From The Washington Post:
By Zachary A. Goldfarb, Published: July 21 E-mail the writer
DETROIT — The battle over the future of Detroit is set to begin this week in federal court, where government leaders will square off against retirees in a colossal debate over what the city owes to a prior generation of residents as it tries to rebuild for the next.
Soon after Detroit emergency manager Kevyn D. Orr and Michigan Gov. Rick Snyder (R) approved a bankruptcy filing Thursday, groups representing the 20,000 retirees reliant on city pensions successfully petitioned a county court to effectively freeze the bankruptcy process.
Now, city and state officials, who say the court ruling will not affect their plans, are asking a federal judge to hold hearings early this week to validate the bankruptcy and move forward with a strategy for Detroit to discharge much of its estimated $19 billion debt.
Orr has promised that retired city workers, police officers and firefighters will not see pensions or health benefits reduced for at least six months. But on Sunday, he said those retirement benefits will have to be cut down the road.
“There are going to be some adjustments,” Orr said on “Fox News Sunday.” “. . . We don’t have a choice.”
More at the link. But try these numbers on for size:
- In 1960, the city of Detroit had the highest per-capita income in the entire nation.
- In 1950, there were about 296,000 manufacturing jobs in Detroit; today, there are fewer than 27,000.
- Between December 2000 and December 2010, 48% of the manufacturing jobs in Michigan were lost.
- There are approximately 78,000 abandoned homes in the city; many can be purchased for $500 or less.
- Detroit has an area of about 140 square miles, of which about a third is vacant, dilapidated or derelict.
- 47% of residents in Detroit are functionally illiterate, and fewer than half of the residents over 16 are employed.
- Once the nation;s 4th largest city, Detroit has lost 63% of its population since 1950.
From this video, you can see why I watch Nicole Curtis, the “Rehab Addict,” on HGTV and DIY Network:
Miss Curtis once bought a home in Minneapolis for a dollar, to save it from demolition, and not only turned it into half a season’s worth of shows, but did a fine job in restoring the house. It looks like there are plenty of houses in Detroit on which she could work, and she actually is restoring one on North Campbell Street in Detroit. Trouble is, she needs to do about 10,000 more of them.
Of course, the real problem is that even if the lovely Miss Curtis could rehab 10,000 homes in Detroit, those houses are empty and dilapidated for a reason: there are no jobs for the good people of Detroit, and Miss Curtis flips those houses, and needs to do something really radical like make money on them. With no good jobs in the Motor City, there aren’t the buyers who could pay enough to make the rehabs pay off. Instead of Nicole Curtis, maybe Snake Plissken is the guy we ought to send, ’cause that’s about the best use for Detroit now.
To get back on track, the city retirees naturally want the money they were promised. Trouble is, there are now a lot more municipal retirees than there are city workers paying into the system, and there are fewer municipal workers because the city is less than half the population it once was; there is less tax revenue to pay them, and fewer municipal services that they have to provide. The question is going to be whether the state or federal governments bail out Detroit, and my answer would be that no, the federal government should not bail out Detroit, or Philadelphia or Baltimore, or any of the other cities which have mismanaged themselves into bankruptcy. Why should rural people, generally poorer people, have to pay more of their tax dollars to save urban areas from their own foolishness?
More, the problems that Detroit and Baltimore and foul, fetid, fuming, foggy, filthy Philadelphia face are problems primarily driven by union demands and municipal governments too weak-willed to resist them; we have said before that the natural checks of the private sector on union demands don’t apply to the government, and thus the governments have been poor stewards of the taxpayers’ money. If Detroit is bailed out, the leadership — if it can be called that — of many other large cities will think that, in the end, they, too, can get federal bailouts, and the discipline that the Detroit bankruptcy should impose on other cities will evaporate like the morning dew.