, and painless: Shaking down Uncle Sam for $1 billion in emergency bailout money, just like GM and Chrysler.

Bing has hired a Washington lobbying firm for $330,000 to aid his efforts. His quest has the full backing of Rep. Hansen Clarke, who represents the city in Congress, and has been arguing since March that the feds need to step in and rescue Detroit just as they did New York City in 1975. "It's the same situation that's just as grave," Clarke told the Huffington Post. "We need to provide relief for the city of Detroit in order to create jobs in this country and rescue this symbol of our manufacturing power."

New York City got $2.3 billion in federal loans after President Gerald Ford signed the New York City Seasonal Financing Act in 1975.

But Detroit is a bottomless pit of need whose annual debt payments—$600 million a year—exceed its primary tax revenue by $60 million. Without structural reforms and new contracts with municipal unions to rationalize its legacy obligations, it'll run through the billion dollars in a year and be back for more.

But Detroit is hardly alone in promising more benefits than it can afford. States and cities across the country have about $1 trillion in unfunded liabilities on their books, according to a 2010 survey by the Pew Center. Other studies put this figure closer to $3.5 trillion. So if the feds decide to help Detroit – which is not entirely inconceivable given that this is an election year and  Obama will be looking for union votes in Motown – expect a line of city and state leaders holding their tin cups forming from Washington D.C. to Sacramento.

My articles on Detroit's deepening fiscal crisis here and here.

H/T: Walter Grinder

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  1. Buddy, can you spare a billion?

  2. Couldn’t you just rent Detroit out to Iran and North Korea as a nuke test site?

    1. How would you assess any potential damage?

      1. sure, they’d have to put up some decent test structures, but shouldn’t put the testers over their budgets.

        1. They’d have to throw them up quickly and detonate the nuke in a hurry lest the locals burn them to the ground in the interim.

          1. so they hit HomeDepot for their labor. problem solved.

          2. Many of them have already been burned–I drive past them on my way to work. Which is why I have a problem with the North Korea solution–my house, which is in a nice neighborhood about half a mile from Detroit proper, is a nice place to live.
            But it’s the thought that counts.

          3. They’d have to throw them up quickly and detonate the nuke in a hurry lest the locals burn them to the ground in the interim

            There would be a small window of opportunity between the time they get broken into, and the time it takes the locals to realize that there is no copper in them.

  3. Detroit will never, ever change unless forced to by bankruptcy. Bailing it out would be a crime.

    1. Bailing it out would be a crime.

      So, business as usual then.

  4. an election year wand

    Prestoalacazam! Obama wins.

  5. expect a line of city and state leaders holding their tin cups forming from Washington D.C. to Sacramento

    If they bail out a single one, they’ll end up bailing out all of them that deliver them something (votes, mostly).

    So expect this to happen. Obama doesn’t give a shit about anything but his own power, so why wouldn’t he do it?

    1. I will incorporate and buy a cup.

      1. Aren’t you already corpulent?

        1. yes that too, i was too modest to mention it.

      2. i will make a good city.

        I have guns, fire extinguishers and food and transportation

  6. which is not entirely inconceivable given that this is an election year wand Obama will be looking for union votes in Motown

    So Obama is looking for votes in “Big D” Detroit, “deep blue” Illinois? And the Republican controlled house will go along with this?

    The mental gymnastics required to come to the conclusion that this is “not entirely inconceivable” is astonishing.

    1. *deep blue Michigan

      1. All statewide elected officials in Michigan are currently Republicans (Govenor, Sec. of State, Att. General, etc), the State House and Senate are controlled by Republicans. It is not a deep blue state.

        The city of Detroit votes over 90% democrat. Why would Obama do anything to try to win their votes, he already knows he is gonna get them.

        What he should do is come down hard on the Detroit City politicians, call them out as inept, publicly humiliate them. That way all the other Michiganders will respect him and the state will swing Dem again.

    2. Look for the money to come from one of the slush funds the Keystone Kenyan kontrols.

  7. “We need to provide relief for the city of Detroit in order to create jobs in this country and rescue this symbol of our manufacturing power.”

    Uh, if it were such a symbol of power, it would be able to stand on its own.

    1. Well, these are ‘progressives’ making the claim, so you can presume they see ‘progress’ as reverting to the ’50s.
      See, oh, Krugmann on the ‘Treaty of Detroit’; black Americans and foreign competition can just suck it up!

      1. But, the leftopia would already exist if it weren’t for all the Kochsuckers!

      2. Detroit’s manufacturing power has already reverted to the ’50’s.

        The 1850s.

  8. Detroit: too stupid to fail.

  9. Mr. Mayor, you will have saved the lives of millions of registered voters…

    1. Mr. Mayor, you will have saved the JOBS of millions of registered voters

      1. Mr. Mayor, you will have saved the voting rights of millions of recorded burial records.

        1. Now, don’t confuse Detroit with Chicago. Detroit has Tigers, Chicago has Cubs. And some kind of socks…

          1. I remember something going on where democrats have some kind of agreement where they don’t participate in primary elections in the state of Michigan? The agreement that Cunton shit all over?

  10. Let Detroit burn to the ground. naysayers say, let them be hoist on their own petards!
    “We need to provide relief for the city of Detroit in order to….rescue this symbol of our manufacturing power.”
    I agree, a symbol is worth a gazillion bucks. Spend it!

  11. The Crow: Gothic comic-book movie, cautionary tale, or documentary?

  12. The Robocop series is far more accurate. Except there is no Omni Consumer Products eager to foreclose on the city. Treating like an escape from New York property.

  13. those guys are not making a lot of sense man. WOw.

  14. Can’t you people admit the racial aspect of the story? Detroit is 89 percent Black… it’s current woeful economic state is a reflection of its majority population… conversely, Pittsburgh (almost 75 percent white) is one of the nicest places to live in America. They had unions (the USW), just as Detroit has the UAW… but they are white.

    The Visible Black Hand of Economics is on display in Detroit… that you people can’t even bring that up shows what cowards you are when it comes to actual debate.

    Just check out the book, “Escape from Detroit: The Collapse of America’s Black Metropolis.”

    1. You forgot to say, “I’m no racist, but…”

  15. Running Man. Have the retirees run the gauntlet on FOX to collect the pension.

  16. Hey Mad Scientist,

    Get over the “racist” smear. Its tiresome, and city after city in America – that is majority Black- has the exact same problem.

    If Detroit were an anomaly, you could call me a “racist” — it is not. Birmingham, Memphis, Baltimore, Camden, Atlanta… what’s the common denominator?

    Seriously… why can’t you understand that Detroit in 1950 was 81 percent white and one of the best places to live in the world — just 30 years later, it was one of the worst in America… now, one of the worst in the world.

    Reason once published an embarrassing story on Cleveland’s misfortunes, without pointing out the rise in the Black population correlated with the city’s dramatic fall. Funny, the suburbs of Cleveland – which have to go further and further out to escape Black crime – are thriving.

  17. Think we’ll see “Obama to City: Drop Dead”?

    I doubt it. If Giuliani were president though, it would be a fantastic coincidence.

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