Auto industry glitz fails to masquerade Detroit's slide into insolvency
As city edges towards bankruptcy, chance of federal bailout remains slim to none
Detroit, the city that symbolizes the U.S. industry got a taste of the high life over the past few weeks with the Auto Show. Bentleys and Maseratis gleamed on showroom floors and a charity ball saw many attendees putting on the Ritz. The city, sadly finds itself still going over the cliff with bankruptcy a given thing. And quite unlike General Motors Co., Chrysler and Ford Motor Co. chances of a federal bailout remain highly slim.
In addition to a decline in population, Detroit suffers from high unemployment related to a loss of businesses, a flood of home foreclosures and a cut in state funding.
Michigan Governor Rick Snyder last month appointed a team to scour the city's books. The audit could result in a state takeover of Detroit's finances through the appointment of an emergency financial manager, who could then propose federal bankruptcy court as the best option.
Snyder, who has called the situation "a crisis in terms of financial affairs," said the team would deliver its report next month.
"Detroit is teetering on the verge of bankruptcy after the City Council has failed to make the necessary cuts to deal with having a smaller population," Rick Jones, chairman of the Republican majority caucus in the state Senate says.
While he does not favor a bankruptcy, Jones said he would like to see an emergency manager installed. If that failed, there would be a case for finding a way to shrink the Detroit municipal area.
Down 30 percent since 1990, the city's population is now just over 700,000, while still having to provide services to an area encompassing more land than San Francisco, Boston and the borough of Manhattan.
While Mayor Dave Bing and the Detroit City Council have moved to reduce spending and initiate some reforms to stave off a takeover, it may still not be enough.
Detroit was America's fifth-largest city during the post World War II era. Today, it ranks 18th. In addition to a decline in population, it suffers from high unemployment related to a loss of businesses, a flood of home foreclosures and a cut in state funding.
Detroit has been left unable to afford a workforce of more than 10,000 and the surging health and pension costs that go with them and with its retirees. Credit ratings on Detroit's approximately $8.2 billion of outstanding debt have sent it into junk territory.
The city's labor costs, including health care and pensions, are shrinking in absolute terms but rising as a share of the budget. They are slated to drop to $968 million, or nearly 49.5 percent of the operating budget, in the fiscal year ending June 30 versus $1.14 billion, or 45.5 percent, a year earlier.
© 2013, Distributed by NEWS CONSORTIUM.
- - -
Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: Detroit, auto industry, dwindling revenues, dwindling population, bankruptcy
Rate This Article
Leave a Comment
More U.S. News
- Bill Donohue, Catholic League, Disclose Fight with the IRS, Demonstrate Courage
- Father Frank Pavone: Houston Abortionist Killing Babies Born Alive
- Shocking report reveals 38 men, 33 women are raped each day in the military
- Cheap cigarette outlets in U.S. may be funding terrorists
- Why even if you lose, playing Powerball isn't such a bad bet after all
- Nebraska Bishop: Gosnell clinic was 'reminiscent of Auschwitz'
- Sex In Uniform: Why the Increase in Sexual Assaults in the Military?
- Chilling note scrawled by bloodied Boston terrorist reveals motive
- The Storm. The Whirlwind. The Earthquake: Abortionist Kermit Gosnell is Guilty, America is Complicit
- Fr. Paul Schenck: Finding Living Faith on Catechetical Sunday
- The Movie Yellow: Incest as 'Normal' and Cassavates's Slides Into the World of Woes
- The Chicago School Teachers Strike Reveals the Need For School Choice
- The Sexual Barbarians and the Dissolution of Culture
- The Happy Priest Challenges Us to Ask: Who is Jesus to Me?
- Michael Coren on Canadian Public Schools: Teachers, leave those kids alone
- We Cannot Ignore Our Consciences: Cardinal Dolan On Religious Liberty
- In the Face of Danger, Successor of Peter Travels to Lebanon as a Messenger of Peace
- Reflections on the Dignity and Vocation of Women: Who or What?