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(WT) Another day and another of President Obama’s campaign boasts bites the dust. While out on the hustings last year, Mr. Obama pummeled Mitt Romney for writing a 2008 op-ed column in The New York Times titled “Let Detroit Go Bankrupt.”
The Republican nominee sensibly argued that bankruptcy would force the city to go through a drastic — and necessary — restructuring of its finances. Mr. Obama, on the other hand, boasted, “We refused to let Detroit go bankrupt. We bet on American workers … and that bet is paying off.” Until Tuesday.
U.S. Bankruptcy Judge Steven Rhodes cleared the way for Detroit to do exactly what the president promised would never happen: file for Chapter 9 bankruptcy protection. It’s as though the president had told Detroit, “If you like your budget and spending plan, you can keep it.”
Politicians tend to think the public treasury can be endlessly tapped without consequence. This has never been more true than in Detroit, which now owes nearly $20 billion to creditors. Insatiable desire to impose yet more taxes chased away business so that the city that once had 296,000 manufacturing jobs counts less than a tenth of that amount today.
Public-sector unions can take much of the blame for driving up municipal expenses to line their own pockets. Detroit, for example, still employs a “horseshoer” for $56,000 in pay and benefits, even though the department paying his salary doesn’t have a horse. As The Detroit Free Press reported, the unions will fight to preserve obsolete jobs and pad paychecks. Unions ensured retirees would receive a “13th month” of checks every year at a cost of $1.9 billion. Even as the city stared at its fate at the edge of the financial cliff, union bosses kept pressing for more. They asked the bankruptcy judge, with a straight face, to reinstate the 13th-month check.
The decline of the city goes well beyond financial mismanagement. What was once one of the world’s greatest cities is a hollow shell of its former glory. Anyone who saw the writing on the wall has long since run as far as possible away from the decaying town. Despite tax revenues in a deep decline, government spending to placate the unions hasn’t slowed.
“It is indeed a momentous day,” Judge Rhodes declared at the end of his ruling. “We have here a judicial finding that this once-proud city cannot pay its debts. At the same time, it has an opportunity for a fresh start. I hope that everybody associated with the city will recognize that opportunity.” That’s exactly what Mr. Romney said in 2008.
