07/19/2013 07:54 am ET Updated Jul 20, 2013

Obama Detroit Bailout Comments About The Big Three Won't Save City From Bankruptcy

Remember when Obama told America that he "refused to let Detroit go bankrupt"?

While the president was talking about the GM and Chrysler bailouts of 2008 and 2009 when he made the statement, conservative blog The Blaze posted the video (from October 2012) when the city of Detroit filed for bankruptcy on Thursday afternoon.

Detroit is the largest city in American history to file for Chapter 9 bankruptcy. A city once boasting more than 2 million residents now has slightly more than 700,000 calling it home. In comparison, the publicly financed bailout of GM and Chrysler may have saved an estimated 1.5 million jobs, as well as a huge sector of America's manufacturing and trade economy. GM and Chrysler, being profit-generating companies, were also able to begin paying back their loans and buying back stock from the U.S. government.

The Washington Examiner, which also posted the video, commented that the city's bankruptcy filing gave Obama's line about saving the U.S. domestic auto industry "new meaning."

White House spokeswoman Amy Brundage told the Associated Press Thursday that Obama and his senior advisers are monitoring the situation in Michigan, but she also pointed out that Michigan leaders and the city's creditors understand their responsibility to solve Detroit's financial problems. The White House will "continue to partner with Detroit as it tries to recover and maintain its status as one of America's great cities," she said.

In early April, Detroit's Emergency Manager Kevyn Orr met with senior White House officials, including adviser Valerie Jarrett. Orr spokesman Bill Nowling has said that the emergency manager never formally requested a bailout from Obama's staff -- and no offer from Washington was ever on the table.

"There was never a formal ask," Nowling told The Detroit News, "but I think the way it was portrayed to me that it was pretty clear there was going to be no bailout ... akin to what we saw in scope and intent for the autos or for Wall Street.”

The president didn't respond in December when Councilwoman Jo Ann Watson, who has opposed all forms of state intervention into Detroit's finances, instead called on Obama to send the city some "bacon" in the form of federal relief funds.

"Our people in an overwhelming way supported the reelection of this president, and there ought to be a quid pro quo and you ought to exercise leadership on that," she argued. "Of course, not just that, but why not?"

While Detroit will most likely be compared with other recent bankruptcies, like Jefferson County, Ala., and Stockton, Calif., the federal government memorably bailed out New York City when it faced a $12 billion deficit in 1975.

In a 2008 article, The New York Times recalled then-President Gerald R. Ford (who is from Michigan) comparing New York City's spending habits to those of a "wayward daughter hooked on heroin."



The Ruins Of Detroit