CHICAGO — Rahm Emanuel was sworn in Monday as Chicago's first new mayor in more than two decades, a historic power shift for a city where the retiring Richard M. Daley was the only leader a whole generation had ever known.
The former White House chief of staff took the oath of office at downtown's Millennium Park, one of the signature accomplishments in Mr. Daley's efforts to transform Chicago from a gritty industrial hub into a sparkling world destination. Mr. Emanuel later headed to the fifth-floor office of City Hall that was Mr. Daley's lair for 22 years — a longer time than anyone, including his legendary father, ever occupied it.
"We must face the truth," Mr. Emanuel said in his inaugural speech. "It is time to take on the challenges that threaten the very future of our city: the quality of our schools, the safety of our streets, the cost and effectiveness of city government and the urgent need to create the jobs of the future."
"The decisions we make in the next two or three years will determine what Chicago will look like in the next 20 or 30."
Mr. Emanuel inherits a city with big financial problems. His transition team predicted a $700 million budget shortfall next year, but because of some controversial decisions Mr. Daley made — most notably the push to privatize parking meters — he has limited ways to pay for school improvements or repair the city's aging infrastructure.
With Mr. Daley and his wife, Maggie, who is battling cancer, sitting nearby, Mr. Emanuel began his comments by praising his predecessor.
"A generation ago, people were writing Chicago off as a dying city," the new mayor said. "They said our downtown was failing, our neighborhoods were unlivable, our schools were the worst in the nation and our politics had become so divisive we were referred to as Beirut on the Lake."
Mr. Daley, he said, "challenged all of us to lower our voices and raise our sights. Chicago is a different city today than the one Mayor Daley inherited, thanks to all he did."
At the same time, Mr. Emanuel walked a fine line as he sought to assess the city's problems without being directly critical of the departing mayor.
"From the moment I began my campaign for mayor, I have been clear about the hard truths and the tough choices we face. We simply can't afford the size of city government that we had in the past, and taxpayers deserve a more effective and efficient government than the one we have today."
Mr. Emanuel also showed that he would not be shy about wading into national politics, referring to efforts in other Midwestern states to eliminate union rights for many public employees as part of budget cuts.
"I reject how leaders in Wisconsin and Ohio are exploiting their fiscal crisis to achieve a political goal," he said. "That course is not the right course for Chicago's future."
Mr. Emanuel spent much of his campaign battling the perception that he was an outsider from Washington. But after thanking his old boss, President Obama, and inviting a guest list filled with administration figures, Mr. Emanuel made one thing clear: He has friends in high places.
Vice President Joseph R. Biden attended, as did Transportation Secretary Ray LaHood, Treasury Secretary Timothy F. Geithner and David Axelrod, a top Obama adviser who worked with Mr. Emanuel at the White House.