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Detroit bankruptcy filing puts Obama in awkward spot

Posted on: July 19th, 2013 by kresta in the afternoon

By BRIAN HUGHES | JULY 18, 2013 AT 6:50 PM   
Washington Examiner

Photo -   When Detroit on Thursday became the largest U.S. city to file for bankruptcy, it punctured a major narrative that was key to President Obama’s re-election: that his auto bailout would help resuscitate the Motor City’s battered economy and inject life into an area unable to shake hard times.

Facing $18.5 billion in long-term debt, Detroit is now turning to the federal courts for help, hardly matching the rosy portrait painted by the president in recent months.
On the campaign trail, particularly in the Midwestern states dependent on the auto sector, Obama trumpeted his cash infusion to major American car companies as part of his populist pitch to blue-collar voters.

“I wasn’t going to let Detroit go bankrupt. Or Toledo go bankrupt. Or Lordstown go bankrupt. I bet on American workers,” Obama said in the final sprint to November’s election.

And Obama and his campaign demonized Republican presidential candidate Mitt Romney for a New York Times op-ed headlined, “Let Detroit Go Bankrupt.”

Although a variety of factors led to Detroit’s current situation, the White House will face questions about what went wrong in a city that is just a shell of its former self.

Thursday evening, the White House said it was closely monitoring the situation but gave no clear indication about the path ahead.

“While leaders on the ground in Michigan and the city’s creditors understand that they must find a solution to Detroit’s serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalize and maintain its status as one of America’s great cities,” White House spokeswoman Amy Brundage said.

Before the Chapter 9 bankruptcy filing, administration officials had thrown cold water on the idea that it would bail out Detroit as it did with General Motors and Chrysler.

“I know that the president is aware of the situation in Detroit and that administration officials have been in contact with leaders in Detroit, but I am not aware of any plans or proposals that the president has, but we’re certainly aware of the circumstances,” White House Press Secretary Jay Carney said last week when asked about providing aid to the city.

The recent developments in Detroit punch a hole in the feel-good story that Obama — and especially Vice President Joe Biden — spun in touting the administration’s economic accomplishments. It’s a political problem even acknowledged by some Democratic operatives Thursday.

“What can you say? It’s just a sad, sad story,” said one veteran Democratic strategist. “Hard to craft a winning political message around bankruptcy.”

Read more here.

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