Detroit Broke City

File Detroit files for bankruptcy

Turns out it wasn’t the bankers after all. It wasn’t the auto makers either. Or the Republicans.

Detroit Free Press:

How Detroit went broke: The answers may surprise you – and don’t blame Coleman Young

Detroit is broke, but it didn’t have to be. An in-depth Free Press analysis of the city’s financial history back to the 1950s shows that its elected officials and others charged with managing its finances repeatedly failed — or refused — to make the tough economic and political decisions that might have saved the city from financial ruin.

Instead, amid a huge exodus of residents, plummeting tax revenues and skyrocketing home abandonment, Detroit’s leaders engaged in a billion-dollar borrowing binge, created new taxes and failed to cut expenses when they needed to. Simultaneously, they gifted workers and retirees with generous bonuses. And under pressure from unions and, sometimes, arbitrators, they failed to cut health care benefits — saddling the city with staggering costs that today threaten the safety and quality of life of people who live here.

The numbers, most from records deeply buried in the public library, lay waste to misconceptions about the roots of Detroit’s economic crisis. For critics who want to blame Mayor Coleman Young for starting this mess, think again. The mayor’s sometimes fiery rhetoric may have contributed to metro Detroit’s racial divide, but he was an astute money manager who recognized, early on, the challenges the city faced and began slashing staff and spending to address them.

And Wall Street types who applauded Mayor Kwame Kilpatrick’s financial acumen following his 2005 deal to restructure city pension debt should consider this: The numbers prove that his plan devastated the city’s finances and was a key factor that drove Detroit to file for Chapter 9 bankruptcy in July.

The State of Michigan also bears some blame. Lansing politicians reduced Detroit’s state-shared revenue by 48% from 1998 to 2012, withholding $172 million from the city, according to state records.

Decades of mismanagement added to Detroit’s fiscal woes. The city notoriously bungled multiple federal aid programs and overpaid outrageously to incentivize projects such as the Chrysler Jefferson North plant. Bureaucracy bogged down even the simplest deals and contracts. In a city that needed urgency, major city functions often seemed rudderless.

When all the numbers are crunched, one fact is crystal clear: Yes, a disaster was looming for Detroit. But there were ample opportunities when decisive action by city leaders might have fended off bankruptcy.

If Mayors Jerome Cavanagh and Roman Gribbs had cut the workforce in the 1960s and early 1970s as the population and property values dropped. If Mayor Dennis Archer hadn’t added more than 1,100 employees in the 1990s when the city was flush but still losing population. If Kilpatrick had shown more fiscal discipline and not launched a borrowing spree to cover operating expenses that continued into Mayor Dave Bing’s tenure. Over five decades, there were many ‘if only’ moments.

“Detroit got into a trap of doing a lot of borrowing for cash flow purposes and then trying to figure out how to push costs (out) as much as possible,” said Bettie Buss, a former city budget staffer who spent years analyzing city finances for the nonpartisan Citizens Research Council of Michigan. “That was the whole culture — how do we get what we want and not pay for it until tomorrow and tomorrow and tomorrow?”

Ultimately, Detroit ended up with $18 billion to $20 billion in debt and unfunded pension and health care liabilities. Gov. Rick Snyder appointed bankruptcy attorney Kevyn Orr as the city’s emergency manager, and Orr filed for Chapter 9 on July 18.

There is a bunch more and you should go read it. I’ll wait for you.

All done? Good!

One more time:

“That was the whole culture — how do we get what we want and not pay for it until tomorrow and tomorrow and tomorrow?”

I used to be a big-government liberal. Now I am a Non-Affiliated Pragmatist (NAP). I don’t have a political ideology per se. I believe in certain concepts and values, like democracy, justice and liberty. But I’m not wedded to any one way of doing things. I am for whatever works.

We need some level of government. Reasonable people can disagree on how much we need or how it should be organized. But one thing I do believe in very strongly is TANSTAAFL – “There ain’t no such thing as a free lunch.”

TANSTAAFL means that whatever amount of government we have we have to pay for. That’s all. A very simple concept. If you want big government you gotta pay for big government.

Starting around 1932 our federal government started getting big. Like Topsy, she just growed. And growed. Then in the Sixties she started growing even faster. It started becoming a crisis in the Seventies when voters began to rebel against high taxes. In 1980 we elected a guy named Ronald Reagan who promised to cut taxes and shrink the government.

But the voters (that’s us) had kinda got to liking big government. And they (we) still hated taxes. So the political opportunists and craven cowards in BOTH major parties came up with a solution called “deficit spending”.

Deficit spending is what happens when you give drunken sailors crackheads politicians a credit card.

What happened to Detroit is a microcosm of our federal government and many state governments (like California). Lots of local governments are in the same boat. For decades they pushed financial reckoning down the road.

In order to get around balanced budget laws they underfunded public employee pensions, then hid this fact by projecting unrealistically high returns on pension plan investments. But the politicians who made those decisions did not care because they weren’t going to be around when the fit hit the Shan.

Detroit crashed and burned first because it was also troubled with a declining population and a shrinking tax base. Several California cities went bankrupt because of the real estate crash which hit property tax revenues. There is also the Obama Recession which has greatly increased the need for social service spending. Last but certainly not least was the Obama Stimulus.


I honestly don’t know how we’re gonna fix this mess. It took us decades to get here, and it will probably take even longer to get out. I don’t know about you but I don’t have more than 2-3 decades left. That means our kids and grandkids will be paying those debts.

As Mitt Romney said, that’s immoral.

About Myiq2xu - BA, JD, FJB

I was born and raised in a different country - America. I don't know what this place is.
This entry was posted in Blue Model Fail, Federal Deficit, National Debt and tagged , , . Bookmark the permalink.

109 Responses to Detroit Broke City

  1. driguana says:

    Seems like an appropriate moment to review Republican accomplishments over the years as the press is great at distorting reality.

    • elliesmom says:

      No matter what good things the Republicans do, the Democrats get the credit, and no matter what bad things the Democrats do, the Republicans get the blame.

    • DandyTIger says:

      Wow, interesting snark and distortion. And their link to the original GOP page is broken. I’m shocked. I love the part where they say Democrats (soon to be Republicans)… No, actually many of those Democrats are still Democrats. They just turned their overt racism into more PC patronizing behavior and treating minorities as special who need taking care of, as long as they remain good little victims.

      • DandyTIger says:

        But I’m sure they really are concerned and have “good intentions”. Ha, just figured it out, the Dem party is the Concerned Troll party. Which I think means the Repub party is just the Idiot, head up their ass, party. Both spending like drunken sailors, not caring a lick about what happens. What could possibly go wrong.

  2. driguana says:

    Thoughtful. I would add, just for clarity, “if you want big government…..everyone has to pay something”. Goes hand in hand with TANSTAAFL.

  3. DeniseVB says:

    I always liked Crowder’s Detroit video, pretty much shares the blame with the unions too.

  4. The Klown says:


    ONE of the most troubling features of the slow economic recovery is that it has largely bypassed young people. This doesn’t bode well for the future of the American economy.

    For Americans aged 16 to 24 who aren’t enrolled in school, the employment picture is grim. Only 36 percent are working full time, down 10 percentage points from 2007. Longer term, the overall labor-force participation rate for that age group has dropped 20 percentage points for men and 14 points for women since 1989.

    This lack of jobs will damage the long-term careers of a big chunk of the next working generation. Not working after you finish school very often means missing out on developing the skills and habits that will serve you well later on. The current employment numbers are therefore like a telescope into the future labor market: a 23-year-old who is working part time as a dog walker, yoga instructor or retail clerk may be having fun, but perhaps will receive fewer promotions as a 47-year-old.

    One culprit in this situation may be the higher minimum wage enacted in 2009, but the root causes run much deeper.

  5. The Klown says:


    Investment earnings in the state’s public pension system logged robust double-digit gains last year, but future unfunded liability expanded to $10.2 billion as the system grappled with lingering repercussions of recession, an official said Wednesday.

    The Kansas Public Employees Retirement System reported a 14.5 percent net return on investment in 2012 and documented net returns during the current year of 14 percent, said Alan Conroy, executive director of KPERS. Over the past 25 years, the average annual return for the system is slightly above 8 percent.

    Conroy told House and Senate members the gap between actuarial liabilities and assets increased by $1 billion last year largely because of deferred losses from the massive market collapse in 2008. It translated to a system funded in 2012 at 56.4 percent of future liability, a decrease from 59.2 percent in 2011.

    Conroy said the industry standard was to achieve 80 percent funding of pension systems. A pension system falling in the 60 percent to 80 percent range is cause for concern, he said.

    “If 60 percent and below — problem,” he said. “The red flags certainly should be up on addressing that unfunded liability.”

    KPERS serves 156,000 active employees in state, local and school governments, as well as 84,000 retirees. Progress on the unfunded liability was derailed in 2008 when KPERS’ returns plummeted 30 percent.

    • wmcb says:

      IMO, one of the reasons the bankers and the fed and the govt keep cooperating to blow stock market bubbles is because of this. People like to say its for the fatcats, and maybe partly so.

      But most of the money in the stock market is not big traders’ money. It belongs to pensions and retirement plans. And if they don’t keep that bubble inflated, the political costs to them are astronomical.

      Every damn one of them know that allowing the correction to occur earlier is better. That the longer it goes before it crashes, the further in the hole pensions get. But like Detroit, they go to extreme means. Means that in the long run make it worse on everyone. They do this for one simple reason: “We don’t have to face the wrath of the public today.”

  6. votermom says:

    Are you trying to say that “tax more, spend more” is not a recipe for growing an economy?
    *shocked face*

    • The Klown says:

      I didn’t say that. What I said was that “tax less, spend more” is a recipe for disaster.

      • votermom says:

        the article did:

        Detroit’s leaders engaged in a billion-dollar borrowing binge, created new taxes and failed to cut expenses when they needed to. Simultaneously, they gifted workers and retirees with generous bonuses. And under pressure from unions and, sometimes, arbitrators, they failed to cut health care benefits

        I should have included “borrow more” also.

        I think increasing taxes is generally a bad thing. The govt needs to keep taxes low, figure out how to stay out of the market’s way so people can generate wealth through capitalism, and then the govt increases its revenue because it grows its tax base.

  7. votermom says:

    OT grumble
    I seem to behave entered another “wake up with a sinus headache, feel better by around 5pm” cycle so I am very grumpy at the world.
    Also the spousal unit is walking sick (on antibiotics for pharyngitis) which means I can’t really whine in real life.
    So I’ll do it here/
    whine whine whine

  8. Lulu says:

    You ALWAYS have to pay the piper. If he gets shot his kin shows up to be paid instead. This for some reason is not taught in community organizing school but the mob could have explained it to the Democrats if they had asked.

    Broncobamacare is more unpopular than ever and the shit hasn’t fully hit the fan yet.

    So far in Bronco’s term he has failed gun control, failed economic pivot, failed sequester terrorizing of the public, failed Syria war, failed Syria diplomacy haka, and has the Godzilla of failures “Obamacare” looming. This is a historic truly second term.

  9. DeniseVB says:

    In my perfect world, Romney should volunteer to be the Detroit mayor for a term since he seems to have the magic touch for turning failing businesses around.

  10. votermom says:

    Another OT, came across this in a book I was reading and thought y’all would enjoy it. It’s a novel set in Ancient Egypt, and one of the characters is teachings kids The Tale of Truth and Falsehood:

    Truth came home one day, naked and wounded, having been beaten and cursed by the people who did not wish to hear, while his brother Falsehood went dressed in the brightest garments and feasted with every household.

    “What shall I do?” cried Truth to the gods. “No man wishes to hear me and all beat me and throw things at me; look, I am covered with dung.”

    “You are naked” said the goddess Maat, sympathetically. “No naked one can command respect. Therefore take these robes and you will walk without fear and all men will sit at your feet to hear your stories.” And she dressed Truth in Fable’s garments, and he was welcome at every house.

  11. The Klown says:
  12. The Klown says:
    • Karma says:

      All hail the glory of a skyscraper.

      I can’t tell you how many times I’ve read recently that this or that CA city would solve all their problems building up. That if we all aspired to be like New York sardines things would be great, housing would be cheaper, and everyone would be rolling in the cash, etc.

      • votermom says:

        But I thought High Speed Trains were the solution to every problem?

        • helenk3 says:

          you have to get people to ride them. public transportation is not a big thing in California. can not get people out of their cars. Also you have some people in the industry that think the railroad is only for commuters. had that argument since I moved here. they thought the railroad should only be for the 9 to 5 bunch. could never get them to understand there is a very large world that work other shifts and can not use the trains as they are scheduled now

        • Karma says:

          Monorail! Monorail! Monorail!

  13. helenk3 says:

    Atlas Shrugged in real life = Detroit
    no John Gault to be found

  14. helenk3 says:

    the DC Naval Yard shooting in not even over, all the information is not known yet and already cries for gun control by the left

  15. The Klown says:
  16. helenk3 says:

    how changes in population are effecting western countries

  17. DeniseVB says:

    Waiting for Police presser at Navy Yard, waiting for Obama to give a speech on the economy ? Dueling banjos in DC ! Yeeehaww !

  18. helenk3 says:

    this could get very interesting.
    truckers to DC in October nationwide strike

  19. The Klown says:
  20. helenk3 says:

    listened to a couple of minutes of backtrack. my stomach would not allow more. we are going to do all we can about the shootings in DC. yeah just like you did for Benghazi.

  21. wmcb says:

    Aaaand, they are talking about raising the debt ceiling yet again.

  22. DandyTIger says:

    Crisis in DC. So must be time for Obama to leave and have a fundraiser.

  23. wmcb says:

  24. helenk3 says:

    but you do not have to be a doctor to perform an abortion

  25. helenk3 says:

    12 dead in DC shooting
    FBI will take lead in investigation
    2 shooters still on loose

  26. helenk3 says:

    clueless carney : entirely appropriate for backtrack to deliver sharply partisan attack speech on economy after deadly DC naval yard mass shooting

    • catarina says:

      It sure was a fucked up time for Obama to tell us what a great job he’s done with the economy despite those Evil Republicans.

      Thought I was imagining things. Possible shooters on the loose, people dying, and Obama just blathering on about his glorious wonderfulness.

  27. helenk3 says:

    This is what I’ve been able to gather from various sources:

    Two days ago (the day after the 12th anniversary of 9/11), Ayman al-Zawahiri, leader of al-Qaeda, called for small lone wolf attacks on American soil whenever possible. Al-Zawahiri made specific reference to “one brother or a few of the brothers”–which sounds vague to outsiders, but could possibly have been understood within the organization as a concealed directive to a specific cell.

    Shooting suspects were wearing what appeared to be military uniforms.

    The Naval yard where the shooting took place is the headquarters of the Navy’s Sea Systems Command. Recently this HQ had been taking part in the Navy’s preparations for a cruise missile strike on Syria.

    from a commenter at the ulsterman

  28. helenk3 says:

    stolen from a commenter at Rev Amy’s place

    Some interesting comments from another forum on the shooting
    “I thought that the red brick building looked like one I’d previously had dealings with at the Yard but I couldn’t remember the numbers, I just went by which facilities were in the buildings. A friend with current acess said that the red brick building you’re seeing on the news is indeed my old building but IS NOT building 197. Bldg 197, I’m told, is a huge newer construction facility that houses intel services and is supposed to be a new and much more secure building – which begs the question of how the shooters not only got in but with weapons. Also begs the question of perhaps they are employees who got their costumes and equipment in piece-by-piece. I know that at my old USDA facility there was a strict policy that prohibited guns on the property but many many cars had them inside and everyone knew you could get them through if you entered or left during the peak traffic periods as the higher staff didn’t want inspections during high traffic loads as that would cause traffic backups. I remember one guy who had his gun hanging from a holster on his steering wheel and the guards either didn’t see it (for years?) or ignored it. Other thing was, if you came in through the front entrance you had to go through a metal detector but if you were an employee you could come in through the wide-open employee’s entrance dragging a 4.2 mortar if you wanted. Then there were the civilian contractors who’d come in driving trucks or vans loaded with tools, spare parts and closed boxes. There was no way in hell that the guards were going to stop those trucks for detailed searches ‘ They perfunctorily open the doors and look inside and if they didn’t see any large, blinking, neon cartoon-arrows floating in the air saying “BOMB” they’d pass the truck. Reasoning given to employees who’d dare to ask why this loose policy was in effect post-911 (guess whoooooo?) was that the contractor and his employees were cleared by a pre-employment contract in which he swore he and his crew were clean. You’re not seeing the head of security at the Yard on TV right now explaining how these shooters got in – any guesses why?”

  29. driguana says:

    Seems rather odd that every time Obama gets corned some kind of crisis arises…just sayin’…

  30. helenk3 says:

    way off topic

    I love stuffed peppers. this is something I am going to make most likely tomorrow/ make a pot eat some, freeze some for the days I do not feel like cooking

  31. helenk3 says:

    shooting, smoothing we are going to party on.
    whitehouse NOT cancelling salsa party tonight

  32. helenk3 says:

    Iowa Hawk

    David Burge ‏@iowahawkblog 8h

    @Time deletes Putin from cover for US market; 4 days ago Time’s editor announce new job as State Dept flack

  33. helenk3 says:

    Suspect in DC Navy Yard attack was arrested in Seattle in 2004 for anger-fueled ‘blackout’ shooting – @SeattlePD

    and a 2010 arrest in Fort Worth Texas for illegally discharging a fire arm.
    did anyone do a background check on this guy?

  34. helenk3 says:

    per Fox News

    gun incident at the white house.
    wonder if they will still party on

  35. Constance says:

    We need to get the liberals off of their government focus. They should be setting up foundations to run programs funded by voluntary donations NOT running all their programs through a corrupt and wasteful government. Then we need to start building old people dorms. I know too many people over 50 who are being pushed out of their jobs in this depression and they will never work in their profession again. Many of them are shell shocked and I doubt they will ever work anywhere. They don’t have enough saved to retire. The aren’t sophisticated investors and they haven’t been able to earn any interest on the money they have saved. They are losing their homes. Unless young people want to finance them in the style they have become accustomed to or step over them while they are sleeping in the street I think someone needs to build dirt cheap dorm accommodations and start encouraging community building among them because I don’t see any other way.

    • helenk3 says:

      I understand what you are saying. but honestly the first thing that came to my mind as I read it was FEMA camps or gulogs. At one time that would not have been the first thing I thought of

  36. wmcb says:

    Some idiot threw a firecracker at the WH. On a day on lockdown due to base shooting. He’s lucky he’s not dead.

  37. DeniseVB says:

    Poor Obamas, they cancelled their big WH party tonight, out of respect for the Navy Yard shootings. Yeah. Riiiiiight.

    • helenk3 says:

      maybe after bob beckel of all people made it public on Fox that they had no plans to cancel it.
      what are those letters CYA

      • DeniseVB says:

        Missed Beckel, the Nationals/Braves game was cancelled much earlier than The Five. Whole freaking city is in lockdown now, So I’m sure the OFFICIAL WHITE HOUSE PR will be about, cough, security concerns?

  38. helenk3 says:

    anybody else ever had this happen to them? facebook shut down my page due to a site issue. did not say what the problem was

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