Thursday, August 27, 2009

Detroit Economic Crisis Lays Bare False Claims of a Recovery

Detroit Economic Crisis Lays Bare False Claims of a Recovery

Corporate-backed interim mayor proposes layoffs and service cuts

by Abayomi Azikiwe
Editor, Pan-African News Wire

DETROIT--Hundreds of city employees and community residents gathered on August 19 outside the Coleman A. Young Municipal Center to protest budget cuts being enacted by the newly-elected interim Mayor Dave Bing. Bing, who has already placed over 300 workers on indefinite layoff, is also preparing the public for the idling of another 1,000 employees in an effort to close the $350 million deficit.

In addition to the proposed 1,000 layoffs, the Mayor is set to make major cuts in bus services, the only source of transportation for hundreds of thousands of workers, students, people with disabilities and senior citizens. The Bing cutbacks would suspend bus transportation starting on Saturdays at 6:00 p.m. until early Monday mornings. There would be no public bus service at all on Sundays.

Other possible cuts would include the complete elimination of several bus routes all together. These routes would include the Grandbelt, Russell, Oakland and Holbrook.

The mass demonstration on August 19 was largely organized by the Amalgamated Transit Union, Local 26, the city bus drivers. Leaflets were distributed to bus riders for several days prior to the protest. Other unions involved in the demonstration were the American Federation of State, County and Municipal Employees (AFSCME) Local 207, as well as rank-and-file members of UAW Local 2334, and the Detroit Federation of Teachers, among others.

Participants chanted slogans opposing the layoffs and cuts in the public transportation system. Members of the Moratorium NOW! Coalition to Stop Foreclosures, Evictions and Utility Shut-offs attended the demonstration carrying two banners which called for Michigan Governor Jennifer Granholm to declare a state of economic emergency and consequently place a halt on home seizures and energy cuts to individual households.

Public hearings took place during the week of August 24 where city residents were allowed to voice their opinions on the proposed cutbacks and elimination of bus service routes. At each public hearing hosted by the Detroit Department of Transporation, hundreds of bus riders, workers, youth, senior citizens and people with disabilities came out to express their outrage at the proposed cuts in bus service. Altogether during the week, several thousand people attended the public hearings across the city in protest against the proposed cuts in bus service.

By the middle of the week, the administration appeared as if it was willing to make some compromises on bus scheduling. The Amalgamated Transit Union had announced during the hearings that over 100 of its members were going to be laid off by August 28. Bing told the media on August 26 that he had never claimed that bus service was going to be cut on Saturday evenings and Sundays.

With rising unemployment and poverty rates in the city of Detroit, the scaling down and termination of bus routes would be disastrous for the overwhelming majority African-American and working class residents of Detroit.

The Severity of the Crisis Deepens

Despite governmental and corporate claims that the United States economy is beginning to show signs of a recovery, the conditions in the state of Michigan are becoming more desperate for workers, youth as well as small business owners. The official unemployment rate in the city of Detroit stands in excess of 25% and the overall figures for the state is over 15%.

Home foreclosures remain extremely high with each neighborhood in Detroit suffering from a proliferation of vacant homes and businesses. Property values for those who have been able to remain in their homes have continued to plummet.

As a result of the worsening conditions in the neighborhoods, there has been a recent spike in street crimes involving robberies, carjacking and shootings. In response the Bing administration has appointed a new police chief Warren Evans who has stepped-up street sweeps using brutal tactics such as home raids and the deliberate targeting of youthful motorists.

Chief Evans was recently featured on the front page of the August 16 Sunday Free Press holding an automatic weapon while raiding a home along with patrol officers. Yet there has been no discussion on the part of the Bing administration in regard to the root causes of the economic crisis and the consequent budget shortfall.

On August 12, Bing traveled to Chicago to meet with representatives of the bond rating agencies Moody's Investor Services and Standard & Poor. His stated objectives, according to the Detroit Free Press, was to "reassure" these agencies that his administration would take drastic measures to balance the city's budget.

The Free Press in an article on August 12, quoted Bing's press secretary Edward Cardenas as saying that "These meetings are standard practice for a new mayor to meet with the rating agencies to discuss the city's finances and his plans to address Detroit's financial issues. During the campaign, the mayor said he would be working hard to wrap his arms around the budget, and this is yet another example of how he is addressing this issue." (Detroit Free Press, August 12)

In the same article it points out how the bond rating agencies have excercised their power over the fiscal well-being of the city. The writer, Suzette Hackney, states that "In January Moody's, Standard and Poor's and Fitch Ratings downgraded Detroit's bond rating to junk bond status as a result of the city's inability to regain structural balance and ongoing financial deterioration. Approximately $4.7 billion of the city's debt was affected by the downgrades."

Hackney goes on to point out that "Downgrades can carry severe consequences for the city. Besides higher interest rates on the city's debt, depriving the budget of money to fund services to residents, it also could force the city to pay millions of dollars to investors with certain deals with the city."

The August 23 Sunday Free Press noted that city governments throughout the region will face serious problems in financing public projects. "Soon many cash-strapped governments might see higher interest rates that could make it too expensive to finance public improvement projects that some communities need badly."

Another article in the same Free Press issue published on August 23 also notes that "Even Michigan cities that have maintained excellent or above average bond ratings are at risk of seeing them fall and interest rates rise because of concerns about slumping property taxes, auto industry woes and the state's overall poor economy, rating agencies and city officials say."

In response to the pressure being placed on the city to pay the debts at higher interest rates, Bing is demanding that workers and residents accept massive cuts in employment, salaries and services. On August 10 an emergency meeting between the city administration and 50 union locals ended in a shouting match, when labor representatives expressed their opposition to the drastic cuts.

Bing demanded that the workers accept a 10% pay cut by August 28. This wage cut has already been imposed on non-union employees. The Mayor says that the city is running out of cash and could be insolvent in another two months. He has also mentioned that if the workers and city residents do not accept the proposed and imposed cuts that the city could fall into bankruptcy and receivership.

However, even if workers and community residents accept the salary and service cuts, "There are going to be layoffs regardless. At a miniumum of 1,000 layoffs," Bing said. (Detroit Free Press, August 12)

Union leaders at the August 10 meeting refused to agree to the altering of their contracts to accept pay and benefit cuts. Henry Gaffney, president of the Amalgamated Transit Union, that represents 1,000 bus drivers, stated in the aftermath of the meeting with Bing that the city needs to "Clean up your own house and then come talk to us." (Detroit Free Press, August 12)

Corporate media coverage of the current crisis has attempted to portray city employees as overpaid and inefficient. In a August 24 article in the Detroit News, Bing was featured calling for the slashing of wages and benefits that were won through decades of struggle.

However, the reality is that in comparison to other public entities and private industry, city workers are grossly underpaid and overworked. Thousands of job openings have remained unfilled for years requiring employees to perform multiple tasks while their cost of living is increasing every year.

In an attempt to justify the austerity measures, the Detroit News wrote that "Most workers get 17 sick days a year, a paid lunch hour, can keep children on their health insurance until age 25, draw a Christmas bonus of as much as $750 and have Viagra picked up by the city prescription plan." (Detroit News, August 24)

The same article continues by saying that "The average staffer with 15 years on the job can take up to 42 days off a year for vacations, holidays and a host of other paid absences. City officials say eliminating these and other benefits could save about $19 million annually, in addition to the $11 million they hope to cut through 26 furlough days."

The Need for A Worker-Community Alliance to Fight the Cutbacks

Members of the Moratorium NOW! Coalition who were present at the August 19 demonstration outside city hall called for the suspension of the debt service payments to the financial institutions that have demanded the massive cutbacks in municipal services. "Bing must tell the banks to wait, the workers must keep their jobs and benefits," Coalition members shouted.

Coalition members pointed out the injustice of having city workers and residents pay for the failures of the corporate giants and their agents in government. The banking institutions, auto companies and insurance firms have received trillions in bailout money through the government and the federal reserve over the last year while workers have suffered immensely through job losses, foreclosures, evictions, utility shutoffs, the slashing of health care and pension benefits.

The Obama stimulus package has not created any jobs for the unemployed and underemployed in the city of Detroit. In fact it was reported in the Detroit News on August 12 that the state of Michigan is losing approximately $50 million a month due to the drop in income and sales tax revenues.

According to the Detroit News "Governor Jennifer Granholm and lawmakers figured out in May the national recession and the collapsing auto industry would rip a $1.3 billion hole in this year's budget, so they made $304 million in budget cuts and spent $1 billion in federal recovery cash to balance the books."

To address the immediate crisis the Moratorium NOW! Coalition has called for a mass organizing meeting for September 12 in order for the workers and community to declare an economic state of emergency in Detroit and Michigan. The meeting will be held at Central United Methodist Church on Woodward and East Adams beginning at 11:00 a.m.

In a leaflet passed out at the August 19 demonstration the Coalition stated that "It is time for the people to declare a State of Economic Emergency and plan actions to guarantee our fundamental rights to housing, utilities, education, basic services and jobs in accordance with the law. We will develop a strategy to implement a moratorium on foreclosures, evictions and utility shut-offs; an end to school closings and cuts in public education; guarantee health care and basic social services for poor and working people; defending union contracts and workers' rights to living wages and pensions and ending plant and office closings and lay-offs and guaranteeing the right to a job consistent with the Full Employment Act."
Abayomi Azikiwe is the editor of the Pan-African News Wire and a longtime resident of the city of Detroit.

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