The Motor City, with a population of more than 700,000 people according to the U.S. Census Bureau, filed for Chapter 9 bankruptcy Thursday while reporting more than $18.5 billion in debts and liabilities. A Michigan state judge ruled Friday, however, that the bankruptcy ruling violates the state’s Constitution and must be withdrawn.
“There’s some good things that come out of bankruptcy,” Paul said during an exclusive interview with Breitbart News. “One is you get to start over. Bankruptcy lets you be forgiven of your debt. And you do so by getting new management, better management, and by getting rid of unwieldy contracts, contracts that give you where public employees are getting paid twice what private employees are and things come back more to normal. That’s the way cities and businesses can recover.”
Paul added that Obama “is bailing them out over my dead body because we don’t have any money in Washington.”
He also discussed the dangers of the federal government providing financial help to the nation’s 18th largest city, arguing that such a decision will set a precedent that cities across the nation can continue to make poor decisions without serious repercussions.
“You don’t set up an implicit promise from the federal government that everybody is getting bailed out,” Paul said. “It’s sort of like too big to fail for banks. If you have too big to fail for cities or for states and they believe they’ll be bailed out they’ll continue to make unwise decisions.”
“So, really, the answer is, just like the federal government, live within your means and spend what you have but don’t spend money you don’t have,” he added.
Detroit’s bankruptcy filing is a sore spot for the president, as his 2012 presidential campaign released an anti-Romney ad based on the Republican nominee’s 2008 New York Times op-ed advocating for the Motor City to go broke. A Michigan native, Romney is very familiar with Detroit’s financial problems, as his father, George, was the state’s governor in the 1960s as well as an executive for the now-defunct American Motors Corp.
In the ad, Obama said that he wouldn’t let the city get to the point where it would have to declare bankruptcy – which it seems he has since reneged on.
This piece has been updated to include new information.