Monday, December 23

Detroit’s bankruptcy and what it means for America By Charlie LeDuff

DETROIT — I know an old woman who hasn’t opened her windows in a decade, afraid that what’s outside

will climb inside. Inside, there is the stale odor of dead air.

I know another woman who called me about a corpse lying outside her window for six and a half hours. This was because of cutbacks at the morgue. No dignity in death here. They do it better in Baghdad.

I know of an 11-year-old boy who was shot, the bullet going clean through his arm. The cops rushed him to the hospital. There was no ambulance available. About two-thirds of the city’s fleet is broken on an average day.

I know a cop who drives around in a squad car with holes in the floorboards. There is no computer, no air-conditioning and the odometer reading is 147,000 miles. His bulletproof vest has expired. His pay has been cut 10 percent.

I knew a firefighter who died in a fire, but not from the fire. He died when the roof of an abandoned house collapsed on him and his brethren could not find him because his homing alarm was broken and did not sound. He suffocated.

In our town, the 911 dispatch system recently went down for 15 hours, and no one seemed to give a damn. When the system is running, the average wait is 58 minutes.

If this were New York, these stories would have ricocheted around the world. But this is Detroit, and nobody gives a damn. Even here people have been conditioned to accept these things as normal. This numbness, in a peculiar way, is a sign of strength. People here manage to get along somehow.

So we went broke, bust, bankrupt. We’ve known that in Detroit for years. Only now it is official with the Chapter 9 filing. The biggest municipal default in United States history — at least $18 billion. Suddenly, America gives a rip.

How did it get this way, I’m asked? After all, it was just 99 years ago that Henry Ford offered the workingman $5 a day and profit-sharing. How, in less than a century, did it come to this?

The short answers: municipal mismanagement, race riots, white flight, black flight. Overreaching unions and management that couldn’t balance a ball. Proof? The multibillion-dollar bailout of the auto industry. Thank you, American taxpayers!

Then there is our spectacular civic corruption: A former mayor, Kwame M. Kilpatrick, waits for a bed in federal prison, convicted of extortion, racketeering and bribery. He looted the city of millions of dollars and stole the future of thousands of children.

So Detroit files for bankruptcy. What does this mean? Pay close attention because it may be coming to you soon, Los Angeles, Baltimore, Chicago, Philadelphia. In 2011, Moody’s calculated the unfunded liabilities for Illinois’ three largest state-run pension plans to be $133 billion. (It is expected to be even larger this year.) That’s the size of six Detroit bankruptcies — give or take a few hundred million.

Of Detroit’s debt of at least $18 billion, about $7 billion is secured by collateral like casino revenues and utility taxes. That means creditors — big banks — will get paid. Of the remaining $11 billion or so in unsecured debt, about $9 billion is owed to retirees and current municipal workers, people like firefighters and police officers. These debts come in the form of promised pension checks and health care benefits, all backed by a false, unsecured promise. These are the people who are likely to lose out.

In simple math, do we sacrifice 30,000 former and current workers to save a city of 700,000 people? Most Detroiters will tell you yes. We feel bad about it. But we’re simply Americans. And we are desperate.

There also is hope up here on the Great Lakes. We have fresh water, profitable auto companies, more than $130 billion a year in trade with Canada crossing through our city, a world-class research university and, eventually, a clean balance sheet.

So come visit Detroit, my fellow Americans. Come take a look at your future. If you want your money back, come strip copper pipes and wiring from the abandoned buildings — if you can find any copper. Chances are someone beat you to it.

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