Mitt Romney should be proud of what’s happening in Detroit.
That’s because during his time at Bain Capital, he perfected the type of glorified extortion tactics Rick Snyder and Kevin Orr are using right now rob city workers of their hard-earned pension plans.
When Mitt was running Bain during the 1980s and 1990s, the company made its money by forcing companies into debt and then robbing them blind for every last bit of cash they had.
Bain would take out a loan for, say, a billion dollars. It would then use that billion dollar loan – its leverage – to buy a company. But instead of paying back that billion dollar loan itself, Bain would dump it on the company it just bought. In other words, Bain would make the company it just bought pay for its own acquisition.
And where would that company get the billion dollars to do that? Well, good old Mitt would say that it got the money by eliminating fraud and waste. But in reality that money came from stripping the company of its assets and converting them into cash.
It came from taking employee assets – like pensions and decent paychecks – and converting them into cash to pay for the debt, and even converting future assets – the viability of the company itself – into cash to pay for the debt.
It came from gutting retirement funds and firing workers.
In the end, Bain not only ended up with the company, but also got rich off the fees associated with the entire debt repayment process.
And if the company didn’t survive, well, then so be it, because Bain got to make a tidy profit through their fees even if the company died. All that mattered was to strip profitable companies bare and put the money into Mitt’s pocket.
But back to Detroit. Now that Judge Steven Rhodes has OK’ed the city’s bankruptcy plan, massive cuts to Motor City worker pension plans are all but certain.
This is despite the fact that, as a recent Demos study concluded, “Detroit’s bankruptcy was primarily caused by a severe decline in revenue and exacerbated by complicated Wall Street deals that put its ability to pay its expenses at greater risk.”
That’s right, even though they have nothing to do with the city’s financial problems public workers will now have to foot a big chunk of the bankruptcy bill.
Just as Bain Capital trapped companies with massive debt obligations, so too did Wall Street trap Detroit with its risky debt schemes. And now, just as Bain forced everyday employees to pay for the debt forced on their company, so too is Kevyn Orr, Detroit’s Emergency Manager, making public workers pay for the banksters gambling away Detroit’s finances.
Like one of Bain’s acquisitions , Detroit’s will be sold at auction to pay off debts created by banksters.
But It’s not public just workers who will suffer – the whole city is on the chopping block. Kevyn Orr wants the city’s art collection sold off. The water department might be put on the market. And to top it all off, right-wing billionaires are trying to buy Belle Isle Park and turn it into some sort of libertarian-gambling paradise.
The privatization of Detroit is about to begin, and there’s no way the billionaire class is going to miss it.
Mitt Romney grew up in Michigan, so it’s fitting, in a way, that the first attempt to use the Bain strategy on a public institution would be in Detroit.
But make no mistake about it, the fire sale of Detroit is just a preview of what Republicans will do when they force their privatization fantasies on the rest of the country.