A federal judge recently approved Detroit’s request to file for bankruptcy, one more step in the downfall of a great American city.
Once proud and thriving, Detroit’s industry powered America’s industrial age, and its cars were the symbols of America’s strength and prosperity. Detroit has a superb art museum, a proud professional sports legacy, the fame of Motown music, and easy access to Michigan’s varied outdoor recreation.
It was America’s fourth-largest city in the decades of the 1920s through ’40s; it now ranks 18th.
The saga of Detroit’s downfall is tragic. How did this happen, and what is the lesson for the rest of America?
The reasons are not that complicated.
THE AUTO INDUSTRY became complacent, and as Asian and European cars improved their designs and reliability, Detroit’s products became less competitive. Unions overreached, negotiating expensive labor contracts with compliant management. Assembly plants and suppliers moved out of Detroit, largely to right-to-work Southern states and overseas.
Detroit became the sick center of the Midwest’s rust belt.
But it wasn’t just industry and labor that became complacent. The city did not balance revenues and expenses, and Detroit’s deficits grew. Politicians negotiated unaffordable salaries and benefits for city employees. Municipal labor unions repaid politicians by keeping them in office. Middle-class whites and blacks left for the suburbs, eroding the tax base.
The city borrowed to cover operating expenses. Politicians did not look beyond the next election, and the bills were left for succeeding generations to pay.
America is not Detroit. America has a diverse economy not dependent solely on manufacturing; our technology leads the world, and our financial markets are the world’s strongest.
Nonetheless, there are frightening similarities between Detroit’s bankruptcy and America’s fiscal policies.
With eyes only on winning the next election, national politicians are playing a shell game, borrowing to cover operating expenses. They have allowed the federal debt to grow to incomprehensible levels.
But where Detroit’s problems resulted largely from Democratic and labor union politics, America’s fiscal peril results from the failures of both political parties. Democrats’ intransigence on reducing spending and Republicans’ refusal to consider revenue increases have combined to create our enormous $17 trillion debt.
NONPARTISAN STUDIES of America’s debt have unanimously concluded that the solution requires a combination of revenue increases and spending cuts. American citizens cannot expect our deficits to be fixed if we routinely re-elect the politicians who deny this truth.
Here is a novel concept: Why don’t we vote against politicians who do deny reality?
What would happen if Democrats and independents refused to vote for a Democrat who will not cut entitlements and reduce discretionary spending? What if Republicans and independents would not vote for any Republican who will not increase revenue?
This would cause a tectonic shift in Washington.
A new Congress of Democrats and Republicans would actually compromise, cut spending and increase revenue. Budgets that are both mathematically sound and politically achievable would emerge. Congress would go from being the least-productive in history to one of the most courageous.
But it would require that voters recognize that we are complicit in America’s great Ponzi scheme. We would have to acknowledge that the simplistic fiscal approaches from both political parties are wrong. We would have to stop demanding that future generations finance today’s government.
In a detailed examination of their city’s financial collapse, the Detroit Free Press summarized that “elected officials and others charged with managing Detroit’s finances repeatedly failed – or refused – to make the tough economic and political decisions that might have saved the city from financial ruin.”
This is exactly what is happening in Washington.
Citizens must demand that America learn from, and not repeat, Detroit’s appalling mistakes.
(The writer is a retired U.S. Navy officer. He lives and writes in Savannah.)