THE BLOG
08/08/2013 12:51 pm ET | Updated Oct 08, 2013

Detroit Must Grow Up and Liquidate Assets

The financial situation in Detroit is heating up as the city deals with its $11.5 billion of unsecured debt -- and just last week, Mayor Rahm Emanuel in Chicago released the city's second annual financial forecast which revealed the city is facing a $369 million financial shortfall in its operating budget for 2014, and a $1 billion shortfall by the year 2015.

Emanuel, with a boastful tone in his voice, put the typical political spin on the situation and said, "By making the tough but necessary choices in 2012, we were able to cut our budget gap in half in one year without using one-time fixes." As nice as that all sounds, the reality is Chicago is facing increased expenditures across the board come 2015 and 2016, everything from salary and wages and healthcare benefits to workers comp, utilities and a number of other miscellaneous expenses.

Back on the other side of Lake Michigan in Detroit, emergency manager Kevyn Orr announced the city will shell out $200,000 it doesn't have to assess the city's large art collection housed at the Detroit Institute of Art. But Governor Rick Snyder says the city has no plans to sell any of its artwork and called the appraisal "procedural."

So let me get this straight: Detroit is bankrupt and has no money, yet it can conveniently come up with $200,000 for a "procedural" appraisal? This has got to be one of the biggest lessons in delusional thinking of behalf of a municipality. Governor Snyder is also wrong for allowing it to happen.

Orr and Snyder recently concluded that chapter 9 bankruptcy was the only option to try to rescue the failing municipality, but the answer to the mess in Detroit, Chicago and other cities facing a financial shortfall starts with liquidating assets. According to Detroit's ABC affiliate WXYZ, a rough estimate of the value of the artwork is $3 billion. Definitely not enough to cover the city's debt, but a good start. From there it's just a matter of going down the line, from the city held airport to the Detroit-Windsor tunnel, real estate and parking garages. It doesn't matter how old or nostalgic the artwork or any other asset is. It all has to go!

It's a slap in the face to the poor public workers who dedicated their entire lives to serving the city and now their pensions have been severely jeopardized. How do you explain it to all the police officers and firemen who put their lives on the line every day and were relying on those pensions? It starts with selling off the city's assets.

A majority of Democrats believe the federal government should bail out Detroit according to a poll conducted by Quinnipiac University. This is insane! The message we're sending other cities as well as our own citizens is it's OK to mismanage all of your money because the government will come riding in on the white horse to save you. Is the new philosophy in America really that entitlement focused? It's pathetic and disgraceful.

Detroit and Chicago are far from alone, as a number of other large cities have accrued an estimated $118 billion in unfunded healthcare liabilities for municipal workers, according to Wall Street Journal economics reporter Stephen Moore. That's more proof it's time to do away with the unions.

Unions are another archaic American institution that served a purpose in a bygone era and should be buried with the dead. Sure they served their purpose back in the day and gave the little guy a voice, and it worked. But today, the problem is union leaders and members refuse to give up their stranglehold on industry and government. Union workers have become spoiled with inflated wages, tenure, and guaranteed work based on every factor outside of job performance and results. The abuse of power is now coming from the unions instead of employers. The future belongs to the states that become Right to Work states, because these states have stronger tax bases and better levels of employment.

The situation in Detroit and Chicago is quite ugly indeed, but the solution starts with eliminating wasteful spending with money that's not available, liquidating assets, dissolving the unions, and getting out of an entitlement way of thinking that a bailout is the solution.