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Little sign of rush to help rescue bankrupt Detroit
Aggregated Source: Shanghai Daily: Business

DURING the bleakest days of the Great Recession, the US Congress agreed in bipartisan votes to bail out two of Detroit's biggest businesses, General Motors and Chrysler.

Today, there seems little appetite from either Democrats or Republicans in Washington for a federal rescue of the birthplace of the automobile industry. Detroit now stands as the largest American city so far to file for bankruptcy protection.

Such a bailout would be huge, perhaps as much as US$20 billion. Federal resources are strained, with the national debt at US$16.7 trillion and the federal government struggling under the constraints of automatic spending cuts that took effect in March.

President Barack Obama has had a hard enough time getting his present proposals though Congress, where Democrats hold a narrow majority in the Senate and Republicans are in firm control of the House.

"I think it would be a waste of the president's time to even propose it. His plate is so full and throwing Detroit into the mix is the last thing in the world he'd want," said Ross Baker, a political science professor at Rutgers University. "I think the era of big government bailouts is over."

Political leaders in Washington haven't pushed for a bailout of Detroit, which was the nation's fourth-largest city in the 1950s but since has had a declining population, accelerated by hard times for the auto industry during and right after the punishing 2008-2009 recession.

Congress is still in near-gridlock territory. Opportunities for spending vast sums of money on a bailout for Detroit seem severely limited. The White House is taking a wait-and-see approach.

"Can we help Detroit? We don't know," Vice President Joe Biden said in response to a reporter's question. Presidential spokesman Jay Carney, when asked directly if a bailout was a possibility, appeared to rule out such assistance.

"We will, of course, as we would with any city in this country, work with that city and have policy discussions with leaders in the city, and make suggestions and offer assistance where we can," Carney said. "But on the issue of insolvency ... that's something that local leaders and creditors are going to have to resolve."

Local leaders aren't pushing for a federal bailout after the city filed for Chapter 9 bankruptcy protection last Thursday, and Republican Governor Rick Snyder isn't, either. "People should not expect bailouts at either the federal or the state level," Snyder said. "We've been very diligent about this. We want to be a supportive partner at the state level. I believe the federal government does (too)."

Detroit's bankruptcy could last until autumn next year, when Snyder is expected to ask voters for another term.

"I deeply respect the citizens of Detroit," he said. "They along with the other 9 million people in our state hired me to do this job. They're my customers. This was a tough step, a difficult decision, but it's the right decision."

The city's emergency manager, Kevyn Orr, says that, for now, Detroit will stay open, bills will be paid and city services provided.

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