Detroit Did Not Just Randomly Go Bankrupt

David Sirota's article on this subject is really good. The NAFTA comparison is important, as are these details about Detroit's finances that seem to be omitted from most discussions:

So, for instance, from the administration of right-wing Gov. Rick Snyder, we are hearing a lot of carping about the $3.5 billion in pension obligations that are part of the city’s overall $18 billion in debt. The focus leads casual onlookers to believe that — even though they on average get a pension of just $19,000 a year — municipal workers’ supposed greed single-handedly bankrupted the city. What we aren’t hearing about, though, is the city and state’s long history of underfunding its pensions, and using the raided money to spend billions of dollars on corporate welfare.

For a good sense of some of the most expensive, absurd and utterly wasteful boondoggles in the Detroit area over the last few decades, read this piece from Crain’s Detroit or see this 2011 article entitled “Detroit’s Corporate Welfare Binge” by Detroit News columnist Bill Johnson. Alternately, recall this is in the heart of a region whose governments infamously spent $55 million of taxpayer money in 1975 (or a whopping $180 million in inflation-adjusted dollars) on one professional football stadium, then spent another $300 million on yet another football stadium, then sold off the original stadium for just $583,000. Or, just note that Detroit is the largest city in a state that, according to the New York Times, spends more per capita on corporate subsidies — $672 or $6.6 billion a year — than most other states.

By focusing the blame for Detroit’s bankruptcy solely on workers’ pensions, rather than having a more comprehensive discussion that includes both pension benefits and corporate giveaways, the right can engineer the political environment for the truly immoral reality mentioned at the beginning of this article — the one highlighted this week by the Associated Press story headlined “Arena Likely Still On Track, Business As Usual For Sports Teams Despite Bankruptcy Filing.” Yes, that’s correct: at the same time government officials are talking about slashing the meager $19,000-a-year pensions of workers who don’t get Social Security, those officials are promising that they will still go forward with a plan to spend a whopping $283 million of taxpayer money on a new stadium for the Red Wings.

Notably, a political environment that encourages these kind of immoral decisions is beneficial not merely to the corporate interests who directly benefit from such giveaways, but also to the Wall Street investors who still own the outstanding bonds that financed some of the subsidies. Taken together, then, a skewed discussion about budget shortfalls that excludes scrutiny of these subsidies and focuses only on worker pensions predictably ends up prioritizing the financial interests of corporate welfare recipients and Wall Street bondholders over municipal retirees.

It’s the same dynamic on taxes. From the right, Detroit is being cited in the discussion about budget shortfalls as proof of the need for austerity. Yet, we aren’t hearing much about why in the face of such shortfalls Snyder just devoted $1.7 billion to a new corporate tax cut that will likely exacerbate the state’s deficit, nor are we hearing much about why state law compelled Detroit to forfeit other desperately needed tax revenues. Again, the goal here is to make sure that the conversation is one that only is about cutting retirement benefits — not one that adds the prospect of progressive tax reform to the debate.

What happened in Detroit is not some natural disaster that hit us without warning. It's a man made tragedy and we know most of the reasons it we're in this mess. That might be worth mentioning.