Probably not anytime soon, but Chicago is “under scrutiny,” according to Bloomberg News, now that Detroit has filed for bankruptcy. If what’s happened in Detroit is ruffling feathers, consider those feathers ruffled in Chicago, as Chicago’s credit rating was significantly downgraded at the same time Detroit filed for bankruptcy.
Why? Primarily because funding government employee pensions has become a major problem. State lawmakers have failed to address this issue on multiple occasions. Chicago’s murder rate and decrease in population over the last several years apparently factored in as well, which seems to put Chicago on Detroit’s trajectory.
As if to underscore the risk, Chicago Mayor Rahm Emanuel said that Detroit was “a wake-up call for all of those who try to put their head in the sand and say that we don’t have a problem.”
The “problem,” as Emanuel and others see it, is funding employee pensions, which will apparently jump to more than a billion per year in 2015 if lawmakers don’t do something about it.
But it’s not all doom and gloom.
Emanuel said that Chicago, unlike Detroit, has more than one major industry (the auto industry) to fall back on. “Our economy is diverse, which is our strength,” he said.
The consensus, as it would appear in the Bloomberg News report, is that Chicago has many of the same problems Detroit faced, which ultimately forced Detroit into bankruptcy. But, for now, there’s enough time to fix those problems, if only Illinois state lawmakers act.
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Detroit Goes Bankrupt: Chicago Next?