50 years of progressive rule, a $60 billion bailout of of General Motors and Chrysler and the $800 billion 2009 American Recovery Act (aka Porkulus) have brought us to this point:
With $320 million of federal, state and private aid in hand, top White House officials came to Detroit and vowed to help the bankrupt city fight crime, improve mass transport and eradicate blight.
The money is mostly grants from federal or state programs for which the city is qualified, or for which it needed red tape cut to speed access. Some is expected from private businesses and philanthropy groups. President Barack Obama also has appointed Don Graves deputy assistant secretary of the U.S. Treasury Department, to oversee Detroit’s recovery, said Gene Sperling, director of the National Economic Council.
“We only have one goal, and that is to have all of Detroit working together for one Detroit, with the Obama administration as a key partner,” Sperling said today.
The city, once an auto-manufacturing powerhouse, declared the largest U.S. municipal bankruptcy in history on July 18 after years of decline in which its population fell by more than half, to 700,000 from 1.8 million. The city has more than $18 billion in long-term obligations and is plagued by unreliable buses, broken street lights and long waits for police and ambulances.
It would appear that Detroit will be "saved" by some other rationale than "too big to fail".
Make no mistake about it: Detroit being the model progressive city ruled for years by a collective of statists and public employee and private labor unions, this administration will throw their political capital and your tax dollars to whatever extent they can, not necessarily to save Detroit but to salvage a failed ideological model.
Did we say public employee unions? Why, yes we did...
Here's Megan McArdle writing for Bloomberg.com:
I’m rarely speechless, but I’m having trouble putting my emotions into words after reading the latest report on the Detroit pension situation. Now, I admit it: I’m kind of naïve. Usually when I see an underfunded pension, I think to myself “poor pensioners -- undone by a combination of stupid tax rules, volatile stock markets and mismanagement by trustees who tried to restore depleted fund assets with an investment approach you might call ‘desperate optimism’." Thus, I was not entirely prepared for the new revelations about the Detroit trustees’ custom of handing out annual holiday “bonuses” to workers, retirees and the City of Detroit. Between 1985 and 2008, they handed out roughly $1 billion this way. Had they been invested, one estimate says those funds would be worth almost $2 billion today -- or more than half the current shortfall in the funds.
These “bonuses” were used to lower the contribution the city was required to make, to give retirees a little something extra around Christmas time, and to fund individual savings accounts that workers are offered along with their pensions. In 2009, when the financial markets were completely frozen and the automakers were shotgunning through the bankruptcy courts, the pension trust paid 7.5 percent interest into those accounts -- which is about 7.5 percent more than they would have gotten at a bank. This while the pension funds were busy losing about a quarter of their value.
Color us naive, as well. That money that was used to cover the city of Detroit's contribution shortfalls had to come from somewhere, right?
Well, now it looks as if it's coming from yours and our pocketbook. Fancy that.
Remember, this isn't about saving Detroit rather saving face.