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What Caused Detroit’s Bankruptcy? Big-Government Liberalism

Photo: Jeremiah Robinson/ZUMA Press/Newscom

The city of Detroit, once an economic powerhouse, filed for bankruptcy protection last week. Rich Tucker explains what happened in today’s Morning Bell :

Many of Detroit’s problems resulted from a lack of political competition.  Democrats have dominated the city council, and there’s been a Democratic mayor since 1962. One-party government quickly became bad government, featuring a stream of liberal, blue-state policies such as sweet deals for government unions. Now, though, the bill has come due  for these liberal policies.

“For decades, Detroit sustained itself

through the usual suspects of bad fiscal management: unaffordable borrowing, state grant schemes, raising taxes, and deferring public pension contributions rather than cutting city spending ,” explain Heritage’s Alison Acosta Fraser and Rachel Greszler. “But Detroit’s tragic downward cycle has reached its end.”

There’s much Washington should learn from Detroit.  The federal government has a staggering national debt of more than $17 trillion, larger than the U.S. economy. Fraser and Greszler note that future federal spending “will be driven to the breaking point” by entitlement programs.

Tell us in the comments: What do you think caused Detroit’s problems?

Category: Bank

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