Detroit Is So Bankrupt It Can’t Even Borrow More Money: Unions About To Be Shredded

Detroit Is So Bankrupt It Can’t Even Borrow More Money: Unions About To Be Shredded

Want to see what unions do over the long-term? Well then, look at Detroit. It used to be a prosperous, blue collar city. But since unreasonable union demands have crippled the Big 3 Automakers, a lot of jobs fled the city. After the jobs left, the people followed. Now, large sections of Detroit are uninhabited and falling apart. Furthermore, the plunging tax revenue combined with the rampant overspending of the liberal politicians the unions supported has put the city in a hole bigger than it could ever climb out of on its own.

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Emergency Manager Kevyn Orr says the city of Detroit’s cash-flow crisis makes it “insolvent” and unable to borrow more money to mask over debts being made worse by skipping millions in payments for retiree pensions and health care.

After 45 days on the job, Orr’s initial assessment of Detroit’s perilous finances is laid bare in a 41-page report to be delivered today to state Treasurer Andy Dillon.

Calling it “a sobering wake-up call about the dire financial straits the city of Detroit faces,” Orr said he will use the report as a baseline for paring down the city’s $15.6 billion in debt and long-term liabilities. …

The emergency manager’s spokesman put the city’s predicament in more blunt terms. “We’re going to be out of money by the end of the year,” Nowling said Sunday. “If all we did was collect taxes and pay our debt, we couldn’t pay it off in 20 years. That’s the situation that we’re in now.”

Unions are definitely lacking their usual leverage, for two reasons. First, Orr is not an elected official but an appointed manager, which means he’s not susceptible to the usual inducements to provide a sympathetic posture to the PEUs. Second, the law that created Orr’s position allows him to unilaterally terminate union contracts and force renegotiation from scratch, and Orr has already stated he’s willing to use that power:

The emergency manager law gives Orr the authority to “reject, modify or terminate” collective bargaining agreements and concessions will be sought, he wrote in the report.

“This power will be exercised, if necessary or desirable, with the knowledge and understanding that many city employees already have absorbed wage and benefit reductions,” he wrote.

There’s also a third problem for unions, which is the new right-to-work law in Michigan. That forces them to collect their own dues rather than have the state collect them out of the paycheck directly. They won’t have the usual power of forcibly-collected cash to fight Orr, and the descent of Detroit won’t make them terribly sympathetic to Michigan voters, either.

You could almost feel sorry for all the union workers who are about to lose their jobs, take pay cuts and have their pensions slashed except for the fact that they’re in this mess because the unions were being such greedy pigs in the first place. They looted the Big 3 automakers for every dime they could get and they pushed the consequences off until “later.” Well, “later” is now and there’s going to be hell to pay in Detroit.

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