Economic genocide of “Black Detroit” — New report exposes lies used to justify Detroit bankruptcy

Greetings,

New report exposes lies used to justify Detroit bankruptcy

A report issued Wednesday by the New York City-based liberal think tank Demos is a devastating refutation of the arguments used by Emergency Manager Kevyn Orr to throw the city of Detroit into bankruptcy.

The Demos report charges that the financial numbers used by Orr and other advocates of bankruptcy were grossly inflated, and that the real causes of Detroit’s cash flow shortfall were parasitic loans and other financial schemes pushed on the city by the banks and other powerful creditors.

Data assembled in the report adds to the already overwhelming evidence that the city of Detroit’s July 19 Chapter 9 bankruptcy filing was not driven by economic necessity but by political considerations.

Taking into account the Demos findings, it is more obvious than ever that Orr filed for Chapter 9 as part of a strategy to use the bankruptcy courts to gut the pensions of 21,000 retired municipal workers, privatize services and sell off public assets, including the artwork of the Detroit Institute of Arts. The aim is to pay off the same financial institutions chiefly responsible for the city’s crisis and, more generally, the economic crisis that erupted in 2008.

US Judge Steven Rhodes is expected to rule soon on whether the city is eligible for bankruptcy.

The entire political and media establishment in Detroit and around the country have repeated without the slightest challenge the claims by Orr and his co-conspirators that the city is in inescapable financial distress, caused above all by unfunded pension obligations and other “legacy costs”. The Demos report shows that the surge in legacy costs used by to justify the filing “was driven heavily by the city’s complex financial deals, not retiree benefits.”

The real causes of the city’s cash flow problems are not the pensions and benefits owed to workers, but the massive decline in revenue that has taken place under conditions of deindustrialization, mass unemployment, the growth of poverty and huge tax giveaways to corporations.

“Contrary to widely held belief, Detroit does not have a spending problem,” the report states. “Since the onset of the Great Recession, the city’s total expenses have actually decreased by $356.3 million… although its financial expenses have gone up.”

Summing up its main conclusions, Demos writes, “The City of Detroit’s bankruptcy was driven by a severe decline in revenues (and, importantly, not an increase in obligations to fund pensions.) Depopulation and long-term unemployment caused Detroit’s property and income tax revenues to plummet. The state of Michigan exacerbated the problems by slashing revenue it shared with the city. The city’s overall expenses have declined over the last five years, although its financial expenses have increased. In addition, Wall Street sold risky financial instruments to the city, which now threaten the resolution of this crisis.”

The report points to the disastrous social conditions in the wake of the 2008 crash as a primary factor behind the collapse in city revenue. “The number of employed Detroit residents fell by 53 percent from 2000 to 2012. But half of that decline occurred in the single year of 2008 as the Great Recession took hold. There is one inescapable fact: The most significant proximate cause of the cash flow cliff off of which the city fell was the Great Recession.”

Moreover, Detroit lost hundreds of millions of dollars in state revenue sharing as Republican Governor Rick Snyder and his Democratic predecessor—two-term governor Jennifer Granholm—cut more than $700 million in transfer payments from the state government in Lansing to the city. From 2008 to 2013, as the impact of the crisis hit hardest, annual revenue sharing fell 27 percent, from $249.6 million to $182.8 million….more here

 

Click here for reuse options!
Copyright 2013 Hiram's 1555 Blog