Tuesday, January 19, 2016

Follow the money, yet again

So why is the water bad in Flint, Michigan? I know better than to trust Michael Moore's explanations, so I turned to a more reliable source, Walter Russell Mead:
Where there’s a crisis in a modern American city, blue model failures—in particular, bankrupt pension funds or intractable public unions—are probably lurking not far below the surface. That is certainly the case for the water contamination disaster in Flint, Michigan, which is traceable to the city’s desperate efforts to save money by switching its water source from the City of Detroit’s water system to the Flint River. 
The problem is, the water in the Flint River is corrosive and is eating away at the lead pipes:

Over the summer, researchers from Virginia Tech found that Flint River water is highly corrosive. That means when it comes into contact with lead from service lines, household pipes or solder, it eats away at the lead and sends it right to people's faucets.

Why did Flint change its water supply? Because it owes a lot of money to other people. Back to Mead:
Flint’s problem is fundamentally one of money. The city was the birthplace of General Motors and once had a thriving economy based on the auto industry, but those days are long gone and Flint is now known for its deep poverty (40 percent of the population is impoverished), urban blight, and high crime. As a result, Flint’s population has fallen sharply from about 200,000 in the 1960s to under 100,000 today. The economic downturn combined with a drop in population has unsurprisingly severely restricted Flint’s tax revenues.

What hasn’t been restricted much, though, are the pension demands of Flint’s former workers. Flint has about 1,900 government retirees, who outnumber actual city employees three to one. A glance at the city’s financial forecast from spring 2015 shows that, within the city’s general fund, pensions and retiree health care dominate 33 cents of ever dollar spent, with the figure expected to hit 37 percent by 2020.
So why not find a way to cut the pensions? Good luck with that. A story from 2013 tells why:
Another potential blow to Flint's finances was delivered last week when a federal judge denied a second attempt by the city to enact cuts to retiree benefits made by an emergency manager.

Detroit Federal District Judge Arthur J. Tarnow denied Flint’s request for a stay of the injunction on June 25 that means the city cannot make $3.5 million in cuts to retiree health care benefits.

Flint Emergency Manager Ed Kurtz said the city plans an emergency appeal because the ruling “has placed the city’s long-term financial future in question.”
Have to pay the pensioners, even if it means poisoning the children. By the way, Judge Tarnow is a Clinton appointee, in case you're interested. Back to Mead:
The Democratic presidential candidates earned applause last night for denouncing Michigan Governor Rick Snyder’s handling of the Flint situation. But have any of them offered a plan for addressing the underlying cost problems plaguing Flint and other Democratic-controlled urban areas? As we’ve written before, the federal government will likely need to get involved, at some point, with the deepening budgetary disasters plaguing these cities. But this involvement must be guided by the concept of relief-for-reform, in which the bankrupt cities get limited assistance in exchange for real changes to the policies that led to this mess. Those policies include, but aren’t limited to, high wages and pension promises (usually underfunded) for unionized public employees, zoning restrictions, enterprise-killing regulations, unrealistically high levels of tax combined with “exemptions” and carve-outs for crony capitalist special interests, and an overstuffed bureaucracy to give jobs to the politically well-connected. The Democrats are comfortable talking about more money for American cities, but not so much about that whole reform idea—at least, not yet.
Reform must come, but that's not the conversation that the Michael Moores of the world want.

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