Detroit Court Case Presents an Impossible Choice
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  • Corlyss

    “While the principle that federal law trumps state law on most issues is pretty clear, there are real arguments on both sides in this complicated case.”

    There always are compelling arguments on sides. That doesn’t mean the Constitution’s supremacy clause doesn’t still trump the state constitution, which cannot prohibit something that is allowed by federal law.

    • Jim__L

      “But if the state constitution is unenforceable”

      Reality and arithmetic are cruel mistresses, but in the end, they trump all else.

      This isn’t a Constitutional issue at all. This is a Reality issue.

      • Andrew Allison

        It’s both. As somebody recently pronounced, we are a nation of laws.
        The reality, of course, is that the courts cannot create money out of thin air, but they can, and will, decide who gets hosed and how.

        • Jim__L

          I’m not sure being “not-hosed” is going to amount to much, in this case.

          This is not impossible, and this is not a choice.

          It’s a disaster.

        • Corlyss

          “courts cannot create money out of thin air”

          Correct. That’s Ben Bernancke’s job. I suspect that the government’s answer to many of these problems will be inflation.

          • Andrew Allison

            Now there’s a thought. Why doesn’t Uncle Ben just print up $18 billion (a mere 20% of what he’s printing every month to patch the stock market bubble) and eliminate Detroit’s debts. LOL

          • Jim__L

            He’s too busy printing money to eliminate a modest portion of our national debt each year… and that comes to a lot more than $18B.

          • Pete

            Exactly so.

            Maybe one should buy gold & silver.

      • Corlyss

        It amazes me that the old civil rights pimps think this is something they can forestall if only they march and squeal enough. As you note, the math is indifferent, inexorable, and unforgiving.

  • David Heller

    47% of Detroit’s population is functionally illiterate, a direct result of Union corruption at the expense of children. No company will build or expand in a city where the human capital is in even worse shape than it’s ruined political structure…….. Detroit is not going to economically recover because business would be insane to locate there. Tax abatements, and rent seeking lobbiests won’t fix Detroit.

    If — if the destructive power of the Democrat Party (unhindered power for over 50 years – if Big Blue Liberalism actually worked, Detroit would be a workers paradise.) and it’s union co-conspirators can be curbed and new generation of educated children could be raised, then and only then could Detroit be repaired.

    But that won’t happen. Detroit will continue into the ash-heap of history,,,,, just like the Soviet Union … and for the exactly same reasons. Some things can’t be fixed.

    Someday, perhaps in 20-50 years something new and living will rise from where Detroit is today, but it won’t be Detroit.

    • Pete

      “And it’s not just the educational unions….. police, firefighters, medical……….. all of these power centers contributed to the rape and pillage of a population.”

      Exactly so.

      That’s why having the pensions clipped is a type of justice. The public service employees — all of them — milked the system for all it was worth. And there was nary a one of them that was ever worth what they got in compensation.

  • Andrew Allison

    Perhaps we might separate the obligations and recovery issues. The former will play out through the courts and the result will be what it is. It seems pretty clear that the first step toward recovery of the city is to shrink it’s footprint to match a population one third of its previous size. Second is to make reinvestment in the city attractive (see, e.g.

    • Corlyss

      “As to the non-productive capital, how about revisiting the WPA?”

      The problem with that idea as I see it is the WPA had literate people who had what has come to be pejoratively referred to as “middle class values” – hard work, thrift, deferred gratification, show up on time, work for 8 hrs., save what you can, live frugally, make do or do without. The 47% David refers to most likely not only don’t have any of those characteristics, they have seen no reason to adopt them. They get their Obama money, which spends just as well as if they had done something to earn it. The desirable characteristics are dismissed as “acting white.” The race pimps have convinced vast populations that the execrable habits of the permanent underclass – illiteracy, showing up late or not at all, working long enough to get money for an X-box, even rudimentary job skills -are a “culture” all their own of which they should be proud and which they should perpetuate. No doubt in my mind whatever that investors would have NO use for those people whatever.

      • Andrew Allison

        Agreed. I’m sorry to say that the Zimmerman lynch mob has made a racist of me (and, judging by Internet commentary, many others).
        The solution to the problem you posit is: eight hours a day or no welfare (and confiscation of your Obamaphone)!
        Here’s another thought which will, no doubt incite a firestorm: voter ID should consist of a tax return showing that you actually paid taxes.
        The BGI has sown the wind, and will (I hope) reap the whirlwind.

      • Andrew Allison

        I posted a more lengthy response a couple of days ago which apparently contained something VM didn’t like. I’d just like to suggest that we differentiate between the recently- and chronically-unemployed. A large number of the former may, in fact, have “middle class” values. As to the rest, unskilled workfare paid by the hour could work.

        • Corlyss

          Agree. Regrettably, the recently unemployed’s kids are ripe candidates for the permanent underclass.

          • Andrew Allison

            Absolutely; that’s why we need to put them to work ASAP.

    • Pete

      “It doesn’t take a lot of skill, or literacy, to wield a pick and shovel.”

      No but it takes a work ethic to show up at the job site at 7:00 AM, Monday thru Friday, week in and week out, and to do what you are told without giving the boss back-talk.

      This, most of the denizens of Detroit do NOT have.

      • Leah Keever

        Maybe once the handouts stop and they are hungry and cold, a lot of them will find that work ethic.

      • jmatt55

        It’s true. Why work when everyone else can simply be forced to pay your bills? We won’t even let people suffer from the catastrophe of not having a cell phone.

        We should have our heads examined.

    • f1b0nacc1

      Between environmental regulations, OSHA, Davis-Bacon, etc, it would be impossible to recreate the WPA today, even if sufficient political will existed to do so.
      More to the point, can you imagine the civil rights gerentocracy wailing at the thought of (largely black) men and women compelled to perform manual labor in exchange for benefits? I leave the details to your imagination.

  • Anthony

    Bankruptcy poses a dilemma for Detroit (citizens, bond holders, pensioners, etc.); a dilemma describes a situation that has no satisfactory solution. That is, Detroit is in a situation involving a choice between equally unsatisfactory alternatives – two related and informed presentations on Detroit’s present dilemma are “The Great Detroit Betrayal” (Harold Meyerson) and “Four Dumb Things People Are Saying About Detroit” (Alec MacGillis).

    Regarding Via Meadia search for practical ideas going forward, Megan McArdle poses some thoughts in yesterday’s Bloomberg View.

    • kgelner

      Not much of a dilemma. Bankruptcy means citizens get services, no bankruptcy means they go without. The first duty of a city is to the people living there.

      Also wondering, how many people getting pensions currently live in Detroit… perhaps that should be a requirement or prevent as much of the pension being lost.

  • cubanbob

    Until the debt issue is resolved there is no way of getting Detroit back on its feet and on to recovery. Until the debts are liquidated and the contracts annulled no one is going to invest there. And without investment there are no jobs and hence no recovery. The city simply doesn’t have the tax base to sustain its debts and provide services, the State has signaled it won’t be the guarantor of the debt and the Feds in their silence have spoken loudly. There is no way out except through bankruptcy and the complete house cleaning it entails.

  • Doug

    First, resolving the debt crisis. Tax the tax-exempts in the community. For example, Henry Ford Medical Center in Detroit has a half billion dollars in net assets – can be easily argued that high reimbursements from the retired autoworkers and state and local employees created much of this surplus. Last year, the hospital made a profit of $50 million. Demand they return the profits. There is no owner of a tax exempt, so there is no loss to any one person.

    Second, as for the recovery, allow US corporations the opportunity to repatriate foreign profits into Detroit, tax free. They would be required to keep their assets for at least five years so they don’t just take advantage of a short term benefit.

    • ChuckFinley

      Excellent idea. First go after any money still left inside Detroit – persuading anybody who still has money there to remove it ASAP and then rely on political juice to get special privileges for Detroit.

      Why would any corporation place itself in a position to have its assets vulnerable to the corrupt thieves in Detroit for five years? Especially at a time when federal policy has made investing in the United States less attractive than investing in many overseas locations?

    • That’s how you get a hospital to close its doors … certainly when their assets our depleted; perhaps before that if it moves to save its assets for treating people in another location.

      Then, you lose the services … of the hospital, and any other non-profit that is treated in the same manner.

      So yes, people lose.

  • Fat_Man

    Regardless of the merits of the petition in state court, I do not believe that it has the jurisdiction to determine the propriety of the filing in Federal Court. I believe that the state courts decision was void and that the plaintiffs must seek their relief in Federal Court.

    • s w


  • stevewfromford

    I would be in favor of the US making a long term low or no interest loan to Detroit to bridge the current disastrous situation but ONLY on condition that:
    1. Current and future pensioners and city employees agree to a significant haircut.
    2. All current and future employees be converted to a 401K style defined contribution plan for both pension and medical benefits with contributions tied to actual income of the city and measured metrics of services provided. Something like police response time multiplied by citizen complaints times a factor equals pension contribution for that year. Give employees some skin in the game with a significant part of their compensation tied to actual performance.

    3. The state agree to and the federal government grant a waiver of all minimum wage regulation for the life of the loan.
    4. The city and state agree to a hugely simplified business license regime, pass liability reform a la Texas and ditch at least half of the regulation that makes operating a business so risky and expensive.
    5. Foreclose upon and auction off all property more than 3 years in arrears in property taxes with some abatement consideration for seniors with low incomes.
    6. Pass a state and local tax holiday for all income generated from business done in Detroit and seek special empowerment zone legislation from congress to do the same at the federal level for at least 10 years with harsh penalties for abuse or cheating on this and a requirement of audit annually to make sure the income is actually Detroit based.
    7. Immediately issue vouchers to all parents for education of their children at the school of their choice.

    Implement all these, grant a 10B loan and we might just see Detroit, once again soar.
    Never going to happen but nice to dream, isn’t it?

    • Corlyss

      Sounds like you’ve give this a lot of thought.

    • jmatt55

      Yeah, lets loan the insolvent cities and unions even MORE money. They’re good for it.

      What could go wrong?

      • rgbintx

        Correct. Why should we trust them? Why should we expect them to repay the loans? We shouldn’t. Thus, it turns into a wealth transfer from the prudent to the corrupt. Nope, I’m not buying it.

        I say that they made their bed hard and now it is time for them to lie on it. Or, it is has now come time for them to pay the piper.

        • jmatt55

          Yes, it is insanity to believe you can solve a debt problem with more debt.

          The US taxpayers took a $28 BILLION dollar loss in the keester when Obama bailed out his UAW buddies.

          Is that the kind of loan performance we can expect with a loan to Detroit? I’m tired of Dear Leader opening the US treasury to his green energy and union buddies. Enough.

    • Terenc Blakely

      Your solution only will work if the participants are honorable and fulfill their part of the bargain. When was the last time Libs and Democrats shown such honor?

  • HRGuru

    There is nothing permanent about a city and there is nothing that says we need the city of Detroit to continue. We can help the people without trying to prop up the institutions that created this disaster. Total failure is a type of reform. Otherwise Detroit will be like the Oriental rug stores- always going out of business.

  • Michael W. Perry

    No, it’s wrong to say that, “Detroit’s situation seems almost unprecedented.” Several cities in California have already filed for bankruptcy for similar reasons–particularly those out-of-control union pensions–and states such as California, New York, and Illinois are is deep trouble, with their financial ratings dropping.

    What needs to happen first and foremost is best summarized by the expression “twist slowly in the wind.” Those most responsible for this mess, liberal Democrats and their politics, greedy government unions, and the voters who permit that behavior, should be made to suffer quite a bit of prolonged pain.

    After all, it matter far less whether Detroit begins to “work again,” than whether the rest of this country learns from its failure. If the country as a whole is well-run, those who live in Detroit can move out and let the city revert to forest (as some are suggesting). But if much of the rest of the country becomes like Detroit, as three of our most populous states are clearly doing, then there’ll be no place to flee.

  • fustian24

    I think the left would gladly see Detroit continue to suffer rather than admit that their policies don’t work.

    Because of this simple fact, I cannot imagine a solution here. Anyone attempting to address the fundamental problems of Detroit will be demonized so horribly and effectively that they’ll wish they were George Zimmerman working neighborhood watch in Harlem.

    Until the left is thoroughly discredited, Detroit’s fate is sealed.

  • Raul Johnson

    A necessary, though not sufficient, condition for the recovery of Detroit is that middle class families must have an option for educating their children that doesn’t involve the Detroit Public Schools. A voucher system for education plus a commitment to public safety might make those cheap houses tempting to some young families.

  • Sammy

    The public unions/Democrat party cabal must be broken before it destroys the entire country.
    It is time for a new Amendment to the Constitution which outlaws all government unions, federal, state, and local.

    • jmatt55

      Federal workers should not have the right to organize AGAINST THE PUBLIC.

      If you don’t want to serve un der the conditions offered, try working in the real world.

    • Public-sector unions, that as a organization or via individual members can provide financial support to the elected officials that effectively sit across the table from them in negotiations – management that, unlike their private-sector counterparts, have the ability to coerce the taxpayers to underwrite any deal-sweetening for this voting bloc with “other peoples’ money” – have an inherent conflict-of-interest.

      And they have an ally that private-sector labor does not have – a media that is itching to expose political malfeasance.

      Therefore, union representation for the public sector is a low-benefit/high-risk situation for the taxpayers.

  • JackLifton

    The GDP of the USA is barely positive. Wealth is not being created because productive capital that creates jobs is not being deployed. The sacred cows of local control of the schools, “tenured” positions, and millions for stadiums for the masses, but not one cent to improve their chances of self-sufficiency have been bled dry.
    Detroit is now what the Victorians called a “poor house.” But we do not require anyone to work their way out of the poor house. We just continue to give them subsistence living and games. The problem lies not in our Detroit but in ourselves. Giving control of the situation to incompetents and thieves was and is the problem. Detroit is simply the result of what happens when elites provide bread and circuses to the illiterate poor in return for their voles.

  • douginsd

    Some have said a city can’t liquidate. But in fact, it can, because all of the residents can vote with their feet; including the poor, who will move once the city can no longer afford to pay for their benefits and means-tested services.

    Unfortunately, the pensioners will be left holding the bag, but that’s what happens when the unions buy and threaten the politicians into providing pensions, for which they are then unwilling to propose the tax increases needed to fund said pensions. There will be a lot fo apin as a result.

    In the case of Detroit, wasting money on subsidized mega-projects downtown didn’t help, either. However, Detroit is not alone in this respect; the city councils, plus the developer interests in many towns are enamored with such financial black holes.

    • Even if the politicians rammed through tax increases, the people would still vote with their feet … the collapse might be more protracted, but still all but certain.

      • douginsd

        My point was not that taxes should go up, it was that it was way easier for them to promise cushy pensions to be paid in the future with money from who knows where, than to offer pay raises that required raising taxes today, because raising said taxes was not politically potable; after all as far as the pols were concerned,all that mattered was the next election, and by the time the bills came due, IBG,YBG (the never ending story of this financial crisis). To add to this mess, pols who didn’t play ball would be primaried by the unions.

  • rhhardin

    I don’t see why RICO statutes don’t cover getting rid of pension obligations pretty generally.

    You’re not entitled to what is gotten corruptly.

  • mikegiles

    One of the reasons the city is in debt is that they borrowed money to pay the exorbitant salaries and pensions of their workers. Now they can’t do that because no one will lend them the money. But the unions keep demanding that they find someone – anyone – to lend it to them. Common sense should tell them that no one is going to lend money to a city, they KNOW can’t pay them back. The unions are also demanding that they stiff the bondholders to pay them, which GUARANTEES that they won’t find anymore lenders. They are so royally screwed.

  • bladedoc

    Why does Detroit need to be helped? Cities have come and gone throughout history even in the history of the U.S. Let it liquidate and redistribute the assets and manpower to more productive uses. This is how federalism works, this is how the market works.

    • Michael Gebert

      Exactly. Rome didn’t bail out Nineveh.

  • kgelner

    From the cities perspective I see a path forward that could fix things. Make Detroit a tax-free island in terms of state taxes for the next 100 years – no state taxes collected at all, and then also halve the city taxes and remove the city income tax.

    Suddenly now you have a lot of people motivated to move back into the city instead of out. You may even have businesses moving there from other nearby states.

    An increase of population is the only way to grow enough to come close to paying pension obligations, and making it super-attractive to give Detroit a shot is the only way to do that.

    Of course it’s absurd to think anyone managing Detroit would admit lowering taxes is the only way to produce growth.

  • s w

    Maybe I don’t see the issue, but how does state law, even a state constitution, prevent a party, even a city, from availing itself of Federal BK law? Creditors would love to prevent individuals and corporations from going BK to avoid their collection efforts; I can’t see how a state law could be permitted to make that happen, or bankruptcy would be almost impossible to get to. It is a shame that some pensioners and city employees will get shafted after the Chapter 9 trustee gets done, but Detroit dug its own grave slowly, and in public, for decades. Mr. Orr did not push the City into the hole, he is just doing his job.

  • chasrmartin

    Here’s an idea. Let it go bankrupt, impose martial law, arm every adult who doesn’t have a felony conviction unless they’re a member of the city government. Have the state take over the pensions and let any current member of the city government who wants to take early retirement. Then reduce the property tax to zero for ten years, and fund necessary city services from sales tax, limited by state law to one percent. Sell off abandoned properties for $1. Wait.

    • iconoclast

      Need to address regulatory overreach. Land use, environmental reviews, etc all need to be rationalized for this to work.

  • No_Rush

    Isn’t Detroit’s best bid to argue that, constitutionally, if the city isn’t good for the pension obligations, the state of Michigan has to honor them? (States are sovereign entities, but cities are not.)

    • Rick Caird

      If they tried, it would take about a nanosecond for the rest of the state to delete that provision from the Constitution. I really cannot see Grand Rapids or Flint agreeing to pay Detroit pensions.

      • No_Rush

        You have considerably more faith in Michigan governance than I. Here’s hoping you’re right.

    • iconoclast

      It sounds like the city will be able to win that case. Tax increases for everyone! Wheee!

  • mnemonicmike

    Liberals have ignored this oncoming failure for 60 years. And for 60 years, only liberals have run Detroit. Detroit is now a complete wreck. Back off, do nothing, and let the weeds, trees, and grass take over Detroit. Make it a “Green Space” in honor of liberalism.

    • Bill Gryan

      Instead of “ignored” I would say “facilitated”, whether willfully or not on their part.

  • teapartydoc

    One bailout will lead to another and we will end up with a bankrupt country being administered from DC by a bunch of Mafiosos.

  • jmatt55

    We will two things happen:

    1) Unions will sudeenly become acolytes of the tenth amendment and rediscover state’s rights.

    2) Obama will declare that *because* federal law trumps state law, the federal US taxpayers have an obligation to bail out every union pension fund from sea to shining sea.

    Count on it.

    • Rick Caird

      No matter what Obama wants, that could never pass Congress. The reason it could never pass is that the problem will cascade to California, Illinois, Rhode Island, etc.

      Couple that with the idea the Federal Government is functionally bankrupt, and it becomes an impossible sell. What is worse, the PBG does not have enough money to take over all the failing state pension programs.

      • Red_Right_Returning

        It doesn’t matter what Congress will agree to do. Obama will issue a decree (just like, e.g., the Dream Act E.O.) because “we can’t afford to wait.”

        If math won’t co-operate, it can always be overridden by executive order.

      • jmatt55

        As if being insolvent ever stopped the federal government, and ESPECIALLY Obama, from spending money.

        It didn’t stop him from bailing out the UAW with a $28 billion dollar loss for the tax payers.

        It’s not his money, why would he care?

  • koblog

    “We’d like to see more competition between the left and the right to develop creative approaches to the problems of Detroit….”

    Except here’s the left’s approach:

    1. Take from the productive, keep a portion for their “administrative and re-election costs” and use what’s left to buy the votes of the unproductive

    2. Punish the productive with onerous taxes and regulations

    3. Demonize the productive, calling them greedy, polluting, unpatriotic, selfish, not “giving back” to the communities they have pillaged and “not paying their fair share” — then claim to “focus like a laser” on job creation

    4. In the case of left/unionized Michigan, legislate constitutionally that back room deals made, as you say, by corrupt politicians and public unions must be honored even if the broke, corrupt, decrepit city is borrowing $100 million per year to feather those corrupt politicians’ nests.

    5. Legislate that health care is now “affordable” because…because… BECAUSE WE SAID SO, SO SHUT UP, then wonder why all the jobs are part time Pelosi “McJobs” and businesses won’t expand past 49 part time employees

    6. Politicize the IRS to become enforcement thugs for the left and the Democrat National Party in particular, after joking about employing IRS audits against political enemies

    7. Expand the federal government exponentially, running up debt that makes Detroit look frugal

    8. Claim to desire “bipartisanship” but when in power, lock out their political enemies while ramming through pet legislation to achieve raw authoritarian power while enriching themselves and their cronies with public money, all while claiming to be “public servants”

    9. Selective Imperial enforcement of their own laws for political gain

    10. Outright denigration of our Constitution after taking oaths to defend that Constitution. “The Constitution means exactly what I say it means”

    11. Using secret NSA domestic spying and IRS records — whether true or not — to blackmail citizens, political opponents, judges and the press

    Yeah, Dr. Meade, I’m sure the left and right can work together just fine.

    Then again, Detroit may be the exact end state the left is looking for, as your “blue model/red model” meme is clearly demonstrating.

    • rgbintx

      Correct. The left is irredeemably corrupt. We don’t need a dialog between right and left. We don’t need more competition between right and left We need to discredit the left.

      We already have competition between right and left, and the left has consistently produced abject failure.

      • We only need dialog between the intellectually honest, on both Left and Right … though if one is intellectually honest, they will have gravitated towards the Right on many issues and/or at least are willing to admit the shortcomings of the Left’s paradigm of governance … just as we on the Right recognize the honest intent of some on the Left to make things better (as opposed to those merely trying to discredit conservatives in order to protect their mellow from being harshed).

        I can deal with the intellectually honest even if they disagree with my take on things … but the rest are parrots who add nothing to the conversation. They are only useful for generating opportunities (usually at a level of wit between 0 and 0.5)to clearly delineate the differences between Left and Right.

        The parrots still need to be challenged, though … if for no other reason, to warn others of the doggie-doo they are about to step in if they accept the parrotage without challenge.

  • Tina848

    There are some ideas:
    Privatize the school system like New Orleans
    Sell excess city assets at auction, including some of the artwork.
    Sell the abandoned homes for $1, Contingent on demolition and removal within 1 year, no taxes for 10 years.
    Urban farms?!? Use excess land for greenhouses, urban renewal farms, using city water for irrigation.
    Tap Wayne State for business incubator ideas.
    Enterprise tax free zones for businesses that locate in the city.

    • Bill Gryan

      Sounds great, so long as there is no federal government involvement in any of the programs you mention.

    • iconoclast

      Need to issue firearms and training for neighborhoods to deal with the criminals. Maybe deputize neighborhood watch.

      • rgbintx

        Who is going to issue these firearms? Who is paying for them? Why aren’t the good citizens of Detroit buying them for themselves? Why should the taxpayers be on the hook for this?

        Wouldn’t deputizing neighborhood watches put them under the control of the very same corrupt politicians and bureaucrats that have caused this mess?

  • HopeyChangey

    Let’s be honest. Detroit is what happens when you kill the goose that laid the golden egg. Productive people were squeezed, quota-ed, marginalized, taxed and even threatened and the leech finally ran out of blood. Money doesn’t come from nowhere. Someone has to produce it. Gov’t can’t, and people on welfare can’t, and criminals can’t. Detroit is like it is because of the people in it, not mismanagement. You can’t manage what isn’t there. Socialism doesn’t work because without it’s opposite number, there can be no socialism. Socialism needs capitalism, capitalism doesn’t need socialism. Socialism is an excuse factory for failure enabled by gov’t. Detroit is a failure because its people are failures. That’s not gloating, just the reality of feral value systems.

    • Bill Gryan

      In fairness to the people of Detroit, they were indoctrinated into believing in socialism over many generations. They were given a poor education and, as a result, it never occurred to them to consider that they lived in the wealthiest country in the world, and what might have caused all that wealth–i.e. the proverbial goose.

      Then they ran out of other people’s money. And while they suffer over the coming years, Saul Alinsky would feel proud of his accomplishments.

  • juandos

    How many extorted federal tax dollars were already wasted on that rat hole?

    Apparently the citizens wanted that 3rd world existence (via their voting choices) so why deny it to them?

  • Homeros

    For Detroit to succeed it would need to be a different kind of city. It would need the flexibility that comes from either an educated population or a government that regulates lightly.

    It also needs to be the kind of city that creative people want to live in.

    Even then, no purely industrial city has avoided population decline and so forth.

    My dad grew up in Detroit way back when. His brothers, heavy drinkers and light readers, were paid very well. One can only wish Detroit well.

  • Bill Gryan

    I don’t get it. Can’t they just raise taxes and demagogue “the rich”? Isn’t that the solution to everything?

  • iconoclast

    Reform might be to jail all politicians and bureaucrats at manager level and up. Then reducing both taxes and regulatory abuse to encourage business to return.

    But somehow the criminals living in Detroit need to be eliminated. Don’t have a suggestion there.

  • David Govett

    The retired union workers are forgetting the usual way of responding:
    They should go on strike yet again.

  • Beaux Weevil

    The liberals that ran Detroit declared war on math. Math won.

    The same thing that happens in a corporate bankruptcy needs to happen here. The court appointed overseer needs to replace the city government with “mathematicians”. I know that can’t happen, but it needs to.

    Starts with a severe haircut for everyone, including pensioners. It’s a bitter pill. Hopefully the electorate nationwide learn a lesson. Liberal politicians like to talk sacrifice.Well, here’s ground zero for it.

  • Whitehall

    Since $6B is for unfunded retiree medical benefits (a third of the total maybe), and most of these people did devote themselves as civil servants to make a better city, even this stone-hearted Republican can see definitely offering Medicaid to them.

    However, a better compromise would be to grant retirees Medicare benefits although if it is highly unlikely that they and the city ever paid Medicare payroll taxes. This would take an Act of Congress (and not just executive order) and should require that the current employees and the city start paying Medicare taxes immediately.

    In turn, the federal government could take liens (or title) on vacant property owned by the city (for what its worth.)

    • teapartydoc

      “…to make better city…”?–just what city were we talking about?

      • Whitehall

        They may have worked to make a better city but may only have kept it from being worst that is has become.

        Should city workers have just quit and gotten other jobs? Who still works there? How many are union and how many not?

        There must have been some decent ones but separating them from the leeches would be hard.

        Another proviso that might be a good precedent is to cap or eliminate the pensions of ANY and ALL elected officials.

  • Eternal is the bleat; let’s get some ‘smart people’ on this. But it was the brain trust that got us where we are in the first place. I haven’t heard of any Republicans pushing reform in Detroit. There are none in the vicinity and few in the state. It may well be that returning the city limits to a state of nature is the best thing for everyone. Any infusion of cash will be as quickly and pointlessly squandered as all that came before. In any case, Detroit is simply further along the same road as nearly any large city (excepting Atlanta), as many states, including the largest, and of course the federal government itself. Indeed there is pain in store no matter what policies are enacted nor how they are financed, all across the globe.

    • rgbintx

      Not excepting Atlanta. The rot is there, too.

  • ChuckFinley

    If bankruptcy is off the table thanks to that judge’s ruling, we are back to talking about auctioning off the contents of the Detroit Institute of Art.

    Those foolish enough to own Detroit municipal bonds are going to be stiffed but selling off the art work will put a dent in the pension obligations.

    When that money runs out, Detroit can hire hit men to kill off the pensioners. Hey, nobody really wanted that but the state constitution requires that they be paid as long as they are alive and the city is out of money.

  • Piltdown Ghost

    Detroit needs budget constraints built into their laws and firewalled against manipulation, even by majorities of politicians or the people.

    That’s a very undemocratic solution, but it is the only one that will work for Detroit. And why single out Detroit? Other than being the first city of significant population to fail there’s nothing special about it, not really, so rather than point the finger what we really need is a new understanding of one of the inherent weaknesses of democracy.

    As a general rule any organization with elected leaders and the power to tax cannot reliably or sustainably survive without imposed fiscal discipline. (Either that or there is something special and unique about Detroit, something that makes its people uniquely incompetent to rule themselves. I am not one prone to hubris, however; if it can happen to Detroit it can happen anywhere.)

    The lure of spending borrowed money is too great a temptation for elected officials and the people who vote for them to resist — some, in fact, rationalize it, subscribing to a political ideology that considers government borrowing to be a public good or moral imperative. The people who vote for it don’t understand the danger of borrowed money; they can only see the benefits. This creates a huge risk for a democratic organization.

    If Democratically-elected organizations with the power to tax inevitably go bankrupt Democracy itself is imperiled by its own built-in excesses. To have democracy at all it must be constrained from self-destructive policies; the competent rebuilding of a democracy therefore requires provisions against those policies known to be self-destructive.

    Democracy’s survival requires some constraints on democracy. Our Constitution protects the rights of the individual from the tyranny of the majority. As the example of Detroit proves, the rules that make a democracy viable must be protected as well.

  • Denniswingo
  • Both the residents of current day Detroit and the cops, teachers, firefighters and others who trusted in the promises of Detroit politicians and union officials face a world of hurt.

    Dr. Mead, the first reform must be to diminish that willingness to trust in “experts” … or even the “smart people” you would like to see rise to the occasion.

    These people need to learn to trust THEMSELVES …

    … trust themselves enough to exercise the personal initiative to secure at least what is left of their future, and not wait for “smart people” to do that FOR them … even if that means they have to move out of Detroit …

    … then discern who among their neighbors can help them restore what they have lost, and work with them to do it – again, instead of leaving that to the “smart people”.

    If the above does not happen, even “smart people” would just be throwing good money after bad.

    Don’t get me wrong … the advice of “smart people” may prove valuable to these people. But it is the people in the world of hurt who need to be the ones making the decisions, not the “smart people”, let alone “smart people” with the coercive force of law at their disposal.

  • Relying on a pension is a half step removed from relying on social security.

    A political promise to pay your bills when you get old isn’t worth the paper its printed on.

    Economic independence is power. Economic dependence is serfdom. There are a lot of serfs in Detroit who were sold their chains with worthless promises that are now learning the error of their ways.

  • Beldar

    Mr. Mead, go back and ask your bankruptcy experts this more limited question — one that may end up affecting the answer to your ultimate question, maybe deciding it as a practical matter, and one that I think you’ll find much broader agreement upon:

    Will it most likely be a federal court or a state court who decides whether the state constitution makes this bankruptcy filing illegitimate?

    I’m no bankruptcy specialist, but I am a lawyer who practices in both state and federal court. And I’m pretty sure that it will be a federal bankruptcy judge who decides whether and how the state constitution is relevant. And it will likewise be a series of federal judges, not state judges, who review that decision.

    And federal judges often have a more expansive view of federal power, especially on things like bankruptcy courts and their ability to preserve their own statutory jurisdiction, than their state-court counterpart judges do.

    It’s entirely possible, of course, that a federal bankruptcy judge might decide that state law is important, perhaps even determinative. There are even mechanisms for the federal courts to ask their state-court counterparts to clarify or interpret state law when it’s doubtful or disputed.

    But the question will be sorted out by federal judges, even if they ultimately decide their decision is compelled by some state law that isn’t overriden by or inconsistent with federal law.

  • Boritz

    Ich bin [ein] Detroiter.

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