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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

You can read the rest of this article at: http://reason.com/blog/2012/04/25/detroits-leaders-borrow-a-page-from-gove

Short URL: http://www.txwclp.org/?p=8398

Posted by on Apr 25 2012. Filed under Libertarian News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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