A judge 's ruling that the city of Detroit can move forward with bankruptcy and strip the city 's public workers of their modest pension benefits will have a devastating impact on Detroit 's middle class — many of whom are African-American — and the city 's ability to rebuild a strong and sustainable economy . The largest municipal bankruptcy in our nation 's history , the Detroit decision charts a course where Wall Street banks and bondholders are at the front of the payment line while city residents , police officers , firefighters and other public employees are left at the rear , with only pennies . Kevyn Orr , Detroit 's unelected emergency manager , misled the public and succeeded in setting a dangerous precedent that will have ripple effects for other cities and states still struggling to get back on their feet in the post-recession economy . Michigan Gov . Rick Snyder and Orr , a former corporate bankruptcy lawyer , frequently cited the figure of Detroit 's $ 18 billion in long-term debt as the reason the city must declare bankruptcy . According to a recent report , `` The Detroit Bankruptcy , '' written by former Goldman Sachs investment banker Wallace Turbeville , not only is $ 18 billion an inflated and inaccurate estimation of Detroit 's long-term debt , it is irrelevant . Unlike corporations , cities can not be liquidated , therefore cash flow , as opposed to long-term debt , is what must be addressed . Opinion : Detroit , the 'used to be ' city . Detroit has a cash-flow shortfall of $ 198 million . Despite the blame placed on public pensions , the truth is that Detroit 's path to insolvency had little or nothing to do with pensions , which average just $ 19,000 per year for most employees and $ 30,000 per year for police and firefighters , who are not eligible to receive Social Security . There were several drivers of Detroit 's downward spiral : . A depleted tax base : The city 's wealthier white population has declined by 1.4 million since the 1950s , leaving behind an almost entirely African-American and much poorer population . The remaining tax base continues to decline as unemployment stays stubbornly high : In 2008 alone , the number of working Detroit residents dropped by roughly one-quarter , further diminishing the city 's income tax receipts . Property tax revenue also dropped precipitously as home values went through the floor . Skyrocketing financial costs : Wall Street banks saddled Detroit with $ 1.6 billion in loan deals that were highly profitable for Wall Street , but exposed the city to risk it could not afford to take . The banks have already extracted $ 300 million from Detroit to terminate these interest rate swaps , and are posed to collect another $ 300 million in additional windfalls . Corporate subsidies and tax loopholes : While public workers were laid off and had salaries cut , Detroit gave away millions of public revenue in tax loopholes and subsidies to big corporations . A wealth of research finds that tax breaks like these are ineffective and it is apparent they have done little to create good jobs for Detroit residents . These tax breaks should be on the table , just like other obligations of the city in resolving the cash-flow crisis . The dynamics at play in Detroit are the same dynamics creating the growing wealth gap and keeping our economy from making a lasting and sustainable economic recovery . While Wall Street and corporations profit handsomely from a city 's decline , public workers—the city 's middle class—have sacrificed time and again . In recent years , thousands of public workers were laid off , and the remaining public employees accepted a 10 % pay cut , health benefit reductions and a 40 % cut in future pension benefits , saving Detroit $ 160 million . Not only is it immoral to force the working people to give up even more in the name of fiscal responsibility , but these cuts will only burden the effort to solve the city 's long-term challenges by depressing economic activity , pushing more residents into poverty , and making it difficult to retain and attract needed workers . Instead , Detroit 's cash flow shortfall must be addressed by fixing the problems that caused it in the first place . Banks must be told that they have profited enough from interest rate swaps that helped create this mess and will receive no more . The state needs to collaborate by increasing available revenues . Corporate tax loopholes must be closed and ineffective subsidies ended . Like other cities , Detroit can work its way back toward a healthy local economy with good jobs , quality public services and a robust tax base . But making that happen depends on honoring the promises made to workers and ensuring that Wall Street and big corporations pay their fair share .
Eisenbrey : Stripping Detroit 's workers of their modest pensions will kill middle class . Ross Eisenbrey : Most pensions are 30,000 ; $ $ 19,000 year a year for police and firefighters . He says culprits are sky-high financial costs , corporate subsidies , tax loopholes . He says Detroit bankruptcy caused by same dynamics creating inequality in the nation .