Why Chicago Won’t Go Bankrupt—And Detroit Didn’t Have To

[eridani]

http://inthesetimes.com/article/18096/a_scam_in_two_cities

All of this uproar rested on a basic falsehood in the dominant public narrative around Detroit: that pensions played a key role in driving the city bankrupt. But those who studied the bankruptcy closely know that the reverse is true: The city filed bankruptcy so that it could cut pensions.

Detroit’s bankruptcy was not borne out of financial necessity and was not a foregone conclusion. It was a political decision made by state officials. Gov. Rick Snyder and the Michigan Legislature chose to push the distressed city over the edge in order to accomplish two otherwise difficult political goals: slashing pensions and regionalizing the Detroit Water and Sewerage Department. It was disaster capitalism at its finest.

Austerity hawks are now hoping to use the Detroit playbook in other cities to force the public to accept extreme measures to fix budget crises. And the bond markets seem to have finally settled on an answer to that question about which city will be the next Detroit: Chicago. Moody’s Investor Service, one of the three major credit rating agencies, just downgraded Chicago’s credit rating to junk level—the municipal equivalent of a subprime credit score, cautioning potential lenders that the city may not be able to pay them back—making it the lowest-rated major city in the country after Detroit.

Chicago is not an obvious choice. It remains the third largest city in the country, has a thriving downtown and is home to some of the largest and most profitable corporations and wealthiest people in the world. Chicago clearly has money, even though its distribution is wildly unequal.

But as was the case in Detroit, the talk of a Chicago bankruptcy has little to do with the city’s financial health and much to do with a broader political agenda to obliterate the social safety net and slash pensions. Even though there are numerous reasons why Chicago is not going bankrupt, the fact is that there has been a sustained effort by politicians like Mayor Rahm Emanuel to create a financial crisis and then use the threat of bankruptcy in order to usher in deep and painful cuts, just as the Right was able to do in Detroit.

Chicago is the test case for whether the Detroit playbook can be run in other, more prosperous cities. If it succeeds there, cities across the country will likely emulate this strategy to balance budgets on the backs of working-class communities while letting banks, big corporations and the rich off the hook.

[Demeter]

1. IMO, if we can't afford pensions, then we can't afford millionaires and billionaires

[pscot]

2. Rahm is a piece of excrement