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Detroit’s Supposed Debt Progress Has a Flipside

Cutting the benefits of injured firefighters might satisfy the city's creditors, but it won’t necessarily help the city’s economy.

by John Dyer
Jul 10 2014, 11:20am

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Detroit firefighter Tim Carter has been disabled since he tore his rotator cuff and ruptured his bicep while combating a blaze set by an arsonist on Six Mile Road two years ago.

Now the 32-year-old is worried Detroit officials might slash his benefits to help pay off the $18 billion worth of debts that forced the city to declare bankruptcy in July of 2013.

“They are trying to get money from wherever they can,” he told VICE News. “Things are getting chipped away so quickly now that pretty much you don’t know, day to day, what’s going on. It’s extremely stressful.”

Carter is a member of the Detroit firefighters’ union, the city’s last major public labor group that hasn’t accepted a new contract as part of Motown’s bankruptcy — the largest municipal Chapter 9 filing in American history, which has become a symbol of the decline of the country’s industrial power.

On Tuesday, Detroit’s police union reached a tentative deal on a contract to reduce pensions and other costs. Members of the police union as well as retired cops must cast votes to accept or reject the deal by Friday.

“With this agreement, only a few remaining, albeit significant, disputes remain to be addressed between the city and its creditors,” said Gerald Rosen, the mediator conducting the union negotiations, according to The Detroit Free Press.

Carter said he knew how he would vote if and when his union leaders presented him with a similar deal.

“We’re not going to vote for them to take money from us,” he said.

Maybe Detroit Doesn't Need to Spend $850 Million to Raze Blightet Properties. Read more here.

Carter’s dilemma illustrates the flip side of Detroit’s supposed progress in resolving its financial troubles, said Eric Scorsone, an economist at Michigan State University. Cutting the benefits of injured firefighters might satisfy creditors and a bankruptcy judge, but it won’t necessarily help the city’s economy.

“It’s not roses,” Scorsone told VICE News. “There are going to be a lot of downsides to this, even if it’s financially responsible.”

Scorsone wondered if the social and economic toll of bankruptcy would become more obvious after Detroit scales down its government to become solvent.

Police regularly take an hour to answer calls about serious crimes in Detroit, according to reports, and the city has one of the highest arson rates in the nation. Scorsone questioned whether making cuts at agencies that are now struggling to address those problems would make life better for residents. Local leaders need to figure out how to improve Detroit in the long run, he said, because bankruptcy is not a cure-all.

Take General Motors, said Scorsone. The automaker went through bankruptcy and survived with the help of a generous government bailout, but now faces a serious crisis for overlooking technical glitches that led executives to recall millions of vehicles this year.

“GM is across from Detroit City Hall. GM went through bankruptcy better than most people thought, quicker than most people thought,” he said. “But is GM sustainable five or 10 years from now?”

Both Scorsone and Carter noted that Dan Gilbert, owner of the Cleveland Cavaliers and chairman of Quicken Loans, has invested heavily in downtown Detroit. And hip twentysomethings are returning to the city that was a hotbed of electronic music in the 1980s.

To Carter, though, corporate titans like Gilbert and young men wearing skinny jeans were the harbingers of gentrification who would save Detroit by eliminating its once-proud blue-collar culture for good, a transition that’s occurred in much of the Windy City and Manhattan.

“We’re on the cusp of something great,” said Carter. “But it seems that there will be an elimination of the lowest-class people to have that transition take place. What I see happening is, people are trying to leave. When enough people leave Detroit, it will miraculously become the new Chicago, the new Harlem.”

Rahm Emanuel's Gun-of-the-Month Club Is Not Going to Help Chicago. Read more here.

Follow John Dyer on Twitter: @johnjdyerjr

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debt crisis
Dan Gilbert
general motors
detroit bankruptcy
detroit gentrification
detroit negotiations
eric scorsone
gerald rosen