Treasury Secretary Rules Out Federal Bailout For Detroit
Treasury Secretary Jack Lew reiterated one again the Administration’s position that there would be no Federal bailout for Detroit:
Treasury Secretary Jack Lew on Sunday defended the administration’s decision not to help bail out Detroit, saying that the city would need to negotiate its own resolution with creditors.
“Detroit’s economic problems have been a long time in developing. We stand with Detroit trying to work through how it approaches these issues,” said Lew in an interview on ABC’s “This Week.”
But he added that “when it comes to the questions between Detroit and its creditors, that’s really something that Detroit is going to have to work out with its creditors.”
Lew’s comments come one week after Detroit became the largest municipality in American history to declare bankruptcy.
Labor unions have pressed the administration to intervene and provide a federal bailout to help protect the pensions of city workers and retirees. The AFL-CIO on Friday called for an “immediate infusion of federal assistance.”
Notwithstanding the union’s insistence, this clearly isn’t going to happen. Nor should it. Detroit’s problems aren’t going to fixed by a federal bailout, they’re going to be fixed only if the city, its creditors, and, yes, the public employee unions, are willing to reach the agreements needed to completely restructure the city’s obligations. It also may require Detroit itself to rethink its own size and the viability of its current governing model. None of that is likely to happen if the Federal Government comes to the rescue with a cash infusion that is going to end at some point anyway.