Vol. 77/No. 14 April 15, 2013
Michigan Gov. Rick Snyder, a Republican, named Kevyn Orr, a high-profile bankruptcy lawyer, to the post. Orr, an African-American and a Democrat, worked for Chrysler during its 2009 bankruptcy proceedings. He’ll be paid an annual $275,000 salary by the state. Under the state’s emergency manager law, Orr is authorized to slash city expenses; impose changes on city workers’ union contracts; cut down, merge or eliminate departments; and privatize city assets, such as the water and sewage departments. He can also recommend bankruptcy, which would involve tearing up all city labor contracts in what would be the largest municipal bankruptcy filing in U.S. history.
Working people in Detroit have been particularly hard hit by the capitalist economic crisis. Official unemployment in the city stands at nearly 19 percent, as many autoworkers’ jobs were permanently eliminated. Its population, currently 700,000, has declined 25 percent since 2000. With many moving out of town or losing their homes through foreclosures, about one-quarter of the city’s housing units are vacant, according to Detroit Future City.
To finance its day-to-day operations, the city has been selling bonds, which Moody’s Investors Service now rates as worthless. With a long-term debt of $14 billion and a $6 billion short-term debt, one of Orr’s top priorities is to cut funds owed for workers’ pensions and retirees’ health-care costs to maintain payments to the propertied holders of municipal bonds. The city has also instituted mandatory unpaid days off for many city workers. “Bring it on,” Sandy Baruah, president of the Detroit Regional Chamber of Commerce, told the media. An emergency manager “sends a positive message to business that Detroit is fixing its problems.” Democratic Mayor David Bing said he accepted Orr’s appointment and respected his authority to make changes.
“For one individual to be able to wipe out the duties of our duly-elected officials, that’s more or less a dictatorship, and it’s against everything that America is supposed to be about,” Rev. Wendell Anthony, president of the local National Association for the Advancement of Colored People, told the New York Times.
On March 25 a lawsuit was filed in federal court challenging Michigan’s emergency manager law. Among its more than 20 plaintiffs are the American Federation of State, County and Municipal Employees Council 25; Council of Baptist Pastors of Detroit; New York’s Center for Constitutional Rights; National Action Network; and Rainbow PUSH Coalition. The law “disenfranchises citizens from their right to a democratically elected form of local government and their right to elect local officials who possess general legislative power,” the lawsuit says.
Meanwhile, in Stockton, Calif., tens of millions of dollars have been slashed from city services, including for senior centers and libraries. Ten public unions have agreed to temporary wage and benefit cuts, with pensions and retiree health care costs still on the chopping block. The city of 300,000 filed for bankruptcy in 2012.