DETROIT, once the motor car capital of the USA where hundreds of thousands of workers used to flock looking for good jobs in the Big Three car plants of Ford, GM and Chrysler, has become the largest US city ever to file for bankruptcy, with debts of at least $20bn.
Hundreds of thousands of people have already quit the city, whose population has shrunk from two million plus to just 713,000.
Its once-proud centre, made up of the HQs of the motor car industry and giant car plants, is now a wilderness where farms are being established.
Detroit is just one of the scores of US cities that are going bust, a product of the sub-prime mortgage collapse of 2008 which spread to the banks and then the major motor car giants. This saw the motor giants being ‘nationalised’ by Obama, with their bosses remaining in place and with government money poured into them amidst huge wage, pension and health cuts, plus job cuts and many plant closures, all agreed between Obama and the trade union bureaucracy.
In Detroit, as in scores of other US cities, the great ‘American Dream’ has turned into a frightening and real nightmare as the crisis of capitalism exacts its toll in human lives, with tens of thousands of homes boarded up in all of the great cities. There are 78,000 abandoned properties in Detroit alone.
The power in Detroit has been put into the hands of one man, the nominee of the banks, Kevyn Orr. It is he who has decided to make the city bankrupt in a move which the US unions are describing as a ‘power grab’.
In fact, he was handed the power as City Emergency Manager by Michigan state, and now he is going to use that power with every ounce of ruthlessness that he can muster to cancel union contracts, and sack large numbers of workers.
All of the remaining City assets will be liquidated, and union pension funds will be wiped out in the process.
Detroit stopped unsecured-debt payments last month to keep the city running as Orr negotiated with creditors.
He proposed a deal last month in which creditors would accept 10 cents for every dollar they were owed.
But two pension funds representing retired city workers are resisting the plan, since it would be the end of the road for their members’ pensions. Once Orr gets going, their members will see their union contracts cancelled, their wages slashed and their jobs and their pensions destroyed.
Great swathes of the city are going to be ‘written off’ as irredeemable.
Ed McNeil, the lead negotiator for a coalition of 33 unions, said yesterday that Orr’s bankruptcy move was about ‘busting the unions’. He added: ‘I’ve said all along that this is a power grab. This is not about fixing the city’s finances. It’s about the governor and his own agenda to take over the city of Detroit.’
In a letter accompanying Thursday’s bankruptcy filing, Michigan’s Governor Rick Snyder, a Republican, said that: ‘The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations.’ In other words, smash the trade unions, cut wages, rip up every negotiated contract and grab the union pension funds.
The message from the Obama White House is: ‘While leaders on the ground in Michigan and the city’s creditors understand that they must find a solution to Detroit’s serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalise and maintain its status as one of America’s great cities,’ said White House spokeswoman Amy Brundage.
Obama has given his backing to the dictator Orr, to make the Detroit workers pay for a crisis caused by the bankers and the bosses.
He will also give his backing to the scores of US cities that are ready to follow Detroit’s lead.
This is the real face of the US non-existent ‘recovery’ whose essence is bankruptcy, with the number of bankrupt notes being added at the rate of $85bn a month of quantitative easing.
In the face of this great crisis of capitalism, the US trade unions must take action. They must break with the Democratic party and found and build a Labor Party that will fight for the interests of the workers and the poor, and for socialism.
They must defend all union contracts, all jobs and all union pension funds. If the capitalists cannot run US cities, they must be taken over and run by workers’ councils made up of the trade unions, youth organisations and all community groups.
American capitalism has a past but it cannot offer any way forward, or any future, except slumps and wars. The working class must now begin to take action to make its own socialist future.