Countering the Right: Insidious Koch Brothers Attack on Detroit Bankruptcy Settlement

A prime example of the absurd economic inequality in the U.S. has reared its ugly head as the Koch brothers apparently got bored and have decided to throw money at the Detroit bankruptcy settlement in an effort to deceive the 99%.

Their first tactic of deception is to attack the “bailout”.  Just one issue with that: it’s not a bailout.  As noted by Republican Gov. Rick Snyder in the article:

“This is a settlement. This not a bailout,” Snyder said. “And I want to be very, very clear about that.” (Emphasis added)

The easy way to confirm that statement as true would be to simply realize it was an officially filed Chapter 9 bankruptcy and not a legislative decision to provide stimulus-type money to the city.

But that isn’t the really despicable attack by the Koch brothers group.  Take a look at their page at http://www.strongerdetroit.com/ (disgracefully named, as usual).  You’ll see this nugget of info:

Per capita state revenue sharing payments are over 3x what other cities receive.  In 2010, Detroit received $335 per capita in revenue sharing payments compared to $96, the average amount per capita all other cities over 50,000 in Michigan received.

Clearly, those greedy people in Detroit just upped their piece of the Michigan pie in the years leading up to this bankruptcy until they were all happy, fat cats.

Except they didn’t:

Between 2000 and 2010, inflation adjusted state revenues per capita declined by 13.7 percent in Detroit, while in Buffalo they increased by 45 percent.  In the recession period alone (2007 to 2010), state aid to Detroit went down by 8.2 percent, but went up by 7.2 percent in Buffalo.  Thus a big difference between these two structurally similar cities is the economic and fiscal environment and fiscal choices made at the state level.  Had New York treated Buffalo in the same way fiscally as Michigan dealt with Detroit, Buffalo, which is already teetering on the edge of fiscal crisis, might have been forced to declare bankruptcy as well. (Emphasis added)

But that doesn’t tell the whole story.  The per capita spending is still three times higher and some might be angry by this.  Unless they realized why.

Detroit’s poverty rate is a whopping 38.1%, according to the Census Bureau, more than double the Michigan state rate of 16.3%.  Add on the fact that Detroit is Michigan’s largest city by a lot (more than three times the size of second place) and the picture starts to come together.  But just to drive the point home, let’s give an example to further explain the disparity.

Suppose you have two cities in a state and both have a population of ten people.  City A has one person (10%) living below the poverty line.  City B has three people (30%) living below the poverty line.  If the state spends $100 per person in various ways on people below the poverty line (education, unemployment insurance, food stamps, etc.), then City B would be receiving three times more ($300) from the state than City A ($100).

The reason for Michigan’s spending on Detroit is not very difficult to figure out.

The reason the people of Michigan might fall for the Koch brothers heinous attack on the city’s bankruptcy settlement is also easy to figure out: brainwashing.