Detroit Residents on Bankruptcy – We Have No Democracy

Published on truthout, by David Bacon, August 15, 2013.

DETROIT – On July 18, 2013, Kevyn Orr, the city emergency manager appointed by Republican Gov. Rick Snyder, declared Detroit bankrupt under Chapter 9 of the bankruptcy code. According to official accounts, Detroit is $18.5 billion in the hole, making this the largest of several recent bankruptcies declared by US cities and counties.  

In theory, such a declaration means that all the city’s creditors will suffer and will have to accept only a fraction of what they’re owed. But when a bankruptcy judge decides who will have to make sacrifices, those making the most painful ones will be Detroit’s 21,000 retired city employees and its 9,000 current ones.

“Everything they’ve been promised, both contractually and kind of a social contract, is being pulled out from under them. It’s morally indefensible,” Michael Mulholland, vice president of Local 207 of the American Federation of State, County and Municipal Employees told journalist Jane Slaughter. “I was told if I worked here I’d have a steady job and in my old age not be in poverty.” Mulholland’s pension as a retiree is $1,600 a month, not an income that can support a family, even in a city like Detroit, where housing prices have plunged … //

… Anticipating what was to come, lawyers representing public union pension funds went to court to enforce a provision of the Michigan Constitution. It says, according to Ingham County Circuit Court Judge Rosemarie Aquilina, that the governor can’t “diminish or impair pension benefits.” Hearing that the judge was about to make her ruling invalidating any pending bankruptcy, Snyder and Orr declared bankruptcy a few minutes before she acted. The judge condemned the move, because it gives all authority to a bankruptcy judge and removes review by the normal court system. “It’s cheating, sir, and it’s cheating good people who work,” the judge told Brian Devlin, assistant state attorney general. On July 23, however, the state Court of Appeals granted a motion by Attorney General Bill Schuette to stay Aquilina’s order to stop bankruptcy proceedings because they violate the state constitution.

Veteran Detroit Congressman John Conyers, one of the most progressive in the House of Representatives, said the judge’s ruling mandated congressional hearings to determine whether Snyder and Orr were misusing bankruptcy to slash pensions and medical insurance. The chairwoman of the Congressional Black Caucus, Marcia Fudge (D-Ohio), called for Detroit to be provided federal aid like cities recovering from natural disasters. “Some want to unfairly make city workers and their pensions the scapegoats, but they are not the problem,” she said.

In another lawsuit, the National Association for the Advancement of Colored People made an even deeper challenge to the emergency manager law. In US District Court, it charged that the law discriminates against African-Americans. More than half of Michigan’s 1.4 million black residents live under rule by emergency managers – which effectively nullifies their right to vote. By contrast, only 1 percent of white residents live under managers.

That disparity is a result of Detroit’s history and its consequent financial crisis. The city shares a common history of the devastation of its industrial base with most of the largest US cities. To a greater or lesser degree, they all have suffered the same fate. If Detroit’s is deeper than most, it is in large part the result of its past as one of the most heavily industrialized places on the planet … //

… Just from 2000 to 2010, Detroit lost one-quarter of its population; 273,500 people. After New Orleans, which lost 29 percent of its population in the wake of Hurricane Katrina, Detroit’s 25 percent loss is the largest percentage drop in the history of an American city with more than 100,000 people. Ten years ago, Detroit was the tenth-largest city in the country. Demographers at the Brookings Institute now believe it might be the 18th. That’s the smallest it’s been since 1910, just before the automotive boom brought millions of well-paid jobs and turned Detroit into the Motor City.

In 1960, Detroit had the country’s highest per-capita income. Today, while Detroit makes up only 23 percent of the metropolitan region’s population, it is home to nearly half of the people living in poverty. Median household income for Detroit residents ($26,098) is less than half that of residents in the suburbs ($54,688), and 52 percent of that of US residents generally ($50,221).

Another consequence of the crisis was the concentration of African-Americans, Mexican-Americans and Arab-Americans in Detroit’s urban core, while more affluent white people left for the suburban areas that surround it. Half of Michigan’s black population now lives in the city of Detroit. In the suburbs, only 9.6 percent of residents are black.

In October 2009, the Bureau of Labor Statistics found the city’s unemployment rate was 27 percent. Detroit Mayor Dave Bing, however, argued that this number was an undercount, because it doesn’t include people who have given up looking for work or those working part-time jobs because they can’t find full time ones. He said that one of every two working-age Detroit residents was unemployed or couldn’t find enough work to support themselves. In any city with high unemployment and precarious jobs for those working, an economic downturn wreaks much more havoc than it would in a more stable community. The Detroit News estimated that when the current recession began, Detroit’s official unemployment rate jumped 7.2 percent in one year … //

… On  July 4, 2013, a long line of marchers showed up at the swank Cadillac Hotel, where Orr has been living since arriving in Detroit. The marchers demanded independence from city managers. One of them, Elder Helen Moore of the Keep the Vote No Takeover Coalition, founded in 1999 to combat the takeover of Detroit Public Schools, said, “There is no reason to celebrate the Fourth of July, because Detroit is not free. We have no democracy. Our school system has been practically destroyed by state takeovers. We are crying out today for freedom for our people, black, white and Latino. We don’t do second-class citizenship very well.”

“When you hear that the service is terrible in Detroit,” Herrada laughed in a telephone conversation with Truthout, “imagine us raising our collective glass in cheer, because we did not come here to serve anyone.”

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