The Obama administration has a team of advisers that has been working to find ways to speed up funds and help the city apply for funds it might be eligible for. The team also is providing technical assistance and other help. (Brandy Baker / The Detroit News)
Washington — The White House ruled out a bailout for bankrupt Detroit because it wasn't politically possible, a senior Obama administration official said Tuesday.
Gene Sperling, the director of the White House National Economic Council and the point person on the administration's efforts to help the struggling Motor City, told reporters Tuesday that it would have raised false hopes if the Obama administration had floated the idea of a bailout for Detroit.
"We did not feel we had any available financial tools, and secondly, we did not think that the prospect of legislation was even close to viable," Sperling told reporters at a breakfast hosted by the Christian Science Monitor. "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."
Detroit filed for a record setting municipal bankruptcy in July, citing $18.5 billion in debt and long-term obligations. Prior to the filing, the Detroit emergency financial manager Kevyn Orr and then Detroit Mayor Dave Bing went to the White House to talk about the city's finances — and to gauge federal interest in aiding the city.
Sperling said if a bailout had been possible, the White House would have weighed the possibility.
"If we did, there would have been a policy discussion about under what context you would have done that, but since there wasn't anything viable, we thought it important to have a clear message which was a two-fold message — which was one, we didn't have tools at our disposal that would help Detroit with their fundamental fiscal crisis but number two: we believe in the future of Detroit, we believe in the people of Detroit, and we're going to be their partner in their economic development and their comeback."
In September, the White House announced nearly $300 million in new, re-purposed and freed-up grants from the Obama administration and private foundations to help the Motor City.
The Obama administration has a team of advisers that has been working to find ways to speed up funds and help the city apply for funds it might be eligible for. The team also is providing technical assistance and other help.
Much of the money had been awarded in previous years, but millions of dollars were delayed due to red tape, mismanagement or other problems, officials said.
Last month, Vice President Joe Biden said the federal government would not provide a bailout to help the city exit bankruptcy.
“The city will do it on its own, but there’s no reason why the federal government can’t do what we’re already doing,” Biden said. “There are things that the city was entitled to, to begin with, that aren’t new monies but they are monies that have been reorganized and brought back in at the mayor’s disposal.”
On Friday, President Barack Obama had lunch with Detroit Mayor Mike Duggan. Duggan said he didn't seek a bailout in that lunch or in meeting with Biden. Sperling called the lunch "very positive." Obama was "impressed" with Duggan's focus on job creation.
"It wasn't about bailouts. It was about what we could do to work together," Sperling said Tuesday.
Sperling, who plans to leave the White House shortly, didn't say who will replace him, but said "there is no shortage of commitment" from the White House.
He cited the White House’s on-the-ground point person in Detroit, Don Graves; the next NEC chief, Jeffrey Zients; HUD Secretary Shaun Donovan; and deputy Office of Management Budget director Brian Deese as among the key people in the administration on Detroit.