Detroit is broke.
On Thursday, the Motor City became the largest in U.S. history to file for bankruptcy. After decades of factory closings, and a massive decline in population, even Governor Rick Snyder's little dictator – Kevyn Orr – couldn't save the city from financial ruin. Now that Mr. Orr has moved Detroit into bankruptcy court, creditors will be forced to accept pennies on the dollar for the city's debt. Of course, Governor Snyder and Mr. Orr are calling for huge cuts to Detroit's union and pension contracts, which they've been after for some time.
Even before the bankruptcy, Mr. Orr tried to convince these groups to accept 10 cents on the dollar, and blamed public unions for the city's financial strain. Because the pension groups refused the so-called offer, Mr. Orr and Governor Snyder are blaming the bankruptcy on public workers. In a press release yesterday, Governor Snyder wrote, “Despite Mr. Orr's best efforts, he has been unable to reach a restructuring plan with the city's creditors. I therefore agree that the only feasible path to a stable and solid Detroit is to file for bankruptcy protection.”
In a press conference today, Mr. Orr indicated that secured creditors will be favored over unsecured – translation – Detroit workers are screwed. Governor Snyder has offered no alternatives other to throwing workers under the bus, like investing in the city by creating jobs and repairing infrastructure, which could be done using state funds. Instead, Snyder and Orr will use three decades of Reaganomics, outsourcing, and wage decline to destroy public unions and sell the city off in parts. And, it won't be long before Republican lawmakers in other states catch on, and use forced austerity measures to do the same in their states.