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In Detroit Bankruptcy, It's the Poor Who Lose

City's rush towards bankruptcy spurs fears of further privatization, service gutting, poverty

Sarah Lazare, staff writer


Ingham County Circuit Judge Rosemarie Aquilina ruled Friday afternoon that Detroit's bankruptcy filing is "unconstitutional" and must be withdrawn.

The ruling, came after lawyers representing the city's pension funds won an emergency hearing to block the bankruptcy filing.

Michigan Attorney General Bill Schuette said the state will now request a hearing with the Michigan Court of Appeals.


The Detroit emergency manager's filing of city bankruptcy Thursday sparked fears that the impoverished municipality is set to go barreling towards more privatization measures that will further devastate the city's poor.

In the largest Chapter 9 bankruptcy case in US history, the move will allow the city to decimate benefits and pensions for city workers and retirees—the city's 'unsecured' lenders— while gutting public services and diverting public dollars to pay off the big banks who own much of the city's debt.


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Unions charge that emergency manager Kevyn Orr—with the support of Michigan Governor Rick Snyder—rushed into bankruptcy to subvert democratic process and avoid the Michigan constitutional mandate requiring municipal governments to keep their word on pension contracts with retirees. American Federation of State, County and Municipal Employees president Lee Saunders declared in a statement released immediately after the decision:

Governor Snyder’s plan to suspend democracy, drive one of America’s largest cities into bankruptcy and deprive workers of their hard-earned retirement security, moved dangerously closer to reality today when without a single negotiation with unions, workers or retirees, Snyder authorized Detroit’s financial manager to file for bankruptcy.

Orr—appointed by Governor Rick Snyder last March—has already been blasted for advancing a Republican-led state takeover of city government and pushing a corporate agenda of privatization that further devastates Detroit's poor and disenfrachises the city's majority African-American voters.

The New Yorker reports that Michigan voters signaled their disapproval of bankruptcy filings for Detroit:

Last November, Michigan voters, fearing the possibility that Snyder would force bankruptcy upon Detroit, voted in a referendum to repeal the law that gave him the power to appoint an emergency manager such as Orr. Snyder subsequently used a lame-duck session of the G.O.P.-controlled state legislature to force through a new law giving him similar powers to those in the law that the voters had just struck down.

The unelected manager, who is a former corporate bankruptcy lawyer, wielded his near absolute 'emergency' powers since taking up his position to push forward plans to cut off poor neighborhoods from essential services and privatize transportation, streetlights, and even garbage pickup throughout the city. Nothing has been safe from his plan for rapid privatization: he was even considering selling off the city's esteemed art museum.

Nearly 60 percent of Detroit children live in poverty and 33 percent of all land sits vacant in a city where more than 80 percent of all residents are black. Half of all streetlights are non-functional, and a majority of public parks have shut down.


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