Analysis of Detroit bankruptcy on NPR, Fox Business, Financial Times
State, national and international media turned to the experts at the Center after the city of Detroit announced it had filed for bankruptcy Thursday afternoon.
Michael LaFaive, director of the Morey Fiscal Policy Initiative, told National Public Radio that the situation is unprecedented.
“It’s municipal bankruptcy territory that is largely uncharted,” he said. “We haven’t seen the type of numbers we’re looking at in Detroit or anywhere else.”
LaFaive explained more in a blog post, pointing out that he made very specific recommendations a dozen years ago that could have helped Detroit avoid this downfall.
LaFaive gave another interview to NPR on Friday after Ingham County Circuit Court Judge Rosemarie Aquilina issued a ruling trying to block the bankruptcy, saying it violates the Michigan Constitution. “My sense is that federal law trumps state law in this case,” LaFaive said. Michigan Attorney General Bill Schuette has said he will appeal the judge’s ruling.
James Hohman, assistant director of fiscal policy, told The Daily Caller that Detroit’s problems stem from “decades of mismanagement,” that that entering bankruptcy is the right move.
“From a financial point of view, let me be blunt: Detroit is broke,” he added. “It’s been spending 38 cents on the dollar toward legacy costs. The city has a problem with its accounting systems and its management policies.”
Hohman also spoke with Fox Business, explaining that Detroit’s bankruptcy plan emphasizes the city’s current operations, with a secondary emphasis on secured debt, such as bonds. Unsecured debt repayment, such as pensions and retiree benefits, will be more complicated.
Labor Policy Director F. Vincent Vernuccio told Fox Business that the city has a chance to “get back on financial footing,” but that Detroit must address several issues in order to attract new businesses, including police response times and street lighting.