5 reasons Detroit is broke

The new emergency manager has taken his first hard look at the books, and his report shows a city that's almost beyond repair.

By Kim Peterson May 13, 2013 3:05PM
The Motor City Casino and hotel is seen through a hole in the wall of an abandoned building along Grand River Avenue on May 1, 2013 in Detroit, Michigan (© Ann Hermes/The Christian Science Monitor via Getty Images)Detroit is in the middle of a financial meltdown, a crisis so severe that it needs a top-to-bottom overhaul. If it can't be fixed, it may become the largest city in the country to file for bankruptcy.

The city's new emergency manager, a bankruptcy lawyer just two months into the job, issued a scathing report Monday detailing how bad things have become.

The verdict? Detroit cannot stay on its current path and survive, and its financing and operations must be completely restructured. The city is about to run out of cash.

There's a long list of reasons Detroit is broke, but here are some of the biggest ones:

Everyone moved away. Detroit was at one time the fourth-largest city in the country, but now it has more than 100,000 vacant lots and buildings, CNN reports. Set aside for a minute the problems of blight and crime that creates. The empty buildings have drained Detroit's revenue from property and income taxes. Check out the GooBing Detroit Tumblr for stark images of how far, and how fast, the city has fallen.

So Detroit had to borrow. And borrow and borrow. Now it's carrying a crushing $15 billion in debt. It needs to pay $246 million a year on that debt -- a whopping 20% of its general fund budget.

And it can't borrow more. Surprise, no one wants to lend money to a city on the verge of bankruptcy. The few who are willing to lend will exact a huge cost. A tax-exempt city general-obligation bond maturing in 2015 is trading at an 8.5% yield, Bloomberg reports. That's very expensive for the city.

Too many employee unions.
There are 48 employee unions in the city, and there's no way Detroit will reach consensus with all of them.

Too many pension obligations. Retirees outnumber current employees by more than 2 to 1, and retiree benefits are one of Detroit's biggest bills. Last year, more than 8,000 former police officers and firefighters collected an average of $30,000 each, The Detroit News reports. Nearly 12,000 retired city workers or their spouses collect about $19,600 each year.

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566Comments
May 13, 2013 3:33PM
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Gee....  Let sum it up for you...  Those that work for a living voted with their feet to keep what they earned and not have it taken from them to support the leech class.  

The leech class expanded, and those that work and paid for this fled to avoid supporting the leeches...   This is going on with NY, IL, CA etc, and people are fleeing the tax and spend big government for freedom, liberty and small government like TX....

If you believe in socialism, move to Obamaville and be fleeced... otherwise move to Texas and keep what you earn!
May 13, 2013 3:26PM
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Do you think Obama, Pelosi and Reid have taken notice? Seems like the whole country is headed down the same path. You can't keep spending more than you take in.
May 13, 2013 4:46PM
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Just shows what happens when the government can't print money or tax enough Republicans to supports the freeloading democrats.

May 13, 2013 4:58PM
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Detroit is an example of what happens when Democrats completely run a city and state.  This is the result of liberalism given free reign.  Obama is trying his best with the help of the liberals in Congress to change the US into another Detroit or Chicago.
May 13, 2013 4:59PM
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Once the minority's move in the majority move out.  The minorities didn't work, thus did not pay taxes, but the city still had to pay its bill and the poeple on welfare.  There is a reason parts of Detroit look like Liberia.
May 13, 2013 3:19PM
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Detroit:  Socialist heck gone down the tubes.  Any bets how long it will be before the US goes bankrupt.  Oh, wait., the Fed can just print more money. No problem.
May 13, 2013 5:07PM
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I can name Detroits failings in one fact...................Democrat Rule for DECADES.
May 13, 2013 4:57PM
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You can thank the Democratic mentality for this.
May 13, 2013 5:04PM
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The Free Ride is over.....Level the city and   make it farmland.. Let  the State take over the pensions..Is there a choice??...Thank You Unions for Destroying another great American Icon...Whose Next???

May 13, 2013 5:09PM
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Once the hub of our industrial power. Today Detroit is a soulless city filled with apathy, mediocrity, no hope and no change. Prosperity once flourished here, today poverty is its epitaph. The home of one of the greatest captains of industry, Henry Ford, has been reduced to a populace embracing dependency.

As Ford Motor Company clings to its sovereignty, it stands alone as the only real surviving icon of a once thriving industry. The Big Three has been reduced to a survivor, a foreign entity and a nationalized embarrassment. The auto industry that we once dominated struggles as the populace has been minimized by corruption.

A once proud city of millions is a wasteland with no future in sight.

Liberalism/Progressivism has left its fingerprint squarely on this once great city. Its irrational social and economic justice propaganda has been exposed for the hoax it really is. A virtual circus of Liberal mayors, city council members and sundry administrators has summarily destroyed Detroit.

A consortium of Liberal ideology and union thuggery has reduced a major American city to insignificance. The auto-capital of the world now competes to be the murder capital, a dubious honor.

As this city prospered from its roots in the Underground Railroad to an industrial force unseen before, the slow insidious infiltration of Liberalism has reduced it to chaos. Mustangs, Corvettes and Barracudas once dominated the landscape, today rusted shells and empty dreams litter the streets and neighborhoods.

An illiterate populace now predominates and its only hope is more dependency. Poverty strips any ambition and possible improvement as the Liberal solution is always, more government that further enslaves them. From Coleman Young to Kwame Kilpatrick, the typical Liberal "Bread and Circuses" promise continues. Any realistic attempt at helping the despondent masses is attacked as racist, and instead, more taxpayer money is demanded with no results.

It will take decades to reform this once great city, if at all. The population must be assured that the only way out of poverty is not through more welfare but through education. The prevailing mentality of Liberalism/Progressivism must be replaced with pride, ambition and exceptionalism. Liberalism loves crisis as it hands out more, but never enough. It claims it wants to help but it only makes it worse. It promises hope but refuses real change. The status quo is demonized yet it is continued to maintain its manipulative grasp of the unwashed masses.

It’s sad to see a once prosperous city with hard working good Americans to be so manipulated by an ideology built on more of the same. Until the people throw down the Liberal/Progressive chains that bind them and denounce its lies and corruption nothing will change. Insanity is defined as doing the same thing over and over and expecting a different result.

Insanity, meet Liberalism

May 13, 2013 5:07PM
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Nobody is gonna move back there and help fund the welfare class. You tax the workers to pay for the dead weight and soon the workers bail and this is what's left.

 

I'd say just pull out,let the street rats have the ruins. I'ts there bed,let them lie in it.

May 13, 2013 5:09PM
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5 reasons Detroit is broke-

Democrats

Unions

Democrats

Unions

Obama

May 13, 2013 5:06PM
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The unions have been killing companies more and more each year. The death of a city is now at stake. It's time to put the unions in to the past where they belong. They are not needed any more. At the very least, take away their ability to "strike" for higher wages and benefits. Only work safety should be "strike-able"!!!
May 13, 2013 5:27PM
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I was born in Detroit. Thank God I got out in 1980.  Years of corrupt, liberal mayors & idiotic liberal policies made the city a hostile place for anyone with a family or business.  Crime ran wild, driving everyone who could get out, to get out.  About the only people left are cops & robbers.  I think the last mayor is locked up. The greedy liberals and union thugs sucked the blood out of a once great city.  Detroit is the liberal litmus test city that failed.
May 13, 2013 5:08PM
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You ar elooking at Johnson's Great Society at It's finest

May 13, 2013 5:02PM
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Detroit is crumbling because it has been invaded by Muslims.
May 13, 2013 5:15PM
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Democrats, Democrats, Democrats, Democrats, and more Democrats! 
May 13, 2013 5:03PM
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bring back the auto industry to the usa        not Canada   japland    mexico
May 13, 2013 5:24PM
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Black Culture, that was the number 1 reason for Detriot is a pit.
Unions, the second reason and still the reason Detroit is done.
liberals, Detroit kept voting them into office, ya get what ya vote for

The same three scums are alive and well in your city.  Good luck.
May 13, 2013 5:17PM
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Let Detroit die. The left wing politics and unions have driven it to the point of no return, not to mention the corruption that has ran so rampant in that city of ill repute. Drugs, prostitution, and union corruption pretty well describe that cesspool of a pig sty.
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