As Rahm Emanuel explores a mayoral bid in his hometown of Chicago, he faces two unpleasant outcomes should he decide to run: He could lose. Or he could win. A loss would diminish the reputation of the savvy White House Chief of Staff and brawling politician—a more petite version of Lyndon B. Johnson. A win would mean inheriting a gargantuan fiscal mess, a cantankerous city council, and a 10.5 percent metropolitan area jobless rate.
After Richard M. Daley's Sept. 7 announcement that he would not seek a seventh term as mayor of America's third-largest city, a growing list of candidates is exploring bids for the office. They include popular Cook County Sheriff Tom Dart; State Senator James Meeks, minister at one of Chicago's largest congregations; former city Inspector General David Hoffman; and Democratic Representative Luis Gutierrez. Top Chicago politicians say Emanuel is no shoo-in, and that Dart and Meeks may be more formidable contenders. The office has been held by the current Mayor Daley or his father, Richard J. Daley, for 43 of the past 55 years.
The current Mayor Daley's political prowess has camouflaged a host of racial, ethnic, and political schisms in the city that are likely to erupt after he leaves, as they did in 1983, seven years after his father's death. Chicago can't afford such political chaos now, given that the city faces an estimated $655 million deficit in its $3.39 billion budget for 2011. Business leaders want "someone that can keep this city connected globally, someone who is a leader, someone who is a fiscal conservative," says Jerry Roper, president of the Chicagoland Chamber of Commerce.
Whether Emanuel, 50, is that candidate isn't clear. "Not everyone is going to salute and line up to support him," says Dick Simpson, a political science professor at the University of Illinois at Chicago. Candidates have until Nov. 22 to file nomination papers for the Feb. 22 election, which is almost certain to be followed by a runoff contest on Apr. 5.
Chicago's next mayor will surely face a cash squeeze since Daley spent most of the $3.5 billion gained from leasing parking meters, garages, and a 7.8-mile elevated toll road. Moody's Investors Service cut Chicago's credit rating on $6.8 billion of general obligation debt, to Aa3, the fourth-highest, from Aa2, before an August bond sale. "They're a AA-rated borrower that is trading as if it was rated A," says Richard Saperstein, managing director at Hightower Advisors Treasury Partners in Chicago. "This means they're in line for a downgrade. The market is telling you something."
Daley's decision in 2008 to let a Morgan Stanley (MS)-led partnership run its parking meters was especially controversial. While the $1.15 billion deal brought in cash, Bloomberg News reported in August that recent financial documents show drivers will pay at least $11.6 billion in parking meter charges in the next 75 years, or 10 times what the city received for the lease. Even Rahm Emanuel can't fix that.
The bottom line: As Chicago's Daley exits, the next mayor faces potential racial tensions and few options to close a budget shortfall.