Detroit Bankruptcy, 10 Years Later

Jul 23, 2023

This month marks the 10-year anniversary of Detroit’s filing for bankruptcy. Politicians and the media have lots to say about how much “progress” the city has made since the supposed “Grand Bargain” was made to settle the bankruptcy.

They point to indications like working street lights, a reduction in property crime, and increased high school graduation rates. But these glowing reports fade when you consider that while 71% of Detroit high-school students now graduate, for the state of Michigan as a whole, the number is about 80%. And fewer students from Detroit go on to graduate from college than those across the state. Or that 30% of the population makes less than $27,740 per year.

In the meantime, the population of the city continues to decrease. Mortgage lenders foreclosed on 65,000 homes following the 2008 subprime mortgage crisis and the city foreclosed on another 73,000 homes between 2009 and 2015.

The report gets dimmer still when you look at who paid the price for the “Grand Bargain.” To ensure the banks could continue their plunder, state and city officials imposed cuts to city workers’ retirement benefits. City workers in the General Retirement System had their pensions cut by 4.5% in the deal. More importantly, they lost a 2.5% cost-of-living adjustment (COLA), which over 10 years’ time means a 25% reduction that might have allowed them to partly keep pace with inflation.

Police and firefighters who had already retired did not suffer losses to their pensions, but they did not pay into Social Security, so their retirement income is based solely on their pensions. Both they and general workers had their retiree health care taken away. Workers were given a small stipend which paid for only a small part of the costs of their health care coverage, until they became eligible for Medicare. And future police and fire retirees will receive a considerably lower pension compared with their pay while they were actively working. To pay for retiree health care, many city retirees have had to return to work.

And while the city forced this rotten deal on city workers, it has found billions of dollars in corporate handouts for real-estate billionaires like Dan Gilbert and the Ilitch family. In short, the great “progress” being pushed by the politicians and corporate media is not being felt by most long-term residents of the city of Detroit, many of whom remain victims of financial wheeling and dealing simply designed to put more money into the pockets of the very wealthy.