The Detroit bankruptcy is the inevitable byproduct of liberalism and, if the GOP had half a brain, they would be plastering this message all over national television. Detroit filed for the largest municipal bankruptcy in U.S. history Thursday after steep population and tax base declines sent it plummeting toward insolvency.
That is actually only half true, because Gov. Snyder was right to say that Detroit’s fall was in motion for 60 plus years. A whopping 20,ooo retired city workers will continue, for now, to receive payments, but will soon take an enormous hit. An astonishing $9 billion is gone, and 100,000 lenders will get .10 on the $1.00, if they are lucky.
Detroit exemplifies the false and dangerous promise of liberalism, and sadly other cities who cannot meet their own pension demands will follow suit, literally. President Obama’s own state is one such instance, where union pensions and idleness have blown a hole in the budget that is simply unrepairable. Let’s take a look at the reactions from officials, and then understand what this truly means.
The filing by a state-appointed emergency manager means that if the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.
Kevin Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall, and made the filing Thursday in federal bankruptcy court.
“Only one feasible path offers a way out,” Gov. Rick Snyder said in a letter to Orr and state Treasurer Andy Dillon approving the bankruptcy. The letter was attached to the bankruptcy filing. Snyder added:
The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services. The city’s creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations.
Snyder had determined earlier this year that Detroit was in a financial emergency and without a plan to improve their financial outlook. Snyder hired Orr in March, and he released a plan to restructure the city’s debt and obligations that would leave many creditors with much less than they are owed.
However, Orr was unable to convince a host of greedy creditors, including the city’s union and pension boards, to take pennies on the dollar to help facilitate the city’s massive financial restructuring. Some creditors were already asked to take about .10 cents on the $1.00 of what the city had owed them. Underfunded pension claims would have received less than .10 on the $1.00 under that plan. A team of financial experts put together by Orr said that proposal was Detroit’s one shot to permanently fix its fiscal problems, but they refused to acknowledge reality.
The filing leads to a 30 to 90 day period that will determine whether or not the city of Detroit is eligible for Chapter 9 protection, and define the number of claimants who may compete for Detroit’s limited settlement resources. The petition seeks protection from unions and creditors who are renegotiating $18.5 billion in debt and liabilities, according to the Detroit Free Press. White House spokeswoman Amy Brundage, said in a statement:
The President and members of the President’s senior team continue to closely monitor the situation in Detroit. While leaders on the ground in Michigan and the city’s creditors understand that they must find a solution to Detroit’s serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalize and maintain its status as one of America’s great cities.
In other words, a bailout is not off the table, which would set a dangerous precedent for other cities who are sure to file bankruptcy as well. The auto-bailouts were touted by the Obama reelection campaign, but by no stretch of the imagination were they the success stories that politicians have made them out to be. Sen. Carl Levin, D-Mich., also said in a statement:
I know firsthand, because I live in Detroit, that our city is on the rebound in some key ways, and I know deep in my heart that the people of Detroit will face this latest challenge with the same determination that we have always shown.
This is simply unbelievable. Carl Levin, for years, has presided over this debacle, and now in the very same year he announces his retirement from Congress the city coincidentally files for bankruptcy. Who will be hurt the most from Levin’s and other politicians’ broken promises? The people who voted them in office, that’s who.
Detroit Mayor Dave Bing said he didn’t want the city to go bankrupt, but now that it’s happened, the people of the city “have to make the best of it.” I would say, that you made your bed and now you have to lay in it. Detroit used to have the highest median income per household in the country, and now it ranks 66 out of 68. Crimes rates are sky-high and the police, who are broke, boast an astonishing response time of 58 minutes, far above the national average.
A number of factors – most notably the steep population decline due to high taxes and less opportunity, which destroyed the tax base – have been blamed on Detroit’s descent toward insolvency. Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them – mostly to Red states – such as Texas, Tennessee and South Carolina. Detroit’s budget deficit is believed to be more than $380 million. Orr has said long-term debt was more than $14 billion and could be between $17 billion and $20 billion.
This is truly a travesty, a symbol of nationwide American shame, and a confirmation of American idleness and sense of self-defeating entitlement to the rest of the world. Detroit was once synonymous with U.S. manufacturing prowess, dominance and power. Once mighty automotive giants switched production to planes, tanks and munitions during World War II, earning the city the nickname “Arsenal of Democracy.” Now, it will earn the shameful slot in history for being the largest city to file for bankruptcy, and the one that started the precipitation of other financially distraught American cities.