Letter: Making Detroit Prosperous Again
To the Editor:
In his July 29 commentary, “Liberalism and Unions Destroyed Detroit,” Michael Tanner has cherry-picked Detroit’s history, viewed it through biased glasses and drawn a conclusion blaming “liberalism” and unions for the near-death of the city.
Detroit’s problems are not the political product of either conservatives or liberals; Detroit’s problems exemplify, in extreme, an American problem. Politicians made promises that cannot be kept: We cannot wage war and maintain a monstrous, unnecessary military, maintain our infrastructure, provide adequate regulation and justice, assure financial security for retirees, the ill and the disabled, educate our citizens and fund development of new technologies and products while reducing revenue. The government has an enormous debt because people are willing to lend us money, and we are not willing to pay for the services.
Detroit made promises that cannot be covered by city’s revenue. Many employees retire young enough to have second careers while collecting liberal pensions, which adds significantly to the city’s $9 billion in obligations. Bondholders are owed another $9 billion dollars, plus or minus.
Like the federal government, Detroit solved its revenue shortfall by selling bonds. Municipal bonds are historically safe, and interest payments are tax-sheltered. Investors shoveled money into Detroit.
Now Detroit is bankrupt. Can Detroit borrow more, practice austerity and survive? The European Union’s response to Greece’s financial ills was to loan billions and impose horrific austerity measures. Greece will never pay back the loans.
Bondholders and pensioners are the sacred cows in Greece and in Detroit. Once the old, the sick and those ineligible for Social Security are taken care of, the same significant reduction percentage applied to pensioners should be used for all creditors/obligees. The federal government should run the city for five years, allowing short-term borrowing at reasonable rates. Then Detroit can be free to thrive once again.