The federal bailout of General Motors and Chrysler is often called the "Detroit bailout." But while the Big Three automakers have become profitable again, the city of Detroit continues to face a dire financial crisis and looming state takeover. So Rep. Hansen Clarke, a Democrat who represents the city in Congress, is pushing for a second bailout -- this time for the city.
Clarke said he plans to seek emergency federal aid in Congress and from the Obama administration and may introduce legislation as early as next week. His plan is modeled after the federal bailout of New York City in 1975. "It's the same situation that's just as grave," Clarke told HuffPost. "We need to provide relief for the city of Detroit in order to create jobs in this country and rescue this symbol of our manufacturing power."
New York City got $2.3 billion in federal loans after President Gerald Ford signed the New York City Seasonal Financing Act in 1975.
Clarke said he hasn't determined how much money he'll request. He said he's looking into "a combination of grants or loans."
Detroit faces a cash shortfall that could leave it unable to pay bills and meet payroll in April. The city's budget deficit is near $200 million for this fiscal year, and its long-term obligations are $13.2 billion -- or $18,500 per resident.
The city's financial crisis has prompted an investigation by Michigan Gov. Rick Snyder, and a state-appointed financial review team will determine by the end of March whether to recommend an emergency manager take over the city.
Both the governor and Mayor Dave Bing have said they want to avoid an emergency manager. Snyder this week presented a possible consent agreement between the city and the state that he says would allow for restructuring and keep the mayor and City Council in power.
But city officials, residents and lawmakers have roundly rejected the governor's plan, saying it would weaken the power of elected officials and collective bargaining rights for city workers.
Clarke said the proposed consent agreement sparked his plan to request emergency aid. "When I look at the fact that it's still a virtual takeover of the city, that's when I realized I got to take action immediately," he said. "I want the relief to be sizable enough that it will put the city in a strong or at least satisfactory financial situation to get it out of its emergency status for the next couple years."
Clarke said he intends to work with other members of Detroit's delegation in Congress and expects broad support from Democrats. He pointed to support for his Detroit Jobs Trust Fund Act, introduced last year, among Democrats and some Republicans, including Rep. Candice Miller. The bill would allow Detroit to retain federal income tax paid by its residents, and had drawn 31 cosponsors as of December.
Rep. John Conyers and Rep. Gary Peters, Detroit-area Democrats who have been vocal on the emergency manager question, were unfamiliar with Clarke's plan, spokesmen said Wednesday. Conyers has strongly opposed an emergency manager for Detroit, calling the law that allows for the state takeover unconstitutional. He also has said he's against the governor's proposed consent agreement.
Clarke said he believes a fiscally stable Detroit is vital to the U.S. "What I'm trying to avoid is a takeover by the state that will result in massive cuts, massive layoffs and the sale of assets," Clarke said. "That would actually cripple our ability to bring in new jobs. That would be damaging to the city and to our national economy."