Welcome to tax season, now prepare to give your #Obamacare subsidy back


**Posted by Phineas

"Obamacare has arrived"

“Obamacare has arrived”

This item has been sitting in my files for a while (1), but, since we’re deep into tax season, it’s still relevant — especially so for people relying on that federal subsidy to help pay for their “affordable” health care:

As many as 3.4 million people who received Obamacare subsidies may owe refunds to the federal government, according to an estimate by a tax preparation firm.

H&R Block is estimating that as many as half of the 6.8 million people who received insurance premium subsidies under the Affordable Care Act benefited from subsidies that were too large, the Wall Street Journal reported Thursday.

“The ACA is going to result in more confusion for existing clients, and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” the president of a tax preparation and education school told the Journal.

While the Affordable Care Act fines those who don’t have health insurance, it also provides subsidies for people making up to four times the federal poverty line ($46,680).

But the subsidies are based on past tax returns, so many people may be receiving too much, according to Vanderbilt University assistant professor John Graves, who projects the average subsidy is $208 too high, the Journal reports.

If, like a lot of people, you’re used to getting some sort of a refund, you probably already have an idea of how much you expect and how you plan to spend it. Imagine then how happy these many millions of people will be when they’re told they’re either getting less of a refund, or that they in fact owe money. And, on top of that, their subsidy for the next year will almost certainly be lower, so even more of their money will go to the insurance companies by force of law for coverage that probably isn’t as good as they had before, or at least isn’t what was promised.

That, my friends, is a recipe for angry voters. And, oh, there’s a presidential election warming up, too. Fancy that.

If anything good comes of this fiasco, it will probably be the hard-learned lesson that government is poorly equipped to do more than a certain few tasks and running a huge, massively complicated healthcare system isn’t among them.

Call it another “teachable moment.”

(1) Ancient by Internet standards — a whole month!

(Crossposted at Public Secrets)

Report: Government may have erroneously paid out $100 billion in 2013

Money on trees

Apparently, the government thinks money grows on trees.

And people wonder why we think a smaller government is a better government- via the AP:

WASHINGTON — By its own estimate, the government made about $100 billion in payments last year to people who may not have been entitled to receive them — tax credits to families that didn’t qualify, unemployment benefits to people who had jobs and medical payments for treatments that might not have been necessary.

Congressional investigators say the figure could be even higher.

The Obama administration has reduced the amount of improper payments since they peaked in 2010. Still, estimates from federal agencies show that some are wasting big money at a time when Congress is squeezing agency budgets and looking to save more.

“Nobody knows exactly how much taxpayer money is wasted through improper payments, but the federal government’s own astounding estimate is more than half a trillion dollars over the past five years,” said Rep. John Mica, R-Fla. “The fact is, improper payments are staggeringly high in programs designed to help those most in need — children, seniors and low-income families.”

Mica chairs the House Oversight subcommittee on government operations. The subcommittee is holding a hearing on improper payments Wednesday afternoon.

Each year, federal agencies are required to estimate the amount of improper payments they issue. They include overpayments, underpayments, payments to the wrong recipient and payments that were made without proper documentation.

Some improper payments are the result of fraud, while others are unintentional, caused by clerical errors or mistakes in awarding benefits without proper verification.

Gotta love the smell of government incompetency first thing in the morning! /sarc o=>

(Video) 1948 cartoon: “Make Mine Freedom!”


**Posted by Phineas

Here’s a neat animated short from almost 70 years ago that does a darned good job showing the differences between a society based on individual liberty and the free market, on the one hand, and those based on statism (Socialism, Communism, and Fascism) on the other. It makes good use of humor to get its point across:

Nowadays, I think we could add another “-ISM” to that patent medicine’s list of ingredients: the religious totalitarianism of Islamism.

Via Dan Mitchell, this was part of good post on how the Left was wrong about unemployment insurance.

(Crossposted at Public Secrets)

The IRS wants to tax your frequent flyer miles and hotel points


**Posted by Phineas


It’s as if the agency was worried it wasn’t hated enough.

Writing at Reason, Ira Stoll reports that the Internal Revenue Service is looking at taxing rewards points offered by airlines and hotel chains:

Just in time for your summer vacation, the IRS is getting ready to toughen the tax treatment on frequent flyer miles and hotel loyalty reward programs.

The IRS announced in 2002 that it wouldn’t try to go after individuals for income taxes on frequent flyer miles or hotel loyalty points earned on company-paid business trips. Yet the temptation to wring some tax revenue out of the vast non-dollar economy of Starwood Preferred Guest Starpoints, Marriott Rewards points, American Airlines AAdvantage miles, Delta Skymiles, and so on is apparently so great that that the government just cannot resist.

Sure enough, the Tax Foundation, a research group that tracks tax issues, flags a recent post on the View From the Wing blog that runs under the provocative headline, “The IRS Looks To Be on the Verge of Imposing a Big Tax Burden on Loyalty Points.”

The IRS’s plans are vague, but they have airlines and hotel owners concerned enough about the issue that they reportedly sent a letter to Treasury Secretary Jacob Lew. “The IRS’ proposal to alter the tax treatment of loyalty programs will impose a significant new tax on existing and future loyalty points that travel customers enjoy and rely upon,” said the letter, according to a report in Politico. “Any change or clarification of loyalty program accounting should be made through the legislative process, not IRS promulgation.”

Frequent flyer mile fanatics got a wake-up call on the issue back in 2012 when Citibank sent IRS Forms 1099, documenting “miscellaneous income,” at a rate of 2.5 cents a mile, to customers who had signed up for an American Airlines-branded credit card and gotten 40,000 AAdvantage miles as a bonus. It was an unpleasant surprise to cardholders who thought they were getting a free trip, not an unwanted extra tax bill.

I’ll say. I rarely rack up enough points for a free flight or hotel night, but I know plenty of people who fly a lot and who rely on those points to help cover the occasional vacation. Suddenly taxing them not only diminishes their value as a customer-retention tool, but also burdens the consumer by imposing a monetary cost for a non-monetary reward. (Sure, the points have “value,” but it’s not like real income. Just try paying for a meal with airline points…)

Stoll covers several problems with this plan, but I’ll add one of my own: this is another example of the gradual bureaucratic usurpation of legislative power that’s grown to be such a problem since the Progressive Era. Congress writes laws that allow regulatory agencies to create rules for their implementation, but agencies, like bureaucracies everywhere, constantly push the bounds of that authority to accumulate ever-greater power to themselves, to the point whereat they’re no longer writing rules, but actually making law in place of the elected legislature. Which, for progressive ideology, is a feature, not a bug. (1)

Although, perhaps “usurpation” is too strong a word. After all, congresses dominated by both Democrats and Republicans have gone along with this, even if they didn’t agree with progressive ideology, passing vague legislation and letting agencies “fill in the blanks.” It’s a tempting bit of laziness: as Washington accumulated more power to itself, Congress had to deal with more and more, until it became expedient to let someone else deal with the details. And it gives them political cover: It wasn’t your congressman who decided to tax your airline miles, it was the IRS. Left unsaid is how generations of congressmen and senators have enabled this.

Of the many reforms our government needs, congress reclaiming its power to make laws and reining in the bureaucracy —especially the IRS!— is high on the list.

(1) The basic idea is that democratically-elected legislatures are too prone to public passions, too full of unqualified people, to be trusted with governance. Progressives prefer unelected, dispassionate boards of technocrats who would practice scientific management of public affairs. They may be right about the problems of legislatures, but I think the last century has shown their solution is even worse.

(Crossposted at Public Secrets)

North Korea: the nightmare of living under a god


**Posted by Phineas

North Korea Yeonmi Park

There’s an interesting and frightening interview posted to Business Insider today with Yeonmi Park, a woman who escaped from North Korea with her family as a teenager, but needed years to get over the brainwashing she endured there. An indoctrination so intense, she believed the late Kim Jong Il could read her mind:

Yeonmi Park grew up in North Korea, under the watchful eye of then-leader Kim Jong-il.

Though she escaped with her family when she was 15, it took her years to get over the intense brainwashing she experienced. In a recent interview with Australian public broadcasting channel SBS, Park went into unbelievable detail about growing up in the totalitarian state.

Growing up in North Korea, according to Park, was like “living in hell.” She describes constant power outages, no transportation, and watching classmates and friends disappear without a trace. While that may be unsurprising, the most interesting part of Park’s experience is her admission that she believed Kim Jong-il to be “a god” who could literally read her mind.

“I had to be careful of my thoughts because I believed Kim Jong-il could read my mind. Every couple of days someone would disappear,” Park said.

Ms. Park’s story is part of a larger program on mind-control shown by SBS, the Australian public broadcaster.  The whole show is worth watching.

In an article at SBS, she tells more of her own story:

I lived in North Korea for the first 15 years of my life, believing Kim Jong-il was a God. I never doubted it because I didn’t know anything else. I could not even imagine life outside of the regime.

It was like living in hell. There were constant power outages, so everything was dark. There was no transportation – everyone had to walk everywhere. It was very dirty and no one could eat anything.

It was not the right conditions for human life, but you couldn’t think about it, let alone complain about it. Even though you were suffering, you had to worship the regime every day.

I had to be careful of my thoughts because I believed Kim Jong-il could read my mind. Every couple of days someone would disappear. A classmate’s mother was punished in a public execution that I was made to attend. I had no choice – there were spies in the neighbourhood.

George Orwell’s 1984 depicts the UK after an atomic war and a Socialist revolution. Big Brother is a de facto god to the people: his every word the undeniable truth, no matter how it contradicted what he might have said just the day before. Your innermost thoughts known to him, and he held the power to make you willing to accept your own death and the deaths of those close to you as just. His Animal Farm is a parable of a just revolution hijacked by an anti-democratic cadre, who maintain power by turning the other animals against each other and all into slaves. Both are taught as works of fiction, but Yeonmi Park’s story reminds us that they were more like docu-dramas and that the story hasn’t come to an end.

It reminds me of a saying of John Adams:

“It is weakness rather than wickedness which renders men unfit to be trusted with unlimited power”

Our second president was right, but left something out: it’s not just that Mankind is too morally weak for any one person to hold absolute power, but there is also the weakness that makes us willing to surrender our responsibilities as citizens and entrust a small group of people or a single person with unlimited power. It is dangerous because, eventually and inevitably, that power will fall into the hands of evil men.

And then what is to stop them from proclaiming themselves gods?

(Crossposted at Public Secrets)

North Korea: all men must now wear Kim Jong Un’s hairstyle?


**Posted by Phineas

Bah! You call that a "haircut?"

Bah! You call that a “haircut?”

When you’re the boy god-king of the world’s largest prison camp masquerading as a nation, you can get away with weird, petty stuff like this:

If you are a man in North Korea, we sincerely hope you have a round face. It’s the shape that will work with your new haircut.

That new haircut is reportedly called the “Dear Leader Kim Jong Un,” modeled after—you guessed it—North Korean leader Kim Jong-un’s impenetrable block of black hair atop his chubby cheeks. The style reportedly became a state-mandated guideline about two weeks ago, though experts familiar with the country have said there’s no evidence a new hairstyle rule has gone into effect.

According to the article, this isn’t something new for North Korea: Kim’s father, the late, demented Kim Jong Il, launched a state campaign against long hair on the grounds that it sucked the nutrients from one’s brain.


Anyway, a TV campaign was launched and “journalists” would go to people’s homes to confront them about their overly lengthy locks. This being North Korea, I suppose they were lucky not to be shot or fed to the dogs.

Back to Kim III, and regardless of whether this is true, it’s another illustration of why limited, constitutional government is best; when there are no limits to the powers of the rulers, there are also no limits to what they will do the the ruled. North Korea is just the extreme example that clarifies the point.

(Crossposted at Public Secrets)

On birthday parties, income inequality, and big government


**Posted by Phineas

"By invitation, only"

“By invitation, only”

So, in all the excitement of the NFL’s “championship weekend” the featured the 49ers thrilling come-from-ahead loss in Seattle (1), I forgot it was Michelle Obama’s 50th birthday. You can bet she didn’t forget, though, enjoying a lavish party attended by 500 celebrities and political stars. An intimate soirée, in other words.

Like Byron York, I’ve no need to know the details, assuming the party was paid for with private money, but the intense secrecy surrounding it is intriguing:

It’s not easy to enforce discipline on successful, wealthy, and famous people used to having their own way. But the White House apparently did not want to see photos of the first lady’s glittery gala circulating around the Internet. So it imposed a strict rule: No cellphones. “Guests were told not to bring cellphones with them, and there was a cellphone check-in area for those who did,” reported the Chicago Tribune. “Signs at the party told guests: No cellphones, no social media.” People magazine added: “Guests had been greeted by a ‘cell phone check’ table where they deposited their camera phones on arrival and it was understood that this was not an occasion for Tweeting party photos or Facebooking details.” The publications cited sources who insisted on anonymity for fear of White House reprisal.

“So great was the secrecy surrounding the party,” the Tribune reported, “that guests were handed an invitation — on their way out, the sources said.”

Kind of amusing for the Most Transparent Administration in History, no?

York speculates on the reasons for the secrecy, including the aforementioned privacy. But, he also touches on another, one that I think is at least equally valid – political messaging:

Or maybe, since the president has announced he is devoting the rest of his time in office to an “inequality agenda,” the White House felt photos of a champagne-soaked, star-studded party would be somewhat off-message.

I’m willing to bet this is it. The Left is singing like a chorus about income inequality and the widening gap, hoping to distract us all from the rolling disaster of Obamacare, and Michelle’s big blow-out would sound a loud discordant note, if it had gotten out on the Internet.

The truth the Ancien Régime misses while enjoying their luxurious parties at Versailles-on-the-Potomac, however, is that their parties are not the problem. No one really cares whether Michelle invites five, fifty, or five-thousand guests. No one cares (other than as an object of mockery) how many snobby dinner parties Anna Wintour throws for her glitterati friends.

The real problem, according to David Malpass in the Wall St. Journal, is that the Left’s preferred big-government, class warfare policies make the dread inequality worse more often than not:

Big government expansions in recent years have harmed individuals with modest incomes while exempting or benefiting people with higher incomes. These include the federal takeover of the mortgage industry, and the Federal Reserve’s decisions to keep interest rates near zero and buy some $3 trillion in bonds. Both of these expansions channel credit to the government and the well-connected at the expense of savers and new businesses.

Middle-income earners used to be the primary beneficiary of the rise in the value of their houses. Housing gains now lift Washington, allowing the government to pay itself huge “dividends” from Fannie Mae, Freddie Mac and the Federal Reserve, which owns nearly $1.5 trillion in the government’s housing-related bonds. The government promptly spends the windfalls, fueling a further accumulation of wealth and income for those with Washington access.

The financial industry is making billions in profits fueled by the government’s provision of zero-rate loans for those with connections and collateral. Wall Street’s upper crust is the epicenter for financing the contractors, lobbyists and lawyers that help the government spend money. Meanwhile, government grabs a huge share of the profits generated by small businesses. It piles on opaque regulations, complex tax rules and countless independent agencies, producing a system that works against small businesses and the middle class. The Affordable Care Act takes pains to exempt Congress, government, corporations and unions, but leaves the rest severely exposed, adding to inequality.

This week’s congressional budget deal saw a narrow group of Washington’s elite legislators and lobbyists working over the weekend to divvy up nearly $1.1 trillion in discretionary spending for 2014. Much of the spending and all of the lobbying and debt underwriting costs will benefit those with high incomes while the extra debt falls heavily on the middle class.

Thus while Our Betters in D.C. and Manhattan and Hollywood graciously deign to run our lives for us (when they’re not attending a fancy-dress ball or jetting off to another exclusive resort), the burdens they impose on our lives really just enrich their friends at our expense and leave us holding the bag.

There’s a genuine opening or moment for a populist revolt coming. Not the Left-wing, class warfare kind the progressives like to sucker us with (and for which far too many fall), but a Jacksonian, democratizing electoral uprising against governing elites represented largely, but not exclusively, by today’s Democratic Party. A rising that would restore opportunity for us all, not trap us like Europe in social democratic amber.

We saw the first wave of this with the Tea Party rising of 2010, and Obamacare creates the conditions for another. The question is, will the Republican Party have the sense and the skill to take advantage of it?

We’ll see.

(1) Okay, I’m done pouting. Really. Just wait’ll next year…

(Crossposted at Public Secrets)

Have a Happy New Year: privatize @USPS


**Posted by Phineas

Poor, trusting fool

Poor, trusting fool

This is a bit of a personal rant to end the year on, but a recent experience with the US Post Office and trying to get a package delivered has lead to the conclusion that one of the best “little things” a new Republican Congress could do in 2015 is privatize the danged thing. First, my recent travails:

On Christmas Day I received some Amazon (1) gift cards. Being a good little consumer, that afternoon I ordered some goodies, including a highly-rated electric skillet (This one, in fact. It’s a great price.) that Amazon promised to deliver for free by the 28th. Great!

So, on the 28th I stayed home to wait for the delivery. By that afternoon, I was curious, so I checked Amazon; “delivery attempted.”

“Really?” I thought. So I checked the USPS site: “Delivery attempted at 9:37 AM. Notice left.”

By now a bit concerned, I went down to the front of our apartment complex to check the mailboxes: no package, no notice, no nothing. Like I said, I had been home all day. My cell phone was on, the ringer set to “loudest.” At 9:37 AM, I was letting in my writing partner for a day’s work. In other words…


Apparently the schmuck carrier couldn’t be bothered to actually try to contact me. I understand he couldn’t come to my door (it’s a large, winding complex), but… he could have called. I’d have come right down. But, I guess he didn’t want to make the effort. Maybe he was tired.

Checking the USPS site again, I saw a redelivery option (2) held out the promise of delivery Monday (yesterday). So, I filled out the form and printed the receipt. Problem solved — yay!!

You can guess what’s coming.

I waited at home all Monday, not daring to leave my apartment lest I miss the carrier and my new toy. By 5PM, I went downstairs to check and found the regular mailman. I asked her about the package — she’d never heard of it. “What about redelivery,” I asked.

Jay Carney gives more informative answers.

Finally, she helpfully suggested the other carrier might have left it with the building managers. Nope. Not on on their list.

So, this morning, I walked to the post office, waited for the lone clerk at the counter to finally call me forward only to tell me to go to “the door on the left.” After a half-hour or so, I was beginning to fear my package was really “out for delivery” this time, probably to the wrong address. But, no, I was rewarded at the end, the package was mine. Happy New Year, indeed. I then trudged the 1.5 miles home, this time carrying a bulky box and swearing eternal vengeance on the Post Office.

Okay, so, as far as horrible experiences with the USPS goes, and as maddening as it was, that was fairly minor. I’m sure any of you reading this could come up with far worse. But the whole experience had me wondering…

Why do we put up with this garbage?

Private companies have a much harder time getting away with poor service. Not only are there irate customers who can go elsewhere, but angry shareholders to wonder why they’re not making money. And, at the end, a poorly run, money-losing company goes out of business.

The USPS, which lost over $20 billion from 2007-2010 –and $5 billion in FY 2013, goes chugging on. This report from the Cato Institute well-documents their problems. For example:

A key driver of mail delivery costs is the congressionally mandated obligation to serve virtually every mailing address, regardless of volume, six days a week. Fulfilling this “universal service” obligation results in the USPS having large fixed costs, including the costs of more than 36,000 postal outlets, 215,000 vehicles, and 600 processing facilities.

However, even given the universal service obligation, the Government Accountability Office and USPS officials believe that more than half of these processing facilities aren’t needed. Why aren’t they closed down to save money? The GAO notes that the USPS faces “formidable resistance” from members of Congress and postal unions when attempting to close or consolidate facilities.

The USPS is required to provide services to all communities, including areas where post offices have low traffic and are not cost effective. Before closing a post office, the USPS must provide customers with at least 60 days of notice before the proposed closure date, and any person served by the post office may appeal its closure to the Postal Regulatory Commission. The USPS cannot close a post office “solely for operating at a deficit.”

Members of Congress whose districts would be affected by a post office closure often raise a big fuss. Last year, for example, the USPS proposed consolidating 3,200 postal outlets, but following a congressional outcry, the number under consideration was reduced to a paltry 162. That is no way to run a business.

No, it’s not. Labor costs are also a problem:

While the USPS has been able to eliminate a substantial number of employees through attrition, the USPS’s predominantly unionized workforce continues to account for 80 percent of the agency’s costs despite increased automation. The USPS estimates that, in the absence of changes, its total workforce costs will soar from $53 billion in 2009 to $77 billion in 2020.

And at the root of these costs are restrictive union contracts:

Another factor that reduces postal service efficiency is that union contracts inhibit the flexibility of USPS leaders in managing their workforce. For example, most postal workers are protected by “no-layoff” provisions, and the USPS must let go lower-cost part-time and temporary employees before it can lay off a full-time worker not covered by such provisions.

There’s a lot more in this report, which makes a great case that the postal service should be privatized and its monopoly on first-class mail ended. The benefits would redound to the benefit of taxpayers and customers, providing the service the Founders had in mind when they gave Congress the power to “…establish Post Offices and post Roads.” In this day and age, that does not require a government-run, inefficient, and monopolistic postal service.

It’s time to privatize the USPS.

I might then get my packages on time.

(1) By the way, if any Amazon employees are reading this, tell your boss, Jeff, to stop using USPS for deliveries. It’s your two-day guarantee to Prime customers they’re breaking and your reputation they’re harming. Fire them.
(2) The page for which apparently works as well has the healthcare.gov payment system — not at all. I sense a trend in government-built web sites.

(Crossposted at Public Secrets)

Obama tool @SallyKohn: Losing your current health insurance plan is a good thing, rube

Useful idiot.

Words of wisdom.

There are Useful Idiots, fools, and then there are absolute tools -and “progressive activist” Sally Kohn manages to roll all three into one with this apologetic, lecture-y piece on Obamacare:

(CNN) — Conservatives are expressing shock and outrage that the Obama administration knew that many people in the individual insurance market would not be able to keep their plans once the Affordable Care Act took effect. Such shock is not surprising; overblown outrage is the stock and trade of conservative politics these days.

But here’s what conservatives won’t tell you, lest it undermine their theatrics: Many insurance plans are shutting down because they don’t meet the higher bar of quality benefits required under Obamacare, and of those people who lose access to their plans, many will pay less and all will have better and more comprehensive options.

Also, with a few exceptions, no one is really noting that this point isn’t quite news. In 2010, the fact that certain insurance plans would not be grandfathered into Obamacare because of their inadequate coverage was widely covered by the press. It was a given, after all that, if standards for health insurance were going to be raised in America — a good thing — then some plans that don’t meet the bar would no longer be available. One could blame this on the Affordable Care Act, or alternatively, one could blame this on insurance companies for providing such substandard care in the first place.

Here’s what this boils down to:

Will some people lose their current insurance? Yes.

Will these same folks lose health insurance coverage? No.

They will all have access to better plans and in many cases pay less because of expanded options and tax credits.

And many will have a LESSER plan and WON’T be able to afford anywhere close to the plan similar to the one they LIKED because they don’t qualify for those “expanded options” and “tax credits”, Ms. Kohn. What happened to FREEDOM OF CHOICE? What if someone LIKED their plan and wanted to STAY on their current plan – which suited THEIR needs just fine?   What if you’re in the middle of a  healthcare issue right now, pregnant, or maybe going through cancer treatments, and end up having to switch off to another plan midstream and can’t keep the doctor/care team you liked?

None of this matters to Ms. Kohn, and other Obama apologists like her, who are – in a nutshell – saying “who cares that MILLIONS will be dropped from the plans they’re on, and who gives a RIP that Team Obama KNEW this early on (as did the mainstream media) and still flatly and falsely asserted otherwise anyway?  Barry O and his crew on Pennsylvania Avenue have declared that this is a better option for you, so just deal with it and shut up, ya rube!”

Welcome to modern day “liberalism”, folks, where thinking for yourself is secondary to being ‘patriotic’ enough to eagerly want to pay higher taxes, fork out more money for a healthcare plan you don’t like, and pledge blind allegiance to Uncle Sam – as long as he (or she) happens to be a far left Democrat.

On Detroit, bankruptcy, and President Obama


An October 2012 tweet from our celebrity President:

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.

Obama speaks in Detroit

How many failures can you spot in this picture?
(Photo via MarketWatch)