Detroit:
Michigan’s Greece

Apr 2, 2012

The State of Michigan and the City of Detroit are pushing an attack on Detroit’s city workers. The attack will be used as a battering ram on all public workers in the state–and the country.

Claiming Detroit is in a financial state of emergency, Governor Rick Snyder has been using the threat of an Emergency Manager to force both a financial “consent agreement” on the city and a contract reopener on all city workers.

When they took a look, city workers discovered that a number of the contract proposals were being forced on them by new laws passed by Michigan legislators in this last year. The legislature passed laws directing all public entities to set definite caps on wages, health benefits, and pensions–and to do away with pensions for all new hires, replacing them with accounts like 401(k)s. So, all the contract concessions that Detroit city workers are seeing will be seen by ALL public workers in Michigan when their next contract expires–as dictated by a pack of new state laws.

Not only that, but one new state law basically forces public workers to accept the last offer made by their employer–or they won’t have any pay increases or healthcare after the contract lapses! No extensions will be allowed.

The city’s debt wasn’t caused by what the city paid to its workers and retirees–it was forced on it by the state and the banks.

For the past ten years, the state has underpaid its revenue sharing obligations to the cities by 4.2 billion dollars. It underpaid by 499 million in just this past year. Detroit, as Michigan’s largest city, lost the most money from the state.

Cities had to scramble–especially poor and working class cities, which saw jobs and tax revenues drop in the same period. Like Detroit, many of them turned to loans from the banks.

They got roped into loans with big balloon payments, like the adjustable rate mortgages that forced so many homeowners into foreclosure in recent years. Now, these cities–including Detroit–are faced with the same problem as the homeowners. They owe more and more money to the banks, just because–they owe money to the banks. And the banks are demanding their money.

The banks are finding more ways to dump debt onto Detroit. In the last couple weeks, two debt rating agencies, Moody’s and Fitch–basically arms of the banks themselves–downgraded Detroit’s debt. Why? Because it owes lots of money to banks. And what happens when Detroit’s debt is downgraded? It owes MORE money to the banks: Fitch says Detroit owes a 50-million-dollar “termination payment,” while Moody’s added another 350 million dollars!

State treasurer Andy Dillon, a Democrat, admitted his main concern is the banks in a meeting last week. He said, “The review team cannot do anything that would jeopardize Detroit’s bond rating.” So, the bond holders–the banks–are the important ones in this situation, not the people. The bondholders must be paid!

Just like in Greece, in order to reward the banks, attacks are being pushed on the laboring population. As city workers are being attacked, services and conditions in the city worsen–all city residents are being attacked.

Snyder, Dillon, and Detroit officials plan to leave Detroit city workers and residents with nothing–to feed the greed of the banks.

In Europe, the attacks the banks started in Ireland and then spread to Greece have turned into attacks on the standard of living of working people throughout the continent.

It’s the same here. What’s being pushed in Detroit is only the beginning of what the politicians and the banks plan for the whole state. And we’re already seeing variations of it in cities and states across the country.