US sending bankrupt Detroit $300 million. Think 'stimulus,' not 'bailout.' (+video)
At a closed summit in Detroit, US officials pledged $300 million to help the nation's largest-ever bankrupt city invest in infrastructure, public safety and transit, and begin eradicating blight.
The Obama administration is pledging nearly $300 million in federal dollars to Detroit to help shore up basic infrastructure priorities, such as improving public transit and police and eradicating blight.
Just don’t call it a bailout – a term that's still toxic on Capitol Hill, on both sides of the aisle.
On July 18, Detroit became the largest US city ever to declare bankruptcy. It owes $18 billion, including $3.5 billion in underfunded pension liabilities and $5.7 billion in other retiree benefits.
The federal effort, announced after a summit in Detroit led by top Obama economic adviser Gene Sperling, doesn't begin to fill a fiscal hole that large, but aims instead to help meet the city's most immediate infrastructure needs.
“We do not think of it as our job to devise the priorities or the strategy for Detroit. Our job is to listen to all sectors of Detroit,” Mr. Sperling told reporters, after the closed meeting on Friday.
The summit included three Obama Cabinet officials – US Attorney General Eric Holder, Housing and Urban Development Secretary Shaun Donovan, and Transportation Secretary Anthony Foxx – along with state-appointed Emergency Financial Manager Kevyn Orr, Michigan Gov. Rick Snyder (R), Detroit Mayor Dave Bing (D), and other state and local officials.
The allocation of federal funds resulted from weeks of meetings with the city to determine where help might be needed most, Sperling said.
Before Mr. Orr petitioned the courts to declare a Chapter 9 bankruptcy for the city, a common cry among residents, and some in the city council, was for the federal government to provide a bailout to save Detroit from the insurmountable weight of its debt. Some argued that the city was owed the spoils the federal government provided private sector companies in the automotive and banking industries in its 2009 bailouts.