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Bailing Out “Detroit” Didn’t Save Detroit, But It’s Not Clear Anything Can

Detroit

In the wake of the Chapter 9 Bankruptcy filing by the City of Detroit, which remains in something of a legal limbo until next week or later thanks to the ruling of a single Circuit Court Judge in Michigan, many Republicans have been having a little fun at the President’s expense by pointing to several speeches he made during the course of the 2012 campaign in which he was taking credit for not “letting Detroit go bankrupt.” This, of course, was an obvious reference to the auto bailout, a bailout which ultimately proved unsuccessful and forced both General Motors and Chrysler into Chapter 11, and an Op-Ed that Mitt Romney had written back in December titled, not by him, “Let Detroit Go Bankrupt.” With the City of Detroit now having filed for Bankruptcy Court protection, many on the right apparently think they have some kind of rhetorical point they can score against the President.

As David Weigel correctly pointed out yesterday, though, it was rather obvious that when Obama and Romney were referring to “Detroit,” they were referring specifically and exclusively to the auto industry, not the city:

You take your political shots when you can, but conflating “Detroit” and Detroit when it comes to bankruptcy is just a confusion-maker. The bankruptcy option on the table for the car companies, in 2008, was some sort of managed Chapter 7 process that would have stopped cold elements of the parts industry. Detroit’s now going through a Chapter 9 process. And it’s not like Obama was the only politician who told Michigan that Detroit could escape its turmoil without Chapter 9.

But that’s politics, and it’s to be expected I suppose. The more interesting question, as Brad Plumer notes is why saving “Detroit” hasn’t saved Detroit:

From 1910 to 1950, Detroit’s economy was synonymous with car manufacturing. The city was filled with dozens of factories churning out everything from Cadillacs to Studebakers — plus auto-parts plants, steel mills, foundries… Detroit’s population swelled to 1.8 million as workers came from all over the country in search of good-paying jobs.

Even then, much of the auto industry’s industrial base wasn’t in the city proper. “From the very start, auto manufacturers preferred to locate in the suburbs—often as a tax dodge,” explains Kevin Boyle, a historian at Northwestern University and native of Detroit. Ford’s giant River Rouge Complex, which employed 100,000 people at its peak, was outside city limits. Even so, enough workers lived in the city to keep Detroit booming.

But starting in 1950, automakers began moving more and more of their operations further away. They looked for space in Detroit’s suburbs and exurbs to build bigger plants as they began automating operations. (“You couldn’t build those automated factories inside the city,” Boyle explains.) They opened up plants in other states to be closer to customers. They shifted production overseas, to Mexico and Brazil, in order to save on costs.

Detroit’s auto jobs kept vanishing as the Big Three lost market share to foreign automakers starting in the 1970s. At the same time, many of the autoworkers themselves were leaving the city to live in the suburbs, further weakening the city’s tax base.

All told, the number of manufacturing jobs in Detroit proper fell from 296,000 in 1950 to just 27,000 in 2011. “There might not even be 10,000 auto jobs in the whole city today,” says Sean McAlinden, chief economist at the Center for Automotive Research. “That’s not much more than in Flint, Michigan, which has had a terrible fall.”

Today, there are only two auto factories left in Detroit. GM has its headquarters downtown (the company was required to stay as part of the auto bailout in 2009) and assembles the plug-in Chevy Volt at its Poletown plant, employing nearly 3,000 people in all. Similarly, Chrysler has moved some of its offices downtown and employs more than 4,000 people in its Jefferson North Assembly plant, which produces the Jeep Grand Cherokee.

But that’s it. Most of the Big Three’s main operations remain outside city limits. Chrysler’s suburban headquarters, where 10,000 people work, is in Auburn Hills, about 30 miles from the city proper. Ford is based in nearby Dearborn and hasn’t manufactured cars inside the city since it was cranking out Model Ts in the 1910s.

That’s why the U.S. automakers can be thriving — earning $13.5 billion last year amid booming car sales, according to Bloomberg — while the city has been drowning in $18.5 billion in debt and finally declared bankruptcy this week.

Ever since GM and Chrysler received a bailout from the federal government in 2009, the automakers have been expanding at a healthy clip. Michigan has added more than 35,000 auto jobs, up 34 percent since its nadir. GM has invested more than $1.5 billion in new production facilities around North America. But few of those jobs are going to the city of Detroit.

“Occasionally some operations get moved in and out of the city, since the auto industry is constantly making shifts,” said Boyle. “But I don’t think there’s ever been any sense that [Ford, Chrysler, or GM] is going to invest to a large extent in the city itself.” Indeed, the last new auto factory built in the city was GM’s Poletown plant in the 1970s and 1980s — and that was hugely controversial in the neighborhood.

In other words, “Detroit,” in the sense it refers to the American auto industry isn’t really located in Detroit any more, and hasn’t been for a long time. Indeed, if you factor in the large number of foreign automakers who now manufacture at least some portion of their U.S.-sold cars in the United States, Michigan itself now accounts for a much smaller portion of the auto manufacturing capacity of the country than it ever has before. One could argue that the auto companies could make out like bandits by buying up land in Detroit and opening new manufacturing plants, but it’s not quite as easy as that. For one thing, building an auto plant is a massive investment of capital that can really only be justified if there is going to be demand for the vehicles that will be built there. Given that much of the demand for American vehicles is growing overseas, it makes far more sense for a company like G.M. to build a new factory overseas to meet that demand, something that has been happening recently in China where it has built factories for cars that will be sold exclusively in the Chinese marketplace. Moreover, building a factory inside Detroit is only going to do so much to help the city. If the people who work there aren’t going to live there, but instead decide to live in the suburbs and commute to work, for example, then that’s not going to help to build the city’s tax base.

In the end, it’s hard to see what’s going to “save” Detroit, or indeed if anything can. Which is why I think this observation from Dave Schuler is likely spot-on:

I think it’s clear that we can’t afford to spend enough to save every American city. States must take a more active role in monitoring the fiscal health of their cities on a real-time basis and be prepared to step in early in the process later when the harm has already been done.

Now, with the harm already done, what Michigan needs most is an orderly process for decommissioning a city. Detroit needs to shrink and either be divided into viable pieces if there are viable pieces or allow large portions to return to nature. The city doesn’t have the incentives, the power, or the finances to do that. It’s up to the state of Michigan and, with the White House indicating that federal help will not be forthcoming, the state of Michigan alone.

It’s a sad thing to say about a once great American city, but in the end I think Dave is basically right here. Trying to maintain the illusion that Detroit is going too return to what it once was is to deny reality, and the cost of maintaining it in its present form is quite plainly proving to be untenable. One can argue that the state and Federal Government should step in, but all that is likely to do is put a temporary band-aid on a long term problem. The wound is going to continue to fester and the pain will just get worse while conditions for those who continue to live and work in all but the most exclusive and well-protected parts of the city will just get worse and worse. There have been suggestions over recent years that all or part of the city be absorbed into the surrounding county. To some degree that simply means passing off the problems from one political entity to another, but there really doesn’t seem to be any other option at this point. Detroit as it once was, whether that means the auto industry or the city, is no more and it isn’t coming back. Just as the auto industry has, painfully, had to learn to adapt to a new world, the city will as well even if that means becoming a shadow of its former self.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. john425 says:

    And while the job losses and the population exodus continued, that fact was kept hidden from the Democrat city management machine. Now of course they can say. “Who knew?”.

    Apparently Democrat mismanagement was never an issue.

    Like or Dislike: Thumb up 5 Thumb down 10

  2. stonetools says:

    One can argue that the state and Federal Government should step in, but all that is likely to do is put a temporary band-aid on a long term problem

    If the goal is to move Detroit to being a smaller city, that doesn’t mean the state and federal government has no role.Indeed, they MUST have a role. The official who committed Detroit to bankruptcy is a state official, and the bankruptcy process is a federal process.
    What role Michigan and the US government has to play is up for debate. But there is no way that they CANNOT play a role.

    Like or Dislike: Thumb up 3 Thumb down 1

  3. Mikey says:

    Now, with the harm already done, what Michigan needs most is an orderly process for decommissioning a city. Detroit needs to shrink and either be divided into viable pieces if there are viable pieces or allow large portions to return to nature.

    There are viable pieces, but the question is what to do with them. The areas outside downtown could become separate towns within Wayne County. This would of course require county government and services to grow, but that could be done. Downtown Detroit could remain Detroit, a much smaller and easier-to-govern-and-finance Detroit.

    It’s a problem almost on the scale of rebuilding after a war, except there’s no money to actually do it.

    Like or Dislike: Thumb up 3 Thumb down 0

  4. Dave Schuler says:

    @Mikey:

    It’s a problem almost on the scale of rebuilding after a war, except there’s no money to actually do it.

    That’s why I think the state must necessarily be involved. The city doesn’t have the power, the money, or, frankly, the incentives to do what must be done.

    The objective isn’t to create a Motown theme park. It’s to produce a livable and viable place for the people who continue to live in Detroit out of the ruins that are still left. It’s the people we should care about, not the city.

    I disagree vehemently that we should just let the people of Detroit stew in their own juices on the grounds that “elections have consequences”. I dislike that expression whether it’s in mouths of the president of the United States or his detractors.

    But I also disagree with Steve Rattner that, of course, we should save Detroit, preserving its public employees’ pensions completely intact because their only sin was voting. There must be some middle ground between those two poles.

    Like or Dislike: Thumb up 8 Thumb down 1

  5. Tyrell says:

    How about this: turn the city into a publicly traded company, sell stock. Run it as a business.

    Like or Dislike: Thumb up 0 Thumb down 10

  6. stonetools says:

    People should understand that Detroit has lots of advantages. Its a major port, with access to the Great Lakes, that is within several hours’ travel of much of the upper Midwest. With the right leadership, it could come back.
    Remember New York City in 1975? At that time, it was the exemplar of crime, decay, urban blight, and “socialist” mismanagement.Most conservatives prophesied unconditional (and well-deserved) disaster. Now, the Big Apple is back, baby.
    Similar prophecies were made about the entire state of California. Yet Jerry Brown turned things around as soon as the Republicans were voted into political irrelevance.
    What Detroit needs is a leader with the right vision and some state and Federal help.

    Like or Dislike: Thumb up 8 Thumb down 1

  7. JKB says:

    No business is going to build significant capital infrastructure inside Detroit. That is just asking to be raped. The politicians and voters will immediately move to bleed it dry.

    From the sound of in those articles, there hasn’t been an auto industry in Detroit proper for a century. It just happened to be the word with the largest lettering when people looked at the area on a map. And Detroit followed the SOP for cities, they keep expanding trying to recapture more victims, uh, taxpayers, until they hit hard limits of other incorporated areas. Now, people have moved across those hard limits and the whole ‘city” is dying just like the urban cores. And there is no saving it, without hard reduction of debt. If the bankruptcy allows the pension funds to maintain a claim on future Detroit, should it recover, it won’t. No one will build new business in it with that looming expropriation of wealth waiting to pounce. A reduction in area might help but it will have to come with at least a moratorium of a 100 years on Detroit trying to re-annex it. Because, once free from Detroit the areas could revitalize and draw the greedy eyes of urban politicians.

    But the first question to answer is what economic advantage does Detroit offer today even if they didn’t have the debt burden or to large of an area? Why locate a business there, before somewhere else, given the requirements for businesses today.

    Like or Dislike: Thumb up 2 Thumb down 6

  8. JKB says:

    @stonetools: Now, the Big Apple is back, baby.

    On the backs of the much maligned Wall Street. Finance walks out of Manhattan, NYC collapses.

    Like or Dislike: Thumb up 4 Thumb down 0

  9. Mikey says:

    @Tyrell:

    How about this: turn the city into a publicly traded company, sell stock. Run it as a business.

    Robocop was a movie, not a policy prescription…

    Like or Dislike: Thumb up 8 Thumb down 0

  10. superdestroyer says:

    @JKB:

    I always find it odd when talk about wanting to raise marginal tax rates to 50-70% while believing that it will have no effect. Manhattan and Brooklyn would not exist as those places do today if marginal tax rates where very high. All of the luxury business in Manhattan would not exist without low marginal tax rates and finance. However, only one city in the U.S. gets to make all that money in finance and none of those Ivy Leaguers are not about to move to Michigan.

    Like or Dislike: Thumb up 0 Thumb down 0

  11. andrew e. says:

    @john425: First of all it’s ‘Democratic’ not ‘Democrat’. Nothing like discrediting youself from the get-go. Second I love the insinuation that the downfall of Detroit is all about the Democrats running it, like other places run mostly by Democrats like San Francisco don’t even exist. Hey maybe factors BEYOND politics have something to do with the condition of Detroit.

    Highly-rated. Helpful or Unhelpful: Thumb up 15 Thumb down 0

  12. al-Ameda says:

    @superdestroyer:

    I always find it odd when talk about wanting to raise marginal tax rates to 50-70% while believing that it will have no effect. Manhattan and Brooklyn would not exist as those places do today if marginal tax rates where very high. All of the luxury business in Manhattan would not exist without low marginal tax rates and finance. However, only one city in the U.S. gets to make all that money in finance and none of those Ivy Leaguers are not about to move to Michigan.

    Are there significant numbers of people who propose to raise the marginal income tax rates to 50% or 70%? I have not heard of any such group of people.

    It’s somewhat mythical, that there is a growing group of people who want to do that – I think conservatives keep saying that there are many people who want the tax rates that were effective in the 1950s, because it serves to keep conservatives motivated. Sort of like those nutbags who believe that Obama wants to confiscate our guns or that the government is buying up all the ammo so that … you know the paranoia.

    Like or Dislike: Thumb up 8 Thumb down 0

  13. john425 says:

    @andrew e.:

    Democrat is the term I prefer because it’s hardly a “democratic” party. I used to live in San Francisco but their policies drove the middle class out. All that is left is the truly well-off and the welfare entitlement class.
    Factors beyond politics certainly played significant roles but to dismiss Detroit’s operating procedures and political assumptions is to deny reality.

    Elsewhere, another reader lauds California’s comeback under Governor Moonbeam. Checked the state’s unfunded pension liabilities lately?

    Hot debate. What do you think? Thumb up 5 Thumb down 16

  14. David M says:

    @john425:

    It’s the Democratic Party, period. You’re insistence on calling it something else reflects poorly on you and invites other people to ignore your wishes and call you what they prefer instead. Juvenile is probably the kindest description of the democrat party nonsense.

    Like or Dislike: Thumb up 12 Thumb down 1

  15. al-Ameda says:

    @john425:

    Democrat is the term I prefer because it’s hardly a “democratic” party.

    Actually you use that term because conservative talk media provided it to you.

    I was born in San Francisco and have lived in San Francisco too. Yeah it’s changed, yeah it’s gentrified, and yeah the new middle class here is the Chinese-American community. Is it different from the days when white working class people ran the show? Of course it is. Is it a worse off city for all those changes? I don’t think so, however I do not spend my time wallowing in some rose-colored glasses tinted remembrance of the (allegedly) good old days, rather, I, like many other people adapt and adjust to the changes that come our way. By the way – San Francisco as a city populated by an entitled welfare class? That is pretty far from the truth, and calls you out as a resentful person, one who is angry that he cannot afford to live in the city any more.

    Like or Dislike: Thumb up 11 Thumb down 2

  16. stonetools says:

    @john425:

    Heh, the recovery of New York City and California have given conservatives all sorts of butthurt (so much so they try to deny the recovery altogether)
    Well socialist California is back , Governor Moonbeam and all. Since California can actually raise revenues now, thanks to their rejection of idiotic Republican no-tax policies, they will eventually fix their pension problems. It’s amazing how well a state can do, once Republicans can’t block intelligent reform any longer.It’s a lesson for the whole country.
    Circling back to Detroit, let’s remind ourselves once again that the Michigan state government is all Republican and they bear part of the blame too.

    Like or Dislike: Thumb up 7 Thumb down 1

  17. Ebenezer_Arvigenius says:

    How about this: turn the city into a publicly traded company, sell stock. Run it as a business.

    Argh. I really wish economic illiterates would stop pretending to be free market spokesmen. It’s not only painful but gives the entire concept a bad name …

    Like or Dislike: Thumb up 4 Thumb down 0

  18. There was no saving the Detroit the only thing that was going to turn Detroit around is that they had to bottom out and start from scratch.

    The market had already started to work in place of the tax payer funded power hungry government street thugs that some call police.

    http://karendecoster.com/detroits-anarcho-patrols-vs-police.html

    http://www.freedomsphoenix.com/News/134498-2013-05-12-anarcho-police.htm

    http://www.lewrockwell.com/lrc-blog/anarcho-detroit/

    Same thing is slowly happening to transportation in Detroit

    http://beforeitsnews.com/libertarian/2013/06/detroits-anarcho-transportation-vs-the-establishment-transportation-2510726.html

    Liberal economic polices failed Detroit, Crony Capitalism failed Detriot and the Paleoconservative noise makers of blaming immigration/minorities moving into Detroit is nothing but a pathetic distraction

    Maybe the bankruptcy of Detroit will actually meddling politicians something but I wont hold my breath

    Like or Dislike: Thumb up 0 Thumb down 0

  19. Tyrell says:

    In the 1960′s criminal elements moved in and infested most of Detroit, bringing a culture of violence, drugs, assaults, and robberies. Coleman Young did a lot of good things as mayor, with some outstanding building projects. But he underestimated the criminal element and weakened the police force. Also there were the riots of the ’60′s that plagued major cities. We know now that these riots were not some spontaneous, random occurrences, but were planned, equipped, orchestrated, and carried out by subversive radicals: communists whose aim was a revolution that would engulf the cities and would lead to an overthrow of the government. This was not the work of disgruntled, discouraged city residents on hot summer nights. Proof? Joseph Califano, who worked for Johnson and later Carter would say a few years ago that “this nation was under siege!”
    There are now declassified phone conversations between President Johnson and V.P. Humphrey concerning the communists directing these riots. Mayor Coleman could never get a handle on the criminal element that had taken over and ran the law abiding citizens out. This was also the era when the courts started giving “rights” to criminals and tying the hands of the police. Crime increased and turned inner cities into war zones.
    Other things that hurt Detroit was an ineffective school system and the exit of much of the car industry due mostly to exorbitant union demands.

    Like or Dislike: Thumb up 0 Thumb down 1

  20. carpeicthus says:

    @john425: “Democrat” is the term you prefer because you are a jerk. There are people who have political disagreements, and there are jerks. You’re no more persuasive to a general audience than anyone who can only say “Rethuglican.” You’re not arguing, you’re masturbating.

    Like or Dislike: Thumb up 5 Thumb down 0

  21. Tillman says:

    @Tyrell: It’s not as if the communists were attempting to take credit for things beyond their control, like, oh say, any megalomaniac (or politician, redundancy aside) attempts.

    Like or Dislike: Thumb up 0 Thumb down 0

  22. Tillman says:

    @Ebenezer_Arvigenius: A sad result of invested interests appropriating the phrase “free market” to describe their own designs, most often involving bending the law to benefit their security and none other. A true free market plays no favorites and invests in the opportunity of all to fail.

    On the other hand, a government that didn’t play favorites in some respects would not truly represent the will of the people in my view.

    Like or Dislike: Thumb up 1 Thumb down 0

  23. Megan McArdle says:

    @al-Ameda: Given that the top marginal tax rate is now over 40%, not including the state and local taxes in the high-tax states where many of those people live, if you want to “raise taxes on the rich”, you most assuredly do want to raise marginal tax rates to 50%.

    I agree that many advocates of raising taxes on the rich seem unaware of what they’re actually advocating.

    Like or Dislike: Thumb up 1 Thumb down 1

  24. john425 says:

    @al-Ameda: Actually I live in the 425 area code, just outside Seattle. While extremely liberal Seattle prefers bike lanes to jobs, the “old-fashioned, conservative” state constitution prohibits a state income tax and also requires the state to balance it’s budget and prohibits a deficit. A state income tax amendment has been defeated statewide several times.

    That’s why we have Boeing, Microsoft, Amazon, Starbucks, Nordstrom, RealNetworks and Weyerhauser, et al.

    Like or Dislike: Thumb up 1 Thumb down 1

  25. Just Me says:

    If Detroit is saved it won’t be from throwing money at it and hoping something works.

    The City has to make businesses want to set up shop and invest in the city. Right now tax policy and government policy at the city level seem to push business elsewhere-proximate to Detroit but not in it. Strong tax incentives could change this.

    I do wonder how Detroit might fare if the city shrunk to a smaller size. Detroit also seems to be missing the young population that moves in and renovates and revitalizes an old neighborhood.

    I read in an article on the subject that one thing Detroit lacks is a strong and easy to use public transportation system-not sure how a curate the comment was but it was used to point out why business and people were moving outside the city. A solid public transportation system may help the city attract business and residents but once again there is the issue of money to pay for it.

    The city probably will need an infusion of money (whether it is able to discharge debts and renegotiate others or not) to rebuild-the key is putting that money to use in ways that will make the city better and not just throwing it around in the hopes that something sticks. The city needs to also create a business friendly tax environment-businesses aren’t going to build there if they can get a better tax deal in a suburb.

    Like or Dislike: Thumb up 0 Thumb down 0

  26. Tyrell says:

    @David M: I am still a loyal card carrying member of the southern Democrat Party; the party of Russell, Hollings, Ervin,Nunn, Fulbright, Mills, Talmadge, Russell Long. I only voted Republican twice and I ended up regretting one of those times. I sometimes backslide and vote independent. There are still a lot of Democrats in the south. We didn’t all switch parties.

    Like or Dislike: Thumb up 1 Thumb down 2

  27. Tyrell says:

    @Tillman: Johnson – sometimes I wonder about him. Califano was a credible, skillful leader.

    Like or Dislike: Thumb up 0 Thumb down 0

  28. al-Ameda says:

    @Megan McArdle:

    @al-Ameda: Given that the top marginal tax rate is now over 40%, not including the state and local taxes in the high-tax states where many of those people live, if you want to “raise taxes on the rich”, you most assuredly do want to raise marginal tax rates to 50%.

    We are talking about the top marginal federal rate, which is still at very low post-WW2 levels, and I (despite your statement) most assuredly do not want to raise those marginal federal income tax rates to 50%.

    Like or Dislike: Thumb up 0 Thumb down 0

  29. al-Ameda says:

    @john425:

    @al-Ameda: Actually I live in the 425 area code, just outside Seattle. While extremely liberal Seattle prefers bike lanes to jobs, the “old-fashioned, conservative” state constitution prohibits a state income tax and also requires the state to balance it’s budget and prohibits a deficit. A state income tax amendment has been defeated statewide several times.
    That’s why we have Boeing, Microsoft, Amazon, Starbucks, Nordstrom, RealNetworks and Weyerhauser, et al.

    I lived in Seattle for 5 years – a great, great city. Yes, you do not have a state income tax, however you do have a very high state sales tax – and that’s okay, each state determines it’s own fiscal systems and fiscal priorities.

    San Francisco and Silicon Valley are not slackers when it comes to attracting modern technology and scientificand biomedical research companies either – Genentech, Gilead, Google, Facebook, Linked In, SalesForce, Apple, Twitter, and many more are within a few blocks or a few miles of my downtown San Francisco office.

    I love both San Francisco and Seattle, both are great places to live and work.

    Like or Dislike: Thumb up 2 Thumb down 0

  30. Mikey says:

    @Just Me:

    Detroit also seems to be missing the young population that moves in and renovates and revitalizes an old neighborhood.

    Not entirely. There are areas of Detroit within which gentrification is proceeding. Indian Village was gentrifying before I left in 2003, and I’ve heard of the New Center area and Corktown doing the same. I think the area around Eastern Market probably is, too, but I haven’t been there in years.

    It’s just really difficult and slow in a place as blighted as Detroit.

    I read in an article on the subject that one thing Detroit lacks is a strong and easy to use public transportation system-not sure how a curate the comment was but it was used to point out why business and people were moving outside the city

    Detroit has no public transportation worth talking about. There are some buses and the “People Mover,” the latter being an elevated monorail system that just does a loop around downtown and sees little use unless there’s a Red Wings game at the Joe. Nothing that would bring commuting workers in from the suburbs like we have here in D. C. and many other metro areas. So everyone who works in the suburbs lives there too and there’s no reason to go into Detroit at all.

    I think there was some talk a while back about running light rail up Woodward Avenue, which goes from downtown clear out to Pontiac (about 20 miles) in pretty much a straight line. No idea what happened with that, but no doubt it would be incredibly expensive.

    Like or Dislike: Thumb up 0 Thumb down 0

  31. Mikey says:

    @Mikey: Looks like there is something going on with public transportation on Woodward Avenue: http://en.wikipedia.org/wiki/M-1_%28Michigan_highway%29#Future

    Like or Dislike: Thumb up 0 Thumb down 0

  32. Randy says:

    @Dave Schuler: When 47% of the citizens of said city don’t pay their taxes and haven’t for years. And continue to elect officials (50years of democrats) that refuse to take action on those property taxes. Then I say they made their bed let them lie in it. The small business and middle class that paid their taxes where pushed to the brink and finally left the city now what is left is what made the city what it is today!

    Like or Dislike: Thumb up 2 Thumb down 0

  33. Randy says:
  34. al-Ameda says:

    @Randy:

    When 47% of the citizens of said city don’t pay their taxes and haven’t for years.

    That 47% number seems to apply to EVERYTHING.
    Coincidentally, Mitt Romney got 47% of the vote.

    Like or Dislike: Thumb up 2 Thumb down 1

  35. anjin-san says:

    @ JKB

    That is just asking to be raped. The politicians and voters will immediately move to bleed it dry.

    Yes, Wesley Mouch and Mr. Thompson are just waiting to pounce.

    Like or Dislike: Thumb up 0 Thumb down 0

  36. john425 says:

    Additional data points about Detroit. # is appalling.

    1) At this point, the city of Detroit owes money to more than 100,000 creditors.

    2) Detroit is facing $20 billion in debt and unfunded liabilities. That breaks down to more than $25,000 per resident.

    3) Back in 1960, the city of Detroit actually had the highest per-capita income in the entire nation.

    4) In 1950, there were about 296,000 manufacturing jobs in Detroit. Today, there are less than 27,000.

    5) Between December 2000 and December 2010, 48 percent of the manufacturing jobs in the state of Michigan were lost.

    6) There are lots of houses available for sale in Detroit right now for $500 or less.

    7) At this point, there are approximately 78,000 abandoned homes in the city.

    8) About one-third of Detroit’s 140 square miles is either vacant or derelict.

    9) An astounding 47 percent of the residents of the city of Detroit are functionally illiterate.

    Like or Dislike: Thumb up 3 Thumb down 0

  37. Randy says:

    @al-Ameda: And you are seriously implying that its the 47% that aren’t paying taxes that are voting for a Republican that’s funny dude. How about you look at the 300,000 pages of tax books you and your Democrat friends will find you are not paying your fair share! Its public record so go look, to long for me to post! Look at the records then compare to registered voting!

    Like or Dislike: Thumb up 0 Thumb down 1

  38. Barry says:

    @john425: First, it’s ‘Democratic’; if you can’t speak English,….”

    Second, a whole boatload of cities have had problem. And states, as well – if we were ever able to cut the Red States loose of the government teat, most of them would sink into the swamps from which they emerged.

    Like or Dislike: Thumb up 2 Thumb down 0

  39. Barry says:

    @john425: “Democrat is the term I prefer because it’s hardly a “democratic” party. I used to live in San Francisco but their policies drove the middle class out. All that is left is the truly well-off and the welfare entitlement class.”

    Thanks for admitting that your self-discrediting wasn’t an accident. As for San Francisco, have a friend read you what you just wrote. If it’s so bad, the rich would not be living there.

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  40. al-Ameda says:

    @Randy:

    @al-Ameda: And you are seriously implying that its the 47% that aren’t paying taxes that are voting for a Republican that’s funny dude.

    Infer what you will, I was only pointing out that 47% shows up a lot, and that includes the 47% that Romney dismissed, and 47% who voted for Romney. Taxes? I find that working class Whites, most of whom pay a very low marginal federal income tax rate are the most vociferous critics of the federal income tax rates. Seriously dude, there is a big disconnect between working class Republicans and reality.

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  41. bill says:

    @stonetools: yes, the koch years, what a disaster he was. he was great at charming the media though so he usually got a pass. but detroit is not nyc and has little future aside from employing demolition crews to reclaim the land. really, $25,000+ per person just to balance the books-and then what happens next year?

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  42. Megan McArdle says:

    @al-Ameda: With the Medicare changes, top marginal federal rate is now around 42%. If you want to raise significant money from the rich, you need to raise that marginal rate to at least 50%; total state and local already is north of 50% on folks who live in NYC, SF, etc. Since most people advocating raising taxes on the rich do want to raise significant revenue, I assume that they are actually talking about raising the rates to 50%, though I also think that few of them have actually worked through the math. At any rate, this is not some mythical construction, but a reasonable calculation of what folks are calling for.

    And while marginal rates used to be much higher, deductions also used to be MUCH more generous; a lot of executive compensation was getting wrapped into expense accounts and so forth. The 1986 tax reform changed all that, so that a statutory rate in 1960 was effectively much higher than the same statutory rate would be now.

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  43. al-Ameda says:

    @Megan McArdle:

    And while marginal rates used to be much higher, deductions also used to be MUCH more generous; a lot of executive compensation was getting wrapped into expense accounts and so forth. The 1986 tax reform changed all that, so that a statutory rate in 1960 was effectively much higher than the same statutory rate would be now.

    Good points. Deductions today are what helps the middle class. Because of homeownership very few people in the middle class pay the max-rate. The mortgage interest and property tax deduction (particularly in high cost urban areas) results in a significant mitigation of the tax burden. The same is true of working class homeowners. For me, the mortgage interest and property tax deduction results in reducing my federal tax burden from about 28% to 19%. I suspect that millions of other home owning citizens have a similar situation.

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  44. Rob in CT says:

    What Schuler said.

    The situation is so bad, we’re basically sitting around discussing the orderly destruction of (what remains of) a city, so that it can be reconstituted as something potentially viable. There’s no way you accomplish that w/o state and federal involvement. And yes, of course the public employees are going to take a hit. It sucks, but then so does the entire situation. It’s well past the point where small, cautious moves can salvage things.

    I, for one, think that Detroit is simply the worst off of many similar cities. Cities whose growth and prosperity were tied to the growth of particular industries/employers who later failed or departed (e.g. Studabaker in South Bend, IN, Kodak in Rochester, and so forth). It’s easier to grow than it is to contract. Hartford has had similar problems. Good leadership would have helped Detroit, but I think people overrate that and underrate larger trends.

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  45. Rob in CT says:

    @al-Ameda:

    I share your suspicion. Last time I checked, my effective rate was ~17%.

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