Jackson Jambalaya

The Wall Street Journal editorial page praised Detroit for making the tough decision to enter bankruptcy. Bankrupty allowed Detroit to begin to get its house in order. Believe it or not, the city has made some progress:

Treasury Secretary Jack Lew is parachuting into Detroit this week to "highlight the Obama Administration's continued commitment to the city's revitalization." But the real news is how much-maligned bankruptcy is giving city leaders important tools to rebuild.

Merely a year ago, Detroit's unions, politicians and black leaders were warning that Governor Rick Snyder's appointment of emergency manager Kevyn Orr would trigger a civil war. Jesse Jackson charged that Mr. Snyder was creating a "plantocracy, a plantation-ocracy," never mind that Mr. Orr is black. Yet letting the city wallow in its political failures would have been the real crime.

Detroit boasted the nation's highest homicide rate. Police response times were five times the national average. A heart attack was usually fatal because emergency medical care barely existed. About 40% of the city's 88,000 street lights were broken and nearly half of the city's 78,000 blighted buildings were deemed "dangerous."

Meantime, the city had accumulated a $700 million deficit (on $1.2 billion revenues), which was projected to grow to $1.35 billion by 2017. Retirement liabilities had ballooned to $9.2 billion. Several pension-fund trustees and money managers had been indicted for accepting kickbacks.

When Mr. Orr filed for bankruptcy last July, he proposed slashing unfunded retirement liabilities and general-obligation bonds by up to 90% and investing $1.25 billion from debt savings into public services. Unions sued to block the pension cuts, but federal bankruptcy judge Steven Rhodes in December set an important precedent by affirming that federal bankruptcy law trumps state laws protecting pensions and contracts.

Mr. Orr has since negotiated smaller haircuts, which nonetheless impose tough discipline and will put the city on a sustainable post-bankruptcy course. Voter-approved unlimited general obligation bonds, which are backed by the city's "full faith and credit," will be slashed by 26% while unsecured "limited" general-obligation bond holders may recover just 15%. The haircuts ought to remind investors that no debt is risk free.....

Mr. Orr's plan will free up more than $100 million annually for revitalization. New police chief James Craig has already implemented new IT systems that have contributed to a 14% year-over-year decline in homicides. More than 3,200 streetlights have been replaced, with about 50,000 new installations planned by the end of 2015. New mayor Mike Duggan and the city council have formed a land bank to clear blight and intend to cut property tax bills by 5% to 20% this year.

Bankruptcy is also renewing public confidence and helping spur business investment, which is critical to expanding growth from the booming downtown out. Racial tensions have receded.

The White House last summer announced $320 million in repurposed federal funds for Detroit, and the Detroit Free Press last week reported that the Obama Administration has offered an additional $100 million from the bank bailout for blight removal to soften the pension blow for workers. On his taking-credit tour Mr. Lew is showcasing the federal investments. But Detroit has been drawing Washington welfare for years—$700 million between 2010 and 2012. The aid merely propped up the decadent political culture.

The real credit for rescuing Detroit belongs to Mr. Orr and Gov. Snyder, who had the guts to put the city into bankruptcy. Rest of editorial

Note to the Yarber administration: If there is bad news in the city finances, just tell us and make the tough decisions.