Michigan’s Governor Opposes a Federal Bailout of Detroit

Michigan’s Governor Opposes a Federal Bailout of Detroit

After Detroit filed for bankruptcy, Michigan Gov. Rick Snyder says federal intervention is not the right answer.

Published July 22, 2013

One week after the city of Detroit filed for bankruptcy, the governor of Michigan has made clear that the he doesn’t favor the idea of a federal bailout of Detroit, an idea that has been widely discussed among public officials.

"I do not view that as the right answer," said Rick Snyder, the Republican governor of Michigan, speaking on Face the Nation when asked whether he would ask the federal government for a bailout. "The right answer is, bankruptcy is there to deal with the debt question."

Furthermore, Snyder said that he would also oppose a move for the state to bail out Detroit.

“It's not just about putting more money in a situation," Snyder said. "It's about better services to citizens again. It's about accountable government."

Detroit became the largest city in American history to file for bankruptcy, a result of long-term debt of $18 billion or more. The city’s population has shrunk dramatically over the last few decades and its tax base has eroded as a result. About 85 percent of Detroit’s 700,000 residents are African-American.

The decision was made by Detroit’s emergency financial manager, Kevyn Orr, who was appointed to the position by Snyder earlier this year.

For his part, Orr said he was not comfortable offering an opinion on whether the federal government should play a role in assisting Detroit to regain its financial footing.

“I'm an appointed official, not elected official,” Orr said, speaking to Fox News. “I'm going to stay in my lane. I'm not going to stray into political morass.”

He added: “But one thing I would say is we operate on the assumption that we have to clear this process, this problem, on our own. We are not expecting the cavalry to come charging in. We are out here on outpost and we have to fix it because we dug the hole. And that's the assumption that we are operating on, on how we're going forward.”

Orr said that the problems of Detroit reflected long-term problems.

“A lot of this debt, a lot of the practices that I put forward in my June 14 report, that talked about deferrals, unfunded obligations, borrowing, addiction, the debt — even a level of corruption from 2002 to 2008, which was significant — have created this problem,” Orr said.

A huge issue in Detroit has been the fate of the pensions of 20,000 retirees. Many elected officials in Detroit have insisted that the pensions retirees be protected.

Snyder said he had sympathy for the retirees whose pension payments over the long term may suffer as a result of the bankruptcy. He said it is important that a group of retirees become involved in advocating their case during the bankruptcy proceedings.

“There is a challenge there,” the governor said. “But the bankruptcy process allows us to do it in a more thoughtful, more deliberative process where they can have a seat at the table.”

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Written by Jonathan P. Hicks


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