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Detroit: The Legacy of the New
Democrat Party
by Michael Schaus
Jul 22, 2013
Detroit
has filed for Bankruptcy.
Among the opposition’s arguments against an organized restructuring of
the
city’s debt, are constitutional worries, pension concerns, and
President Barack
Obama’s reputation. (Or, “street cred” if you prefer.) A Michigan
judge, in a
stunning display of impartiality and balance, said the bankruptcy
should be
withdrawn in part because it failed to honor “the (United States)
president,
who took (Detroit’s auto companies) out of bankruptcy.” I’ll give you a
moment
to catch your breath and re-read that last sentence.
Most
lawyers that have involved
themselves in any number of bankruptcy cases would be quick to tell you
that stroking
the ego of the US President is rarely a prerequisite for filing. But,
Judge
Rosemary Aquilina ordered the bankruptcy be withdrawn because it failed
to do
just that. Oh, she also mentioned that the Michigan constitution
disallowed any
sort of pension fund restructuring. More on that in a minute.
Making
the claim that President
Obama saved the Auto Industry is like saying Neville Chamberlin saved
Britain.
At last check, the Treasury Department would have to sell roughly 190
million
shares at nearly $90 per share for taxpayers to break even on Obama’s
attempt
at venture capitalism. GM is trading around $36 a share. Additionally,
President Obama’s unprecedented insertion of the Executive Branch into
bankruptcy proceedings for the auto giant came with a rarely reported
$45
billion in write offs. (The book value was roughly $18 billion.) All of
this
says nothing to the fact that senior investors and preferred stock
holders were
pushed aside so that the United Auto Workers union could bear as little
loss as
possible. The President’s first attempt at running anything within the
private
sector cost the US taxpaying public a great handful of money.
Judge
Aquilina’s argument, aside
from her concern for our President’s reputation, is rooted in a
provision in the
Michigan Constitution that limits changes to pension plans. The
Michigan
constitution does, in fact, place restrictions on when, or if, pension
plans
can be resolved. However, Governor Rick Snyder has indicated that to
the extent
pension plans are funded, they will not be touched. Pension plans that
are
underfunded, however, will be examined in public by the bankruptcy
court so
that the city’s obligations can be resolved...
Read
the rest of the article at
Townhall Finance
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