Congress Refuses to Offer Detroit Financial Bailout image

Congress said it does not consider offering Detroit a federal bailout, after the city filed for Chapter 9 bankruptcy protection.

Michigan Senator Carl Levin said that Detroit should first look for “every single federal program available” to get help. The Congress’ refusal to approve the bailout is a clear sign that the government tries to avoid any new spending as lawmakers predict another shutdown over increasing the US debt limit this year.

“Not new bailouts, but existing programs,” Levin said in an interview at the Capitol yesterday.

If last year President Barack Obama said during the campaign that the $82 billion bailout for the auto industry was a good choice, now his administration seems to have lost interest in aiding Detroit, the home of Chrysler, GM and Ford.

“This administration will, you know, work with Detroit and talk about policy ideas,” White House press secretary Jay Carney told reporters said yesterday. “When it comes to the matter of the city’s insolvency, that has to be resolved by local leaders and creditors.”

In May Kevyn Orr, the city’s emergency manager, warned that Detroit is running out of cash, but unfortunately, as Senator Susan Collins said, the city should have taken into consideration this warnings and act more quickly to take measures, as now taxpayers are not interest in helping.

“For the federal taxpayers to be asked to bail out a city that has made its own bad choices to me is absurd,” said Collins, a Senate Appropriations Committee member.

Source: Bloomberg