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Latest News - July 2013

July 26, 2013
Unions ask Obama for Detroit bailout
Source: The Hill
By: Megan R. Wilson

Union leaders are calling on Congress and President Obama to provide a federal bailout to the city of Detroit.

The executive council of the AFL-CIO, the nation’s largest labor federation, called for an “immediate infusion of federal assistance for Detroit” to be matched by Michigan, which they say has not done enough to keep the city from going through bankruptcy.

“Bankruptcy must not be used as a tool to impoverish city of Detroit workers or retirees. City workers have already made severe concessions to keep the city afloat,” the executive council said in a statement. “They are not to blame for Detroit’s financial problems, yet they have been making sacrifices all along the way to help the city out.”

The executive council, which consists of more than 50 leaders from various organized labor groups, are angry about pensions for retired workers facing suspension if Detroit goes through Chapter 6 bankruptcy.
“It appears that Governor [Rick] Snyder and [Emergency Financial Manager] Kevyn Orr are pushing Detroit into bankruptcy to gut the modest benefits received by Detroit’s retired public service employees,” the AFL-CIO’s statement reads.
Snyder appointed the emergency financial manager in March to try and help the Motor City sort out its finances.
The governor has come under fire for hiring a Washington bankruptcy attorney, which the AFL-CIO said shows bankruptcy was his plan all along.
“Mr. Orr’s decision to file for bankruptcy can be taken as confirmation that he was hired, secretly and ahead of a declared financial emergency, because he is a bankruptcy expert,” the organization writes.
Orr represented Chrysler during the car company’s 2009 bankruptcy and restructuring.
Snyder said on Sunday that he can “empathize” with the city’s retirees, but said the decision to go into bankruptcy had to be made, given the city’s financial state.

He noted that, due to cutbacks, most of the city’s street lights no longer work and police often take up to an hour to respond to calls.

“There were no other viable options,” Snyder said on NBC’s “Meet the Press.”

Earlier this week, Detroit Mayor Dave Bing said he had been receiving “great support” from the White House, but that it would be difficult to ask for direct assistance.

“They have been helpful, but now that we've done our bankruptcy filing, I think we've got to take a step back and see what's next,” he said on ABC’s “This Week. “I'm not sure exactly what to ask for.  I mean, money is going help, no doubt about that, but how much?”

Members of Congress have rejected the calls to bailout the city.

On Thursday, Sen. John Cornyn (R-Texas) filed an amendment to appropriations legislation that would ban the federal government bailing out financially troubled cities.

“There's no good reason why Detroit or any other American city ought to receive a taxpayer-funded bailout from Washington," Cornyn said. "I hope that the normal bankruptcy process will be allowed to go forward, and I hope that the bankruptcy follows the rule of law, and the Obama Administration resists any temptation to meddle in the process and play politics."

Detroit would be about $600 million in the red this year, if it hadn’t pulled out loans to finance the deficit.

Orr said in his earlier report about the city’s finances that it had “exhausted” its ability to borrow anymore and will finish out the current budget year with a $162 million cash-flow shortfall.

Detroit's bankruptcy would be the largest for a municipality in U.S. history.




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