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While the national media was busy counting down to the $85 billion automatic federal spending sequestration, Detroit Mayor and basketball legend Dave Bing announced that the State of Michigan will take control of the city on March 1st by appointing an Emergency Financial Manager with the equivalent control of a bankruptcy trustee. Detroit committed municipal suicide through crony capitalism and union feather-bedding. As the city’s population shrank from 1.8 million in 1950 to 714,000, Detroit refused to shrink government spending by the $327 million necessary to balance its budget. Perhaps the example of Detroit’s downfall will prod Congress to get serious about downsizing the federal spending before America meets suffers a similar fate.
The City of Detroit in the 1950s reigned as the capital of America’s “Industrial Heartland.” As the home of the “Big Three” automobile manufacturing companies, Ford, Chrysler, and GM, the metropolis was a hub of industry and commerce that offered an abundance of job opportunities for people working in industry. But in 1961 Time Magazine ran a front page article entitled “Decline in Detroit”:
“If ever a city stood as a symbol of the dynamic U.S. economy, it was Detroit. It was not pretty. It was, in fact, a combination of the grey and the garish: its downtown area was a warren of dingy, twisting streets; the used-car lots along Livernois Avenue raised an aurora of neon. But Detroit cared less about how it looked than about what it did—and it did plenty.”
A big reason for the continuing decline in Detroit is city government has often been plenty crooked. “In almost every decade you can find evidence of corruption in Detroit”, says Thomas Klug, a history professor at Marygrove College and Director of the Institute of Detroit Studies. “Today, Detroit serves as a hub of poor leadership, political corruption and abandonment, crumbling automotive manufacturing, and disorganization, as crime and drugs dominate the once booming city.”
Dave Bing’s predecessor, Mayor Kwame Kilpatrick is currently on parole and is facing federal charges that he, his father, and Detroit demolition contractor Bobby Ferguson were shaking down city contractors and vendors for bribes. Federal prosecutors have already obtained convictions against 25 Kilpatrick appointees, contractors, consultants and former City Council member, Monica Conyers, who was released last month to home confinement after serving three years in prison for taking bribes to vote in favor of a $1.2-billion city sludge disposal contract.
Prosecutors in closing trial arguments last week claimed Mayor Kilpatrick used his position to steer $83 million in city contracts to Ferguson, who sometimes performed little if any work and beat out lower bidders. Ferguson allegedly shared proceeds with Kilpatrick and his father, who allegedly extorted money from vendors to get or keep city contracts. Lawyers for Kilpatrick and the others denied the charges, saying the men are honest, hard-working and the victims of weak evidence and government witnesses who lied to protect their own skins. A 12-member jury is deliberating the fate of the three men. The racketeering and extortion carry a maximum penalty of 20 years in prison.
Unions have long dominated politics in the city of Detroit. From 2008 to 2011 according to the Detroit Free Press, health insurance costs for Detroit employees and retirees jumped 62% to $186 million a year and pension contributions in that period jumped 140 percent, from $50 million to $120 million. Mackinac Center for Public Policy reports Detroit Federation of Teachers are the best paid in the nation. Recently Service Employees’ International Union organized thousands of people in Detroit receiving Medicaid payments to care for sick relatives to join their union. Each month the union now receives $3 million in dues that are deducted directly from Medicaid checks.
Detroit non-union managers last week thought they were immune from the repercussions of financial irresponsibility when they paid themselves on the verge of bankruptcy “longevity bonuses” ranging from $150 to $750 depending on years of city service. When Iris Salters, President of the Michigan Education Association, was asked what it would be like if Republican Governor Rick Snyder appointed an Emergency Financial Manager with the power to break Detroit’s union contracts and fire political figures, she snarled: “I believe it’s just like being in the slave days.”
For Americans who believe in the merit of financial responsibility, March 1st may go down as a historic tipping point when United States federal and local governments were finally forced through sequestration to begin living within their means.
CHRISS STREET & PAUL PRESTON
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