Politics & Prejudices
Want to stop the emergency manager?
Step up with the ideas to make things happen — or get out of the way
Published: January 25, 2012
Yes, you read that right.
Last week hundreds of people marched in Ann Arbor to protest the emergency manager law — and the man behind it, Gov. Rick Snyder. They got as close as they could to the governor's home in a ritzy gated community. They chanted "We are the People's Army," and "This is what Democracy looks like," and similar things.
They had every right to do that. The governor himself said so. But frankly, they didn't accomplish anything.
Nor did they say what the state should do instead of eventually appointing an emergency manager to run Detroit.
Nor have any other of the law's many critics come up with any alternative strategy that makes any rational sense. "Giving the elected leaders a chance to fix it," just doesn't cut it. They've had years and years to do so, and none of them are offering any plan now.
Nor do they have a clue how to address the long-term problems, which include $12 billion in unfunded liabilities.
Sure, the state could come up with money to help Detroit close its current budget deficit, as long as Detroit fires enough workers and further weakens essential services, including police and fire.
But what about the next crisis a few months from now? What about the billions and billions in pension and other liabilities for which no money is set aside? How will the city ever be able to pay?
How will the remaining 700,000 mostly dirt-poor Detroiters get themselves out from under this mountain of debt, while maintaining some minimal standard of city services?
They can't. They never will, simple as that.
So here's a rational suggestion for how to fix Detroit's problems, and give Motown a decent long-term chance to succeed. The state should take its lead from what Washington did to save General Motors and Chrysler. Detroit needs to be taken over, restructured, helped through a "soft landing" that is likely going to include bankruptcy.
And last, but not least, Detroit needs to be guided through a merger — an arranged marriage if you will — to help keep her stable.
That's what the government did for Chrysler, marrying it off to Fiat, and because of that the all-but-dead automaker is alive and prosperous and growing stronger by the day.
This analogy isn't perfect, but there's a lot that applies. Here's what should now happen to Detroit: Nobody doubts that when the financial review team finishes its work, probably around the end of next month, it will confirm that things are a total mess.
The team could then recommend either that the city seek a consent agreement, under which Mayor Dave Bing and the council would take on new powers to fix the city's finances.
Or it could recommend the appointment of an emergency manager. The governor says that he hopes this could be done with a consent agreement. Normally, I would agree. But not this time.
The problems are just too mammoth and overwhelming. They are results, to some extent, of the city being stiffed by the suburbs and the state and the generations who used the city and abandoned it.
But they are also the result of years and years of criminal behavior and utter irresponsibility on the part of the politicians who ran Detroit, borrowed billions that they expected future generations to pay, and just kept kicking an ever-growing can down the road.
Fred Leeb, a turnabout expert who was briefly the emergency manager in Pontiac, says Detroit has "hit the wall."
Detroit's "leaders must make drastic cuts in costs now, yes, but they must also develop and implement new far-reaching but practical strategies," he said. Borrowing more money is not the answer, he says, adding that "every day that goes by without this positive process working at full speed is a day that speeds up the downward spiral for the city of Detroit." And without a healthy city, Michigan is never going to be able to attract new investment and business either.
So here's my solution:
Following the financial review team's report, the governor should move to appoint an emergency manager as soon as possible
The emergency manager then needs, as a first step, to figure out Detroit's true financial state as soon as possible, stabilize things — and then present a plan to return to solvency with an eye toward growth.
The best way to do that may well be a so-called "soft bankruptcy." The state helps guide Detroit through this as easily as possible — maybe by separating everything into two municipal corporations — "Good Detroit" and "Bad Detroit."
We help the good stuff get stronger and in a position to survive. The bad stuff is sold off, closed out, liquidated, disposed of.
Detroit starts fresh and clean. Yes, the creditors take a haircut, and Michigan's credit rating will be hurt for a while. This is strong medicine, but in the not-so-long run, everything should be better off.
But now for the final chapter: Gov. Snyder should then ask the Legislature to take the city and combine it with the county.
> Email Jack Lessenberry