State, feds must join Detroit’s recovery

Guest Editorials
It was hardly a surprise last week when Detroit became the nation’s largest city to file for bankruptcy protection. But while the lawyers, creditors, bankers and union officials maneuver
for their best advantage, some other hard questions about the future need to be addressed.

As unlikely and as unpopular as it may be, there needs to be serious consideration about state and federal bailout money for Detroit. Before that can happen, there needs to be a clear, hard-nosed restructuring about how the city — and others in the same boat — will operate in the future.

If Detroit were the victim of a natural disaster, there would no doubt be loads of taxpayer-generated rescue funds on the way. Detroit is a disaster of another kind: An almost unprecedented population loss, an abysmal tax base, the eradication of a private sector job base, a failing school system, vanishing home values, and ridiculous levels of public mismanagement and corruption.

It’s a deep mess. But the state and federal governments can’t walk away from the devastation. There are still 700,000 people there — nearly one of every 10 Michigan residents — who need basic services and hope for the future.

While outrageous runaway pensions in Detroit (and Wayne County, for that matter) make headlines, the typical Detroit pensioner receives a much more modest sum. Pensions may have been awarded too liberally, but there is little public good accomplished
by greatly slashing the money that was budgeted into individual retirement plans.

There will be pain — likely a lot — but the idea of pensioners receiving 10 cents on the dollar is unacceptable from both a humane and an economic sense. Throwing away purchasing power — or forcing people onto public assistance — would not be good economic policy.

Even if the Detroit bankruptcy plans survive legal and political challenges, the effort will go for naught if the result isn’t a balanced city budget that provides services worthy of the state’s largest city. Cleaning up the books is merely a first step. The city must fix its street lights, reduce crime, upgrade education and provide jobs. This is a long, hard process that demands both hard-nosed finances that Republicans say they love with the social
programs that they too often set aside. Democrats, meanwhile, have to acknowledge that corrupt and foolish management under their party’s banner has contributed mightily to Detroit’s demise.

There is a further issue that goes beyond our state’s borders.

Detroit is far from the only municipality facing hard times and unsustainable pension costs. Any federal assistance to Detroit will be a template for future solutions.

A badly structured bailout would merely be seen as encouragement
for local governments across the country to continue bad habits and resist tough decisions.

Why not? The feds will print more money and bail them out.
Regardless of the cause, Detroit residents are and have been in a bad place. State and federal governments must be part of the rescue. In so doing, they have an obligation to future residents — of Detroit, Michigan and the nation — to take long-term corrective
steps as well.