There’s a big difference between four years ago, when General Motors and Chrysler were nearing financial collapse, and today, when their city is itself on the brink of bankruptcy.
Everyone, from General Motors executives to the President of the United States, took GM’s troubles seriously. Though lawmakers disagreed on the remedy, they knew that what happened to GM would have momentous consequences.
What’s baffling to me is that the same doesn’t seem to be true for Detroit. Far more people live in Detroit than work for General Motors and Chrysler combined. We seem to be on the brink of the biggest municipal bankruptcy in history, which is going to have enormous consequences even for those of us in Ishpeming.
If you don’t think all this will affect Michigan’s bond rating and image worldwide, then you are a bit naïve. But unwillingness to face reality seems to be rampant among those connected with Detroit.
I often disagree with Detroit News business columnist Daniel Howes, but the man does understand the bottom line. And in his column today, he observes that Detroit and its “failed political class” are clearly on a short road to losing their power to do anything.
“The only question,” Howes says, “is who will be calling the shots. A team appointed by Lansing, under new emergency management legislation, or a federal bankruptcy judge.”
There seems little chance of avoiding one or the other. Last spring’s so-called “consent agreement” clearly isn’t working. The city will soon be out of money to pay its basic bills, especially if Detroit’s city council continues to refuse to do what it needs to draw funds from a fund set up by the state. But perhaps because things have been so bad for so long, the city seems fogged in an air of unreality.
Yesterday, for example, there was supposed to be an emergency meeting of the City Council to once again try and stave off running out of cash. The mayor called this meeting last week, but then didn’t show up, saying he had a “family matter.” The council members who did come said they were still not willing to spend the $300,000 needed to hire a respected law firm to give the mayor financial advice. That‘s something required by an agreement the city made with the state. If they don’t hire the firm, the state won’t give the city thirty million dollars Detroit desperately needs to make its mid-December payroll.
In any event, the whole meeting may have violated the state Open Meeting Act. Seems the city’s controversial corporation counsel’s office only posted required notices of the meeting after the building was closed for the holidays. No, you can’t make this stuff up.
Several months ago, Joe Harris, who was the city’s auditor general for ten years, told me that Wall Street would react far more favorably if the state takes over Detroit than if the city plunges into federal bankruptcy. If that’s so, the lame duck legislature might want to forget about proposed fetal tax deductions, and craft a new emergency manager law soon.
We are all going to pay for what’s been a long-term failure of leadership. The only question is: How much? If there was ever a time when relentless positive action was needed, it is now.
Jack Lessenberry is Michigan Radio’s political analyst. Views expressed in the essays by Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.