Thursday, July 18, 2013

Detroit Heads To Bankruptcy

The problem with socialism is that eventually you run out of other people money. And as Instapundit is fond of pointing out, anything that can't go on forever won't. So today it is for Detroit.

Just as the Soviet Union was the poster child for failed communist economics, so is Detroit the poster child for failed left wing policies in America. Detroit, wholly under Democratic control since 1962, has gone from one of our nation's premier cities to failure and ruin. It faces unfunded pension liabilities of between $17 and $20 billion and has stopped paying money it owes to unsecured creditors just so it can keep city services running. The city has been spending $100 million in excess of revenues for at least the past five years.

So now this poster child for all that is wrong with Democrat misrule filed for bankruptcy today - with all that means for the all powerful unions and public pensions.

The state took over the management of Detroit's finances earlier this year, declaring it in a financial emergency. After studying the city's finances for several months, Kevyn Orr, the Governor's designee for restructuring Detroit, put together a deal that would have meant breaking union contracts and permanently reducing pensions. The unions and pensions are screaming bloody murder - not merely refusing the offer, but going to court, requesting that the state not be allowed to file for bankruptcy because the Michigan state constitution provides that public pensions cannot be touched. That is a pretty easy legal question. Art. I Sec. 8 gives Congress plenary power over bankruptcy law, and as such, it cannot be altered by any state law.

At least one Democrat city council woman has floated the request for Obama to give Detroit a federal bailout, arguing it was justified since Detroit's Democrats turned out strongly for him in the last election. Just send them some of those free Obamabucks.

That would be grounds for civil war. Update: Joshuapundit has up a much more detailed post on the bankruptcy that is well worth a read.


Ex-Dissident said...

There are plenty of reasons for civil uprising against the state already. However, I doubt enough will rise up to make a difference.

GW said...

Actually, Obama himself floated this idea also, for Detroit and other cities, as part of his State of the Union speech. I don't know though, Vinnie. The Revolution of 1775 was kicked off by just a militiamen in a standoff with the Brits. The Arab Spring began with a single act of self immolation. The size of an initial "uprising" does not matter, it is the amount of kindling that the spark touches.