Chicago's race to the bottom accelerates - credit downgraded to 'junk' status

As Detroit emerged from bankruptcy and began the long, arduous, process of clawing its way back from its Chapter 9 low point, it began to actually improve itself. No, it's not "there" yet. It's got a long way to go. But, if you live in or around the city, the improvements are obvious and easy to spot.

The fact that things are getting even slightly better means Detroit is threatening to leave a vacancy at the bottom of every "Worst cities in America" list. Fortunately, Chicago spent the last 30 years making all the same mistakes Detroit made, so there will be a new town ready to fill that void. As we learned this week, Chicago's race to the bottom is nearly complete. Moody's has dropped their credit rating two notches - all the way to junk. From Reuters:

Moody's Investors Service on Tuesday pushed Chicago's credit rating into the "junk" category, potentially triggering $2.2 billion in accelerated debt payment and increasing the fiscal challenges facing the nation's third-largest city. The downgrade of Chicago's $8.1 billion in general obligation debt to "Ba1" could limit Mayor Rahm Emanuel's options as he seeks to address a state-mandated $550 million increase in city pension payments in 2016.

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The only big U.S. city with a lower Moody's rating is Detroit, which exited bankruptcy in December. Emanuel lashed out at the rating agency, which said its records do not show Chicago ever having junk rating before. "This action by Moody's is not only premature, but it is irresponsible to play politics with Chicago's financial future," said Emanuel, a Democrat.

Actually, it's not premature. It's probably overdue because this is the exact situation that faced Detroit in the years before bankruptcy became unavoidable. Left-wing leaders spent decades trading cushy pensions to public-sector union bosses in exchange for loyalty, influence, and votes. This led to more Dems in office. Dems always lead to higher taxes and those taxes encourage businesses to flee the region. Less business means more poverty, more crime, and - ultimately - a reduction in the tax base. So, in order to maintain something close to the status quo, taxes go up and services are pared back. In order to maintain their power over an increasingly dissatisfied populace, the Democrats running the show promote expensive-but-useless social programs and, you guessed it, more deals for the unions It's called the death spiral and, eventually, the whole process has been repeated for so long that it becomes completely unsustainable and collapse is unavoidable. Detroit may have written the book on it, but it looks like Chicago is going to perfect it, and apply it to a much bigger city. ...Which means that the steps necessary to right the Windy City's fiscal ship will be that much more painful.