America as Detroit

The malignant cancer cells oozing from the petri dish of progressive policy known as the City of Detroit are soon to metastasize throughout the body politic. The disease, which has been described by Mark Steyn as the “malign alliance between a corrupt political class, rapacious public-sector unions, and an ever more swollen army of welfare dependents,” will first lay low other formerly great American cities. Newark, Oakland, Cleveland and Los Angeles initially come to mind. But the same fate awaits nearly every other large municipality ruled for generations by so-called progressive thinkers.

Once U.S. cities have danced to Motown’s latest bankruptcy beat, it will be the rest of America’s turn to confront unfunded liabilities. In the case of Detroit, fully half of what the city owes—$9 billion out of Detroit’s unpayable $18 billion—is the unfunded pension liabilities to retired public employees and those still on the city’s payroll.

But wait. $9 Billion? $18 Billion? Those amounts are mere rounding errors in the context of the U.S. budget deficit and aggregate national debt. Former Obama car czar Steve Rattner opined recently in the New York Times that “the 700,000 remaining residents of the Motor City are no more responsible for Detroit’s problems than were the victims of Hurricane Sandy for theirs, and eventually Congress decided to help them.”

But Detroit’s fiscal problems are not a natural disaster. Indeed, the city’s economic and social problems are what Secretary of Homeland Security Janet Napolitano might have called a “man-caused” disaster. Rattner even obliquely acknowledges that free will was behind Detroit’s disaster. The six words preceding his plea for a second, smaller Detroit bailout (GM was the first) were “[b]ut apart from voting in elections...”

That is the rub. There is, there never has been, and there never will be a free lunch. Yet Americans have been voting themselves money since LBJ’s Great Society. According to the Federal Reserve, the nation’s unfunded liabilities stand at over $125 trillion, including Medicare ($86.6 trillion), prescription drugs ($21.8 trillion) and Social Security ($16.4 trillion), which amount does not include the $16.8 trillion current U.S. Treasury debt. These entitlement programs were sold to the public as “pay as you go” and were supposed to build surpluses to balance already known future demographic shifts. But leaders in both major parties invaded these programs’ current income (from payroll taxes) to win votes by financing discretionary programs such as farm supports, food stamps, weapon systems, student loans, housing-loan guarantees, green-energy subsidies and literally hundreds of other spending initiatives—all for political constituencies capable either of making contributions or putting political boots on the ground.


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commented 2013-07-29 23:15:43 -0400 · Flag
Beauforde writes:

I simply cannot believe that the political class is venal or intelligent enough for what is happening to be intended…“unintended consequences” are the specialty of the “Progressives” for more than 9 decades now…to think that the current disaster was planned…I cannot believe that. These pygmies are too dim-witted to hatch such a dastardly plan. These “over-educated technocrats” are supercilious imbeciles and devotees of the most supercilious self-appointed elite of them all Keynes…and they really believe(d) that they could bring “fairness” and a kind of Social Utopia through their social engineering and tax policies…they have failed miserably (Detroit and most of Europe is their fetid Petri Dish)…but they are too invested in their dogma to admit failure so they will drive us all over the cliff with them…
commented 2013-07-29 22:37:38 -0400 · Flag
JC writes:

detroit bankruptcy will set many precedents, most of them will be welcomed by we taxpayers.