Corruption In Action - Detroit Gets $320 Million Federal Bailout

Back when Detroit's financial woes heated up, Detroit City councilwoman JoAnn Watson made a racially oriented demand that President Obama bail them out, saying, "Our people in an overwhelming way supported the re-election of this president and there ought to be a quid pro quo and you ought to exercise leadership on that."



As I wrote at the time, I trust you know exactly whom Ms. Watson meant by 'our people'. And given the almost certain probability of voter fraud in Wayne County, what she meant by 'support'.

Well, it may been a while coming, but President Obama saw to it that his friends in Detroit got a little somethin' somethin'. Shutdown or no shutdown, sequester or no sequester, Detroit just received $320 million of your tax dollars.

Now, the Regime would have it that this is certainly not a bailout. They're calling it a stimulus. But just like Obama's other stimulus,it seems like the money is mainly going as a payoff to the president's political allies rather then being being used to restructure debt or create any actual jobs.

The Obama Administration is being fairly closed mouthed about this. All they'll reveal is that the funds came from FEMA, Homeland Security, HUD and the TARP bailout funds, and no one seems to know who actually authorized it or put the package together.

As the normally Obama friendly Christian Science Monitor reported, another oddity is that most the money is supposedly earmarked for programs already being funded by places like the Ford, Kresge, and Knight Foundations. The reason for the apparent duplication will become evident when you realize where the money is actually going.

As I reported earlier, there has been a running war between the entirely black Detroit City Council and Emergency Manager Kevyn Orr ( who is also black, not that it matters to the Council), who filed bankruptcy after he was appointed to try and sort out the dysfunctional city's finances by Governor Rick Snyder.

Part of what Orr is trying to accomplish involves changing some of the sweetheart contracts the City Council and people like incarcerated Mayor Kwame Kilpatrick made with the public employee unions in exchange for campaign swag and votes that allowed them to rule what was once America's most prosperous city as their personal fiefdom.

Aside from trying to restructure the ridiculously opulent pension plans, the bankruptcy also allows Orr to restructure the union contracts. And therein lies the real story behind the 'stimulus', which is exactly what this is, unless we want to use the more appropriate term 'bribe'.

You see, the majority of the funds come with some interesting strings attached. They require that the city ceases any attempt to change the existing union contracts and pay what are referred to as 'prevailing union wages', thus giving the City Council and the unions a huge weapon to use against any reforms Kevyn Orr might try to push through, since the money's available for the status quo courtesy of the American taxpayer.

Ditto when it comes to the pension plans. The Motor City's pension managers are insisting that the pensions are only underfunded by a mere $634 million, so no reform is necessary. Orr, a bankruptcy attorney originally from Washington DC has reports from his accountants showing the shortfall as a much more realistic $3 billion. With the arrival of the ObamaMoney , the opponents of any pension reform (again, mostly the unions) have another weapon to use.

It's worth mentioning, by the way, exactly how Detroit's pension plans got into this state.

The theory behind pension plans is pretty simple. An employer and its employees contribute funds every month that are invested in certain vehicles like stocks and bonds, with the idea that retiree benefits with be eventually paid out of the profits. It's similar to an old, time tested strategy known as dollar cost averaging - you commit a certain percentage of your earnings to investment, and with even normally competent management, good years average out with not so good years to give you a decent profit on your investment over time.

After five term Mayor Coleman 'I don't know nothin' about no Krugerands' Young took over in the 1970's, the City of Detroit started doing things differently. When the investments did well, instead of leaving them in the fund and re-investing them for further profit, Detroit payed its retirees a 'thirteenth check'. When the investments didn't do so well, that 13th check continued anyway, so there was a constant looting of the pension funds that was largely covered by simply raising taxes or diverting other revenues into it. Even a drug addled southside crack dealer would have realized that this was unsustainable, especially as the city's tax base moved away to avoid skyrocketing crime and taxes. But the ruling powers in Detroit had a personal incentive to keep the status quo, as many of them were dipping directly into the pension funds. That is one of the reasons former Mayor Kwame Kilpatrick is now a guest of the federal government.

Another question this raises..a lot of American cities are in trouble. Are federal bailout finds now going to be distributed on a 'party loyalty' or even a racial basis? Congressman Jerry McNerney, the Democrat representative of a district that includes the city of Stockton, California wrote President Obama and asked this question directly without getting a response. He wanted to know why aid was not extended to Stockton, a city which declared bankruptcy last year, “and suffers from many of the same problems as Detroit”.

I wouldn't expect an answer anytime soon if I were Rep. McNerney.

As for Detroit, let's remember something. This was not Hurricane Katrina or 9/11 or Hurricane Sandy . There was no emergency here that required the use of federal funds. This was merely a Chicago-style marker for money and services received, paid out from our tax dollars to President Obama's union allies, nothing less and nothing more.

Detroit's plight is due to over forty years of racial politics and Democrat rule, and the outright theft, greed and criminal mismanagement by politicians the people of Detroit continued to elect for decades, and will likely continue to elect in the future. The unions in particular have no claim on any bailout, since they were part of the same circle of corruption and benefited from it. Even worse, without attacking the core problems of Detroit (which may prove impossible, given th ecurrent population) nothing's going to change no matter how much federal aid pours in.

The Obama Administration has stated that Detroit cannot expect to receive any more federal aid. I'd rate that statement to be as true as President Obama's famous "If you like your doctor and your health plan, you'll be able to keep them."

Especially as we get closer to the midterms.