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Posts Tagged ‘Detroit’
November 25th, 2013 at 5:52 pm
After Obamacare, Cities Want Pension Bailout Too

After decades of kicking the financial can down the road, some of America’s biggest cities now want to try throwing it up the ladder.

Starting January 1, Detroit will move its retirees to Michigan’s federally-run Obamacare exchange. Instead of the previous full coverage paid for by taxpayers, each retiree will get a $125 monthly stipend. The move is projected to save the city roughly $120 million.

Chicago and other cash-strapped cities are considering similar options.

But the move to offload state and local obligations onto federal taxpayers is just getting started. Writing for City Journal, Steven Malanga explains that municipal debt related to unfunded pensions far outweighs the amount owed to retiree health benefits.

To big city mayors the solutions, of course, are identical – Ask Uncle Sam for a bailout.

At some point, America’s entitlement culture – up and down the socio-economic ladder – has to take a back seat to fiscal reality. We’ll see if enough people are ready to have such a debate when the 2016 presidential election rolls around.

July 18th, 2013 at 5:10 pm
The Wages of Liberalism
Posted by Print

This story would be slightly less depressing even if we hadn’t all seen it coming for years:

Detroit on Thursday became the largest city in U.S. history to file for bankruptcy, as the state-appointed emergency manager filed for Chapter 9 protection.

Kevyn Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall and made the filing Thursday in federal bankruptcy court.

A number of factors — most notably steep population and tax base falls — have been blamed on Detroit’s tumble toward insolvency. Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them.

This, of course, doesn’t take the analysis back quite far enough. The population and tax base are symptoms, not causes. Why did people actually leave? Well, there were local officials intent on driving out part of the population on racial grounds, the dominance of unions that ended up choking the auto industry, overwhelming crime rates, and a spate of corrupt politicians.

For decades now, Detroit has been a laboratory of liberalism. Today’s news only makes explicit what many of us concluded long ago: the experiment has failed.

May 12th, 2011 at 1:12 pm
Education Reform: First Mitch Daniels, Now Rahm Emanuel?

Maybe there’s a Midwestern Miracle in education reform unfolding.  Outgoing Indiana Governor Mitch Daniels (R) was hailed last week for getting an expansive school vouchers program passed.  The Detroit public school system is seriously considering allowing 41 of its schools to become charter schools.  Now, Illinois is within a majority vote of its state House of Representatives of curbing the power of teachers’ unions.  The chief beneficiary of this latest reform: newly elected Chicago Mayor Rahm Emanuel.

Right now, Emanuel’s people aren’t talking, preferring to let state lawmakers take heat for giving the new Hizzoner the right to extend the school day and weaken the teacher tenure system.  Though I think Emanuel is far from the best potential education reformer, I won’t be surprised if he extracts some serious concessions from teachers unions.  If the bill weakening Illinois’ educators’ “rights” to disrupt the education of the children they serve passes, the moment may be ripe for Illinois – through Emanuel – to return a shard of the public school spotlight where it belongs: on the pupils.

March 14th, 2011 at 12:14 pm
Detroit Public Schools Charter a New Course

For every crisis there is an opportunity.  The Detroit public school system is in a fiscal state of emergency with a mandate to eliminate its $327 million deficit.  At first, leadership planned to close 40 of the district’s 142 schools.

Now, more innovative heads have prevailed.  Yesterday it was announced that instead of closing schools the district would convert 41 of them into privately-run charter schools.  Estimated savings to the taxpayer: more than $28 million.  Estimated benefit to parents looking for a hand-up out of failing classrooms: priceless.

Of course, teachers’ union advocates bristle at the idea that nearly one-third of their Detroit membership will be laid off and required to reapply for jobs without costly pension funds and tenure protection.

But the data doesn’t support the status quo.  Since Louisiana lawmakers transformed New Orleans into the only public school system where a majority of students attend charter schools, scores on student achievement exams have risen dramatically.

Louisiana’s reform was made possible by the devastation of Hurricane Katrina.  Michigan’s ongoing financial crisis may be just the opportunity Detroit families need to get the education – and the tax relief – they deserve.