The Obama administration has found $100 million to send to struggling
Detroit, despite recurring claims that the government cannot afford to
make any more spending cuts.
House Democratic Leader Nancy Pelosi claimed just last weekend that
"there's no more cuts to make." Pelosi made the comments in response to
Republicans demanding additional cuts in exchange for raising the debt
ceiling.
"The cupboard is bare," she told CNN.
Apparently not completely bare.
Gene Sperling, chief economic adviser to President Obama, told the
Associated Press the administration scrounged through the federal budget
and found untapped money that "either had not flowed or had not gotten
out or not directed to the top priorities."
That money is now being sent to Detroit.
Considering the Motor City is at least $18 billion in debt, it will
take a far larger infusion of cash or historic deals with bond holders,
insurance companies and other creditors to correct the problem.
But the $100 million infusion is a step toward greater federal involvement.
Sperling and three other top Obama aides -- U.S. Attorney General
Eric Holder, Transportation Secretary Anthony Foxx and HUD Secretary
Shaun Donovan -- will meet with state and local officials Friday during a
closed-door meeting with Gov. Rick Snyder, state-appointed emergency
manager Kevyn Orr, Mayor Dave Bing and community and business leaders.
The federal money being directed Detroit's way by the U.S. government
will be augmented by millions of dollars more in resources from
foundations and Detroit businesses.
The Obama administration repeatedly had signaled it would not offer a
massive federal bailout like the one credited with helping rescue
Chrysler and General Motors.
"There is not going to be a bailout," Democratic U.S. Sen. Carl Levin
told The Associated Press on Wednesday. "We have enough problems with
the federal deficit. We need to be creative and look at existing
programs. There are still some funds there."
The funding announced by Sperling will include $65 million in
Community Development Block Grants for blight eradication, $25 million
in a public-private collaboration for commercial building demolition and
nearly $11 million in funds to ensure working families can live in safe
neighborhoods.
Holder will announce $3 million that, in part, will be used to hire
new police officers. About $25 million also will be expedited to Detroit
to hire about 140 firefighters and buy new gear.
"It wasn't enough to try and free the resources," Sperling said. "We had to make sure they are well-used and targeted."
In addition, Orr, the city's emergency manager, has told the city's
two municipal retirement systems he wants to freeze Detroit's pension
plans and move to a 401(k)-style system.
The gathering Friday follows a series of meetings with the White
House to plot ways to pull Detroit from a fiscal pit that this summer
made it the largest U.S. city to file for bankruptcy protection.
Detroit has had a poor record in making sure grant money is used properly and even spent at all.
In 2011, Mayor Dave Bing fired the director of the city's Human
Services Department after an internal investigation revealed $200,000
intended for poor residents was spent on office furniture for staff
members.
The following year, his office had to scramble to use about $20
million in grants that had been left sitting for demolitions of
thousands of vacant houses. The city's Police Department also allowed a
$400,000 grant to lapse for a new armored vehicle.
The grant troubles have rankled Orr, the emergency manager Gov. Rick
Snyder appointed to lead the city out of its financial mess.
Orr has said Detroit is so poor that it can't afford to lose out on
any resources. In July, he made Detroit the largest U.S. city to file
for bankruptcy protection.
Grants only can pay for things the city otherwise couldn't afford.
Several businesses even pitched in $8 million earlier this year to help
pay for a new fleet of emergency vehicles, including 23 EMS units and
100 police cars, to boost public safety and reduce response times.
Police Chief James Craig said Thursday that he was in Washington a
few weeks ago in search of federal resources for his department.