A federal judge ruled on Tuesday that Detroit could proceed into bankruptcy and cut pensions to address its fiscal woes.

U.S. Bankruptcy Judge Steven Rhodes affirmed that the Motor City was indeed insolvent and certified that it could move forward with plans to eliminate nearly $20 billion in debt. Half of that shortfall comes from the city’s defined benefit pension system, which was designed to guarantee workers a portion of their salary for life.

Rhodes said Detroit must provide a pension haircut in order to address the budget deficit.

“It has long been understood that bankruptcy law entails the impairment of contracts,” Rhodes said, while pledging that he “will not lightly or casually exercise power […] to impair pensions.”
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2012: OBAMA BRAGS ‘I REFUSED TO LET DETROIT GO BANKRUPT.’ TODAY, DETROIT GOES BANKRUPT