The message of Detroit: Feds won’t bail out cities
By EDEN MARTIN October 3, 2013 7:10PM
Sometimes the big news is what we don’t hear — Sherlock Holmes’ dog that doesn’t bark. Something like that happened late last month in Detroit.
Senior Obama administration officials, including the attorney general and secretaries of Transportation and HUD, met in Detroit with members of the Michigan congressional delegation and local leaders to announce a $300 million aid package. It includes money to hire firefighters and police officers, to demolish abandoned buildings, to repair buses and help construct a city rail project. Some of the $300 million had previously been awarded, so the announcement represented a partial repackaging — making the total seem larger.
Politically, this helps respond to the question: You bailed out the automobile companies, so what are you going to do for Detroit? Something is better than nothing.
What it does not do — the dog that didn’t bark — was offer to bail out Detroit or its pension funds. The president of the International Association of Fire Fighters said in an interview that he had earlier met with senior Obama aides and been told that there would be no “new stimulus money” — that Congress would never pass it even if the Obama Administration proposed it. The union chief said in an interview that he was displeased that there had been no discussion about the pensions of Detroit’s retirees and employees.
There is disagreement about the amount of Detroit’s unfunded pension liability. The city’s emergency manager, Kevyn Orr, puts it at a minimum of $3.5 billion.
The administration’s aid package does not address that liability — which is mountainous for a bankrupt Detroit.
That is the big news. If the administration had proposed to guarantee or help fund the Detroit pensions, it would have set a precedent requiring it to help other faltering state and municipal pension plans around the country, such as those in Illinois and Chicago. The total could well be in the trillions. The federal government has enough debt problems.
So the message to Illinois and Chicago is clear: You broke it, you pay for it. You cannot count on the feds to bail you out. Congress wouldn’t approve it, so there’s no point in the administration proposing it.
It’s time for Springfield to act. Continued delay just makes the problem more monumental.