Detroit is largest US city targeted for state takeover
Michigan governor declares financial emergency
- Duration 4:42
- Date Mar 4, 2013
Michigan governor declares financial emergency
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So financially strapped Detroit Michigan is now one step closer to being taken over.
By the state after Michigan's governor declared a financial emergency in the motor city let's take a look at some of the city's economic problems and exactly how things are shaping up their latest unemployment rate in Detroit.
Look at that.
Eighteen point 2%.
It has averaged that number for the last year 36%.
Of people in Detroit live under the poverty level.
And they have lost one quarter of their population dropping to 707000.
Joined now by two gentlemen her take a look at this with us Stephen Moore is senior economic writer the Wall Street Journal.
That a Collison president of -- financial group LLC -- -- welcome to -- those numbers are staggering -- this is a big.
That has just fallen on incredibly tough time -- Yeah this is a populated -- you mentioned the population down a third of the last decade have -- down by more than half over the last 25 or thirty years number this was once one of the five biggest cities in America.
And I would make the case do you -- -- that may be putting it into receivership remember this is what happened to New York City back in the 1970s what it couldn't pay its bills.
This might be the right solution because what's really bankrupting this city right now is those outrageously inflated.
Pension and health care benefits to retired workers from the city that I -- working anymore -- providing city services.
-- that there's about fifty.
That have -- over various parts of the economy and to try and a lot of people are pointing at that.
As it one of the biggest problems at -- because they have promised weighed more than they can ever afford to pay and that that's the basic map and that is net.
I -- so -- that you've become the one reason why the choice in the situation.
It's the unions I mean it's it's clear and simple the unions are are destroying Detroit to destroyed many other industries and you know this ties right into the auto industry -- -- look what happened the auto industry what was the issue there the unions once again give 48 -- -- the city has to deal with.
Are you looking at billions and billions of dollars in unfunded pension.
Billions of dollars of health care costs in the future where's this money gonna come from -- to -- -- negotiate with the unions and a promise the politicians that are in Detroit now.
Aren't gonna do that so you have to bring somebody -- from the outside to take care of us.
I system everybody ready and I.
The reason a lot of these major cities you know a lot of cities in California and also facing bankruptcy are looking either -- receivership or the bankruptcy option is this may be the only way marketed to get out from under those enormous.
Contracts and those obligations because once they file for bankruptcy that almost -- personal envoy and they can be renegotiated.
And that's what a lot of city managers are looking at doing right now because if they stay on the path they're on right now not the one out of every three tax dollars -- -- that's being collected from a shrinking tax base would go not for services schools and roads and parks and emergency services.
But the paper pensions of people are retired you just can't run a -- -- You know -- I think back to the election of President Obama talking about saving Detroit it now and a -- have a car industry was one of the great victories.
The first term President Obama -- how does that.
Play into what we're talking about here or does it.
Well if it was a great victory you have a lot of people one into the Detroit forward expanding auto industry -- -- our auto industries not expanding.
You're raising GM and Ford doing decent as -- overseas sales it's not thinking do domestically right now you know taking a look at Detroit it's it's.
Economy's based on the auto industry let let's get real here the fact that the auto industry is not doing well means you -- it's not doing well it's a failure that -- one of the top five largest cities.
It in the past and our country is now about to go bankrupt.
It didn't save anything -- or Detroit.
And see this guy let me just that one quick thing about the auto industry actually is doing pretty well this is not -- -- Michigan anymore that's what it does I don't actually and a exactly so that you know the motor city just in the motor city anymore -- states like Palestinian taxes that are in Alabama that because why -- -- what drove them away that what I don't -- it was and they didn't have to deal at the unions and Nancy I think -- exactly -- right to work lives in Michigan should become -- right to work plot that that would bring some of those jobs back.
There's -- list the US cities going going broke what a sad list that is -- California Jefferson County Alabama Pontiac Michigan Detroit Michigan.
And central falls Rhode Island a story of American manufacturing on that list gentlemen thank you very much and we have the thing I -- tennis around thanks guys such.