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For now, Obama sidesteps Detroit bankruptcy

- The Washington Times - Sunday, July 21, 2013

President Obama will travel to the Midwest this week to give a major speech about economic revival, bypassing bankrupt Detroit, where he has resisted pleas for a federal bailout.

The president will fly Wednesday to Galesburg, Ill., and Warrensburg, Mo., to promote his domestic agenda, featuring an address at Knox College in Illinois. White House senior adviser Dan Pfeiffer said in an email Sunday night that the president will "kick off a series of speeches that will lay out his vision for rebuilding an economy that puts the middle class and those fighting to join it front and center."

The speech also will serve as Mr. Obama's attempt to regain control of his second term, which has been sidetracked by scandals such as Benghazi, secret surveillance and the abuse of Internal Revenue Service powers.

"The president thinks Washington has largely taken its eye off the ball on the most important issue facing the country," Mr. Pfeiffer said. "Instead of talking about how to help the middle class, too many in Congress are trying to score political points, refight old battles, and trump up phony scandals."

Mr. Pfeiffer said the president will outline economic steps that he will take on his own, steps that Congress should take and actions that private industry can accomplish to bolster the economy. He said Mr. Obama also is trying to set the terms of the debate for looming battles with Congress over the budget and debt limit.

"In a couple of months, we will face some more critical budget deadlines that require congressional action, not showdowns that only serve to harm families and businesses — and the president wants to talk about the issues that should be at the core of that debate," Mr. Pfeiffer said.

But it's the plight of the Motor City, more than $18 billion in debt, that has dominated the economic news of the past week.

Detroit filed for Chapter 9 bankruptcy protection Thursday, facing huge unfunded pension obligations of its unionized employees and other fiscal challenges. Mr. Obama's former "car czar," Steven Rattner, is among those calling for the federal government to intervene.

Some of the president's top aides, including Valerie Jarrett and economic adviser Gene Sperling, have held discussions with officials from Detroit and Michigan. But White House press secretary Jay Carney said the administration is not planning to provide the city with financial aid.

"On the issue of insolvency and on those matters, that's something that local leaders and creditors are going to have to resolve," Mr. Carney said Friday. "But we will be partners in an effort to assist the city and the state as they move forward."

Vice President Joseph R. Biden expressed less certainty, telling reporters that "we don't know at this point" whether the administration can help Detroit. He said aides are studying the details.

In April, Detroit's emergency manager, Kevyn Orr, met with senior White House officials, including Ms. Jarrett. Orr spokesman Bill Nowling said that Mr. Orr never formally requested a bailout from the president's staff, and the administration never put an offer on the table.

Gov. Rick Snyder, a Republican, approved the bankruptcy filing last week, but a judge in Michigan said Friday that the bankruptcy filing violates the state's constitution and must be withdrawn.

State Attorney General Bill Schuette is appealing the ruling. Ingham County Circuit Court Judge Rosemary Aquilina, a Democrat, ordered that a copy of her ruling be sent to Mr. Obama, saying he "bailed out Detroit" and may want to look into the pension issue.

During his re-election campaign last year, Mr. Obama hammered home the theme in battleground states such as Ohio and Michigan that he saved Detroit's auto industry with an $80 billion federal bailout in 2009.

"We refused to throw in the towel and do nothing. We refused to let Detroit go bankrupt," Mr. Obama said in a weekly address in October. "We bet on American workers and American ingenuity, and three years later, that bet is paying off in a big way."

During the campaign, Mr. Obama portrayed Republican opponent Mitt Romney as favoring bankruptcy for Detroit automakers. Mr. Romney said he favored a managed bankruptcy process from which the car companies could emerge leaner by shedding burdensome union contracts, real estate costs and other obligations.

Although city leaders have pleaded with the president for help, Michigan's congressional delegation hasn't pushed for a federal bailout.

"We just need to step back and think about it," said Rep. Sander M. Levin, Michigan Democrat.

Mr. Obama will use the stops in Illinois and Missouri to make his case for spending on infrastructure and for universal preschool programs. He also is expected to highlight the economic benefits of comprehensive immigration reform.

The White House chose Knox College as the site of Mr. Obama's speech Wednesday because it's the same place where he delivered his first economic speech on the national stage, as a U.S. senator in 2005.

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