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5:35 am
Wed May 21, 2014

Koch Brothers' Group Tries To Derail Detroit Bankruptcy Deal

Originally published on Wed May 21, 2014 8:06 am

Transcript

RENEE MONTAGNE, HOST:

Michigan lawmakers are debating a big aid package for Detroit, nearly $200 million. The city has been in bankruptcy court for almost a year. And until now, the state hasn't been willing to help it with anything that could be called a bailout.

While Michigan Governor Rick Snyder supports the current deal, many of his fellow Republicans appear to be balking, especially after a threat of political retribution from the Koch Brothers political network.

Michigan Radio's Sarah Cwiek reports.

SARAH CWIEK, BYLINE: Detroit officials have been doing lots of talking in Lansing for the past week, lobbying hard for a state aid package.

Kevyn Orr, Detroit's state-appointed emergency manager, and the bankruptcy lawyer in charge of Detroit's historic case, told lawmakers that the city has a reasonable plan to resolve its issues and avoid a long, complicated court battle. But he says that without state funds, that could easily unravel.

KEVYN ORR: To put it bluntly, we need your money. I'm just begging for the money. And then show me the money.

CWIEK: This isn't your usual aid package, though. It's a bit more complicated. Together, the state and a group of foundations would come up with over $800 million.

Not coincidentally, that's the same value that Christie's auction house has put on the Detroit Institute of Arts' world-class collection. The money would backstop the city's underfunded pensions and spare Detroit retirees the kind of severe cuts Orr had threatened.

And then, in theory at least, those retirees would approve Orr's controversial restructuring plan, sparing the museum from a potential fire sale. That deal is dubbed the grand bargain, and not surprisingly, it has its critics.

Some of Detroit's creditors insist the museum's assets are worth much more than $800 million and argue that the city should be forced to sell at least some pieces to pay them off.

And then there are the political critics.

SENATOR MIKE KOWALL: People from outstate, of course, feel that it's not their responsibility. They didn't do it. People from the near suburbs are, you know, irritated and resentful of the fact that they have to bail Detroit out. So, there's still a lot of hard feelings.

CWIEK: That's State Senator Mike Kowall, expressing the conventional wisdom about how Michigan's non-Detroiters feel about the city's situation.

While Republican Governor Rick Snyder backs the grand bargain, some of his fellow Republicans still see giving Detroit any kind of help to be political poison.

And now, the Michigan chapter of an influential conservative group is warning those Republicans that a yes vote will have consequences. Americans for Prosperity is the national political action network backed by industrialist billionaire brothers Charles and David Koch.

Scott Hagerstrom directs the group's Michigan chapter and says Michigan has given Detroit too much of its money for decades.

SCOTT HAGERSTROM: And it hasn't worked. It's enabled bad behavior, and it needs to stop.

CWIEK: Hagerstrom argues that Michigan taxpayers shouldn't support the grand bargain when Detroit is sitting on an estimated $3 billion in city assets, including its art museum.

HAGERSTROM: They're in bankruptcy. They need to sell those assets first, to provide for their retirees, before looking for a handout.

CWIEK: Hagerstrom says Americans for Prosperity will tap its deep pockets and activist network to get Republicans this message, if you vote for the grand bargain, we'll make your life difficult in the next election.

But despite that, it's not at all clear that Michigan voters outside Detroit do hate the grand bargain. A poll recently commissioned in part by Michigan Radio found that nearly half those voters support helping Detroit.

And when they learn that money will go to help city pensioners and protect the museum, support swells to a sizeable majority - even among Republican voters.

Bernie Porn is with EPIC MRA, the firm that conducted the poll.

BERNIE PORN: This is not going to in any way, shape or form negatively impact legislators running for reelection.

CWIEK: Both the deal's supporters and opponents have little time to pressure lawmakers, though. Legislators could take an initial vote on the grand bargain later today.

For NPR News, I'm Sarah Cwiek in Detroit. Transcript provided by NPR, Copyright NPR.