When US automakers GM and Chrysler were forced into bankruptcy during the trough of the Great Recession, the US government stepped in with $80 billion of taxpayer money. Auto sales (and profits!) have since recovered, saving tens of thousands of good paying manufacturing jobs nationwide. And while the US Treasury has recently estimated that taxpayers will ultimately lose $20 billion on the bailout, it's hard to argue that we didn't get our money's worth considering the enormous role the auto industry still plays in our economy.
So if Detroit's automakers are worthy of a bailout, why not bail out the city of Detroit?
When Hurricane Katrina devastated New Orleans and surrounding Gulf Coast communities, the US Congress allocated over $110 billion toward disaster relief and reconstruction. And just this year, after Superstorm Sandy plowed through the Northeast, damaging or destroying hundreds of thousands of homes and businesses, Congress allocated nearly $51 billion in disaster relief aid.
But the storm surge of free market globalism that ravaged Detroit's economy has proven just as devastating as any natural disaster. So why not provide billions of dollars of federal aid to help rebuild Detroit too?
Lacking the revenue to repay nearly $20 billion in outstanding debt, Detroit filed for the largest municipal bankruptcy in US history yesterday, only to have the filing tossed out by a judge today. Unaided, Detroit stands to have its public assets looted and workers pension funds raided in order to make whole bond holders and other creditors, further diminishing any hope of recovering from the economic storm the city has weathered these past few decades.
So why not help Detroit out—this city that has given so much to our nation? Sure, part of its fiscal problems were self-inflicted through mismanagement and political corruption. But only part. And it's the citizens of Detroit—not its business and political leaders—who will ultimately suffer the brunt of the inevitable consequences from this bankruptcy.
When nature destroys a US city, we open up our hearts and our wallets. But when economic forces beyond the control of local citizens—forces that are the direct result of our nation's free trade policies—wipe away jobs and savings and even entire landscapes, we turn a collective blind eye. Why?
US taxpayers have spent over $60 billion rebuilding Iraq and nearly $100 billion in Afghanistan, and with questionable results. So what would be so awful about spending $20 billion to help rebuild a major American city?