Posted on 07/20/2013 4:56:40 AM PDT by Kaslin
With Detroit filing for Chapter 9 bankruptcy, everybody knows major root-canal cutbacks are coming. Cutbacks of out-of-control government spending, pensions and health benefits. Major cutbacks. We know that.
We also know that the downfall of Detroit is again proof positive that the public-union collective-bargaining model has utterly failed. Unions just loot the benefit lockbox at taxpayer expense. That was the message of Gov. Scott Walker's victorious crusade in Wisconsin. If any good comes out of the Detroit debacle, it will be the spread of that message across the country.
But there's another important point here. If Detroit is to truly recover, a growth program of tax-free investment incentives must be part of the process. Specifically, Detroit should be made a tax-free enterprise zone, along lines proposed years ago by the late Jack Kemp.
The capital-gains tax should be suspended for new ventures. Investment spending and profitability should be made tax-free. Some kind of income-tax break should be put into place for the new employees of new companies. And property taxes should be waved.
Chris Edwards of the Cato Institute tells me that Michigan suffers from a huge business-property tax that's levied on machinery and equipment. He also points out that Detroit has the country's highest property taxes on homes, the top commercial property tax and the second-highest industrial property taxes. Get rid of all that. And then let's hope Gov. Rick Snyder keeps lowering Michigan's corporate tax rate.
But the point is this: A Kemp-like enterprise solution would be vital to Detroit's comeback. Especially a capital-gains tax cut, along with other direct-investment tax cuts. It can be done.
Not forever. Perhaps for three to five years. Something like that. But states and cities compete with each other on a tax basis. And you can bet the ranch that a tax-free Detroit will see investors pouring in, making for a rapid economic recovery.
Land and labor are pretty cheap right now in Detroit. Combine those low costs with a low-tax regime, and the city could snatch victory from the jaws of defeat.
The biggest additional problem is the crime wave. The Detroit homicide rate is high. According to National Review Online's Jim Geraghty, the city has been named among America's most dangerous for years. Detroiters wait an average of 58 minutes for police to respond, compared to a national average of 11 minutes.
Years ago, when crime was a huge issue in New York City, Rudy Giuliani instituted new policing methods to make the city safe again. He accomplished that, and he lowered taxes too. Gotham had a huge comeback.
Now, I'm not suggesting that the outrageous public-union benefits shouldn't be slashed. That's the root-canal side of the reform equation. And it is crucial.
Steve Malanga tells me that 15,000 city workers currently pay lifetime retirement health care costs for 22,000 retirees. It's like financing a separate government. That one piece alone is about $5.5 billion.
And pension-fund accounting is as phony as a three-dollar bill. With a highly unrealistic 8 percent long-run return rate, the city government didn't have to make any more contributions to the retirement fund. And apparently the 40 or so municipal unions persuaded the city government to actually float new pension-obligation bonds just to fund their own bloated pensions. (Many municipalities use this fiscal gimmick.)
All in, Detroit is running a $350 million deficit with a near $20 billion total-debt position. They pay themselves a living wage and then spend way more on schools per pupil than the national average. The result is one of the lowest student-performance rates in the country.
I'm not going to go into the economic wreckage that the United Auto Workers created at Ford, GM and Chrysler. But the focus now should be on curbing the power and money of Detroit's municipal public unions, who have lined their own pockets at taxpayer expense. Taking a cue from Wisconsin's Walker, collective bargaining should be sharply cut if not eliminated. And hopefully a bankruptcy court will settle all the obligations at 5 to 10 cents on the dollar, as Detroit emergency manager Kevyn Orr tried to do but failed.
But again, creative economic-growth policies must accompany fiscal downsizing if Detroit wants to turn the streetlights back on, rebuild at least 78,000 abandoned homes and structures, and attract businesses and workers to erect a new Detroit.
It won't be about manufacturing this time. But like other recovering cities in the U.S., Detroit could morph itself into a technology/education/medical-research complex that makes use of all the firepower at its fine colleges, universities, hospitals and medical centers.
It can be done. But if ever there was a time and a place to put Jack Kemp's tax-free-enterprise-zone model into practice, now is the time, and Detroit is the place.
Don't forget the growth solution.
I’m not in Detroit either but I don’t sit here and snipe at them.
Here in Michigan conservative tea partiers are actually working on solutions and presenting them to all parties in Detroit.
And Cocaine Larry Kudlow would be one of the biggest cheerleaders.
Is Detroit really that important to the country that it needs outside help? Today’s businesses and populations are mobile, and it would seem that allowing much of it to return to forest and farm land would not be that great a loss.
“Here in Michigan conservative tea partiers are actually working on solutions and presenting them to all parties in Detroit.”
Well, I’m a Tea Party member (you didn’t state that you are a TP member, are you?). Guess, my question is do you “really” believe that all parties in Detroit will listen to conservative solutions - much less act upon them? If yes, then I have say that you are the consummate epitome of the definition of an optimist! Good luck and good speed :)
The loss has already occurred.
There is no need for Deetroit.
When GM moves to Birmingham, it will be all over
Michigan should sell Detroit to China. Then the Chinese could make it a theme park, fly their people in and show them the evils of capitalism.
Forget the politics for a moment, at a spiritual level yes.
Imagine this, Beck can get 1.4 million on the Mall to Protest Obama.
How about 1.4 million Conservative Volunteers show up in mass with their Chain Saws, Bobcat's, Braun and Hard-Hats to disassemble the 70,000 vacant homes...
We could do it in a week, if not less.
Talk about building a bridge to the Black Community their. How many of our Conservative friends would make friends their and extend their stay to help out even more...
The positive vortex that would be is hard to imagine....
Why not lease out the port and the lakefront for a really lot of money? Then, split what’s left of Detroit into three or four separate towns. With more close local control of police, government and schools, some areas will become liveable and attract a population which thrives off the economic boom from the waterfront.
I consider that a waste of time and resources. The city and the people are beyond redemption.
It is better to start a new, from scratch, in a different location.
Yes they are...
Like State Senator Pat Colbeck's Free-Market Alternative to the Obamacare State Exchanges with an HSA policy combined with a Concierge service as it's core idea..
It has been shared with EM Orr, and the Police and Fire Unions....
Then it won't happen.
". . . Detroit could morph itself into a technology/education/medical-research complex . . . "
Areas that are "technology" focused almost all, if not all, end up with "progressives" running the government because "progressives" make up the majority of the "technologists" in spite of their often pretending to be libertarian.
Most education in this country is a democrat fascist brainwashing and recruiting machine that soaks up taxpayer money like a sponge in return for spewing anti-Christ, anti-American, anti-Freedom, propaganda. "Education" is nothing but another arm of the democrat fascist media machine with recruiters in the mix. The hard sciences are an exception but that won't be true much longer.
The health care sector has been driven into horrible shape by a combination of government regulation and MBA driven "profit center" thinking and has been at the mercy of the government and government run programs for quite a while. BarryCare is just the last step in the destructive process that's been going on for fifty years.
The whole "post industrial society" is a scam. Technology is a force multiplier for an industrial society, not a replacement for an industrial society.
JMHO
Meanwhile here in reality....
We have two choices. We accept the democrat “fix” or we come up with solutions of our own.
If we can stop it, and Canada continues to Fubar their system, Detroit and SE Michigan will continue to thrive as Canadians come here as their blow off valve and often pay cash to get fixed what Canadian-Commie-Care won't do.
BarryCare will destroy what is an Import Money maker for Michigan....
After it is completely abandoned, it would make a great movie set for all the post-Armageddon Sci Fi movies.
I thought the title said “A Hemp Growth Plan...”
Given the recent direction of the country with respect to marijuana laws, that could actually be a viable strategy...
That’s OK I’m not a racist. I want them to share the load.
So, democrat crooks steal the city into bandruptcy. Then all taxes are done away with. I assume cities doing well, like Houston, would have to fit the bill. Somebody’s gotta’ pay the cops and street sweepers. Just another way of saying “spread the wealth around”.
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