Everything you ever wanted to know about the Emergency Manager takeover of Michigan, and how we allowed it to happen

I had the good fortune a week or so ago to attend the Netroots Nation conference in Detroit. Among the people that I met while there was attorney Alec Gibbs, who, in recent years, has been keeping busy representing retired public employees left without adequate insurance in the wake of the Emergency Manager takeover of Flint, Michigan. What follows is our conversation on the origin of Michigan’s Emergency Manager law, what it’s done to Flint, the current challenges against it in the courts, and what we can do to fight back.

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[Nayyirah Shariff, a Flint-based activist with the Democracy Defense League, is pictured above silently protesting an Emergency Manager order in Flint that prohibited public comment before city council votes.]

MARK: If we follow the Emergency Manager narrative all the way back to its point of origin in Michigan, as I understand it, we find ourselves in Ecorse a little over 25 years ago. What was happening there in the late ‘80s that led to the passage of Public Act 72 (PA 72) in 1990?

ALEC: PA 72 grew out of an unprecedented action that was taken by Judge Richard Dunn, who was a trial court judge on the Wayne County Circuit Court. He appointed Louis Schimmel as a receiver for the City of Ecorse, which was a relatively small downriver suburb of Detroit. It was entirely due to the steel industry. When that industry collapsed, so did the tax base for Ecorse. When Dunn appointed Schimmel, the legislature felt the need to retroactively validate the receivership, and that’s why PA 72 was drafted and passed.

MARK: How did Dunn justify his decision? It seems like a big leap for an individual judge to essentially take over the finances of a city.

ALEC: A few years before Dunn’s decision, there was a Court of Appeals decision that suggested a municipality, specifically a school district, could be placed into receivership in extraordinary circumstances. Basically, they said it could be done when there was no conceivable alternative. Judge Dunn’s decision was premised on Ecorse’s failure to pay creditors and make contributions to its pension fund. There were a few different lawsuits that were consolidated, and the result was the receivership… Judge Dunn is an interesting historical figure in his own right. He was elected in 1974, on a platform that encouraged the extension of judicial services into the Detroit suburbs. The pro-suburbanite platform has to be seen within the context of the busing issue, and the famous Miliken v Bradley Supreme Court case, which came out of a Michigan desegregation order, and ended cross-district busing, which created a white flight surge in the region. This happened as Judge Dunn was campaigning.

MARK: I’m not sure that I follow. Are you saying that Dunn was swept into office by white voters who felt as though they needed to be kept safe from Detroit’s urban (black) population?

ALEC: I don’t think Judge Dunn’s campaign was necessarily explicit on that point, but it isn’t like we have access to all of his campaign literature. He was campaigning on a pro-suburban platform; he was calling for more court services to be extended to the furthest outlying cities in Wayne County. And the example he cited was related to public safety. I’m sure that voters probably understood that to mean, at a minimum, increased county presence and services, including police services, in places like Northville. So it would certainly feed on the suburban fear of Detroit.

MARK: And what did did Public Act 72 say?

ALEC: Well it changed quite a bit between 1990 and 2004. But basically it created a position known as an Emergency Financial Manager (EFM). If there were certain fiscal problems that showed a municipality or a school district was facing financial distress, a review team would be appointed by the Governor to evaluate the available evidence and decide if there was indeed a financial emergency. If there was, the Governor could hand the management of the city’s financial condition to the Municipal Loan Board, which would then appoint an Emergency Financial Manager, or work with the local government to develop what was called a consent agreement, if the review team thought that was a feasible alternative. And, if the EFM decided that the city needed to go through bankruptcy, he could give the local government authorization to file a Chapter 9 petition, subject to oversight by the executive branch.

MARK: But, in its earliest iteration, the Emergency Financial Manager law did not empower this Governor-appointed administrator to break union contracts. Is that correct?

ALEC: That’s correct. That power did not emerge until Public Act 4 (PA 4) was passed in 2011.

MARK: So, as of 2011, Michigan’s Emergency Managers have had the ability to break union contracts. They did not, however, have the ability to break contracts with financial institutions. Is that correct?

ALEC: That’s correct. The banks were safe; workers (and retirees) were not. This was by design, given the interests of the people who were responsible for drafting this law.

MARK: Were there non-Michigan precedents when all of this first began to happen, in 1990? Or was the situation in Ecorse truly unique?

ALEC: There was a major precedent that was incorporated into PA 72, and that was the New York City financial crisis. When NYC neared insolvency, the state government interceded and created new institutions to stabilize the city’s finances. The story behind that financial crisis is interesting in its own right, and involves significant transactions and interactions with Wall Street firms that were underwriting the debt. But, in response to the financial crisis, the State of New York created a Municipal Assistance Corporation, or MAC, that could issue new securities to finance outstanding debt. When MAC had trouble selling the bonds, it began to demanded wage freezes, increases in subway fares, layoffs and tuition charges for the free city university system (CUNY). This caused a lot of unrest. And, to put the austerity on firmer footing, the state also created the Emergency Financial Control Board (EFCB). The EFCB took over the City’s finances, and the EFCB maintained very strong control over NYC finances for a decade, remaining in existence until about 2008.

MARK: When, after the passage of Public Act 72, was the concept next revisited in the Michigan legislature?

ALEC: There were a number of amendments that expanded the power of EFMs over the years. The first amendment was in 2002, while Governor Engler was in power. And it was amended again in late 2003, about a year after Granholm was elected. When Granholm took office, there were at least two cities in receivership… Highland Park and Flint. The amendments were largely directed at Highland Park, because the EFM there had suspended the Mayor’s salary, which was unprecedented, and not authorized by PA 72. So the legislature amended it. The amendments were also given retroactive effect. That was done under Granholm. After that, the EFM could effectively suspend the local elected government. Then were amendments in 2004 that vested a lot of legislative and executive power into the EFM. An EFM could, after that, exercise the same powers as the mayor and city council in amending, adopting and enforcing ordinances, as long as those ordinances affected the local financial condition of the city. That’s a very expansive power, and, in fact, Louis Schimmel would later try to use that power to force a transfer of the city’s pension system (which is the best performing pension system in the country) to the statewide Michigan Municipal Employees Retirement System (MERS).

MARK: When you say that Louis Schimmel tried to use this power to change the city’s pension system, which city are you referring to? By this point, Schimmel had moved on from Ecorse, right?

ALEC: Yes, I am referring to Pontiac. When PA 4 was repealed by way of referendum, PA 72 went back into effect, and Schimmel had to rely on the powers he had under PA 72. So he cited his ability to enact ordinances that affected the City’s financial condition. The Oakland County Circuit Court disagreed, compared him to a dictator, and he backed off. For now, at least.

MARK: And why did Schimmel want to restructure the Pontiac pension fund, given that it was, as you mentioned, performing well?

ALEC: That’s a mystery. Schimmel’s plan followed a successful transfer engineered by Flint’s emergency manager in the summer of 2012, though. And it also parallels efforts to control pension fund investments in other states, and a conservative effort to push the idea of a “public pension crisis,” which the progressive investigative journalist David Sirota documents quite well in his 2013 report The Plot against Pensions.

Now, it’s important to remember that current Michigan Governor Rick Snyder left his venture capital firm, Ardesta, in 2008, because he was frustrated with the reluctance of “institutional investors” to finance venture capital projects in Michigan. This includes pension funds, as well as MERS. And MERS, by the way, is moving towards direct investments in local firms. And you know what their chief investment officer cites as the reason for that? Michigan’s “competitive” business environment, courtesy of Rick Snyder. And his Emergency Managers have pushed these transfers, in Flint, in Pontiac, and in other cities, which have substantially increased the investments that MERS can make. In addition to that, the Emergency Managers control federal and state grant allocations, and the Michigan Economic Development Corporation (MEDC), through the Michigan Strategic Fund (MSF), is responsible for distributing even more money. In recent years, it’s worth noting, the MEDC and the MSF have been the targets of bipartisan criticism for reporting inflated and misleading job figures. And the Mackinac Center is at least publicly opposed to the existence of the MEDC and other corporate subsidization programs.

MARK: OK, so your sense is that Michigan’s Emergency Managers were given the word to push their locally controlled pension funds into MERS, with the thought that they could then dole the money out to venture capitalists friendly with the administration, etc…

ALEC: That’s really the question isn’t it? In other states, like New Jersey for example, there has been pretty extensive reporting on this. For example, The Nation has connected Paul Singer, the founder and CEO of the hedge fund Elliott Management Corporation, to Chris Christie’s “pension reform” project, and Singer was also a major contributor to the short term PAC RGA Michigan 2010. According to the disclosures that are available he was the third top contributor at $500,000, just behind Robert Perry and David Koch. Just over $482,000 came from Steve Cohen of SAC Capital Advisors, another hedge fund. SAC, by the way, just settled a major insider trading case that arose out of the University of Michigan in 2008, and one of their hedge fund managers, Matthew Martoma, was convicted of insider trading in February. Now, in light of these known contributions, and in light of the fact that Snyder’s NERD fund had dark money pouring into it in cities with EMs, aren’t there a lot of questions we should be asking about these transfers? After all, the transfers to MERS involve hundreds of millions to billions of dollars.

Now with respect to MERS, there’s also been a significant increase in direct lending, which is also reflected in the national market. This is a way of avoiding the stricter lending standards that apply to banks. In other words, these pension funds are now supplying credit to “midsize” companies that can no longer get loans from banks because their credit isn’t good enough. There are arguments marshalled in favor of this, including the elimination of financial intermediaries or middlemen, but this is happening with very limited public input, and in an era of politicized financing. We should be concerned, and we need independent and progressive financial experts to scrutinize what’s happening with our pension funds.

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MARK: Your mention of the conservative, Michigan-based think tank, the Mackinac Center, a little while ago, sent me to their website in search of their thoughts on the takeover of Ecorse. Following is a clip from a 1989 report by Greg Kaza, who was then Vice President for Policy Research at the Mackinac Center.

At first glance, Ecorse, Michigan, appears an unlikely place for a grand experiment. Aging steel mills dominate the landscape in the 2.2- square-mile community of 11,000, located in a region known as Downriver Detroit. Down-river is typical of many of the “Rust Bowl” areas that dominate America’s once-great industrial heartland. Row after row of small, wood-frame houses stand in the shadows of the mills, home to three generations of steelworkers. Along West Jefferson Avenue, the bars and fast-food establishments are fighting a battle against creeping blight. Crack cocaine dealers have invaded from Detroit, decimating several surrounding neighborhoods.

But look beneath the surface and you will find evidence of a grand experiment unique in recent American history. Three years ago, Ecorse teetered on the brink of economic bankruptcy, the result of a $6 million budget deficit mused by wasteful local spending.

Today, the deficit has virtually disappeared, along with most of the Ecorse city government, which has been privatized to the point of near-extinction. “We have created a model city that nobody else in the country has,” explains Louis Schimmel, the man responsible for Ecorse’s grand experiment. “Some communities have privatized certain functions. I’ve privatized just about everything. Everything that I could legally.”…

Sounds like the “grand experiment” in Ecorse went pretty well…

ALEC: Yes, if you’re looking at this experiment from the vantage point of the Mackinac Center, and restricting your timeframe to the first EFM for Ecorse, it might look better, right? But Ecorse was back in receivership by 2009. And this is not just about Ecorse: Flint has had an EFM before, appointed by Governor Engler; the same is true of Hamtramck and Highland Park. The laws simply do not address the actual problems cities face, which is really a decrease in state revenue sharing. Revenue generation is difficult for local governments, given the constraints on taxation imposed by the Headlee Amendment. And it’s not just about loss of funding, because the State of Michigan also passes the governance buck down to these cities.

For example, there are a number of unfunded mandates in Michigan. This gets back to the Headlee Amendment, because it required governments to maintain the level of support for services and activities in existence in 1978, the base year, while also requiring the state to fund any additional necessary costs of newly mandated activities or services and increases in the level of such activities or services from the 1978 base year. This is flagrantly violated by Lansing, and enforcement in the courts takes decades. Many of these costs are hidden. For example, if you adopt very tough restrictions on sex offenders, that means you are requiring police to devote a substantial amount of time to monitoring them, to enforce state law. The state has also imposed election requirements that impose maintenance, data reporting and additional compliance costs. And there are also local services that are practically mandatory even though they are not considered mandates. And, even when the Michigan courts find that there isn’t a violation, the challenged mandate often violates the spirit of Headlee. For example, every county has the responsibility for providing room and board for juvenile wards, but the Michigan Court of Appeals has said that any county can house juveniles in any state, federal or local facility, so the state isn’t responsible for reimbursing a county for building a new facility, even though the state has an obligation to pay for half of juvenile housing costs. But that kind of decision ignores the ways in which using existing facilities may be impracticable, while requiring every local government to establish that there’s no actual alternative. The net result is piecemeal litigation that takes decades to resolve funding disputes between the state and local governments.

MARK: And how did Flint fare? Did aggressive privatization solve all of your problems?

ALEC: Clearly not. Most privatization is simply a boon to some favored special interest. Even if you privatize or outsource public functions, you still have to pay for them. For example, when Flint transferred the local pension system to MERS, the city initially claimed it was saving hundreds of thousands of dollars each year in administrative costs. But, in fact, there was no cost-savings, because the pension system was the entity responsible for paying these administrative costs. Additionally, the transfer to MERS will probably cost the City of Flint even more in the long term, because MERS uses a shorter actuarial period to calculate the city’s payment obligations, which means that the payments to the pension system will be set to increase in the short run.

MARK: How did you become involved in this fight?

ALEC: My father has been representing a Flint-based retirees association for decades, and, when I started working for him in 2009 and 2010, they were were under attack by the new mayor, Dayne Walling, and austerity advocates in his administration. So, for example, when the mayor cut health care benefits for a number of widows in early 2010, we fought it in court. And there were other attempts to eliminate or reduce pension payments and health care for other retirees, etcetera. In 2002, when Flint was under its first Emergency Financial Manager, Flint retirees and the City of Flint had actually settled a case involving reduction of prescription drug coverage. Basically the city decided it no longer wanted to cover newer drugs that didn’t have generic alternatives, which would have forced retirees with serious health conditions to expend thousands of dollars out-of-pocket. After the city lost that suit, they settled, and the EFM at the time, Ed Kurtz, actually signed off on that settlement agreement. In 2011, Flint’s first emergency manager under PA 4 was appointed. Ironically, he was appointed on election day. And one of his first orders was aimed at that settlement agreement. He came in and issued an order that tried to modify the settlement agreement, basically eviscerate it. We fought that in court, and we won. And then we were asked to fight similar orders in Pontiac, Saginaw, Hamtramck, and elsewhere. So we’ve been busy.

MARK: You mention Public Act 4. When did it come about, and why was it that the legislature had decided to pass another act, instead of just continuing to amend Public Act 72?

ALEC: Public Act 4 was a complete revision of the concept of municipal receivership. In fact, the name change to “Emergency Manager,” from “Emergency Financial Manager,” was prompted by challenges to actions taken by an EFM for the Detroit Public Schools, actions which involved EFM interference in academic development. So, in PA 4, an Emergency Manager for a school district was given broad power well outside of fiscal or financial management, and an injunction restricting the Detroit Schools’ emergency manager was lifted in response. And, of course, another major change was that the appointment of an EM automatically divested local elected officials of their power, subject to an EM’s discretionary power to restore it on terms and conditions he deems fit.

MARK: And then we had Public Act 436 in 2012. What was it that led the Republican legislature to revisit the Emergency Financial Manager law once again?

ALEC: There was a voter referendum, a successful one, in November of 2012. That created a very big problem for the state Republican leadership, because their eyes were still on the prize: Detroit. So, when PA 4 of 2011, the first Emergency Manager law, was toast, the State legislature just passed a virtually identical bill in the same lame duck session that turned Michigan into a right-to-work state. But, this time, they included a nominal appropriation in the bill, which would prevent another public referendum. And they didn’t give the law immediate effect. This was important, because Kevyn Orr, Detroit’s EM, was appointed while PA 72 was still in effect, following the referendum. And, while the new law, PA 436, supposedly gives cities a menu of options, ranging from consent agreements, to neutral evaluations, to bankruptcy and emergency managers, those choices were not made available to cities with EFMs appointed under PA 72. Instead, PA 436 used a grandfathering clause to turn those EFMs into Emergency Managers with all of the powers of a traditional Emergency Financial Manager and then some, but effectively prevented Detroit from picking its poison. Not that it would have mattered; if the Governor is determined to appoint an emergency manager, the executive branch can still force a city into receivership. A city might be able to delay the inevitable, but that is all it can really do. The idea of “local choice” is largely illusory.

MARK: Can you elaborate on why “financial” was dropped from the Emergency Financial Manager title?

ALEC: Yes, that was in response to some early litigation that challenged actions taken by the Emergency Financial Manager in Detroit. In December of 2010, before Public Act 4 was passed, Wayne County Circuit Judge Wendy Baxter ruled that the Detroit school board had academic powers under an emergency financial manager. Before the board could make any decisions, the new law was passed and the word “financial” was dropped to remove any doubt about the expanded responsibilities of an EM under PA 4. When PA 4 was implemented the injunction was lifted because Emergency Managers had power over academic matters, and when PA 4 was suspended, another judge put the school board back in charge of academic matters.

MARK: So it was changed to reflect the increased powers of a state appointed receiver?

ALEC Yes. And I think that it was also a reflection of strategy. Because this law was sold on a theory that these cities were mismanaged into the ground to the point of a generalized crisis, not simply a financial one. So for example you have the Flint EM claiming that retiree health care threatens public safety. You have Kevyn Orr telling the Wall Street Journal that Detroit workers are entitled, stupid, lazy and fat.. The backlash against that was pretty strong, so he backed away from those comments when he spoke with the local press. But it was very revealing: These people, members of the financial and technocratic intelligentsia that dominates Wall Street and Washington, think that workers don’t deserve anything.

You see this very clearly in the Detroit water shutoffs. I think that they are very happy to cut off water to unemployed Detroit families, because they’ll either die from dehydration or leave, paving the way for the Detroit Future City plan. The shutoffs weren’t designed simply to improve the water system’s finances; if that was the plan, they would target the corporate accounts, but they don’t want to do that.

In order to convince people that this is a legitimate project, its architects must lay the blame on the working class. They are very cognizant of the parallels to authoritarianism; Kevyn Orr was quick to point out that the takeover would be perceived as a fascist exercise in emails that were released as part of a FOIA request. That was in relation to the idea of the Bloomberg Foundation financing the takeover, which also raises interesting questions about the secret donors who paid for Orr’s $4200 a month condo at the Westin Book Cadillac.

But the corporate press doesn’t dwell on this. Instead there are two competing narratives, one that is reflective of American liberal or Keynesian thought, and the other reflective of more right wing presuppositions. In the liberal framework, which Flint’s Mayor Dayne Walling articulates quite well, this is the inevitable consequence of the decline of the manufacturing industry, and is largely beyond the control of local officials, even if local corruption might exacerbate the problems. The right wing narrative blames unions and local corruption almost exclusively, and that’s the narrative you hear coming out of Orr when he meets with the Wall Street press.

Of course, all of these people are footsoldiers with patrons in the corporate sector. They have been set up to take the fall if necessary. And you don’t have to look very far to see earlier examples of this. The irony of the local corruption narrative is that it is partially true, after all; Detroit’s former mayor, Kwame Kilpatrick, was corrupt. But his bid rigging schemes that rewarded Detroit-based supporters didn’t create Detroit’s cash crisis; the cash crisis was the result of cuts to state revenue sharing as well as predatory lending from Wall Street. Kilpatrick was beloved by Wall Street for his loan deals, and the Bond Buyer invited him to Wall Street in 2005 to accept the “Midwest Deal of the Year” award. Was that deal disastrous and illegal? Judge Rhodes thought so, but he still accepted an $85 million payout to the banks to settle it. That settlement not only meant a loss of $85 million, but the loss of any opportunity to recover hundreds of millions in fees from an illegal municipal financial transaction. And the banks, UBS and Merrill Lynch, will still collect the remaining payments from Syncora, which insured the transaction.

Local corruption exists, but it is a symptom of a disease, and it would be a mistake to view this as a partisan matter, since both major political parties are complicit. President Obama has refused to prosecute the banks that laid waste to this country in 2008 and sought to pick at the ruins like vultures, although the Justice Department is quite willing to prosecute local officials while entering into civil settlements with financial institutions that made corrupt practices an investment policy, like JP Morgan. In this rigged game, only the people lose.

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MARK: What are we seeing now in other parts of the country? Is American Legislative Exchange Council (ALEC), for instance, pushing similar legislation in other areas, seeing how successful it’s been for Republicans here?

ALEC: This legislation is a little more organic than something you see out of ALEC. But the state’s main ALEC-affiliated “think tank,” the Mackinac Center for Public Policy, is a strong proponent of this law. One of their resident scholars is Louis Schimmel, the state’s first emergency financial manager and someone who has served as an EM in a number of communities. Public Act 4 of 2011 and Public Act 436 of 2012 were drafted by the current CEO of one of Michigan’s largest law firms, Michael McGee of Miller Canfield. He has floated this law as an alternative to bankruptcy across the country, at seminars sponsored by the American Bar Association, for example. Snyder’s officials have also attended municipal bond seminars to discuss the topic. There are more limited versions of this law that have been enacted in Indiana and Rhode Island. But I think that conservative leaders and activists outside of Michigan who find it attractive are waiting to see how legal challenges play out.

MARK: And how have we fared thus far relative to challenges, both at the polling place and through the courts?

ALEC: Well the voters clearly hate this law, they rejected it in 2012. The courts are another matter. By and large, they have gone out of their way to avoid any direct ruling on the constitutionality of the emergency manager law in general or on actions taken by the EMs in various cities. So the Michigan Supreme Court was set to rule on a challenge brought by progressive attorneys at the Sugar Law Center for Economic Justice, and they punted after PA 4 was repealed by the voters. There were some important exceptions: In Flint, retirees got an injunction in March of 2013 which was upheld by the Sixth Circuit in January, and in August of last year a three judge panel of the Sixth Circuit, in a case coming out of Pontiac, called the immediate effect vote for PA 4 “farcical” and directed a lower court to consider the effect of the voter referendum. Last may, that ruling was set aside by the entire Sixth Circuit in a very unusual en banc ruling, which also cast doubt on Emergency Manager orders to gut retiree contract rights.

The attorneys for the State Attorney General and the Emergency Managers have successfully prevented a number of constitutional challenges by using a unique feature of bankruptcy law. After Detroit filed its bankruptcy petition in July of last year, the attorneys moved for an extension of what is called an “automatic stay.” When a city files for bankruptcy, pending lawsuits against it are “stayed,” or stopped, until the bankruptcy court has time to rule on the city’s petition. Very shortly after the petition was filed, Orr asked Judge Rhodes to extend the automatic stay to prevent any constitutional challenge to PA 436! Judge Rhodes granted his request, and, as a result, three lawsuits challenging PA 436 were stayed.

The lawsuits that were stopped did not name the City of Detroit as a party. They were challenging PA 436 as an unconstitutional impairment of the right to vote, the right to equal protection, the right to due process, the right to enforcement of contracts, and as an interference in the exclusive power of the federal government to pass uniform laws on bankruptcies. Judge Rhodes later clarified his order and said that it did not extend to some of the challenges, but he still ruled that Detroit residents could not bring a suit to vindicate their constitutional rights. And the State of Michigan is still appealing Rhodes’ ruling, arguing that no constitutional challenge to emergency management should be allowed to proceed for as long as Detroit is in bankruptcy or subject to the jurisdiction of the bankruptcy court, which could be a very long time.

This is a very bizarre abuse of the bankruptcy process. If those lawsuits are successful, PA 436 would be deemed unconstitutional from the date of enactment. That means that the bankruptcy court would never have been able to accept Detroit’s bankruptcy petition. So you have a very unusual situation, where a court is effectively saying that Detroit residents can’t be allowed to vindicate their rights, because, if they are successful, it will cast doubt on the bankruptcy itself. It is a very circular argument.

MARK: As was mentioned earlier, Michigan’s policies over the past several decades have helped to put our aging cities in the situations they now find themselves in. Cuts in state revenue sharing. The passage of the Headlee Amendment. Etc… I’m not sure how much of this was planned at the outset, but it certainly seemed to come together pretty well for folks on the right. Our cities were defunded to the point of collapse, giving the state the ability to install non-elected officials with sweeping powers, who then sold off public assets, smashed union contracts, and privatized everything that could be privatized. It’s difficult to imagine a better scenario for those intent on shrinking government and killing unions.

ALEC: Well I don’t think that the current assault on local democracy was planned when the voters passed Headlee in 1978. I think that Governor Snyder’s plan for Michigan cities was planned well before PA 4 was introduced, right down to the cronyism for the various private contractors. How do we know this? Because in December of 2010, Crains Detroit Business ran a story titled “Dillon scouts talen for state turnaround team: Treasurer expects wave of local fiscal distress.” The article outlines a December 2010 meeting that was held at the Detroit Regional Chamber of Commerce. The Chamber is one of Governor Snyder’s strongest supporters, and they had just appointed a new president earlier that year who was not only a strong supporter of Snyder before he was elected, but was also a strong proponent of Kevyn Orr’s appointment in 2013.

But we can learn a lot from that December 2010 article. Who attended that meeting? Representatives from the following firms with EM contracts: Plane & Moran, an accounting firm based in Southfield that has handled fiscal and audit reports, Miller, Canfield, Paddock and Stone PLC, which was responsible for drafting the law, Bloomfield Hills-based Plunkett Cooney PC and Troy-based Giamarco Mullins & Horton PC, all of which have received EM contracts.

Why was Dillon expecting a wave of local fiscal distress? Because they had a plan to cut state revenue sharing, in order to finance corporate tax cuts. Interestingly, there’s a quote in that article that lays the blame on the foreclosure crisis. That’s true to some extent, because the foreclosure crisis did create revenue problems for many Michigan cities. But the cash crisis, the threat of insolvency, that was the result of cuts to revenue sharing.

Connecting the dots reveals some pretty disturbing things. Sandy Baruah, for example, was acting head of the Small Business Administration in the waning years of the Bush administration. When he came on board, (http://www.asbl.com/showmedia.php?id=1147) the SBA was embroiled in a controversy over corrupt contracting practices, and he refused to release damaging information that showed how the SBA was diverting small business loans into Fortune 500 corporate coffers. There was also considerable controversy over revelations that banks were abusing the SBA’s flagship 7(a) loan guarantee program, which guarantees loans issued by private lenders for up to 85 percent of the loss in the event the applicant defaults on the loan. This guarantee makes lenders more willing to take on riskier applicants, and it also encourages fraud in the market much in the way lax lending requirements encouraged mortgage fraud. This exploded in 2007, when national outlets reported that the SBA had not only delegated oversight to the lenders who stood to benefit from the loans, but that it had also tried to cover up an Office of Inspector General report on the fraud, which came out of Michigan. It gets weirder: Citizens Bank, based in Michigan, was a preferred lender for the SBA and was named Michigan’s preferred lender of the year for at least three years in a row through 2011.

In 2009, Tom Zernick, who was in charge of SBA loans at Citizens, was recognized as a “Michigan Financial Services Champion” for the number of loans he had processed while in charge of the program.

What ties this all together? Rich Baird, Governor Snyder’s “transformation manager.” (http://www.eclectablog.com/2013/06/richard-baird-rick-snyders-transformation-manager-the-governors-enforcer-behind-the-scenes.html). Baird was brought on by Snyder right after he was elected, and he immediately formed MI Partners LLC, with a single client: Rick Snyder. Baird was being paid out of the Governor’s secret donor “New Energy to Reinvent and Diversify” Fund, also called the NERD fund. Eventually he was brought onto the state payroll because of the controversy over the secret fund, in October of 2013, and in the midst of the Detroit bankruptcy in which both Snyder and Baird had to testify.

Now, Rich Baird’s MI Partners has a listed address of 4755 E Hawk Hollow Drive in Bath, Michigan, and that the former owner, according to the public records (before it was sold to Baird in early 2011, the same date that he formed MI Partners, LLC) was Thomas Zernick, head of that SBA preferred lender program.

Coincidence?

MARK: What, if anything, does that tell us about the Emergency Manager situation?

ALEC: I think it makes it clear that this takeover is planned. It makes it clear that Governor Snyder had a fairly well developed plan for Michigan’s cities before he took office. And it built on the experiences of the most conservative players in Michigan’s EFM law, like Louis Schimmel.

There are actions across multiple cities consistent with this. So you have the transfer of the Flint retirement system to MERS in 2012, and a proposed transfer in early 2013, which was only thwarted by a court decision. And in Saginaw there is a similar proposal, at least for the Police and Fire System. Given the performance of the Pontiac pension fund, there’s no argument that the transfers are about improving performance. So that lends support to some ulterior motive.

And then you have the water situation. Detroit makes the headlines because of the shutoffs, but Flint’s water rates are the highest in the country. Similarly, there was a huge dispute over water during the EFM receivership in Highland Park under Engler and Granholm, and that dispute has been revived recently as Highland Park was put under state control yet again this year. In Flint, the EM also pushed through massive new construction of a new pipeline, one that an independent audit report commissioned by the state treasury argued against. This pipeline just happens to run through an area of Michigan targeted for fracking, which requires significant diversion of water, and you know who is financing it? JP Morgan and UBS, the two financial firms most associated with municipal securities fraud. Miller Canfield represented Genesee County in the bond offering and had to get a conflict of interest waiver from the City of Flint’s Emergency Manager in order to assist with the deal.

MARK: I’m curious… What, in your opinion, would have been the right way to handle the Flint situation?

ALEC: I think that the state should have maintained existing shared revenues, and I also think that the state should commit more resources to cities like Flint that were injured by the decline in manufacturing.

You know what I find fascinating? Both Governor Granholm and Governor Snyder declared financial emergencies in a number of cities, but, for some reason, neither of them believed that they had the power to declare a moratorium on foreclosures, water shutoffs or heat shutoffs, using their power to declare a state of emergency. If the situation is so dire, why is all of the relief directed at the banks? Why is it that we see proposals to starve the little guy and enrich the corporate ruling class?

And I think the reason is clear enough: There’s a ruling class in this country with so much wealth and influence that we do not have a functioning democracy. So it’s not surprising to me that we see recent academic studies confirming that the US functions much more like an oligarchy than a democracy, or that people like Thomas Picketty are raising the alarms, warning us that rising inequality threatens the survival of democracy. The Emergency Manager law is just a manifestation of that threat in one of the states where capitalism has so clearly failed.

That brings me back to Flint. Flint is the home of the sit-down strike, which turned a collection of local activists on the fringe of the automobile industry into a major labor union that helped to organize millions of people across the country. We need something similar today, something aimed at not only restoring democracy at the local level but extending meaningful democracy throughout the city, the state, the country, even the globe.

Now, in the short term, there are things that can be done to alleviate the cash crunch, like restoring state shared revenue, rescinding the repeal of corporate tax cuts with a sensible tax policy, and ending this insane level of corporate welfare that pervades the state. But to sustain that, we need to change institutions. We need worker controlled enterprises, a public bank that uses state money to directly fund public projects, near-complete transparency at all levels of government, and more public input into budgeting decisions. We need a kind of social and political revolution, in part or in full, much as we had during the New Deal era.

MARK: How many people in the state of Michigan are now living under Emergency Manager rule, essentially unable to elect their own local representation? …Did I read somewhere that nearly half of all black voters in Michigan, thanks to the Emergency Manager law, now have no voice in local governance?

ALEC: I’m not sure what the total number is under EM rule, but you certainly have the right statistics on the percentage of African American residents. And, given this state’s history, and the concentration of our African-American population in cities like Flint, Pontiac and Detroit, that’s obviously very disconcerting. That’s one of the reasons that the NAACP brought a lawsuit to challenge the law. Judge Rhodes wouldn’t let that lawsuit proceed, though. The right to vote is apparently trumped by bankruptcy.

According to the State Department of Treasury, there are twelve municipalities under some form of PA 436 receivership: Five have an emergency manager (Allen Park, Detroit, Flint, Hamtramck and Lincoln Park), three have a Receivership Transition Advisory Board that effectively controls local government with veto power over decisions (Benton Harbor, Ecorse and Pontiac), three have consent agreements that restrain local decision-making and are subject to EM rule if breached (Inkster, River Rouge and Royal Oak Township) and one, Highland Park, is under review.

Those are just municipalities. There are also three school districts with Emergency Managers, one under preliminary review and another operating under a consent agreement. Other school districts, like Buena Vista, were just dissolved. All of these school districts are majority minority: Benton Harbor, Detroit, Highland Park, Muskegon Heights and Pontiac. Muskegon Heights just proves that this system is a complete failure for public schools as well: This year, the State of Michigan had to bail out the for-profit company that was brought in by the Emergency Manager to run it!

So if you do the math, you have over 800,000 people living under EM rule, just over 80,000 under the transition boards, just under 36,000 under consent agreements and about 11,600 waiting to hear their status in Highland Park. Now over at Eclectablog Chris Savage shows that you end up with just over half of the State of Michigan’s African-American population living without local government by early 2013, when Detroit was given an EM.

Group of protesters demonstrate against Michigan Governor Snyder's appointment of emergency financial manager for city of Detroit during rally outside federal building in downtown Detroit, Michigan

MARK: So, what’s next? And what do you tell people who want to get more involved in this fight to restore local authority?

ALEC: There’s so much!

In Flint, you can attend meetings of the local Democracy Defense League. The email is democracydefenseleague@gmail.com, and the group also has a Facebook page. If you are more interested in particular issues, you can get involved in a wide range of fights, from the retirees through URGE to the Flint River Water Support Group.

If you want to get involved in Benton Harbor, there’s an urgent campaign against the prosecution of an anti-EM activist, Reverand Pinkney, which is supported by BANCO, a Benton Harbor group.

If you want to get involved in Detroit, there’s a wide range: Detroiters Resisting Emergency Management (D-REM), Moratorium NOW!, Peoples Water Board, Detroit Water Brigade and I’m sure there are others.

If you want to help with the lawsuits challenging PA 436, the Sugar Law Center and the National Lawyers Guild are good contacts.

The Michigan ACLU is also doing important investigative work in this area, and they have hired Curt Guyette, a well known Detroit journalist, to help fight for democracy with a special focus on the EM regimes.

So there are a lot of opportunities to get involved.

MARK: Would you say that you’re optimistic about our chances?

ALEC: Yes and no. I think that there is a good chance that the courts will strike down some of the more egregious parts of this law. As much as conservatives hate organized labor, I think that they are loathe to approve of a law that lets one person invalidate contracts on a whim. The sanctity of contracts, a principle embedded in the Contracts Clause of the US Constitution, is a very conservative value.

But the problem with the EM law is that it is an extreme local manifestation of a broader problem: Democracy is under attack, suffocated by an extreme growth in economic inequality, particularly inequality of wealth. The campaign to repeal PA 4 was an uphill battle; if you talk to the organizers, you realize that convincing the public was just as much of a fight as getting the question on the ballot. People throw their hands up in the air because they’ve watched the banks get bailed out, they’ve watched their neighbors homes go into foreclosure, they’ve seen the future recede in front of them. And even when they are convinced that they can make a difference by voting, they quickly realize that their voices do not carry the weight that Wall Street does.

Even if the courts strike down PA 436, they are not going to unravel the Detroit bankruptcy. They are not going to rescind the so-called “Grand Bargain.” They are not going to rescind Public Act 181 of 2014,which creates a “Financial Review Commission” that effectively governs Detroit for a minimum of ten years under the near complete control of the executive branch. This Commission will effectively govern Detroit for a minimum of 13 years, and given its scope and size it will likely be a much longer period of time. And this is similar to the recommendations of a secretive so-called “Blue Ribbon Committee” that was appointed by Flint’s Emergency Manager. And although it was closed to the public, prominent local businessmen were invited to attend and give input, most notably representatives of the Mott-affiliated Uptown Development Corporation that has benefitted so much from EM rule in Flint. And the same is true for Benton Harbor, where Sharon Hunt and Marvin Raglon, both former Whirlpool managers, sit on the transition board that sets Benton Harbor’s governance agenda, sharing that power with two Snyder officials.

Even when the form of government changes, the material interests behind it remain largely the same. And you maintain this form of rule by intimidating voters, activists and other opponents of plutocracy. You cannot separate what is going on in Michigan’s cities from broader national and global trends, whether it is CIA spying on the Senate, military coups in countries like Egypt, NSA and FBI surveillance, or any number of decidedly anti-democratic practices that are being normalized in an era of inequality and instability. And we cannot separate it from the distorted priorities of the national government; the bombs that fall on Gaza today explode in Detroit. The billions of dollars that our government pays to subsidize the Israeli war machine destroy not only Palestinian lives, but the hope of a better future right here.

We cannot rely on the courts to save us, and we cannot rely on our representatives to save us. So what are our chances? I think that is largely up to us. There have been similar periods on world history, and there have been successful popular movements to restore some semblance of democracy and equality. The ruling class may compete with one another for market dominance, but they are clearly standing together in solidarity against the working class. But I share Dr. King’s optimism about the moral arc of history. If we can stand together and declare that an injury to one is an injury to all, we can win.

Posted in Civil Liberties, Corporate Crime, Michigan, Politics, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 39 Comments

Can we agree that the Detroit water crisis is about more than just unpaid bills?

A few days ago, in the aftermath of a quick post about the ongoing water crisis in Detroit, a reader by the name of Anne left a comment suggesting that, to a large extent, non-profits working in the City were steering clear of the issue. As I read her comment, she seemed to be of the opinion that the current uproar over water shut-offs in Detroit was more the work of outsiders looking to “save” the City, who perhaps didn’t really grasp the fact that, for the most part, the individuals having their water cut off were people who hadn’t paid their bills for years, in spite of having the funds to do so. While she’s right, of course, that many who recently had their water service terminated were people that merely took advantage of a broken system, in which, for years, non-payment of water bills did not result in termination of service, I take some issue with her comments about how it’s not Detroit natives leading the charge. Having just attended the Netroots Nation conference in Detroit, I can tell you with some degree of confidence that there’s a large and growing grassroots movement in the city pushing this forward.

If you have a moment, I’d suggest that you watch the following video, shot at the conference, featuring Abayomi Azikiwe of Moratorium Now!, Meredith Begin of Food and Water Watch, Monica Lewis-Patrick of We the People Detroit, Jean Ross of National Nurses United, and Maureen Taylor of the Michigan Welfare Rights Organization, who, by the way, was leading a petition drive in 2009 to “make water affordable and stop shutting off the water of low-income people” in Detroit. This session, titled Turn on the Water! How Locals are Fighting Back Against the Shutoffs, was moderated by Peter Hammer, the director of Damon J. Keith Center for Civil Rights at Wayne State University.

[Jump to 32:30.]

Speaking of comments left on this site in the wake of my last post on the Detroit water crisis, here are a few that I found interesting. I think, taken as a whole, they pretty well reflect the diversity of views people hold about the issue… And they remind me, once again, just how awesome of a readership that I have. [note: A few of these comments have been slightly edited in order to improve clarity.]

Demetrius:

I don’t understand the strategy behind this movement/protest.

Where were the big national-attention-getting protests and Hollywood celebrities when Detroit/Michigan neighborhood were being picked clean by multinational banks and their predatory loan practices?

Or when Michigan legislators deliberately engineered policies that drove older Michigan cities like Detroit toward bankruptcy, privatization, and into the hands of “Emergency Managers?”

Or when tens of thousands of public workers — including police officers, firefighters, teachers, bus drivers, and office clerks — were being told “sorry,” but the pension and health care benefits for which they worked for 20, 25, 30 years … won’t be there for them when they retire?

While I’m sure there are many very poor people in Detroit who need/deserve help with paying their water bills, in this case it appears that many may have simply been strategically taking advantage of a system in which for many years on end there were little/no consequences for not paying.

So I would ask the people behind these protests: Who *should* pay the cost for the hundreds of millions of dollars it costs to build and maintain a system capable of collecting, treating, and delivering billions of gallons water to millions of individual homes and businesses across a seven-county area?

I’m sure the organizers mean well, and I suspect much of this outrage is really aimed at the multinational banks, corporations, and governments that have put Detroit (and Michigan) citizens in such a dire predicament … but having this much energy and attention focused on the water issue — while ignoring or discounting the larger forces at play — seems like a tactical mistake.

And given metro Detroit’s already toxic landscape with regard to race, class, and geography, it is hard for me to imagine how having Hollywood celebrities descend from their private jets to lecture us all about how, for those living in the City of Detroit, water should be a “right” (presumably paid for by higher water rates on suburbanites) is really going to help.

Elf:

From the Rustbelt Radical:

Detroit sits next on 20% of the world’s fresh water and has the third largest water supply system in the country, and yet thousands of its people are denied access to clean water. If that’s not a damning indictment of the capitalist model, than I don’t know what is.

Why not do what some places do that, by virtue of living in the land with all this oil, share that wealth in subsidies and investments in social services with residents? This water, owned by the citizens of Detroit, provides over 4 million people, largely in the suburbs with water. You would think it would be considered a huge asset of the city in its renewal. Instead of investing large amounts to identify and deal with the many redundant lines and services belonging to abandoned buildings, in order to restore some efficiency. No, the world of capital will not allow for that.

New Detroit chooses to increase rates 9% on rates that are already twice the national average on the people least able to pay ($75 a month when you live on less than $1000 is simply a hardship). And then, turn off the spigot on the poorest and most vulnerable; those behind for the measly amount of $15, or as also happened in many cases—those in good standing. All the while water runs in the street from innumerable breaks, water continues to flow to countless abandoned structures and businesses that owe 100s of thousands in debt to the Water Department aren’t touched. The golf clubs necessary to make the privatizations deals that are undoubtedly already being discussed still get theirs, $400,000 of debt or not.

But what’s not necessary to that deal, are all those black, and mostly poor, people that make up eighty-something percent of the City’s population. More than unnecessary, they are an impediment to be removed. Then the real ‘Development’ can commence.

Remember when we learned about the end of Reconstruction, the reintroduction of share cropping, the end of black elected officials and the rise of Jim Crow? Well, I think we are looking at something analogous here now. Black political power was exercised, for the first time since Reconstruction, in the mainly large, northern industrial, urban centers, backed up by municipal and other unions. With the disenfranchisement of a majority of Michigan’s black citizens, the ‘Right to Work’ enactments and the end of manufacturing and with it, any hope at bettering your position through work, we can add what amounts to forced removal of unwanted population from those cities, so that the land might be better used.

The end of the Second Reconstruction is happening now, in our cities, before our eyes; this time in the era of neo-liberalism, and of the first black President.

Dan:

Elf, the water bills are already subsidized for poor people. They simply chose not to pay their bills because they knew it wouldn’t be shut off. Years and years of in paid bills. This is maddening. This isn’t someone behind $15 and a month late.

Why the fuck are people rallying around people that refuse to pay their bills? This isn’t corporate greed. This isn’t people getting screwed by politicians. This is people trying to get something for free that costs billions of dollars. What the fuck is going on in this world?

Peter Larson:

I think that Detroit needs to make allowances for the very poor or come up with innovative ways to pay for water service so that the very poor can have access to it.

However, while access to clean water is a human right, there is nothing to suggest that access to water free of charge is a human right, which, more often than not, seems to be the underlying message.

Michigan may have plenty of fresh water, but it still costs money to pump it in, treat it and then deal with waste water.

It seems that people don’t realize this. Regardless of ideology, this is just a reality.I had to pay to get my well dug, the pump and to have a septic put in. Perhaps it was my human right to have that done for free?

Mark Maynard:

I’m still working through my thoughts on the matter. I’m by no means one of the most vocal on this subject. (I do not see how unlimited water can be delivered for free to all people.) With that said, though, I think the current situation we’re seeing unfold in Detroit is about more than just water. It’s about poverty, and a system in which the poor pay disproportionately more just to live. It’s just coming into sharp focus here, through the lens of water. I agree wholeheartedly that people who can pay their bills should pay them. I likewise agree that many people just haven’t paid for years because they knew they wouldn’t be shut off. (The last bill to get paid is likely the one that you don’t fear will be cut off.) I don’t think there’s any doubt, however, that many have been cut off who cannot afford to pay water bills that continue to rise. And I fear this is just the tip of the iceberg. With wages dropping faster and the cost of living is rising, it’s just a matter of time before we start seeing stories like this across the country.

Dan:

You will never admit it, but its a lot more beneficial for someone making say $20k a year to not work at all. They’d have exactly the same lifestyle with government benefits. So tell me, why they should work?

Maria:

Dan, they shouldn’t work. And they don’t. They can just go to one of countless Michigan Lawyers, who get them into the disability pipeline. Tens of thousands are lined up waiting to collect a free check.

And the parents just keep having more kids they can’t pay for or take care of, because they know they will get welfare. A water bill is just one example of the bigger problem of lack of personal responsibility.

You have one baby and need help? You should get welfare help. You have a second one? Done. No more money. The city is bankrupt. The state is pretty much bust too.

If you don’t agree that people should be personally responsible, then keep voting for socialism, and soon we’ll have 40% unemployment, just like Spain. Is that compassionate to vote for idiots that want to transform this country into Spain?

Pay your damn water bill people.

Peter Larson:

I’m certainly of the opinion that this situation is the result of a failure of governance. The Detroit City Government should have been proactive about collecting fees for water in the past, and their failure has come back to haunt them, though in a manner slightly different than one might otherwise expect. Failures of governance would usually mean that water service would benefit no one or exclude the poor from the beginning.

I am not very sympathetic here. Returning to a state of regular collections of fee for services does not constitute a human rights violation and, certainly, as I said before, there is no such thing as a “human right to free water” given the high costs of providing water services.

However, the protests are clearly about more than water and should be taken seriously. The water issue has merely served as a springboard for demonstrations regarding a long history of political and economic marginalization and poor city governance.

As for whether the poor pay more to live, they do. Payday loans are often the only banking services available to the poor, as regular banks and credit unions don’t usually offer liquid credit to people whose account balances are usually zero. Non-poor people have credit cards, also a service unavailable to the very poor. This is exactly why payday loan places are able to operate. And while it can be debated as to whether the poor need to have access to liquid credit at all, sudden expenses while living hand to mouth can surface at anytime in the form of disease, injury and car repairs.

It has been shown that prices for goods in poor areas are higher than in wealthy areas even in absolute terms. Detroit’s lack of a large grocery store, for example, forces people to buy food from convenience stores and small markets which are not able to buy good in bulk and pass savings on to customers so that households pay more for food than other places. While it can be argued that people could just visit a farmers market, many poor people work multiple jobs and require the convenience of 24 hour access to food, something a farmers market can’t provide.
From afar, it all seems simple. Having been poor for most of my life, I can tell you that it is not. Poverty is a complicated existence, it is expensive and full of volatilities.

Thom Elliott:

…but personal responsibility is the single most important existential criteria whatsoever, if these thousands of people in pure destitution cant pay their water bill, let ‘em die. The illiterate denizens of an apocalyptic postmodern ruin should be just like the heroic and spiritually pure corperate people who rule our plutocratic oligarcy. As you know our corperate overlords are just bastions of personal responsibility, and never require handouts…like the 110 billion dollars Fortune 500 companies have recieved in corperate welfare since 1976, which includes 13 billion dollars for Boeing, & over 1 billion for Berkshire Hathaway. We also must keep the billions of tax dollars flowing to Israel so they can have enough ammo to murder soccer-playing Palestinian children on beaches. These international corperations with assets in excess of 58B (Warren Buffet) actually need our welfare more then these lazy, good for nothing, socialist blacks, who probably should just be executed en masse for their lack of personal responsibility…

I’m very interested to know what ‘human rights’ even are… at all. If water is not a human right, when every man woman & child require water to live, & we are made of over 70% water, then what is a ‘human’ ‘right’? Are these solely what the technological fist of our twisted nihilisitic world deigns to contingently grant to us? Are rights somehow rooted in the disordered ratiocinations/incomplete project of the Enlightenment from 400 years ago? Are they intrinsic to being-human? Like a human being has apriori rights a fortiori? Or does the vengeful sky god of the US religious nihilists give them to us? Where do rights come from, and what are they?

Wobblie:

Dan, you are living in the past. Able bodied males get no government assistance. With Temporary Assistance for Needy Families (TANF), women only receive assistance for a maxium of 4 years over the course of their lifetimes here in Michigan. I guess you have not noticed the explosion of begging on our streets. This last year I began seeing young able bodied woman at exit ramps begging for the first time.

Oliva:

Gotta say, it looks and feels like a pathology–this (highly engineered, heavily sponsored) turn toward anti-community in the guise of wanting “freedom.” It’s not natural! The people who pretend they got where they are on their own have invested so much in disliking others, sitting in judgment. If not for grants of a kind and pooled resources, would they have drinkable water, a highway to drive upon, a school, a library, a life? Funny (not funny!) how they keep track to make it look like they’re paying for things while others are not. A very unseemly construction. Gotta move beyond this willfully unwholesome era – we know it could be much better for many more people. So much work to do… not exactly simple work either.

Lynne:

The programs for poor people to help them pay for their water are inadequate. Water in the city of Detroit costs about double what it costs in Ypsilanti, partly due to things like older infrastructure and a large number of people not paying. Free water (up to a point) is a human right imho. The solution seems obvious to me. Socialize water and provide a certain amount per person free of charge and then charge a LOT for anything over that amount. Get the people who landscape or fill pools to subsidize everyone else.

And for those of you who have no compassion for your fellow human beings, look at it from a purely selfish angle. There are some serious diseases which can crop up if sanitation isn’t adequate. If there is one thing society should want to encourage, it is toilet flushing and hand washing. Just from the public health perspective…

I might also mention that the Palmer Park Golf Club in Detroit owes the city $200,000 in unpaid water bills. We also use a lot of water for things like baseball fields. Comerica park owes the city $55,000 for water. Hockey ice rinks apparently use $80,000 of water which has not been paid for. If we are going to have a discussion about deadbeats, perhaps we can start there?

Grumpy:

Potable water to drink is a basic human right. That represents about 1% of the 100 gallons of water used by the average American. Flushing the toilet with clean water that is fit to drink is not not a human right.

I know I won’t convince all of you, but I do hope that at least some of you come away from this post recognizing, as I do now, that this is about more than just lazy Detroiters looking to game the system. This is about the rising cost of being poor in America. This is about the cost of living rising as wages fall. This is about the end of the American middle class. And Detroit is ground zero.

It’s worth pointing out that, after last week’s big protest in Detroit, and the letter from the United Nations, the City has issued a 15-day moratorium on water shutoffs. Furthermore, Canadians have begun smuggling water across the border for the people of Detroit and someone has launched a website where donors across the world can be matched up with Detroiters who need help in order to pay their water bills.

Posted in Civil Liberties, Detroit, Uncategorized | Tagged , , , , , , , , , , , , , , , , | 45 Comments

Ypsi 2014 mayoral debate

I couldn’t attend, as I had something else I had to attend to, but my friends Ben and Lindsay hosted a mayoral debate on Monday night at the downtown Ypsilanti library. Here’s the video. If you hit “play” right now, we can watch it together…. Actually, just give me a couple of minutes. I want to pop some popcorn and open a beer.

Posted in Ypsilanti | Tagged , , | 22 Comments

Howard Dean on his 2004 run for President: “We were really running against the Democratic party… The Democratic party was becoming increasingly what we would now call corporatist. They’d given up. They just weren’t fighting for a better country.”

A few days ago, at the Netroots Nation conference, I had the good fortune to catch a session with former presidential candidate, and progressive standard bearer, Howard Dean. Following is the first of three videos I hope to post over the coming weeks, accompanied by my quick attempt at transcription. In this clip, you’ll hear Dean, who until somewhat recently served at the head of the Democratic National Committee (DNC), talk about how he made the decision to run for President, the genius of his campaign, Cheney’s “horse shit,” Bill Clinton’s lying, and the price he paid for telling the truth. (The questions during the session were posed by Joe Joe Rospars, who got his start with the Dean campaign before moving on to be Obama’s chief digital strategist during both of his presidential campaigns. In an attempt to streamline things, I’ve reworded and simplified his questions in the transcription below.)

howarddeandetroit

What made your 2004 campaign so revolutionary?

I didn’t win, so I’ve had 10 years to think about the campaign. (Laughs.) What I realized is, the great genius of our campaign was not that I was against the war and all of that stuff, when nobody else was. The great genius of our campaign was that we had tons and tons of 23 year olds like Joe who came to work for us. And we actually listened to them, and let them decide what to do. And that is actually how this got built. So I actually see our campaign, for those of you who are a little grayer, even though I bear no resemblance whatsoever to Gene McCarthy in many ways, our campaign was in many ways the Gene McCarthy campaign of the ‘60s. It was the expression of a whole new generation… that I call first globals and not millennials. And that’s what the campaign was all about. It wasn’t as well organized as it might have been, but we sure had a hell of a lot of fun. And I do think that we revolutionized politics, but not because I was revolutionizing politics. What I did was give young people the freedom to come to the campaign and revolutionize politics. And that’s really what happened…

How did you decide to run for President?

I didn’t ask anybody, including my wife, whether or not it was a good idea to run for President… So I’ll tell you how I got to run for Lt. Governor (of Vermont). I was in the legislature for two terms… And everything in Vermont, until you get to the top five offices is part-time, including Lt. Governor… So, during my second term, Judy and I were getting ready to have our second child, and that was clearly much to much for our small loft apartment in downtown Burlington, for which we were paying the huge amount of $125 a month. And so we had to move. We had to move out of my district. And, in the district I moved to, there were two State Reps, both of whom were Democrats. They were incumbents. And I wasn’t going to run against them. I could have run for State Senate in Chittenden County. But Chittenden County, by Vermont standards, is a big, very expensive county (to run in). And I could have run against Jim Jeffords, which would have been a loosing proposition. But I figured, “Ah, I could get my name out there.” Or, I figured, I could run for Lieutenant Governor. And I figured, “A Chitlin County race is just as expensive as a Lieutenant Governor race, so you might as well run for Lieutenant Governor.”

So, then, I thought I was being so smart and clever… and I was about 35, or something… and I sit down with this rookie reporter from the Rutland Herald, which, at the time, was the most respected paper in the state in terms of politics, people who know politics, and so forth. And I’m trying to be so clever… as the southern part of the state has no idea who I am whatsoever… as the Burlington Free Press is the big paper in my area… so I thought that I’d hint, and float a trial balloon. And I’m thinking that I’m so smart and so sophisticated. And the next day, on the front page of the Herald… it’s a Saturday, and there’s not anything going on… and the headline says, “Dean to Run for Number Two Spot.” (Laughs.) So I’m working on Saturday morning and my wife gets a call. “What do you think about your husband running for Lt. Governor?” And she says, “WHAT?” (Laughs.) So, the Presidential decision was pretty much made the same way. (Laughs.)

Did you go into the race with the intention of building a grassroots campaign?

No… Actually, opposing the war wasn’t on purpose either. I think one of the charms that the campaign had was that I pretty much said what I thought, which got me into trouble on numerous occasions. But I think it was refreshing for people to see a candidate who said what he thought, and wasn’t looking at 19 polls to tell them what they should think. What happened was… First of all, I realized that, over this past ten years, we were really running against the Democratic party. The Democratic party had completely lost its way. They had deregulated Wall Street, which was a disaster, and we’re still paying a price for it. They had voted for Bush’s tax cuts, which had led to this enormous deficit which Obama keeps getting blamed for. The truth is, those deficits are mostly due to A. the recession that was caused by Bush, B. the tax cuts which were caused by Bush, and C. the Iraq war. That’s where the deficit comes from. So Obama deserves no blame for the deficit whatsoever. You can’t say that when you’ve been President for six years, but, in fact, that is the truth. So the Democratic party was becoming increasingly what we would now call corporatist. They’d given up. They just weren’t fighting for a better country.

So I’d intended to run on balancing the budget, which I thought was important, and on universal health care, which hadn’t been looked at in a long time. And then the Iraq war came along… and I’m not that much of a dove. I supported the first Iraq war because I thought we had a treaty obligation to Kuwait. I supported the war in Afghanistan because they harbored people who killed 3,000 Americans. But I’d also lived through Vietnam, and I read the British press… mostly the Guardian and the Independent… and, in Britain, they publish defense stuff that you couldn’t get published here. And the two intelligence agencies in the world that are the closest are not the Israeli and American intelligence agencies, but the British and the American intelligence agencies. So I was pretty sure that whatever the British knew, the Americans knew. And British intelligence was saying there were, in fact, absolutely no weapons of mass destruction programs in Iraq. And they were also saying that… because Cheney was trying to make out that (Iraq) had an atomic weapons program, which turned out to be complete horse shit… (Laughter.) I actually did not use that word during the campaign, but it’s one of the few that I didn’t… So it turned out that what the Brits were telling their people, which is what was getting in the papers, was that there was probably not an atomic program. And, even if there was, it was five years from any progress.

So, I’d been in this movie before, where a President of the United States was lying to our faces, and sending 55,000 American kids to die in Vietnam. And I didn’t want to see that movie happen again. And that’s how I got to be against the Iraq war. At the time I didn’t know that much about foreign policy. But I’m thinking, “These guys are lying to our faces, and, if they’re lying to our faces, I don’t know what the facts are, but I do know that they’re lying, and we shouldn’t be going to war. If the President and Vice President think it’s OK to lie to us, A. they shouldn’t be in office, and B. we shouldn’t be going to war.” (Applause.) So that very bluntness unearthed… The support of the campaign was actually a bimodal distribution. The young people we drawn to the campaign because somebody was willing to stand up and say what was what. Young people have always been drawn to frankness. As you grow up, you realize that’s not always the best political tactic. (Laughter.) But that’s the way I am, and I wasn’t going to change. And there were also a ton of people my age who had given up on politics. And they came out in droves. A ten thousand person rally, which is what we had in Seattle, just blew me away. By Obama standards, that’s not all that big, but it was an incredible thing. People who didn’t believe in politics because of all of the shananagins that had gone on, suddenly began to think that there was hope again. And then the 23 year olds came in.

And we didn’t know how to do any of this stuff. Joe and his huge team, all of whom were being paid about two hundred bucks a week, when they got paid at all at the beginning… We had these old, clunky sites. Remember, there was no Twitter. There was no Facebook. There was no YouTube. There was email. We had this company Convio, which has somehow still survived. (Laughter.) and Lieberman and Gephardt were using Convio at the same time. So, every time we’d send out an email, and all of these gazillion dollars in contributions would come in, all of their sites would crash, giving us a double benefit. (Laughter.) We’d be bringing all of this money in, and they couldn’t bring any in. So these guys were building this stuff on the fly. (Points to Joe.) They were inventing all of the tools on the fly. We had a lot of interesting stuff, but no one had figured out how to put it all together. Of course, those days, everyone over 30 was totally incompetent with everything having to do with the internet, except for tiny handful of geniuses. But these people who were 23 knew everything. So we said, “Great, you take over the campaign, and I’ll just go out and talk.”

How was running a state different from running a campaign?

I didn’t run the campaign, and that was a mistake. The candidate should never run the campaign, but we were in a lot of disarray back in Burlington. The biggest problem was me, of course, because I’d say what I thought, and I was impulsive. What I said was true, but you do get penalized for telling the truth. I remember when Saddam Hussein was captured. It was on the day of my first major foreign policy address. It was to a group of foreign affairs people in LA. And so we worked out this speech, which was about five or six pages of single-spaced stuff which I was supposed to read. And I absolutely hated reading speeches. I hated it with a passion. But I agreed to do it, because every “i” had to be dotted, and ever “t” had to be crossed. It was all very diplomatic language. And, when Saddam was captured, I didn’t call the office, and I didn’t talk with any of our foreign policy people, and we had some very good people who were working with us, including Susan Rice and Sandy Berger, and I didn’t call any of them. I just crossed out a few lines and wrote in, “And we are not safer now that Saddam Hussein has been captured.” And that is true. This was irrelevant… But it was a stupid thing to do on this triumphal day when everyone could feel good about the American armed forces for having captured this terrible person, who was hiding out in a cellar somewhere. So that’s the kind of stuff which just didn’t help. When you have a candidate who basically does what they damn well please after having agreed to do something else…

Then there was the problem with management at the top of the campaign. Which I’m not going to go into.

And the third problem was our operation in Iowa. And we didn’t have the means to fix it. And that was the only state that we didn’t understand. We were way ahead of everybody else… Kerry actually had to borrow our electors in New York State. New York State is the hardest state to get on the ballot of any state in the country, by far. You have to have a certain number of signatures in each of the 45 counties, or whatever it is. And then you have to have three electors from each one of those counties. And we had a full slate, and no one else did. So our on-the-ground people were unbelievable. But there were a lot of problems on the campaign and that’s the real reason we didn’t (go any father).

You can’t really run your own campaign if you’re running for President. And you shouldn’t. But you do have to have a very disciplined, experienced, organization. And it wasn’t just that.

And there was also the fact that other Democratic candidates were trying to stop you. Weren’t the other campaigns coordinating to keep you from getting the SEIU endorsement?

Edwards actually stayed out of it, to his credit. It was Lieberman, Kerry. Gephardt and Wes Clarke… who was actually… These are stories you never heard before… (Laughs.) I’ve probably never told this on in public before, but I’m going to tell it…

So, the day that Gore endorsed us, which was the 9th of December. This is a big surprise, and all of this… After he endorses us in New York, we fly to Iowa and do an endorsement there. And then he flies to Sweden or somewhat, and I’m flying back… because, of course, I’d disrupted my schedule (for this). And I get a call as we’re taking off, and it’s President Clinton. And he said, “Hey, Howard, how are you?” (Doing a Clinton impression that gets big laughs.) I said, “Well, Mr. President, I’m doing just great.” …I learned two things from this call… And he says, “I know there are a lot of rumors around that the Clintons are supporting Wes Clark, and that is just not so. It’s not true.” And I said, “Umm Hmmm.” And I knew exactly how long he was going to talk. He was going to talk for 37 minutes. Because that’s how long every phone call he… He once called me in a candy store in Vermont, where I was buying presents. The phone rings. And I was at the cashier’s desk. And it’s Bill Clinton on the other end of the line. And it’s Christmastime… And he says, “That is not so.” And so we talked for a while. And the plane is taking off… Cell phones, by the way, do no disrupt plane takeoffs. (Applause and laughter.) …So the plane is taking off and we’re getting higher and higher, and the cell drops off, and that’s the end of the call with the President. So I learned two things. One, I learned that he thought that I was going to win, although he never said that, because he wouldn’t have called me (otherwise). And, two, they had indeed gotten Was Clark to get into the race in order to get me out of there, which is why he insisted that he hadn’t. (Laughs.)

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Elizabeth Warren outlines the fight ahead for Progressives at Netroots Nation 2014

One of my favorite people in the whole world, Massachusetts Senator Elizabeth Warren, dropped by the Netroots Nation conference yesterday in Detroit to talk about banking reform, the threat of oligarchy, the fight to establish the Consumer Financial Protection Bureau, and those things that she feels that we, as Progressives, are ready to fight for. My video is below, but here’s a bit of the transcript.

…We can’t win what we won’t fight for, and it will be a hard fight. Today, many powerful companies look for any way they can to boost their profits and their CEO bonuses. They try to run more efficient companies. They try to grow faster. They try to beat out the competition. But many of them have another plan. They use their money and their connections to try to capture Washington, and rig the rules in their favor. From tax policy to retirement security, those with power fight to make sure that every rule tilts in their favor. Everyone else just gets left behind. That’s what we’re up against. That’s what democracy is up against.

Just look at the big banks. They cheated American families, crashed the economy, got bailed out, and now the biggest banks are even bigger that they were when they were too big to fail in 2008. They still swagger through Washington, blocking reforms and pushing around agencies… A kid get caught with a few ounces of pot and goes to jail, but a big bank launders drug money and no one gets arrested… The game is rigged! It is rigged!

But it isn’t just the big banks. Look at the choices that the federal government makes right now. Our college kids are getting crushed by student loan debt. We need to rebuild our roads and bridges, up rage our power grid. We need to more investment in medical research and scientific research. But, instead of building a future, this country is bleeding billions of dollars from tax loopholes and subsidies that go to rich and powerful corporations.Billion dollar companies take advantage of every benefit they can squeeze out of the American government, and then they put together sleazy deals with foreign countries so that the can renounce their American citizenship and pay no taxes… Billionaires pay taxes at lower rates than their secretaries.

How does this happen? It happens because they all have lobbyists… lobbyists and Republican friends in Congress… lobbyists and Republicans to protect every loophole and every privilege. The game is rigged, and it isn’t right. It is not right.

Take a look at what happens with trade deals. For big corporations, trade negotiations are like Christmas morning. They can get special gifts through trade negotiations that they could never get through (through other means). How does that happen? Because trade negotiations are held in secret so that big corporations can do their work behind closed doors. Giant corporations get insider access to promote their interests while worker rights and environmental regulations are just gutted. From what I hear, Wall Street companies, pharmaceuticals, telecoms, big polluters, and outsourcers are all smacking their lips at the possibility of rigging the upcoming trade negotiations.

Now stop and ask yourselves, “Why are trade deals secret?” I’ve actually heard supporter say, “They have to be secret, because, if people knew what was going on, they would be opposed.” It’s true. Well, my view is, if people would be opposed, then we shouldn’t have those trade deals.

The tilt in the playing field is everywhere. When the conservatives talk about opportunity, they mean the opportunity for the rich to get richer and the powerful to get more powerful. They don’t mean opportunities for a young person with $100,000 in student loan debt to try to build a future. They don’t mean opportunities for someone out of work to get back on their feet. They don’t mean opportunities for someone who worked hard all of her life to retire with dignity… The game is rigged…

So, the way I see it is this. We could whine about it. We could whimper about it. Or we can fight back… I’m fighting back.

This is a fight over economics. A fight over privilege. But, deep down, it is a fight over values. Conservatives and their powerful friends will continue to be guided by their internal motto, “I got mine, the rest of you are you’re on your own.” Well, we’re guided by principle. And it’s a pretty simple idea. We do better when we work together, and invest in building a future.

We know that this economy grown when hard-working families have the opportunity to improve their lives. We know that this country gets stronger when we invest in helping people succeed. We know that our lives improve when we care for our neighbors and we help build a future not just for some of our kids, but for all of our kids. That’s what we believe! These are Progressive ideas. These are Progressive values. These are America’s values. And these are the values that we are willing to fight for…

(As progressives) we believe that Wall Street needs stronger rules and tougher enforcement, and we’re willing to fight for it! We believe in science, and that means that we have a responsibility to protect the earth, and we will fight for it! We believe that the internet shouldn’t be rigged to benefit big corporations, and we should have real net neutrality, and we will fight for it! We believe that no one should work full-time and still live in poverty, and that means raising the minimum wage, and we are willing to fight for it! We believe that students are entitled to get an education without begin crushed by debt, and we are willing to fight for it! We believe that after a lifetime of work, people are entitled to retire with dignity, and that means protecting social security, medicare and pensions, and we will fight for it! And… I can’t believe I have to say this in 2014… We believe in equal pay for equal work, and we are willing to fight for it! We believe that equal means equal, and that’s true in marriage, it’s true in the workplace, it’s true in all of America, and we will fight for it! We believe that immigration has made this country strong and vibrant, and we will fight for it! And we believe that corporation are not people (unintelligible), and we will fight for it!

I know that she’s said that she wouldn’t run, but I think that sounds like a pretty good Presidential platform right there… What do you think?

Posted in Corporate Crime, Detroit, Politics | Tagged , , , , , , , , , , , , , , , , , , , , , , , | 15 Comments

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