Detroit's Q-Line Gets A Nice State Taxpayer Bailiout

Democrats do love their toy trains.

I've blogged quite a bit on the Q-Line, a private-public partnership with losses socialized and profits (which don't exist) privatized, producing a train in Detroit that moves at the speed of a walk for 3.3 miles and costs millions to operate.

Now the State of Michigan is stepping in to forgive a 3.5 million dollar loan to keep the Q-Line in the black in return for . . . advertising rights on the side of the Q-Line streetcars.  Oh joy. This is on top of another $85 million in taxpayer subsidies given to the Q-Line courtesy of Governor Whitmer.

This is being done as the non-profit operating the Q Line gets folded into the Regional Transit Authority. So, moving forward, the entire region including Macomb and Oakland Counties and not just Detroit can be on the hook to pay for this streetcar to nowhere.

The Detroit News: State forgives $3.5M loan for Detroit's QLine in exchange for ad rights on street car

Just more choo-choo cronyism at work, paid for with your tax dollars. Note that its the taxpayer and not the users that pay for the Q-Line as the rides are free as people won't pay to ride it.

Michigan State Bailout - Palooza!

Our dear governor just rescued a bunch of Democrat constituencies from their series of poor choices, at the expense of everyone other taxpayer in the state.

The Detroit News: Gov. Gretchen Whitmer approves money for Highland Park water deal, school debt relief

She just gave out over $134 Million of state money to bailout some key Democrat institutions:  Most notably $30 million to The City of Highland Park as a reward for its decision to not pay its water bill for decades, and for school systems also in debt due to overspending, mismanagement, and corruption.

The bills Whitmer signed also direct the Michigan Treasury Department to pay off $42.2 million in debt owed by Ypsilanti Community Schools, $31.3 million owed by the Muskegon Heights School District, about $18.4 million owed by the Pontiac City School District and more than $10 million owed by Benton Harbor Area Schools.

The money for Ypsilanti's school district includes $19.4 million to pay off the former Willow Run Community Schools' outstanding school bond loan fund balances or the school loan revolving fund balance. The Willow Run district merged with the Ypsilanti school system in 2013.

The spending bills also pay off $12 million in debt owed by the former Inkster School District, which a Republican-controlled Legislature dissolved in 2013.

Note these were all run into the ground by Democrat governance. Nothing is given to the school boards who properly managed their finances, nor to communities that actually paid their water bills, just more bailing out of Democrat-run, profligate spending government entities.

It has still never been explained where the money Highland Park collected from its residents for the water bills, and which it never paid to the water authority, actually went. Nor are we likely to ever get an answer, nor should we expect an accounting for these other communities' debts and what the money was actually wasted on.

This is What Happens When A City Doesn't Pay Its Bills For 10 Years

The City of Highland Park decided it was going to refuse to pay its water bills for 10 years, claiming it was being overcharged.  

That didn't stop them from using the water all that time, collecting payments form the city residents, and racking up $24 Million with an M in non-payment.   Other municipalities in the region were getting soaked with Highland Park's unpaid bills through higher water rates to their residents.

Now the Piper (of water) has demanded to be paid:

Since the ruling, Highland Park officials have said the bill will financially sink the city. The majority Black city has a population of 8,900 residents, a per capita income of $19,401 and a 41% poverty rate in 2021, according to the Census Bureau. The estimated $24 million tab, the exact amount with interest is still being determined, is two and a half times larger than the $9.6 million Highland Park collects annually in property tax revenues.The Detroit News: Highland Park mayor: City in state of emergency

Yet another Democrat-run city, now hoping for a state-level bailout for its profligate actions. They certainly could have escrowed their water payments over those 10 years, but they apparently spent it on whatever corrupt local units of government spend stuff on, and now they have to come up with the money - or get bailed out.

So of course our dear Governor Whitmer instead of having them responsibly handle the situation of their own making,  suggested the city should be bailed out: 

Whitmer's office for months has suggested that GLWA could help solve the debt issue by tapping a $25 million state clean drinking water grant that the Democratic governor and Republican-led Legislature approved last year. Whitmer's office didn't immediately respond Thursday to a request for comment.

So instead of using that grant money for the purpose that it was appropriated for - ensuring clean drinking water for the region (kinda an important use of the funds, yes?), the governor wants to use it to bail out a Democrat scofflaw city that failed to pay its water bills for 10 years.

So the politicians and city that messed this up for 10 years should face no consequences and should be bailed out for their failure. That's Michigan under Whitmer for you.

Detroit Teachers: Please Reward Our Bad Behavior, Or Else

The Detroit Public School system, teetering on the thin edge of bankruptcy, running on a gift of $49 million in state aid, is a prime example of why Johnny can't read with an 8th grade literacy rate that is actually lower than the unemployment rate for the city.

So, on the announcement that the school system will run out of money by June when the latest State bailout ends and will be unable to pay teachers, what does the teacher's union do?

Well, today they organized a coordinated sickout that shuts down 94 of 97 schools.

Strikes by public teachers are illegal but this, the latest in a series of organized sickouts is somehow not considered an illegal strike, and had anyone in authority had any spine they would just fire them all and start over, as Detroit probably can't do much worse.

Considering the lack of actual learning that seems to take place within the DPS, it is unlikely the students will notice the sickout or even notice if the teachers were all fired en masse, but the sickout will affect those parents who actually are employed who will now have nowhere to warehouse the kids for the day.

Unfortunately, Snyder is amazingly going full bore ahead on reinforcing failure and corruption by pushing for a 715 million dollar bailout of the failed system.

The First Rule of Michigan Politics: Always Reinforce Failure

The Detroit News: Mich. Senate OKs emergency aid for DPS

After decades of Democrat domination dooming Detroit's educational domain, it's again up to the grown ups, namely the Republicans at the state level to again bail out the system using state-wide taxpayer's money for their malfeasance.

This $47 million is just the tip of the iceberg for the Detroit education system bailout - think hundreds of millions being stripped from functioning non-Detroit school systems around the state to bail out the over $715 million in debt dysfunctional Detroit system.

For Detroit, More Bailouts Means Never Having To Say You're Sorry

The blue state model has been crumbling in Detroit for quite some time.

Now it is the Detroit Public School system's turn.

This is the school system where 94-95 percent of the children within it are not proficient in science and math and 66% are not proficient in reading. It's a loyal Democrat base of union protected teachers and corruption.

For whatever reason, whether due to belief in big systems, for political expediency, and/or to prevent Michigan's largest city from completely falling apart on his watch, or for some other reason, Governor Snyder seems hell bent on a mission to allow Detroit to continually avoid the consequences of its decades as a corrupt blue state Democrat-Union enclave to the detriment of the rest of the state.

Maybe he's trying to earn a place in history as the Governor Who Saved Detroit. Who really knows?

So when faced with the existence of a crushing $483 million dollar debt held by the Detroit Public School system, what is the proposal from Michigan's nominally Republican governor to deal with the insolvent DPS system?

It is to bailout the DPS out to the tune of $530-$720 million from the state school aid fund over the next 8-10 years to cover the DPS' present debt of $483 million. This will be at the expense of all the other schools in the state that will be deprived of those funds.

Note that this is after and in addition to the already kicked in $195 million the state gave to bailout the city itself.

The proposed bailout will not only have the state school fund pay for Detroit School's debt, but will keep all the union contracts, pension system and all other liabilities in place that led up to the problem in the first place.

Hilariously enough and in a rather brutal assault on the English language and in a feat of political-doublespeak Gov Snyder claims this would not be a bailout:

Asked if his plan in a bailout, Snyder replied, "I don't view it as a bailout when it's really being done in getting something stable and working well."

Folks, it's a bailout. When the state takes over an entity's debts leaving the taxpayer to pickup the tab for that entity's decades-long mismanagement without the entity having to pay a dime, it is a bailout.

Unsurprisingly, this proposal is being less than well-received outside of Detroit: The Detroit News: 'Detroit fatigue' greets Snyder's Detroit schools plan. Surprisingly its not meeting a ton of favor in Detroit and among Democrats and their stalwart Detroit union teachers as their proposal instead is simply for the state to hand over the money to payoff the debt, and then have no oversight reverting back to complete local control with no safeguards to prevent it from happening again.

The money for this bailout coming from taxpayers from all over Michigan, monies that should be going to their local schools. All the other public schools throughout Michigan will suffer to sweep the profligacy and corruption of the DPS under the rug and let it start anew.

How about not just "No" to this bailout proposal, but "Hell No".

Some Of The Last Economic News Of 2014 - US Lost Billions On Auto Bailout

Depending on who you ask, the United States Treasury, meaning you the taxpayer, lost either $9.3 Billion (with a B) or $16.56 Billion, depending on how you do the accounting.  Under Government accounting rules it's the $16.56 number that counts but the administration is touting the $9.3 Billion dollar figure.

In Government-speak, losing $9-$16.5 billion in a transaction is a resounding success.

Did Government Motors Get A Government Blind Eye? The Curious Case of NHTSA And It's Slowdown Of The GM Ignition Recall

The recall of GM's Chevy Cobalt and other compacts is very much in the news. An interesting story that is developing is how slowly the government acted and how it waited to take action in regards to this serious fault at Government General Motors:

The Detroit Free Press: Government's safety agency missed clues to Cobalt issues

Missed clues seems to be quite the understatement.

For years, the U.S. government’s auto safety watchdog sent form letters to worried owners of the Chevrolet Cobalt and other General Motors small cars, saying it didn’t have enough information about problems with unexpected stalling to establish a trend or open an investigation.

The data tell a different story.

An Associated Press review of complaints to the National Highway Traffic Safety Administration shows that over a nine-year period, 164 drivers reported that their 2005-2007 Chevrolet Cobalts stalled without warning. That was far more than any of the car’s competitors from the same model years, except for the Toyota Corolla, which was recalled after a government investigation in 2010.

Stalling was one sign of the ignition switch failure that led GM last month to recall 1.6 million Cobalts and other compact cars, including the Saturn Ion, Pontiac G5 and Chevrolet HHR. Another 971,000 cars from model years 2008-2011 were recalled late Friday to find faulty replacement switches, bringing the total to about 2.6 million.

It gets even more interesting:

The government opened an investigation into the Corolla in late 2009, which led to the 2010 recall of nearly 1.3 million cars to replace faulty engine control modules that could make the cars stall without warning.

The agency investigated the Toyota complaints even though there were no reports of deaths or injuries related to the stalls. By contrast, it had already learned about deadly crashes in the Cobalt.

NHTSA did go full-bore enforcement on Toyota, when there had been no reports of injuries or deaths, but was curiously slow to act with GM after deaths had already been reported.

Was this uneven enforcement perhaps due to a massive bureaucratic oversight?

Or instead, was it a happy coincidence that while there was swift enforcement against Toyota, a major competitor of GM, GM had just been bailed out and essentially owned by the US Government and certainly didn't need any negative news about its vehicles at the time these faults were being heavily reported?

The Winter Of Our Discount Tent - Detroit To Get A $350 Million Bailout From The State

The Discount Tent of course refers to the recent brouhaha where Brooks Patterson, Oakland County Executive, 30 some years ago stated regarding Detroit "“I made a prediction a long time ago, and it’s come to pass. I said, ‘What we’re gonna do is turn Detroit into an Indian reservation, where we herd all the Indians into the city, build a fence around it, and then throw in the blankets and the corn.’”".

While colorful and inflammatory, the statement is, in its essence "truthy" as the left would put it. After all we're not sending in blankets and corn, instead the State of Michigan will be sending in millions of dollars to deadbeats, corrupt government officials and the electorate that succored them for so long as they led the city to ruin and bankruptcy.

The Detroit News: Let's call a bailout a bailout

Let's also note the sad reality, Govenror Snyder, a nominal Republican, is pushing $350 Million dollars on a solid Democrat city to relieve them of the consequences of their malfeasance. That malfeasance of course first being promising pensions that couldn't be paid while squandering the pension money that was there on corruption and incompetence. The second such act of malfeasance being that of the vulnerability of the Detroit Institute of Arts because the City Council for years refused to get it out from under City control and thus let its assets be open to satisfy the city's liabilities rather than safe as an independently and competently run institution.

In short it's a Republican Governerd racing to save a too-big-too-fail Democrat machine.

Why is he doing it when the moral hazard of bailing out those who will invariably continue the same antics and policies that led it to ruin remain in place? Perhaps because in his mind it's the right thing to do or for his own legacy as suggested in the Detroit News:

The governor is spending the largest portion of his time on Detroit and its problems. No other recent governor has devoted so much attention to the city, not even Democratic ones for whom Detroiters voted for by rote.

And again, Snyder is doing it without hope for a ballot box return. Neither the unions whose retirees will benefit, nor Detroiters whose city will be saved, are likely to reward him with votes.

And yet he’s investing his political capital in mustering a Republican-controlled Legislature to do something it has rarely done — recognize the special place Detroit occupies in the state, and thus its special claim on the treasury.

As I’ve suggested before, if he can get that done — and I think he will — Detroit should erect a statue of The Nerd in the center of Campus Martius.

I'd humbly suggest there's no way Detroiters will be putting up a statue of a Republican governor anytime soon, no matter how many millions he hands over to them. Indeed, I expect the first thing we'll hear are complaints that he hasn't given even more of the State's money to the City and its Democrat machine.

If Snyder as part of this deal doesn't explicitly condition this bailout on the severing of the link between the DIA and the city and turning it over to tri-county control, and also require that all future Detroit retirement plans to be 401K types outside the control and sticky-fingers of the Democrat machine, we'll be looking at this same problem yet again, with the same bailout to be the answer.

If that happens, the Governerd will be forever remembered as the Goverfool.

Taxpayers To Take A Bath As Gov't Sells Stock Back To GM At A Massive Loss The Media Fails To Mention

In yet a new corporate welfare move to help out Government motors, the Obama Administration is going to sell half of its stock in the corporation back to GM, and taxpayers will take the loss.

For the government to recoup its money it used to buy the stock, it would have to sell them for $53 a share.

They're being paid $27.50 per share.

Remember, these stocks were acquired in exchange for the loans made by the government to the corporation. The loans were converted to stock which is now being sold back at a loss thus having the government incur the loss and allowing GM to announce all their government loans are paid off and to receive billions without needing to really pay the billions back.

Government Motors indeed.

The Detroit News: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S.

The Obama administration said Wednesday it will sell 200 million shares — or 40 percent of its remaining stake in General Motors Co. — back to the automaker and announced plans to completely exit the Detroit automaker by March 2014.

. . .

Still, taxpayers will almost certainly lose billions of dollars in the $49.5 billion GM bailout. If the government sold the rest of its stock at current prices, taxpayers would lose more than $13 billion.

Since the article refuses to do the math I guess I'll have to do it for them: if 60% of the remaining stock sold at this price would mean the taxpayer suffers a $13 Billion dollar loss, then the government selling the 40% at this price right now is an $8.7 Billion dollar loss.

The Detroit Free Press fared no better in its report, but at least acknowledged that for the government to break even with its remaining shares after this deal it would require thiose share to be sold for $70 a share to break even, up from having to sell all of them at $53 per share to break even rather than this 40% at $27.50. The Freep, just like the Detroit News won't do the math nor report the actual loss that will be incurred by this sale.

I would have thought that would have been rather newsworthy and an important fact to put in the article, don't you think?

Detroit Mayor and Council Busy Manufacturing (a sham) Consent

Detroit's rulers are trying hard to keep their phoney-baloney jobs and the power structure that put them in their positions.

The Detroit Free Press: City's draft of consent deal would give Mayor Dave Bing the power

Saying they are more equipped than the state to avert fiscal ruin in Detroit, Mayor Dave Bing and City Council members are drafting a counterproposal to Gov. Rick Snyder's proposed consent agreement that would leave Bing with the powers of an emergency manager and not put a nine-member board in charge of the city.

More equipped than the state to avert fiscal ruin? Excuse me for a moment while I ROFLMAO....

Whew, ok, all done.

Who do they think they are kidding? They've done a bang up job creating a financial ruin, not averting one. How letting them keepin' on as they've been keepin' on is going to improve matters is rather incomprehensible.

Of course, the changes proposed by the mayor and council are less about what is good for Detroit and more about protecting their power and that of their supporters at the expense of everyone else:

Under the 26-page draft, obtained Thursday by the Free Press and first reported on freep.com , Bing proposes taking over many of the responsibilities of the state's proposed financial advisory board. He would assume the powers of an emergency manager, except that of being able to terminate union contracts.

Under the city's draft proposal, Bing would be authorized to unilaterally lay off employees, close departments, end services, terminate outside contracts and appoint a chief operating officer, chief financial officer and human services director -- all tasks that belonged to the financial advisory board under the state's proposal. "The City Council was given a modified version of the governor's consent agreement draft as a starting point for discussion between the council and the mayor's office to develop a counterproposal," said Kirk Lewis, Bing's chief of staff.

Note the main differences between the City and State proposals.

Not only would Detroit remain solely answerable to the same people who have brought it to the brink of disaster, compelte with continued splintered control between the mayor and council, but the union contracts would remain unalterable.

You know, the same union contracts that have locked Detroit into spending more than it takes in, and having more employees than is justified by its declining population.

In other words, Governor Snyder should treat this proposal treated as a non-starter as it won't deal with the problem and will likely just drag it out longer. It will again be a case of Detroit demanding money from the State of Michigan with no commensurate accountability.

Meanwhile, Congressman Hansen Clarke is going cap in hand to his best bud Obama to ask that Detroit get a bail out: U.S. Rep. Hansen Clarke to seek federal bailout to help Detroit. Good luck with that plan in an election year where people are tired of bailouts and rewarding the profligate.

Should Government Motors really be getting into the educational / social engineering stuff now?

The Detroit Free Press: GM to pump millions into helping United Way improve metro Detroit high schools

General Motors plans to give $27.1 million over the next five years to help the United Way restructure five metro Detroit high schools, as the company continues its post-bankruptcy emphasis on turning around its home city.

The donation, which is the largest ever to come from GM’s charitable foundation, targets the 22 schools in southeast Michigan that have graduation rates of less than 60%. The schools must submit applications in January to get turnaround money and, if chosen, will follow an existing United Way model with the hope of increasing their graduation rates to at least 80%.

As GM has returned to profitability and to the stock market, the automaker has returned to charitable giving.

Now, helping Detroit area schools is indeed a noble (and herculean) task and 27 milion is ust a fraction of the government money the company has received, but should GM, still owing the US Government (read: taxpayers) billions of dollars in bail out money be putting its money into this program?

After shouldn't the Department of Education be the federal government's source of education dollars rather than GM, its new motor vehicle production department?

Is GM just another source of government funds ready to be diverted to government approved social causes?

Bailout deal apparently reached

You know how the Democrats are the evil party and the Republicans are the stupid party? How when they come together and do something both evil and stupid its called bipartisanship?

Here goes: Deal reached on financial markets bailout From the Detroit News:

Congressional leaders and the Bush administration reached a tentative deal early Sunday on a landmark bailout of imperiled financial markets whose collapse could plunge the nation into a deep recession.

House Speaker Nancy Pelosi announced the $700 billion accord just after midnight but said it still has to be put on paper.

"We've still got more to do to finalize it, but I think we're there," said Treasury Secretary Henry Paulson, who also participated in the negotiations in the Capitol.

The report is very short on details and hopefully we'll find more about what we've just had done to us shortly (likely too late to do anything about it), but for now hang on its going to be an interesting ride.

Housing crunch causes and bailout follies

Speaking of crashing like the housing market, here's a decent video as to one of the causes of the current mess.



The cause outlined in the video -- the Democrats revamping of the CRA and pushing banks to lend to those who could not really afford home loans in the first place is not the only reason, but it does seem to be the spark that began the fire. Once the CRA and government led housing boom started, then coupled with the irrational belief that houses would always go up dramatically in value encouraging both quick flips and people buying homes they couldn't afford hoping the increase in value would let them refinance and have massive equity growth, we got to where we are today.

Once this irrational belief was fixed Fannie Mae and Freddie Mac encouraged ARMs and 100% loans to get more people owning houses causing values to rise as demand went up. Investment bankers went along, coupling this with quick sales of loans and then repackaging them into securities that were sold to others and it got worse from there as they then leveraged these securities beyond any rational limit.

In short, the government and high-finance wizards played with our money, got rich on bonuses (or campaign contributions and sweetheart loans in the case of the politicians), and we're left to clean up the mess. Sorry but the bailout is ridiculous in its current form, and even more ridiculous that Frank and Senator Dodd (both recipients of Fannie Mae / Freddie Mac largess and proponents of the policies that caused this mess)are inserting into the bill that 20% of the returns from the bailout does not go back to the taxpayers (or even the government) but to housing advocates such as ACORN - you know the people who helped start this mess in the first place. Nice.