Diane Ravitch reports bad news about education in Detroit. 26 schools will be closed, and teachers’ pay will be cut by 10%. What angers me about this report is that Governor Rick Snyder and his allies preach the school “reform” line. They put the blame for poor education outcomes on teachers. Then they take measures that make good teachers want to leave the profession. The decision to make the cut was made by the city’s Dicta. . . Emergency Manager, who is a puppet of the Governor. Best wishes to the parents and children in Detroit. What is happening in your city is a crime against democracy – and common sense.
Aljazeera America reports that Michigan Governor Rick Snyder is backing a plan that will help Detroit workers save their pensions. That’s great news if it is true. Snyder is the man who brought emergency managers to strip out public wealth from poor cities throughout the state. Now he’s promising $350 million to offset what his own emergency manager in Detroit claims is an $18 billion debt. As Scott Walker in Wisconsin is promising voters big tax cuts, Snyder is trying to show that he really cares about poor people. What is this about? It’s time to run for re-election. If working people are gullible enough to elect leaders that work against their interest, they will get what they deserve.
I frequently blog about income inequality because it is a vital issue that affects all working people, not just those in low wage jobs. Today, President Obama called income inequality, “the defining challenge of our time.” The President referred to specific types of low wage workers in calling for an increase in the minimum wage. More importantly, he addressed the issue of decreased mobility: not only are more Americans being born into poverty, they seem to be stuck there. The President’s words are good and inspiring. However, during his first campaign, he told labor that he would stand with them and put on his walking shoes to be with them in the picket line. Did Obama march in Wisconsin or Ohio? No. Did he push through passage of the Employee Free Choice Act? No. Hopefully, these good words will lead to some positive action. Let’s remember Jesse Jackson motto: “Keep hope alive.”
There is nothing hopeful about the situation in Detroit. Judge Steven W. Rhodes, a federal bankruptcy judge, ruled that all should be for the creditors, nothing for retired workers who paid into pension funds. David Cay Johnston describes the situation as “stealing from the workers.” His reasoning is clear: Pensions are deferred wages. Would anyone think of taking money from an employee’s paycheck? That would clearly be theft. How is a promised pension any different? Johnson lists several examples of how politicians have played this game in the past. Detroit is just the latest, ugliest example of a trend that is also taking place in my state, Illinois, which is run by Democrats.
As Johnston examines the economic impact of Detroit’s bankruptcy, John Nichols considers the political impact. Citing a study by Demos, Nichols argues that Detroit’s serious financial problems should not have led to bankruptcy. Why did the city go bankrupt? So the Governor could appoint an unelected manager to strip assets that range from pension funds to the great collection in the city’s art museum. Nichols quotes Detroit’s new mayor Mike Duggan, who admits that he will only have power to the degree that it is given by the governor and his manager. The elected mayor is powerless. Nichols captures the problem in these words: “There is a lot more at stake in Detroit, and in Michigan, than one city’s balance sheet. Our understanding of democracy, itself, is being subverted.”
If President Obama is serious about addressing income inequality and mobility, he should start in Detroit. Turn the Justice Department loose on Governor Snyder and his “Emergency Managers,” who lord over cities that are populated mostly by poor African Americans. Clearly American citizens in the cities under Governor’s Snyder’s Emergency Manager system are not enjoying the rights promised under the XV Amendment. Detroit is a good starting point, Mr. President. Save democracy and promote opportunity in that great city.
P.S. David Sirota calls out the fraud in Detroit by discussing funds that can be found for a new hockey arena and $6 billion in subsidies, also known as corporate welfare.
Detroit is broke. That’s what the media and the politicians like Governor Snyder tell us. It’s an easy story to tell given the way the city looks. It’s also easy to tell when the politicians and their banker allies only give one alternative. What they don’t say is that unions tried to work out a deal that would have prevented the bankruptcy. The governor and his Emergency Manager (Appointed Dictator) would not talk to them. A cynical person might even think that the governor had some reason for wanting the city to declare bankruptcy.
Common Dreams has reprinted an article by the Nation’s John Nichols that examines how democracy is not working in Michigan’s largest city. Michigan and Detroit voters both rejected Snyder’s Emergency Manager program, only to have the governor revive the program during a lame duck session of the legislature. Nichols interviews experts who point out that several American cities have problems similar to Detroit. As the nation’s industrial base broke down, the federal and state governments responded by cutting funds sent to big cities. Rather than blame local officials as the governor does, Nichols suggests that we look at state government as part of a complex problem.
John Cassidy of the New Yorker looks at the story from the perspective how the city came to the bankruptcy “solution.” He asks the often unasked question: Was this move necessary? Were there alternatives? He points to gentrification in parts of the city. The Emergency Manager, Kevyn Orr seems only interested in giving pensioners as little as possible (as little as 20%) while offering bank creditors (as much as 75%). Cassidy ends ominously by quoting a municipal bankruptcy lawyer who calls Detroit, “a test case.”
The same day Detroit declared bankruptcy, Chicago bond rating was hit with a big downgrade. A couple of weeks later, the city’s school system had its bond rating slashed. Do you see a pattern? The same politicians who failed to fund pensions are now using that action to say pensions need to be cut. They robbed Peter (workers) to pay Paul (bankers). And now they’re asking Peter to pay the bill.
What happens in Detroit will be a test case. If working people don’t wake up, they will pay the bill of the bankers while city workers, including those who have already retired, will have to live on a fraction of the pension they should have received as part of their compensation. Pensions are not welfare. Retired workers are not takers. If Americans don’t wake up to this new make-the-rich-richer scheme, we will all lose.
I’m working from home today, so I’m able to listen to the radio more than on a typical. What am I hearing? More and more about the royal baby and Anthony’s wiener. What’s the news on Detroit? It's bankrupt and there’s no other choice but to cut worker’s pensions. What’s the news in Chicago, a city that had its bond rating slashed? The city’s broke, and we must cut workers’ pensions. Meanwhile, here’s the latest on the royal baby and Anthony’s wiener.
The corporate media, better defined as the info-tainment industry, doesn’t focus on important matters and go below the surface. The budget problems in Detroit and Chicago have resolutions that are not discussed by shallow reporter who look like models. There is also no examination of the real winners and losers. When pensioners are asked to take reduced benefits, who wins? Investors and the bankers who care for their money as if it were a royal baby.
Retired workers and current employees that paid into pension plans expected to have security in retirement. They worked thinking that retirement was part of their compensation, not a resource owned by the city that could used to pay its debts. The problem here is not simply a matter of “resources,” as the Emergency Manager of Detroit put it. People’s lives are on the line, and we need to understand these stories with that in mind.
Government officials, bankers, and the investor class do not care about these people. They only know Return on Investment. They also know that most people will not pay attention to this story. They want the sensational story that’s easy to understand. Working people and the middle class need to wake up, or their wages – present and future – will be the next target.
P.S., Economist Dean Baker compares Detroit to an organization that the government bailed out, Goldman Sachs. Needless to say, the rich get richer.
Detroit is a great American, and it is in trouble. Rather than the state or federal government coming to its aid, they do nothing – or less than nothing. The governor of Michigan has assigned an emergency manager whose main job is to pay creditors by selling off public assets.
Today, we have a small bit of good news for Detroit. According to Daily Kos, musician Jack White has saved the city’s Masonic Temple, which was completed in 1926. White’s mother worked in the building when he way young. The story also notes that White has donated in the past to save a baseball field in the city.
So what do we have here? One person trying to save the city while others who should be protecting public assets want to tear them down and sell them off. Welcome to America in 2013.
[On Sundays, this blog explores topics beyond the work world in “Sabbath.”]
Detroit and Democracy
I wanted to do more to prepare more to write this post, but I’ve had work responsibilities this week and weekend that would not let me dive into research and numbers. Even so, I feel a need to express my less than informed opinion on a vital topic – the impending takeover of Detroit.
It’s not the big media story I thought it would be. It’s taken as a given that Detroit is “bankrupt” and “something has to be done.” I’ve even heard that claim in progressive media. Is Detroit in trouble? Of course, it is. So are many other large American cities that have lost their industrial base. No one seems to be asking if there are alternatives to taking power from the hands of elected officials and putting it in the hands of an unelected Emergency Manager. Governor Rick Snyder presents this solution that he has introduced in other cities as the only way to save the state’s biggest city.
Let’s take a minute and ask some questions:
1. Is the situation as bad as the governor claims? Why is Michigan the only state in the nation where such action is taking place on such a scale? Is the governor really concerned about helping cities, or is he working off an ALEC playbook strategy to transfer public wealth into private hands? Is there any evidence that Emergency Managers in other cities have made a long term improvement in local conditions – long term, not a simple give away to the connected class?
2. Where is the wealth? Throughout America, central cities are surrounded by suburbs that conduct business in and take their identity from the urban hub. Could some system be devised where those who benefit from the hub pay their share for its upkeep? Why not tax suburbs that have a surplus? Why not introduce county wide or regional taxes that would help revive great American cities?
Here in Chicago we’ve had similar claims of impending ruin. One of Mayor Daley’s chief aides used the term “Doomsday” in talking about the state of the city’s school system and public transit system. Both systems were cut in the face of such claims. Mayor Daley also transferred public assets of parking meters and a public toll road to private interests. The city’s finances are not better. In fact, by the end of the contract, the city will lose money on the parking meter contract. Now Mayor Emanuel want to close over 100 schools because of a pending billion dollar deficit. Is this a real problem or a way to move students from public to “charter” schools?
Whenever a politician claims a situation is an emergency, we need to ask for better evidence and transparency, not solutions that make the original problem worse and benefit only those who are the most wealthy. We need to ask harder questions about our leaders and their solutions, especially those that deal with privatization. The fate of Detroit and other cities in Michigan need to seen as a sign of things to come. Will the U.S. live up to its promise of being a democracy that offers opportunity to all of its people, including the poor? Or will the country further devolve into an oligarchy of the wealthy, by the wealthy, and for the wealthy?
Postscript: On this weekend’s Smiley and West radio program, Cornel West said: “You can’t love money and love poor people.” He was criticizing political leaders, both Republicans and Democrats. I can only respond with one word: Amen.
More: Laura Clawson of Daily Kos weighs in on the consequences of a Detroit take over and what has happened in other Michigan cities that have lost their democratic rule.