Rick Snyder: Government bailout is the wrong answer for Detroit

.....

Tweet

Gov. Rick Snyder, R-Mich., said Sunday on "Face the Nation" that granting Detroit a government bailout would be the wrong way to help the bankrupt city.

425x279

Governor authorizes Detroit bankruptcy filing, describes it as only viable option to help residents and restore city; Tough step will revive city buried in $18 billion debt and unfunded liabilities.

DETROIT - Gov. Rick Snyder today authorized Detroit's emergency manager to seek federal bankruptcy protection for the city, saying it was the only viable option to provide the 700,000 people of Detroit with the public services they need and to restore the city.

"The fiscal realities confronting Detroit have been ignored for too long. I'm making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future," the governor said. "This is a difficult step, but the only viable option to address a problem that has been six decades in the making."

Snyder's decision allowed Detroit Emergency Manager Kevyn Orr to make a filing under Chapter 9 of the federal bankruptcy law. Orr filed for Chapter 9 protection today shortly after receiving authorization from the governor. Chapter 9 protects financially distressed municipalities from creditors while their debts are resolved under the direction of a bankruptcy judge.

Detroit has more than $18 billion in debt and unfunded liabilities and doesn't have the revenues to meet those obligations and provide an adequate level of services to its people, who pay the highest taxes per capita in Michigan. The city's debt level is unsustainable. Currently, 38 cents of every city dollar goes toward debt repayment, legacy costs and other obligations. By 2017 that figure is expected to reach 65 cents per dollar.

"The simple fact is Detroit is in a financial crisis. The city is insolvent and has been borrowing money to pay its bills for nearly a decade. Bankruptcy is the only feasible option to fix the city's finances and do what is right for the 700,000 people of Detroit," Snyder said.

The governor noted Orr's restructuring plan for the city calls for investing $1.25 billion over 10 years in core services, primarily police and fire protection, trash pickup and street lighting.

"Fixing the city's finances will allow for investments in key areas that will improve the quality of life for Detroiters and encourage growth and investment in the city," Snyder said.

"We want to create an environment that attracts more families, young professionals and job providers to Detroit. That will be a win for Detroit and a win for Michigan. Michigan is the comeback state and we need our state's largest city to be healthy and strong to keep the comeback going strong."

The governor and Orr will hold a news conference at 10 a.m. Friday to discuss the Chapter 9 bankruptcy filing for Detroit. The news conference will take place at the DPTV studios, which are located at 5057 Woodward Ave., Detroit 48202. The news conference also will be live streamed and may be accessed by going to: www.michigan.gov/snyder.

#####

Executive Office of the Governor Communications Division. P.O. Box 30013. Lansing, MI 48909 - 517-335-6397

Interest Rates Double on Student Loans Amid Democratic Infighting

.....

Tweet

Interest rates on student loans doubled today,

“following top Senate Democrats’ rejection of a bipartisan compromise supported by the president.” We could have easily avoided this.

Back in May, the Republican-led House of Representatives passed the Smarter Solutions for Students Act – a bill based on President Obama’s own proposal and part of the Republican Plan for Economic Growth & Jobs. The House bill would have stopped an immediate rate hike and permanently fixed the program by tying rates to the market (not “the whims of Congress” which, as we can see, aren’t all that reliable). It also protects borrowers by capping rates.

Senate Democrats didn’t pass any bill at all – they left Washington and just let rates double. President Obama never really urged the leaders in his party to take action. And without the president’s involvement, “divisions within their own caucus” have prevented a long-term solution.

You see, some Democrats support a bipartisan plan like the one passed by the House. Others want another short-term fix (“let’s put this off for a year”) to “bring the issue to a head in 2014, when the party again hopes to rally younger voters to the polls in congressional elections ...” These Democrats would rather score political points than solve a problem, and students are the ones paying the price.

The uncertainty over student loans isn’t the only challenge facing young Americans under President Obama. Young and healthy “consumers could see insurance rates double or even triple” under the president’s health care law, says the Wall Street Journal. Finding work is tough too: “the unemployment rate for workers aged 20 to 24 remains stubbornly above 13 percent” and “the rate for those ages 25 to 34 is more than 7 percent,” wrote former CBO Director Douglas Holtz-Eakin in Reuters.

“This Democratic infighting is exactly why we have to take politics out of student loans and put in place a permanent solution,” said Speaker Boehner last week. Click here to learn more about the Smarter Solutions for Students Act and click here for the latest from the Education & the Workforce Committee.

Office of the Speaker H-232 The Capitol Washington, DC 20515 Phone: (202) 225-0600 Fax: (202) 225-5117