Hamtramck, MI as the Moral Compass of America

Government at all levels has a built-in propensity to bury or defer problems. Politicians would rather declare a problem solved than actually solve it. Why? Because they are in the business of playing Santa Claus. They never want to be in the role of The Grinch, although that is precisely what is required to solve our current fiscal mess. The city of Hamtramck, a suburb of Detroit, recognizes their problem and wants to solve it. That in itself is unique. What is not, is that they are hopelessly beyond their ability to pay operating expenses as a result of too many employees, too many services, too high payroll costs driven by unions and the pension promises that can never be met. Any entity, government or business, that finds itself in such a situation has two problems: A deficit problem caused by spending being too high relative to revenues A liquidity problem caused by not having enough cash or cash flow to pay the bills as they come due. These are two entirely different...(Read Full Post)