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“A Loud And Depressingly Familiar Voice”: The Koch Brothers Kick Detroit While It’s Down

Over the last five months, a deal has come together that would solve some of the most contentious issues in Detroit’s bankruptcy. It would minimize the pension cuts for 30,000 retirees and city workers, save the city’s art collection and give a reasonable amount of money to the city’s bondholders.

As expected, there were some objections from a few big insurance companies that stood to lose heavily. But with the support of Michigan’s Republican governor, Rick Snyder, the deal seemed to have a shot in the state legislature, which would be required to spend about $195 million of tobacco-settlement money on behalf of Detroit’s pensioners.

And then, a few days ago, a loud and depressingly familiar voice rose in protest. The Koch brothers, through the screeching megaphone they built known as Americans for Prosperity, condemned the deal and announced plans to contact 90,000 conservatives around the state to build up pressure against it. The Associated Press reported that the group threatened to run ads against any Republicans in the legislature who voted for the deal in the coming days.

AFP has already set up a website — “No more bailouts for Detroit!” — that plays on the long-running, sometimes racially inflected resentment of Detroit around Michigan.

“Michigan has rewritten its laws numerous times to give Detroit special treatment and more financial assistance,” the website says. “Unfortunately, all this help has encouraged, rather than corrected, bad behavior. Years of fiscal mismanagement, corruption and cronyism resulted in Detroit’s staggering $18 billion of debt. Yet its leaders continue to blame the State for Detroit’s problems.”

The poor management of the city by its own officials is well-known and stretches back decades, but the state and its residents bear a huge responsibility for Detroit’s plight. State officials allowed fleeing white residents to hide behind suburban boundaries that depleted the city’s tax base while cutting revenue sharing. The think tank Demos found that revenue sharing cuts amounted to a third of the city’s revenue losses between 2011 and 2013.

As Robert Kleine, a former state treasurer, wrote in the Detroit Free Press last August:

“Detroit may have mismanaged finances, but the state’s cuts to revenue sharing doomed the city. One option would have been for the state to restore revenue sharing to previous levels which would have been worth nearly $200 million to Detroit. The state could have afforded to do this if it had not cut business and income taxes in 2000, and then given business another $1.8-billion tax break in 2011.”

Under the circumstances, the proposed state contribution on behalf of vulnerable pensioners is a modest way to make up for Lansing’s decades of abandonment. But it’s too much for the Kochs to stomach. They apparently want city workers and retirees to publicly suffer for the sin of having been union members. They want bondholders and insurance companies at the front of the creditors’ line, and don’t seem to care if the Detroit Institute of Arts has to sell off its paintings and sculptures to put them there.

As they have in so many other areas of public life, two of the country’s wealthiest citizens are using their good fortune to make life far more difficult for those at the bottom of the ladder.

By: David Firestone, Editor’s Blog, The New York Times, May 21, 2014

May 22, 2014 - Posted by raemd95 | Detroit, Koch Brothers | Americans For Prosperity, Conservatives, Michigan Legislature, Republicans, Revenue Sharing, Rick Snyder, Union Workers