Obama Will Bail Out Detroit “Over My Dead Body,” Says Rand Paul

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As we reported yesterday, Detroit is now the largest US city to ever file for bankruptcy.

It is likely that, as usual, President Obama will simply bail out the city with federal tax dollars.

But Senator Rand Paul from Kentucky said he will use every resource to prevent this from happening.

Paul said Detroit needs to save itself and learn from its mistakes. He said, “I basically say Obama is bailing them out over my dead body because we don’t have any money in Washington.”

He continued, “There’s some good things that come out of bankruptcy. One is you get to start over. Bankruptcy lets you be forgiven of your debt. And you do so by getting new management, better management, and by getting rid of unwieldy contracts, contracts that give you where public employees are getting paid twice what private employees are and things come back more to normal. That’s the way cities and businesses can recover.”

Ilegally dumped tires sit in front of a vacant, blighted home in a once thriving neighborhood on the east side of Detroit hi-detroit-home-crumbling-h 3085_1packard_4__detroit_2012_6134255

Although Obama has not announced a bailout of Detroit yet, the White House said it is “monitoring the situation” there. Steven Rattner said on MSNBC that Obama is currently “making indications that Detriot can be expected to be bailed out.”

Rand Paul said that if Obama bails out Detroit, it will send the message that the federal government will simply bail out any city that files for bankruptcy.

He said, “Those who don’t have their house in order, who are teetering on disaster, will continue to make bad decisions. And by the way these [local and state budget choices] are tough decisions. I’m not saying they are all prescient and that it will be easy on everybody who works for the city or the state, but you need to make these decisions and the sooner you make them the better. If you wait to make them, it’s even harder on people.”

“You don’t set up an implicit promise from the federal government that everybody is getting bailed out. It’s sort of like too big to fail for banks. If you have too big to fail for cities or for states and they believe they’ll be bailed out they’ll continue to make unwise decisions,” Paul continued. “So, really, the answer is, just like the federal government, live within your means and spend what you have but don’t spend money you don’t have. The problem is so many of our state governments, the politicians are being elected by the public service unions. If the public service unions want to be paid twice as much as what private sector employees make, they want twice as good benefits and twice as good a pension.”

Paul concluded that Detroit should be held responsible for the fiscal mess the city got itself into.

Even though Obama would bail out Detroit with good intentions, good intentions do not always yield positive results. As Rand pointed out, a Detroit bail out would only set a bad precedence for the rest of the country.

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