Steven Greenhut on Union Greed Driving California to Bankruptcy
Few non-Californians pay much attention to the goings-on in Stockton, a hard-pressed Gold-Rush-era industrial city of 300,000 that sits in the agriculturally rich San Joaquin Valley. But bond-holders, taxpayers, and government officials throughout the country will be listening to U.S. Bankruptcy Judge Christopher Klein's expected ruling on Monday as he decides whether the city may remain in bankruptcy. As Steven Greenhut explains, if Klein sides with the city, then municipalities will face a disturbingly low bar for pursuing bankruptcy. They will be emboldened to choose Stockton's course—i.e., using bankruptcy as a strategic policy tool to offload debts without having to confront the main reasons that they went bankrupt in the first place, such as lush pensions for public employees.