Detroit in a hostile takeover bid?

The Detroit skyline is seen in this 2008 file photo. / Spencer Platt/Getty Images

DETROIT - The idea is extreme, even in a city accustomed to fighting for survival: Should the state of Michigan step in to run Detroit?

The governor has taken steps in that direction, proposing an unprecedented move that could give an appointed manager virtually unchecked power to gut union contracts, cut employee health insurance and slash services. But city leaders bristle at the notion. Said the mayor: "This is our city. Detroit needs to be run by Detroiters."

If it happens, Detroit would be the largest American city ever taken over by a state. Michigan has seized control of smaller struggling cities, but until now Detroit was always off-limits.

That changed this week, when Republican Gov. Rick Snyder's administration said it would begin a review of Detroit's precarious finances. If the governor concludes that the city's economic situation constitutes an emergency, he could dispatch a manager who could push the mayor and city council to the sidelines.

It's not clear how everyday services like trash pickup and bus routes would be affected, but the fixer's mission would be clear: Do whatever it takes to stop the bleeding.

Democratic Mayor Dave Bing says Detroit doesn't need the help. He insists the city is reducing a $150 million budget deficit and easing cash-flow problems on its own.

"We know what needs to be done, and we stand ready to do it," an indignant Bing said.

The financial review starts Tuesday and may last up to 90 days, meaning a takeover could be under way by the end of February.

The same fate has befallen other cities.

Atlantic City agreed in 2010 to let New Jersey take over its finances in an arrangement that allowed the city to spread a $9.5 million deficit over five years, sparing homeowners and businesses a significant property tax increase.

In Pennsylvania, Gov. Tom Corbett signed a law in October enabling a takeover of Harrisburg.

New York City had a brush with bankruptcy in the mid-1970s, but the rescue package put together by then-Gov. Hugh Carey stopped short of a full state takeover.

"It terms of a city, I think Detroit stands alone," said Michael LaFaive, director of fiscal policy at Michigan's Mackinac Center for Public Policy, a nonpartisan group that espouses free markets.

An emergency financial manager would have the power to privatize utility departments, as well as the bus system and other agencies. A manager also could sell off city-owned parking lots and even Belle Isle, Detroit's popular island park, LaFaive said.

That person could even cut the pay of the mayor and city council members.

In a 2001 report, LaFaive wrote about Detroit's burgeoning fiscal problems and recommended privatization, contracting out services and ways to generate revenue.

"I think they knew what the recommendations were, but their hands were tied a bit by recalcitrant employee unions," LaFaive said. "Those kinds of bold reforms would be difficult to get over with the city council or voters, in general."

Last month, Bing declared the city government "broken" and said the public's checkbook would be short by $45 million next year unless Detroit starts saving money fast. In an attempt to ward off an emergency manager, he proposed laying off 1,000 employees — 9 percent of the workforce — and negotiating 10 percent pay cuts with unions.

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[Zann-Zel]

May 2nd, 1933, the day after Labor day, Nazi groups occupied union halls and labor leaders were arrested. Trade Unions were outlawed by Adolf Hitler, while collective bargaining and the right to strike was abolished. This was the beginning of a consolidation of power by the fascist regime which systematically wiped out all opposition groups, starting with unions, liberals, socialists, and communists using Himmler's state police.
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Is this what you want for your country???

[gginla]

For the most part, yes, without the Nazis of course.

[smittyc]

Hilary Clinton just came back from Myanmar where she gave billions in aide for agreements on "human rights" and then claimed center state in the news for her "accomplishment". Detroit is 150 million in the hole, why couldn't they have taken care of Detroit first?

[rightbehind]

Good question provided it's true. Your proof?

[smittyc]

We are lifting sanctions in Myanmar and providing foreign aid as part of the agreement. Go to any business news source and read up on Myanmar. Further in November we just gave Afghanistan another billion, and Egypt as well. Why when our own U.S. cities are in such bad financial shape is this going on? Our current work force is down to 64% of those that were available to work. The drop in unemployment is due to people giving up looking for work, not jobs created. This is taxing our safety net as they are seeking public aid.

[smittyc]

Just glad Detroit is not my home. I'd say there is something terribly wrong if 25% of a city population fled. Good luck to all involved in fixing the problems.

[greenjr91]

After being raised half of my life in Detroit and moved out several years ago I'm still shocked state intervention in Detroit didn't happen a lot sooner especially after Kilpatrick's disgraceful performance as the mayor. Honestly Bing and the rest of the city clowncil need to get their heads out of their a$$e$ an realize they can't get Detroit's house in order without state help. The whole so-called press conference held Friday was nothing but another race-baiting tactic by the city-council (as usual) to make the takeover seem as more of a racist maneuver by the Snyder than something done based off of facts and practicality. Detroit has been on its way to this eventuality for decades and sad to say if Detroit tanks it could take Michigan along with it; maybe not immediately but eventually the rest of the state will fall apart because of the mess Detroit has made for itself. I don't like the state takeover of any city no more than anyone but given the fact Detroit is barely clinging on to life support by this point I say the state has no choice but to intervene now. Detroit made the mess they're all on their own the city can't blame the recession for the mess it's all the recession did was exacerbate the problems that were already there for a long time before it happened. Detroit had nearly 40 years to clean up its mess and that alone speaks for itself how bad the city has become, and if a state take over is what is necessary to finally start cleaning the city again then so be it I'll gladly take that over another corrupt mayor and city clowncil's pitiful ideas any day.

[retm-w]

And you believe that the state taking over will be any different, there will just be a different level of corruption by the state politicians.

[notyrants]

krewgie December 4, 2011 5:10 PM EST
Obama's "managers" are already running Detroit.
As to your veiled threats of revolution (typical Left Wing talk), bring it. While OWS may indeed be revolting, it doesn't have the guts or the numbers to launch anything approaching a revolution.
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Would you suggest OWS get the guts? Sounds like you don't want veiled threats, sounds like you want revolution. Good for you. The people need to rise up against those whose talk of running government like a business truly means privatized non-democratic corporate government hostile takeover of the commons by a few capitalist oligarchs.

[gginla]

Detroit In Ruins

http://www.youtube.com/watch?v=1hhJ_49leBw

[credibility2]

...Detroit's sacred cow unions are worried about a state takeover...as they should be...

[retm-w]

Why would the unions worry, their memebers will take the hit either way. The state politicians and their corporate friends will be the ones that make out, selling off city property and assetes for pennies on the dollar, exactly what the gop governor wants. They could care less about the taxpayers as long as they line their pockets.

[smittyc]

There is a lot in play here. Detroit gov and unions have a lot of retirees they are paying for. Unwinding the current situation needs to be done carefully so as to not cause another bad situation in the chain.

[payback108]

Detroit prime example of what America will become under the leadership of today

[rightbehind]

LOL! A countries wealth is measured by its resources. This nation is extremely wealthy. The rich are buying up those resources as quickly as possible with their protected buying power. There is a billionaire banker that lives down the road from me. He has bought up some of the finest farmland in the county. He had more than 2600 acres last I heard. He has a full staff of Latinos to care for it. I drive by it at least 3 times a week to check on my own farm. He has approximately 50 acres of corn still in the field rotting as we speak. People better wake up or they will be paying heavily at the market for this guys and others like him who play with hobby farming.

[Samlv]

Why bother? Detroit started to self-destruct during the riots in the 60's and kept moving down from there. They did this to themselves. Let them self-destruct. Just close the place, put up a big fence, and move on.

(I was there; you have not seen a thing until you have seen angry, armed looters destroy everything, live)

[cbsblogger]

Most of the cities for the average person are the equivalent of third world nations. The good USA manufacturing jobs and economy that funded these cities were given to Asia and others by traitors in Congress so that bankers and CEOS could profit. The cities no longer have viable jobs that funded their governments and pensions. Public workers were once low paid relative to manufacturing workers.

This is reality and every American, especially politicians and the ultra rich needs to feel the sacrifice that loss of our economy has caused. The rich need to pay much more in taxes. The public sector workers too need to sacrifice. They need pensions and pay cuts to reflect parity with society.

[Samlv]

True, but we also need our government to intervene to compete with other countries using their governments to domaine entire industries. No oher country would ever, ever allow the exodus of entire segments like steel, autos or textiles.

And no other country which has an auto industry ever really allowed American cars in, either.

Free trade is not fair trade. Free trade is foolish trade, when your partners are cheating.