Detroit has declared bankruptcy, and while the city’s 700,000 residents have been denied a bailout by the Obama administration, a handful of foreign countries continue to receive hundreds of millions in aid each year, far surpassing the total currently given to the struggling Michigan city.
Bloomberg News reports that President Obama proposed giving Colombia about $323 million in aid next year, mostly to combat drug trafficking and violence. Detroit, with an 81 percent higher homicide rate and a list of economic woes, will get just $108.2 million.
Is foreign aid partly to blame for the current problems? Policy experts have given mixed analysis, but one thing is clear – the people of Detroit are being asked to sacrifice more to make up for the $17 billion in long-term debt the city owes.
“One of the difficult things about the Detroit bankruptcy is what it will actually mean for the people living there, who have gotten less attention, than what it will mean for the bondholders,” said Nicholas Johnson, vice president for State Fiscal Policy at the Center on Budget and Policy Priorities, in a statement to Mint Press News. “Keeping the focus on how to make Detroit as strong as possible ought to be the highest priority.”
Is foreign aid part of the problem?
Are foreign countries, diverting money from U.S. citizens in need? Not exactly. The U.S. government has a long history of giving aid to foreign countries and actually ranks far lower than other donor countries when it comes to doling out cash.
“The U.S. has used aid in part to achieve policy objectives and to strengthen other economies in the world. We rank incredibly low in terms of how much we send in overseas aid. While the federal government ranks low, federal dollars represent about the quarter of revenue for states and local governments,” Johnson said.
Johnson reports that federal aid to states comes in a variety of forms, including Medicare, Medicaid, pre-k education and nutritional assistance programs.
There is actually a long list of countries that now receive more money than Detroit. Using Library of Congress data, ABC news reports that Israel, Afghanistan, Pakistan, Iraq and Egypt are among those countries that all receive sums greater than the aid that Detroit will receive.
What does that mean for Detroit? It could point to a similar set of policies that many believe slowed disaster relief during hurricane Katrina, a storm that killed thousands along the Gulf Coast in 2005.
At that time, U.S. forces were deployed in Iraq and Afghanistan – wars that have cost U.S. taxpayers roughly $4 trillion since Sept. 11, according to the Brown University Costs of War Project.
Here’s where things unravel. Roughly 40 percent of Louisiana and Mississippi National Guard troops were stationed abroad during Katrina, slowing the response time and straining state and local resources after the storm. An estimated 1,833 people died as a result of the storm, which also caused at least $81 billion in property damage. Commentators believe that it highlights a major policy failure that has continued through the Obama administration.
“After 9/11, money once earmarked for levees or disaster response instead funded wars in Afghanistan and Iraq or found its way to the Department of Homeland Security’s budget. “What mattered in the narrower context of the Katrina response was that both tenets of the Bush faith – the small-government mantra and the conviction that the nation’s gravest threats were posed by the likes of Bin Laden, not Katrina – conspired to gut the nation’s disaster response bureaucracy in the name of making the nation safer,” wrote Jed Horne, an editor at New Orleans Times-Picayune.
That was under George W. Bush. But now the foreign policy priorities are again being called into question since Obama and a bipartisan majority in Congress have decided not to approve federal aid to Detroit, while maintaining billions in aid to foreign countries as well as a foreign occupation in Afghanistan.
Although not destroyed by a natural disaster, Detroit has all signs of a city in deep crisis. According to a recent study by a demographer, 60 percent of the city’s children live in poverty, a situation that researchers believe is a direct result of the economy.
Detroit: economic disaster zone
“The children are not well,” said Data Detroit’s Kurt Metzger. “The problems of the economy – certainly the unemployment – and the high rates of poverty have really influenced a lot of the effects of adequate prenatal care, in terms of birth weights.”
The National Institute for Literacy reports that roughly 47 percent of adults in Detroit, around 200,000 people, are “functionally illiterate,” meaning they have difficulties with basic reading, speaking, writing and computational skills.
Homes are vacant and many people are unemployed. The list of problems continues seemingly ad infinitum, but Congress appears unwilling to green light aid that is earmarked for a specific city or locality. Urban flight resulting from the decline of a once robust manufacturing sector has seen Detroit’s tax base shrink considerably – from about 2 million residents in 1950 to 700,000 today.
“There’s no good reason why Detroit or any other American city ought to receive a taxpayer-funded bailout from Washington,” said Senator John Cornyn (R-Texas) in a recent statement, adding he hopes that the “Obama administration resists any temptation to meddle in the (bankruptcy) process.”
For Johnson and policy researchers, addressing systemic problems that affect communities across the U.S., not just in Detroit, may be the best, only chance to address issues of poverty.
“If it’s a problem in Detroit, it’s a problem for the whole country. There are way too many kids living in poverty around the nation, as a result of de-industrialization, loss of middle class jobs, lack of infrastructure, criminal justice policy – a lot of factors,” Johnson said. “There are lots of policy issues that go into the high rate of child poverty that are going to have negative impacts down the road. We’ve got this big problem around the country. I think the approach would be to focus on the structural problems that cause this problem.”
For now though, it appears that Detroit’s emergency management has resorted to cuts rather than aid as the way out of crisis for the city. The state’s emergency management has called for Detroit to reduce or eliminate benefits for the city’s 30,000 employees and retirees as part of the emergency manager’s plan to reduce a $386 million budget deficit and pay off more than $17 billion in long-term debt.
This article originally was published Aug. 2, 2013.