Apr 12th, 2012 by TMH
By: Jeffrey Klein
Political Buzz Examiner
As of a week ago, the United States now has its’ own version of Greece–Detroit, Michigan, the center of the nations automotive and union universe. However, it is also a city that reached its population epoch in 1950, but according to the 2010 census now counts just 713,777 residents.
On April 4, 2012, the City of Detroit signed a consent decree, in order to receive a loan of $137 million, to continue operating, according to a FOXNews article yesterday.
“Right now our deficit is at $193 million,” Detroit Councilman James Tate said. “We have a long-term debt of over $12 billion.”
And, on March 20, 2012, Moodys Investor’s Services released a notice of downgrade for the numerous debt obligations of Detroit, lowering them from mid B to low B ratings, which contained the further caveat … “The ratings remain under review for a possible downgrade.”
First time politician, Michigan Gov. Rick Snyder, a Republican, former Chairman of Gateway, and founder of a venture capital firm in Ann Arbor, gave Detroit leaders a choice:
Agree to work with a nine-member financial advisory board to make changes and fix the money problems, or the city will come under the control of an emergency manager, which would mean Mayor Dave Bing, Democrat, and the city council giving up their power.
“This agreement paves the way for a good-faith partnership that will restore the fiscal integrity taxpayers expect and ensure the delivery of services that families deserve,” Snyder said after the consent agreement was reached.
“I call it relentless positive action” Snyder said. “No blame, no credit, solve the problem, take on the next one and keep going.”
Tate said the time for kicking the debt can down the road is over. “No more can,” he said. “No more road.”
It is clear the Detroit had no [real] choice but to sign the decree–they were out of cash, and on the steps to bankruptcy court.
Now the hard decisions and changes begin, said Wayne State University Business professor Bill Volz. He blames Detroit’s cash crunch on antiquated politics and “a series of collective bargaining agreements for which the city couldn’t pay.”
“Politically, the city consistently supports the Democratic Party in state and national elections (local elections are nonpartisan). According to a study released by the Bay Area Center for Voting Research, Detroit is the most liberal large city in America, measuring only the percentage of city residents who voted for the Democratic Party.”
There is also the fact that Detroit has exclusively elected Democrat Mayors since 1961, who were mainly a collection of lawyers, a sheriff, five-termer Coleman Young, Kwame Kilpatrick, a state felon, facing a federal racketeering trial with his politician father beginning in September, a former newspaper writer–who was also a civil rights activist, whose father, a lawyer, was also a proclaimed Marxist-Leninist, and finally Detroit Piston’s basketball Hall of Famer, Dave Bing, founder of Bing Steel.
And at the heart of the Detroit’s financial problems are the collective bargaining agreements covering 48 separate municipal unions.
City leaders basically called the system upside down, according to the FOXNews article.
“We have 22,000 retirees with only 11,000 employees paying into the system,” Tate said. “There’s no way we can sustain that.”
Cuts will have to be made in such areas as health care and retirement benefits, and some jobs likely will be lost, and contracts will have to be altered if the city is going to balance its budget.
However, the unions are beginning to stir the pot of discord already, as on Tuesday, a small group stood outside city hall in freezing, wet weather, sharing a microphone and chanting: “Democracy now” and “We won’t give up our rights.”
Local union leaders even considered attempting a recall of Gov. Snyder, like fellow GOP Gov. Scott Walker in Wisconsin; but, Michigan laws would make a recall a lot more difficult.
“The fight will continue,” AFSCME president John Riehl vowed. “We’re kind of being pushed into a corner,” concluding with the worrisome prediction that ‘the situation could get very ugly.’
“If we were to strike, and the teachers were to strike, all together here in Detroit … we think we’d have the opportunity to shake things up and maybe get some settlement and maybe get some money out of Washington,” he said.
“Get ready,” a union member told Fox News Channel. “This is going to be a huge battle. This’ll be just like Wisconsin.”
How will it all turn out?
There will be no “money from Washington.”
Next, there are three events that would trigger an end to representative government in Detroit; probably for quite a long time.
First, lawmakers fail to work with the nine-member financial advisers, and finally implement what will be Draconian reductions to the city budget, because with 32.6% of city residents below the poverty level, it’s not likely that balance will come from significant revenue increases.
Second, creditors are unable or unwilling to modify their contracts or extend payment terms.
Third, if AFSCME union local president, John Riehl, makes good on his word of launching a massive strike, and starting … “a huge battle just like in Wisconsin,” Detroit will truly begin to look like Athens–and still suffer the same fate as Eastern Airlines did in 1991.
Detroit is the portal into the future of the United States under Democrat influence, as there likely will not be another chance to kick the national can down the road again.
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