President Barack Obama is using $100 million taxpayers’ dollars to help keep Detroit’s pension funds afloat, contradicting his administration’s commitment to avoid a bailout.The federal $100 million is being described as “blight remediation,” but it allows the city’s new managers to reshuffle more cash into the city employees’ pension funds, which were looted by city and union officials for several decades.
The stealth bailout was exposed by the Detroit Free Press, which said the $100 million would be taken from the so-called “Hardest Hit Fund.” That fund was created by the administration in 2010 to counter the disastrous implosion of the federally-inflated real estate bubble.
White House officials have consistently tried to downplay public concerns that he would bailout the city.
“To have floated [a bailout] would have given false hope and taken people’s eye off the important task ahead so what we tried to do was make clear that the federal government — we did not have tools at our disposal that could be helpful to Detroit,” Gene Sperling, the director of the White House National Economic Council, said in February.
On Wednesday, White House spokesman Jay Carney declined to comment about the report. “Well, I haven’t seen the reports so I’m afraid I can’t offer any comment on them, but I’ll take the question,” he said.
But Obama is facing a tough midterm election, and he is being pressured by his union allies to top up the pensions funds.
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