Time to start watching U.S. cities go bankrupt. Prior to Detroit, there was Stockton, California, and, according to Stephen Moore, now the chief economist with the Heritage Foundation, there are more than sixty of the largest cities that “are plagued with the same kinds of retirement legacy costs that sent Detroit in Chapter 9 bankruptcy” last year.
“Keep an eye on ‘too big to fail’ cities like Chicago, Philadelphia, and New York,” he warned. Among the twenty cities he listed in an August 2013 Newsmax article, he cited Compton and Oakland, CA, Harrisburg, PA, and Providence, RI. What these and other cities have in common is that “the vast majority are located in states with forced unions, non-right-to-work states.”
As Steve Stanek, a research fellow with the Heartland Institute, reported, when a federal judge, Stephen Rhodes, cleared the way for Detroit’s bankruptcy filing, in December, the American Federation of State, County, and Municipal Employees (AFCCME) immediately filed a notice of appeal, but Detroit has more than 100,000 creditors. As its emergency financial manager, Kevyn Orr, said, “The reality is the city has no cash on hand to pay the magnitude of the debt we have, which is $12 billion—$5.7 billion of which has to do with health care obligations, $3.5 billion has to do with pensions, and $2 billion has to do with bondholders.” Continue reading