Detroit’s Public Sector Unions may push the City into the Biggest Municipal Bankruptcy in U.S. History

Posted by PITHOCRATES - December 16th, 2012

Week in Review

Michigan just became a Right to Work state in an effort to lure business into Michigan.  Whose high union costs have chased business away from Michigan.  Detroit, The Motor City, auto capital of the world, home of the Big Three, is a dying city.  While Mercedes, BMW, Toyota, Honda, etc, have built new auto plants in the United States not a one of them built in Michigan.  Because of their high union costs.  So Detroit has the Big Three.  But no one else.  And even two of the Big Three recently filed bankruptcy thanks to those union legacy costs (pensions and health care for retirees who outnumbered the active workforce).

So Michigan is bad.  But Detroit is worse.  They’ve lost so much industry that the number one and two employers in the city are the City of Detroit and the Detroit Public Schools.  Both who have unions doing to the City of Detroit what the unions did to the Big Three (see Detroit has “serious financial problem”: Michigan treasurer by Ann Saphir posted 12/15/2012 on Reuters).

A check of Detroit’s finances has found a “serious financial problem” with the cash-strapped city, a step that could lead to the biggest municipal bankruptcy in U.S. history…

That official would have the power to put the city of 700,000 into Chapter 9 bankruptcy if other rescue plans are not feasible or effective.

Detroit, home of General Motors Co., has been hit by a steep population decline, years of severe budget deficits and escalating employee costs, all of which led state officials to begin an intervention process last year.

Detroit’s population peaked at 1,850,000 in 1950.  The city has since lost over half of its population.  First the jobs left.  Then the people.  During this time the size of city government grew.  As did the public sector union pay and benefit packages for those public sector workers.  The city’s costs soared as their tax base disappeared.  So it’s no surprise that the city is facing perhaps the biggest municipal bankruptcy in U.S. history.

At this point in time it’s probably not a question if Detroit will file bankruptcy.  But a question of when.  They’re going to have to do what the Left wants to do for people underwater in their mortgages.  And for students buried in student loan debt with no job prospects (because they got degrees in Philosophy, Religious Studies, Anthropology, Archeology, Area Ethnic Studies, Civilization Studies, Information Systems, etc.).  Forgive their debt.  So these people can crawl out from underneath their debt and return to some sense of normalcy in their lives.  But the Left will not endorse this same solution for Detroit.  Because the city’s debts just happen to be to the Left’s greatest campaign contributors and constituency.  Public sector unions.  The Left will screw banks and mortgage companies every day of the week.  But when it comes to the public sector unions they’d rather screw the taxpayer.

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