At What Cost Do We Stabilize The City Of Detroit’s finances?

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    First of two parts

    It is no secret that the city of Detroit is in the midst of a financial crisis of historic proportions. It is also no secret that our financial situation has been decades in the making. Since the day I came into office, my administration has spent countless hours developing restructuring strategies and making the often difficult — but always necessary — decisions that would lead to a stabilization of our city’s finances and improve the quality of life for our citizens. We couldn’t fix the 40-year balance sheet, but we have addressed several pressing issues and developed successful reform initiatives to improve the city’s operations.

    Early in my term, my administration helped convince General Motors to keep its headquarters in downtown Detroit and pushed for a regional authority to oversee Cobo Center’s renovation and operations. Today, GM has emerged from bankruptcy as a stronger company with a bright future, and Cobo Center is a world-class facility once again after a $300 million renovation and expansion. We reduced the number of city employees by more than 25 percent, which saved nearly a half-billion dollars. Through our revenue enhancement initiatives, we collected more than $32 million owed to the City of Detroit.

    We have consolidated the operations of our first responders in a new, state-of-the-art $60 million Detroit Public Safety Headquarters, which will save the city $3 million per year. I remain committed to demolishing 10,000 dangerous, vacant structures during my four-year term. To date, we have knocked down 8,350. In September, we began demolishing one of our city’s longest standing eyesores, the former Brewster-Douglass Housing Projects, after securing $6.3 million from HUD. And, prior to the appointment of the new police chief, we brought the Police Department to 92 percent compliance with federal consent decrees — up from 29-percent in 2009. Once we reach 94 percent compliance, the city will save $1 million per year in oversight fees.

    Despite our significant progress, the state appointed an emergency manager in March to balance our city’s financial books. At that time, the state and I agreed that the EM would focus on the city’s balance sheet in order to reduce our $18 billion long-term debt. Together, we developed a Memorandum of Understanding indicating that my administration would continue to implement restructuring initiatives in city government and conduct day-to-day operations. The state expressed confidence in my key staff members leading the restructuring efforts.

    However, the state reneged on the Memorandum of Understanding and mutual “partnership” with my office. Key members of my administration have been re-assigned or forced to resign.

    The Washington elite are returning to their obsession with the long term budget crisis which means extremists are once again calling for benefit cuts to Social Security and Medicare. Last week as the government reopened, President Obama called for cooler heads to prevail and warned elected leaders to ignore the bloggers and paid activists who have been distracting lawmakers from the real task of growing our economy.

    The president’s warning should also apply to so-called moderates who continue to succeed in creating a fable to convince rational people to agree to make sacrifices of family sustaining programs, rather than ask the rich to pay their fair share of taxes. The plotline of the fable is that the growing share of elderly in our population creates a growing share of “non-workers” the rest of us must “support” through Social Security and Medicare. In this warped tale, as the elderly become a bigger share of the population, they will take away from resources the rest of us need.

    In particular, the rapid increases in medical costs mean the elderly will consume a disproportionate share of resources, because they tend to have more expensive health care needs than the rest of us. According to current Congressional Budget Office projections, in 2038, when about 21 percent of our population will be older than 65, we would spend 14 percent of Gross Domestic Product (GDP, all the goods and services produced in the economy) on Social Security and Medicare.

    But using the argument that Social Security and Medicare will become a rising percent of GDP is irrelevant. If the government gets totally out of the business of Social Security and Medicare, and the elderly paid out of pocket for everything on their own, as 21 percent of the population they would still consume the same 14 percent amount of the nation’s income.

    The solution from Republicans, and those like Pete Peterson (an 87 year old billionaire) who has personally invested his fortune in perpetuating this fable, is that the government needs to get out of assuring the elderly that the benefits they paid for will be honored to support Social Security and Medicare. The “smart” people in the Washington elite think we should compromise by lowering the lifestyle of the elderly-or as they euphemistically say “slow the growth of their lifestyle” as the president has proposed by letting the costs of living outstrip the benefit levels by reinventing the formula for adjusting for inflation.

    We need to look at policies from the perspective of what our nation needs first, and the best policy designs to achieve those goals, rather than what the rich will accept. Because the tea party and the shutdown of the government and the threatening of the United States’ standing tells us the rich are too greedy to accept anything less than more sacrifice from the rest of us.

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