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An October 2012 tweet from our celebrity President:
Obama: “I wasn't going to let Detroit go bankrupt. Or Toledo go bankrupt. Or Lordstown go bankrupt. I bet on American workers.”
— Barack Obama (@BarackObama) October 26, 2012
The story on what happened today, via Fox News:
Detroit filed for the largest municipal bankruptcy in U.S. history Thursday after steep population and tax base declines sent it tumbling toward insolvency.
The filing by a state-appointed emergency manager means that if the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.
Kevin 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.
“Only one feasible path offers a way out,” Gov. Rick Snyder said in a letter to Orr and state Treasurer Andy Dillon approving the bankruptcy. The letter was attached to the bankruptcy filing.
“The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services,” Snyder wrote. “The city’s creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations.”
Snyder had determined earlier this year that Detroit was in a financial emergency and without a plan to improve things. Snyder hired Orr in March, and he released a plan to restructure the city’s debt and obligations that would leave many creditors with much less than they are owed.
Detroit isn’t the only city in Michigan in financial dire straits, but it’s the biggest.
Sadly, Detroit isn’t the only liberal city run into the ground by Democrats that faces this situation. Baltimore may be next. From a February Huffington Post piece:
WASHINGTON — The Baltimore city government is on a path to financial ruin and must enact major reforms to stave off bankruptcy, according to a 10-year forecast the city commissioned from an outside firm.
The forecast, obtained by The Associated Press ahead of its release to the public and the City Council on Wednesday, shows that the city will accumulate $745 million in budget deficits over the next decade because of a widening gap between projected revenues and expenditures.
If the city’s infrastructure needs and its liability for retiree health care benefits are included, the total shortfall reaches $2 billion over 10 years, the report found. Baltimore’s annual operating budget is $2.2 billion.
The report was prepared by Philadelphia-based Public Financial Management Inc., a consulting firm that has prepared similar forecasts for Miami, Philadelphia, Pittsburgh and the District of Columbia. Baltimore’s decision to commission the forecast differs from those cities because each of them had already ceded financial oversight to the state, or in the district’s case, the federal government.
The forecast will provide the basis for financial reforms that Mayor Stephanie Rawlings-Blake plans to propose next week. The city has dealt with budget deficits for the past several years, closing a $121 million gap in 2010. But those deficits have been addressed with one-time fixes that haven’t addressed the long-term structural imbalance.
“When you have budget after budget and you know that there are systemic problems, I felt an obligation to do more than what we have done in the past,” Rawlings-Blake told the AP. The forecast, she said, shows that the city needs to address its financial woes “before it’s too late, and somebody is coming in and making these choices for us.”
That’s what happened to the District of Columbia, 38 miles to the south, in 1995 after the city reported a budget deficit of $700 million. Congress created a financial control board that instituted tight spending controls and ultimately took over all hiring and firing in nine city agencies. The spending cuts, combined with a robust regional and national economy, drove the nation’s capital back into the black.
Are y’all detecting the same pattern I am?
They said if I voted for Mitt Romney in 2012, that Detroit would end up having to file bankruptcy. And they were right.