I’ll have a longer piece up shortly about the unfortunate, albeit predictable, developments in Detroit. There’s a fair bit of happy talk out this AM about how bankruptcy provides a clean slate, and there’s some truth to that. But there’s a lot of pain between here and there, especially for stakeholders with public pensions and other public sector workers, not to mention creditors of unsecured debt.
Should the US government sweep in and bail the city out, like Presidet Ford did for NYC in the mid-1970s? Unlikely this Congress would go there and while there have actually been very few municipal defaults in the USA (five since 1970), there is a process–Chapter 9 of the bankruptcy code–which Detroit will follow to discharge unsecured debts and restructure its liabilities.
But that doesn’t mean DC should wash its hands of this city in need. Instead, I propose “Detroit Works!”–a temporary public jobs program to get the un- and underemployed of the city back to work repairing their city’s damaged infrastructure, its parks, streetlights, and urban blight. It’s a great way to marry a problem with a solution, and one that helps the people of the city build back their own incomes along with their city.
But didn’t you just say Congress wouldn’t help Detroit? No, I said it wouldn’t bail out their debts. I didn’t say it wouldn’t help them pull themselves up by their bootstraps.
OK, I’m not saying they would either. But let’s try and see what happens.
Who’s in with me??!!