Rahm Emanuel came up with a useful catch phrase when he was White House chief of staff for President Obama. With the new administration facing challenges that started with two wars and a recession of vast proportions, Emanuel declared, “You never want a serious crisis to go to waste.” The phrase took on a life of its own -- at least in Washington.

Now Emanuel is bringing it home to Chicago. With good reason. Chicago’s finances are a wreck, murder rates in parts of the city are among the highest in the country and infrastructure has been long neglected. In addition, foreclosures and unemployment have exacerbated the traditional disparities between the rougher south and west sides of town and the still-glittering downtown. It’s a set of problems on which Emanuel, who was sworn in as mayor on May 16, fully intends to bring his crisis-exploiting mentality to bear.

“This is the opportunity to do things you couldn’t do before because it was too politically hard,” Emanuel says. “The change is going to be significant, and it’s going to be equal to the challenges we face.”

For those who have not been following Chicago politics closely, it may come as something of a surprise that Emanuel has inherited a raft of problems. He is following in the footsteps, after all, of Mayor Richard M. Daley, who not only served for a record 22 years, but also earned an international reputation as one of the most successful and innovative mayors this country has ever seen.

Daley was fearless in addressing many of the intractable difficulties of the city, taking formal control of perennial problem areas such as management of the school system and public housing. Unlike many other former industrial cities in the Midwest, Daley helped Chicago adapt to a post-manufacturing economy long after it ceased being the hog butcher for the world and suffered the shutdown of the massive U.S. Steel plant along the lakefront. “Chicago stands out in the industrial heartland,” says Minneapolis Mayor R.T. Rybak, “as being the best example of repositioning your city for the post-industrial economy.”

Daley’s emphasis on quality-of-life issues -- not just the climate change and green roof campaigns that were widely copied by his peers, but his promotion of parks, colleges and cultural institutions -- have helped spruce up a downtown that remains a magnet for tourists and corporate headquarters. The downtown Loop area, which might have had 10,000 residents 10 or 15 years ago, now is home to 150,000. Daley helped change the notion that cities were the sick centers of regional doughnuts, showing instead that they could be places that create wealth. “A lot of cities didn’t protect their downtown areas,” says Alderman Bob Fioretti. “That’s when they got in trouble.”

But for all his clear victories, Daley punted some fiscal problems into his successor’s hands. The recession that Emanuel and his old boss, Obama, couldn’t fully lift is still affecting Chicago. The city is dependent on help from a state that will begin its new fiscal year next month more than $8 billion in arrears in scheduled payments to municipalities, school districts, hospitals and other service providers. The city’s budget shortfall will be at least $500 million; the school district’s will easily exceed that. Chicago, which managed to defy the population-loss trend in other major cities in the 2000 Census, has over the past decade lost nearly 200,000 residents, slipping back to a population level not seen since before 1920.

Emanuel intends to address all that and more. His ambitions may yet exceed his grasp -- and the tough decisions ahead of him will make for an exceedingly short honeymooon period. But to the extent that Emanuel can right Chicago’s wrongs, he may provide a more useful guide to his peers in how to steer through tough times than even Daley would have, had he stuck around for yet another term.

Emanuel recognizes that his job description now requires not only putting the fiscal ship back right but ensuring that Chicago doesn’t slip up in the ways that Daley managed to prevent during his long time in office. “The decisions we make in the next two or three years will determine where we are in the next 20 to 30 years,” Emanuel says. “If we make the wrong decisions, we could veer off. We could become a Cleveland.”

Emanuel is famous not only for his catch phrase, but also for a few personal quirks. He studied ballet throughout his youth and then served as a civilian volunteer on an Israeli army base during the first Gulf War. What he’s best known for, though, is his swearing.

Emanuel is known to have cursed not only at White House underlings, but at presidents and prime ministers too. (He served as a top aide in the Clinton White House before winning a seat in Congress in 2002, which he gave up to work for Obama.) When as a teenager he sliced his middle finger -- he lost part of it -- Emanuel developed an infection so bad that his parents worried it might cost him his life. After he checked himself out of the hospital, his mother worried the fever “might have affected his mentality or his intellect,” as she once told a reporter. “But the first time he woke up, I realized he was cursing, and it was, ‘He’s going to be OK.’”

That kind of reputation might harm a mayoral candidate’s image in many places, but not Chicago, which likes its leaders to be strong. “The more they said things about Rahm being tough and not necessarily a nice guy, the stronger his support became,” says Paul Green, a veteran observer of the city’s politics and a political scientist at Chicago’s Roosevelt University.

Emanuel has a tough-guy gaze but also a high-pitched laugh. His personality seemed to undergo a bit of a shift as he made the rounds of school auditoriums and “L” train stops during his campaign. He may have always used swearing for emphasis -- “even when he has a temper and says [the F-word], he is not out of control,” says Marilyn Katz, a media and public policy consultant who has known him for years -- but throughout the campaign, he swore it off. When confronted about his foul language at a forum a couple of weeks prior to his inaugural, Emanuel said, “I would like the record to show -- have I done that in seven months?”

There are still reports leaking out about Emanuel cursing during private meetings with aldermen, but his public demeanor has become G-rated and perfectly calm. The sense of discipline he’s displayed has helped him, says Larry Bennett, a political scientist at DePaul University and author of The Third City, a recent book about Chicago. During the long, heated battle about whether Emanuel met the city’s residency requirements to run for mayor, he remained composed in the face of considerable baiting. “It allowed him to be the embattled figure who was the victim of small-minded Chicago ways,” Bennett says. “It was tremendous for him. He was the calm public servant, just waiting for the opportunity to serve.”

Chicagoans are deeply proud of their city. In contrast to his opponents, who often seemed unable to look beyond the city’s fiscal problems and endemic economic divides, Emanuel managed to convey a sense of Chicago’s continuing promise -- if it can get such problems under control, he always emphasized. “For as long as I’ve known him, 20 years, he’s been a person who wasn’t afraid to push to make things happen, and voters like that,” says Avis LaVelle, a consultant and Daley’s first mayoral press secretary. “I don’t think voters chose Rahm Emanuel to keep doing the same things and not ruffle the nest. They like the get-it-done attitude of the new mayor.”

Emanuel’s appeal apparently transcended racial lines, something he has in common with his predecessor. Daley may not have been known for it nationwide, but in Chicago one of the main accomplishments people speak of in discussing his legacy was his success in calming the city’s racial tensions. Chicago was known as “Beirut by the Lake” during the 1980s tenure of Harold Washington, the city’s first black mayor, who was undercut by a racially divided council that frequently came down 29-21 against his proposals. His opponent’s theme song in the 1983 mayoral election was Bye, Bye Blackbird.

But where Washington entered office after winning just 13 percent of the white vote, Emanuel had the support of 53 percent of the city’s African-Americans.

LaVelle recounts being approached by an African-American man at an inner-city McDonald’s who told her he would be supporting Emanuel, despite the attempts of other candidates to divide the vote along racial lines. Emanuel pulled together a coalition resembling Obama’s in 2008, winning the support of affluent white liberals and African-Americans alike. Emanuel avoided a runoff, carrying 40 out of the city’s 50 wards. “I’m going with Rahm,” the man at the McDonald’s told LaVelle, “because we don’t want a nobody for mayor, and we don’t want a mayor that nobody knows.”

Emanuel may have proven popular among black voters, but he did less well with Hispanics, and some of the relatively few wards he lost had been reliably Democratic since the days of mayors who predate even Daley’s father’s time in City Hall.

The reason is that Emanuel lacked support from public employees, who share a great deal of unease that he will become yet another contemporary executive setting out to cut their salaries and benefits. “There is no way he can go and attack the deficits of $500 million to $700 million without going after pensions and health care,” says Roosevelt University’s Green. “He lost wards that have been Democratic since [Mayor] Anton Cermak [in the 1930s] because city workers know what’s coming.”

Last year, Daley filled a budget hole of $650 million without raising property taxes, but he did it primarily through the use of one-time funds. Daley drained dollars raised through leasing parking meters and a highway. That means the city has already used up in six years some 80 percent of the money raised by 75- and 99-year leases. He also bought labor peace by inking multiyear contracts -- written in more prosperous times, when 4 percent annual pay raises seemed like a reasonable idea.

In addition to the operating deficits, the city’s four major pension funds are more than $12 billion short of full funding. As a result, over the past decade Chicago has not only lost population, but also seen the share of unfunded pension liability increase from $827 to $4,340 per resident. “A recent Daley commission I served on found that the city is $710 million short annually in pension contributions,” says Laurence Msall, head of the city’s Civic Federation, a nonpartisan government research organization. “Making this up would require that the city more than double its annual property tax levy.”

Emanuel had no trouble winning applause during the campaign by promising not to double property taxes. He devised a variety of ideas to tackle the city’s financial problems, from charging nonprofits for water use to instilling competition in such areas as garbage pickup. He has even, like many other soon-to-be disappointed elected officials before him, talked up the idea of lowering the sales tax but broadening the base to capture more of the economy, including services.

The main thing, though, is that he wants public employees to recognize that they will have to help make up the gap in areas such as pension funding. Emanuel says he’s open to ideas about how to achieve the savings he needs, but he also says he won’t vary from his goal in terms of dollar amounts. “Nobody -- business, labor, people in the administration -- can come to me with the attitude of defending the status quo,” he says. “The status quo does not work, and I’ve got $500 million in problems to show you that.”

The public employee unions, which did not support his candidacy, say that while Emanuel talked a good game about consulting them during his transition, they have yet to see evidence of his willingness to work with them. “Some people, their idea of collaboration is to say, ‘Here’s our plan, and we want you to endorse it. If you don’t endorse it, you’re an obstacle to change,’” says Henry Bayer, executive director of American Federation of State, County and Municipal Employees Council 31. “I don’t think someone is being an obstacle to change if they don’t want to rubber stamp every idea the mayor has.”

Emanuel is fond of pointing out that the unions didn’t support him -- but he won anyway. Even before being sworn in, he successfully lobbied the Illinois Legislature to change work rules in the Chicago schools, which he frequently complained have the shortest term of any major city’s district, as well as school days that run 90 minutes shorter than most other metropolitan districts. “We can’t run from these problems any longer,” he says. “I want a debate about how we’re going to use that hour and a half, not how we’re going to get compensated for it.”

Daley managed to convince not only Chicago residents, but also businesses that expended millions at his behest that it was worth investing in what had been a miserable public school system. Daley put billions into school construction and helped pave the way for a host of reform ideas that are now being promoted nationally by his former schools chief, Arne Duncan, Obama’s secretary of education. “If Daley hadn’t changed the tone about what could be accomplished, there would have been a taxpayer revolt,” says Alderman Patrick O’Connor.

As in many areas, Emanuel not only wants to build on what Daley has done in education, but to move things a few steps further. Chicago public schools, though much improved, remain a disappointment, with a dropout rate of about 50 percent. Emanuel supports a broad panoply of education changes -- not just lengthening the school day and school year, but more aggressive use of charters, a limit on teacher strikes, and changes to tenure and merit pay for administrators as well as teachers. “Rahm is going to take on what Daley couldn’t -- the unions and longer school days,” says Chuck Bernardini, a former alderman. “What’s going on countrywide will probably be helpful to Rahm. Everyone sees what’s happening in other states, and that has to bring some realism to the unions.”

Emanuel may be convinced that he is going to have to restructure the services the city can deliver -- and reduce the size of the workforce that delivers them. But within the school district, as in other areas of government services, Emanuel is going to have to confront forces that aren’t convinced his ideas are necessarily the best, or even politically tenable. Bernard Stone, who served for 38 years on the City Council before being ousted in April, notes that his opponent -- who was backed by Emanuel -- received significant financial support from unions. The question Stone asks is, “What loyalty does she owe?”

One-fourth of the 50 City Council members are newly sworn in, along with Emanuel. The vast majority are inclined to support his positions, but many will be looking to establish their own power. Despite being a city that’s long been known for its mayors, Chicago actually has a weak-mayor form of government by law. “Daley didn’t start with a council that gave him unanimous votes for everything,” says LaVelle, the consultant. “He had to earn that.”

But the fact that the council is so sprawling makes it difficult for it to stand on equal footing with the mayor -- particularly one with the star power Emanuel has shown. “The problems of the city are so great, and 50 aldermen have such narrow interests,” says Green. “Only the mayor can provide a citywide solution.”

Emanuel starts out as mayor with the ear of the president, and the personal Rolodex and fundraising ability to chart his own course. He has already attracted top talent from around the country, not relying on the usual coterie around Chicago City Hall. His pick to run the school system, Jean-Claude Brizard, helped raise graduation rates from 39 percent to a much-improved though still miserable 51 percent during three years in the same job in Rochester, N.Y. Garry McCarthy, his pick for police chief, comes from Newark, N.J., where he helped drive down crime rates -- especially for violent crime -- repeating a trick he’d pulled off as a deputy commissioner in New York City. “He’s attracting talented people from inside and outside the city,” says Msall, the Civic Federation president.

Not everyone has applauded Emanuel’s picks. A group of black aldermen complained that the faces of the mayor’s public safety team are too white. The Chicago Teachers Union is more than a bit unhappy that he chose a schools CEO who had just received a vote of no-confidence from the union in Rochester. How Emanuel’s administration is ultimately judged, of course, will depend on how close he can come to making good on his promises to address Chicago’s problems.

But because of his prominence and the independence his political celebrity buys him, some Chicagoans even dare to hope he’ll run an administration that won’t be hampered by the same sort of corruption that the city has long been known for. As media and public policy consultant Katz notes, when Steven Spielberg handed Emanuel a check, he wasn’t hoping to land a city contract.

Mostly, Chicagoans hope that Emanuel will not only bring new ideas, but also the drive to push them past what is likely to be considerable resistance. This is not the time for a wimpy mayor. Emanuel took the risk during the election of saying he was going to take on the city’s most difficult problems, and he won a big victory. So he starts, at least, with a strong hand. If the person taking office after Daley was someone “who people felt was a step down, Chicagoans would be nervous about their future,” says Alderman O’Connor. “But I don’t think that’s the case.”