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Financial Consultant James McTevia argues when it comes to balancing a state budget, you can't spend more money than you take in.
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-- the the Detroit city council's meeting at this hour and could out today and the latest financial rescue proposal.
If an agreement isn't reached by Thursday Michigan governor Rick Snyder can impose an emergency manager to run Detroit.
James and TBA is that business turn around specialist and he joins us.
From Detroit to this this latest plan I think it's their third one you think this is the winner.
I don't know.
I don't know it's politics that -- you know we only got to do is look at Washington DC.
How successful politics has been and resolving financial difficulties.
-- It -- this is a huge problem for the city.
And they -- no way to close this budget gap they've been wrangling over forever the unions have come to the table they made what they think are very substantial cuts but.
The governor doesn't think -- even close to finding a resolution of these cuts aren't enough what is the best way to solve this problem.
Well why well look somebody certainly has got to be in charge.
There right now they've been negotiating over the composition.
Of the financial advisory board that that's been going on now for over -- month.
The Detroit has got a very serious financial problem and I've been doing this for fifty years and the only way that should consult a financial problem.
His reduce expenses increase revenue our combination of both somebody's got to get a hold of the checkbook in Detroit.
Somebody has got to freeze all payments on debt all interest.
Only the top.
More.
Expenses have got to be paid a you can't make cuts to the police in your fire because they're giving.
The enormous service to the citizens and and somebody's got to restructure the debt I mean -- Detroit is not not going to be able to do it.
So where do you start with that because when you look at the statistics you can see you know in Detroit that half of all tax dollars that -- -- go back out.
Two employees -- -- its needs such a big problem.
How do you Stearns and those cuts like for example you know -- -- would you start with who would you who would you fire.
First.
It's not a matter firing it's a matter of finding out how much your revenue is.
And then you go across the board and you make an across the board adjustment.
And everybody's compensation.
And all of the bills consistent with your revenue is.
That's the way you would do -- if you're running a house running a city our government our federal government.
Is no different than running your budget you can't spend more money than you take -- it's that simple.
What I mean the other side of the argument would be that you immediately deprive all these people of payment.
You know they paid into these pensions they -- not get it out over time.
That it affect your -- -- the -- down the line because then people have no money to go out buy goods what do you say to an argument like that.
The path of the city's already bankrupt you literally have -- bankrupt city -- one of the largest cities in this country is bankrupt.
-- why should we be surprised the entire nation is bankrupt.
You can't solve -- financial problem by borrowing money.
Or kicking the can down the road and somebody is going to have to stand up and say we're not going to be paying this money out anymore because we don't have it.
In keeping the governor is the best person to do this I -- the reason we're focused so much on this is not because of Detroit in particular but because.
This is really an example of what's going on across the country it's going on in Greece is going on around the world and this is -- or an example for us right here up close do you think the -- the best one to step in a do or do you think they should file for bankruptcy what would be most effective.
I think the first step is to appoint an emergency financial manager -- That is got turn around and it -- got insolvency experience.
Who is -- gonna get control of the checkbook.
And is gonna make massive cuts.
-- on all expenses across the board.
Not just the -- is not just the fire not just like garbage massive cuts across the board.
They're gonna have to find out where they are in revenue and then they're gonna have to provide services consistent to the revenue.
He can't borrow any more money my gosh Detroit can't even pay what are those now.
So borrowing money has never solve the financial problem.
You need -- you need a specialized turnaround manager.
And a few steps sentences that he can't do it and quite frankly the city is gonna have to going to bankruptcy -- and -- -- going to bankruptcy.
James ATV and that's.
Our thanks for coming out and talking about it we appreciate -- obviously -- -- --
