Detroit elected a new mayor November 5 and he will take office in less than a month. But the future of this great American city and its citizens isn’t being defined by decisions made by voters on Election Day. It is being defined in federal bankruptcy court—and by an “emergency manager” who has no democratic legitimacy.
With a ruling Tuesday by US Bankruptcy Judge Steven Rhodes, Detroit officially becomes the largest US city ever to enter Chapter 9 bankruptcy. Despite a determination that negotiations with creditors outside of bankruptcy court had not satisfied good-faith requirements, the judge cleared the way for the emergency manager and his law firm to advance a “plan of adjustment” that is likely to include deep cuts in pension guarantees for retired city employees and a “fire sale” of city assets that could result in public utilities and the Detroit Institute of Arts collection being bartered off to private bidders.
What Judge Rhodes has done is not the end of the bankruptcy process. It is merely the beginning. But the process has been framed in a manner that runs the risk of undermining the city’s long-term recovery by taking money away from the most vulnerable residents of Detroit. As Jordan Marks, executive director of the National Public Pension Coalition notes, “In the bankruptcy, the modest pensions of Detroit’s firefighters, police officers, and other city employees could be all but wiped out, even as Wall Street banks continue to extract hundreds millions of dollars from the city’s economy. This is a dark day for people of Detroit who worked hard, played by the rules, and are now at risk of losing everything.”
By Tuesday afternoon, according to Reuters, the emergency manager, Kevyn Orr, had "called on unions to help bridge gaps with the city on planned pension cuts." And he has commissioned the auction house Christie's to assess the value of the art institute's collection — which traces its roots to the 1880s and includes works by Bruegel, Cézanne, van Gogh and murals by Diego Rivera — for possible sale.