Policy: Economy

White House: No bailout coming for Detroit

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The White House on Friday shot down the idea of providing a bailout to Detroit, which this week became the largest U.S. municipality to ever file for bankruptcy.

“On the issue of insolvency and on those matters, that’s something that local leaders and creditors are going to have to resolve,” White House Press Secretary Jay Carney said.

Some liberals have called on the Obama administration to bail out the Motor City like it did with the major American auto manufacturers.

But it became clear Friday that the White House was not eager to go down that path, stoking talk of general aid — not a cash infusion — for Detroit.

“[We] will be of assistance in general both in terms of policy as well as just being a partner with Detroit as Detroit finds its way and moves forward in the coming weeks, months and years,” Carney added.

Since news of the bankruptcy filing broke, Obama’s top surrogates have held a series of meetings with leaders in Detroit and Michigan. Gene Sperling, the director of the National Economic Council, Secretary of Housing and Urban Development Shaun Donovan and Obama adviser Valerie Jarrett have reached out to officials in Michigan, Carney said.

But the White House is being careful not to ratchet up expectations for federal dollars.

“I don’t have a specific idea to present to you today,” Carney said when pressed for specifics about the White House’s response.

Vice President Joe Biden gave an even more blunt assessment.

“Can we help Detroit?” Biden said, repeating a reporter’s query. “The question is, we don’t know.”

In recent months — and particularly on the campaign trail — Obama trumpeted his bailout of the U.S. auto industry. He proudly declared, “I wasn’t going to let Detroit go bankrupt” many times in the buildup to November’s election.

Now he’s left to deal with a mess with no end in sight.

Detroit is facing roughly $18 billion in long-term debt. A Michigan circuit court judge on Friday called Detroit’s bankruptcy filing unconstitutional, ordering it removed from federal court — the state’s attorney general is appealing the decision. It's also not clear if a judge in a state court can order a party in a federal case to drop an action.

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