Why does Uncle Sam care more about Detroit than Stockton?

The Obama Administration has cobbled together a $325 million bailout of the Motor City using Troubled Asset Relief Program (TARP) and Federal Emergency Management Administration (FEMA) funds. The White House views the Detroit bankruptcy as “an exceptional thing happening during the Obama Administration” according to National Economic Council Director Gene Sperling.

So how come Detroit is exceptional and Stockton isn’t? Not only are their ills basically similar but Stockton was actually the first city of any consequence to go into bankruptcy during the Obama Administration.

The $325 million isn’t part of any overall federal strategy to assist cities that have hit the financial rocks. It is designed specifically for Detroit and no one else.

Flashback to October 1975. The ultimate American big city — New York — was on the verge of financial collapse. Spending had outstripped revenue for years. Debt was crushing the city as were overly generous labor contracts. New York went looking to Washington, D.C., for a federal bailout. Then President Gerald Ford said no. Ford believed federal help would give New York City an easy way out and wouldn’t address long-term problems.

That forced creditors, union, and city leaders to craft together a plan to keep New York City afloat. Then, months later, when realistic spending plans were in place, labor contracts renegotiated and debt restructured federal help was offered in the form of loans. The deal called for $2.3 billion in loans over three years at one percent above the federal cost of securing the money.

New York City made a comeback thanks to a forced, self-imposed austerity coupled with federal loans that were paid back.

Uncle Sam’s bailout comes even before Detroit has come up with a plan to exit bankruptcy.

Detroit needs tough love. And that means the pain that Stockton has and is going through. Stockton has no choice but to come clean from overly optimistic budgeting and learn to live within its means. They have no one bailing them out. But at the same time, Stockton ultimately will emerge from bankruptcy much stronger in the long run.

Financial discipline and taking responsibility for bad decisions aside, what Uncle Sam is doing is giving Detroit the equivalent of $456 for every man, woman, and child within its city limits on top of all other federal aid and programs.

To match its generous redistribution of tax dollars to Detroit, Stockton would have to receive $135.9 million from the Obama Administration.

The unfairness of the administration’s bailout of Detroit was underscored by one of Obama’s fellow Democrats — Congressman Jerry McNerney who happens to represent Stockton.

McNerney fired off a letter to the White House on Friday questioning why “compassionate assistance” as the administration has framed the Detroit bailout wasn’t offered to Stockton. McNerney noted Stockton filed for bankruptcy in 2012 during the Obama Administration and has many of the same problems as Detroit.

McNerney politely cut to the chase noting “this is not a time for favoritism.”

But as McNerney should know by now, favoritism is what makes the money flow along the Potomac.

Influence peddling is the name of the game.

Not only do both major political parties use California as a cash cow for campaigns but they routinely give the Golden State the short end of the stick when haggling starts on everything from carving the federal revenue pie to federal jobs and pork. That’s not to say the federal government should be in the habit of taking money from local sources and then returning it with strings attached after taking a 25 percent or more cut for bureaucratic overhead. Nor should Uncle Sam generate jobs or locate them based on a political rewards system. And certainly Washington, D.C., should be on a pork free diet but that is as likely to happen as the entire state of Texas going 100 percent vegan.

That aside, it is fairly clear that Stockton doesn’t matter to Uncle Sam.

And given what happened after a previous federal administration treated New York City as the current administration is treating Stockton, it might just be the best thing for Stockton’s long range economic vitality.



This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at dwyatt@mantecabulletin.com or (209) 249-3519.