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Don't buy the right-wing myth about Detroit

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The list of states and cities following this path goes on -- but you get the point. In the conservative narrative about budgets in general, the focus is on the aggregate annual $333 million worth of state and local pension shortfalls -- and left out of the story is the fact that, according to the New York Times, "states, counties and cities are giving up more than $80 billion each year to companies... in the form of tax loopholes and subsidies."

The mythology around Detroit, then, is just another version of this propaganda.

So, for instance, from the administration of right-wing Gov. Rick Snyder, we are hearing a lot of carping about the $3.5 billion in pension obligations that are part of the city's overall $18 billion in debt. The focus leads casual onlookers to believe that -- even though they on average get a pension of just $19,000 a year -- municipal workers' supposed greed single-handedly bankrupted the city. What we aren't hearing about, though, is the city and state's long history of underfunding its pensions, and using the raided money to spend billions of dollars on corporate welfare.

For a good sense of some of the most expensive, absurd and utterly wasteful boondoggles in the Detroit area over the last few decades, read this piece from Crain's Detroit or see this 2011 article entitled "Detroit's Corporate Welfare Binge" by Detroit News columnist Bill Johnson. Alternately, recall this is in the heart of a region whose governments infamously spent $55 million of taxpayer money in 1975 (or a whopping $180 million in inflation-adjusted dollars) on one professional football stadium, then spent another $300 million on yet another football stadium, then sold off the original stadium for just $583,000. Or, just note that Detroit is the largest city in a state that, according to the New York Times, spends more per capita on corporate subsidies -- $672 or $6.6 billion a year -- than most other states.

By focusing the blame for Detroit's bankruptcy solely on workers' pensions, rather than having a more comprehensive discussion that includes both pension benefits and corporate giveaways, the right can engineer the political environment for the truly immoral reality mentioned at the beginning of this article -- the one highlighted this week by the Associated Press story headlined "Arena Likely Still On Track, Business As Usual For Sports Teams Despite Bankruptcy Filing." Yes, that's correct: at the same time government officials are talking about slashing the meager $19,000-a-year pensions of workers who don't get Social Security, those officials are promising that they will still go forward with a plan to spend a whopping $283 million of taxpayer money on a new stadium for the Red Wings.

Notably, a political environment that encourages these kind of immoral decisions is beneficial not merely to the corporate interests who directly benefit from such giveaways, but also to the Wall Street investors who still own the outstanding bonds that financed some of the subsidies. Taken together, then, a skewed discussion about budget shortfalls that excludes scrutiny of these subsidies and focuses only on worker pensions predictably ends up prioritizing the financial interests of corporate welfare recipients and Wall Street bondholders over municipal retirees.

It's the same dynamic on taxes. From the right, Detroit is being cited in the discussion about budget shortfalls as proof of the need for austerity. Yet, we aren't hearing much about why in the face of such shortfalls Snyder just devoted $1.7 billion to a new corporate tax cut that will likely exacerbate the state's deficit, nor are we hearing much about why state law compelled Detroit to forfeit other desperately needed tax revenues. Again, the goal here is to make sure that the conversation is one that only is about cutting retirement benefits -- not one that adds the prospect of progressive tax reform to the debate.

For his part, Kevyn Orr -- the unelected "emergency manager" imposed on Detroit by Snyder -- insists he will be evenhanded in distributing the pain of the city's bankruptcy. But with Wall Street bondholders intensifying their push to make sure all the pain is felt by public employees, and with the right's blame-the-workers narrative preventing any real discussion of corporate subsidies and tax policies, it's a good bet the $19,000-a-year pensioners are going to bear a disproportionate share of the sacrifice. After all, out of all of this situation's players -- corporations that want public subsidies, bondholders, rich folk who want more tax cuts, right-wing Synder administration officials and municipal workers -- the retirees earning benefits just above the poverty line have the least amount of political power.

So, as always, they probably won't be at the negotiating table. Instead, they'll almost certainly be where they usually are: on the menu, exactly where the conservative movement wants them.

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David Sirota is a full-time political journalist, best-selling author and
nationally syndicated newspaper columnist living in Denver, Colorado. He blogs for Working Assets and the Denver Post's PoliticsWest website. He is a Senior Editor at In These Times magazine, which in 2006 received the Utne Independent Press Award for political coverage. His 2006 book, Hostile Takeover, was a New York Times bestseller, and is now out in paperback. He has been a guest on, among others, CNN, (more...)
 

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Let's not forget the union thugs, bloated governme... by Bill Johnson on Thursday, Jul 25, 2013 at 8:54:31 AM