Beltway Confidential

Union leader: The feds must bail out Detroit

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Beltway Confidential,Sean Higgins,Labor unions,MSNBC,Detroit,Federal Bailouts,Analysis,Michigan,Detroit Bankruptcy

In an interview on MSNBC Tuesday evening, American Federation of State, County and Municipal Employees President Lee Saunders made the case for a federal bailout of now-bankrupt Detroit:

This administration has a responsibility to deal with the problems that impact on urban centers across this country. The engines — The engines of states who are experiencing financial difficulty.

I’m not saying that we have got to bail everything out. But, if we can rescue cities and countries in Europe; if we can bail out Wall Street, which we did; if we can rescue the auto industry, which was the right thing to do, then I think we’ve got to think about creative measures in which we can help urban centers across the country who are experiencing financial difficulty.

Saunders’ union represents the city’s employees, who face having their pensions severely cut as the city works it way through bankruptcy. Saunders contends that would be illegal because the city promised the benefits to the workers and the Michigan constitution forbids trimming them. That will likely be trumped by federal bankruptcy law though, which does allow breaking such contracts.

What’s interesting about Saunders’ comments is how perfectly they illustrate the domino-like logic of bailouts: Every time an institution is bailed out, the argument against bailing out another institution becomes weaker. After all, why one and not the other? What is the difference?

Saunders is making an appeal based on that. Unfortunately for him and the workers he represents, bailout fatigue set in a long time ago in Washington.

Hat tip: David Freddoso.

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