LeDuff: Detroit bankruptcy, the little man loses - DC News FOX 5 DC WTTG

LeDuff: Detroit bankruptcy, a good life for a good day's work is gone

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Hundreds of workers at the Ford Highland Park Plant in the 1920's. Hundreds of workers at the Ford Highland Park Plant in the 1920's.
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Off the Chain Opinion
by Charlie LeDuff, Fox 2 News

DETROIT – It was precisely 99 and one half years ago that Henry Ford announced the $5 a day job plus profit sharing.

In less than a century, the promise of a good life for a good day's work is gone. Detroit is bankrupt. The factories are overseas. There are no more paychecks to wallpaper over the maggots. Only lawyers will get paid. Detroit has hit its nadir.

It's an embarrassment. Our former mayor Kwame Kilpatrick is on his way to federal prison for looting the city. Wayne County Executive Robert Ficano wonders if and when the federal hammer will drop on his corruption probe.  Former City Council President Charles Pugh is AWOL, running from allegations that he had an inappropriate relationship with a boy. The Big Two still owe the American taxpayer for their bailouts. Michigan is now a right-to-work state. You thought we'd hit bottom. But it turns out the bottom has a trap door.

The big question is, who will lose in the largest municipal bankruptcy in American history? The simple answer is the Little Man.

Banks and investors who loaned money to Detroit and were smart enough to ask for a dedicated revenue stream to back the loans … things like casino receipts and water bills, they will be okay because they will get first priority in bankruptcy court.  Of the $11 billion in unsecured debt, $9 billion is owed to municipal retirees and current employees. People like cops and firefighters who don't draw Social Security. Their checks are on the chopping block because the promises made to them are not secured. So auntie, the retired secretary, will exist on gruel. And uncle, the retired firefighter, will walk on crutches.

In a town that was built by the Little Man, the Little Man is being undone. Undone by political corruption, municipal mismanagement, unsustainable promises, racial turmoil, population flight, overreaching unions and management that cannot count. Remarkable in a town that invented not only mass credit (GMAC, 1919) but also Chapter 9 bankruptcy (Detroit Mayor Frank Murphy, 1933). 

We are a spectacle. The national media is here. Not because they care about us. And not to cull material for late night comedians. They are here because their towns may be next.  Baltimore. Los Angeles. Atlanta. After them, the states may be the next dominoes. California's budget is a financial swamp and the Illinois state pension fund is so underfunded you could neatly stuff four Detroit bankruptcies inside its balance sheet.

As I've said before: Detroit was the vanguard of the way up and it is the vanguard of the way down. And hopefully the vanguard of the way out. 

So blame the Little Man at your peril. The lazy blue-collar boozer who had his buddy punch the clock for him. But it's not that simple. We are all to blame. Remember the assessment of Steve Rattner, the Obama auto czar, gave when he took a look at GM's books: "The weakest finance operation any of us had ever seen in a major American company."

After he said that, Rattner was charged by the SEC in a pay-to-play scheme involving the New York State pension system.

Greed, sloth, ineptitude.  It's the American way. Laugh at Detroit and you're laughing at yourself.

 

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  • LeDuff goes inside massive Detroit Police raid

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