Another Bankrupt California City

Retiring from the City at 50 years old and drawing 90% of your highest pay or being employeed for as little as six months and getting life time health benefits are a couple of the reasons Stockton, California is going bankrupt.

The people of Stockton will feel financial fallout for years after a federal judge ruled Monday to let the city become the most populous in the nation to enter bankruptcy. This coming from an Associated Press article yesterday.

But the case is also being watched closely because it could answer the significant question of who gets paid first by financially strapped cities — retirement funds or creditors.

"I don't know whether spiked pensions can be reeled back in," U.S. Bankruptcy Judge Christopher Klein said while making the ruling. "There are very complex and difficult questions of law that I can see out there on the horizon."

The potential constitutional question in the Stockton case is whether federal bankruptcy law trumps a California law that says money owed to the state pension fund must be paid. In making his ruling, Klein disagreed with creditors who argued that Stockton failed to pursue all avenues for straightening out its financial affairs.

"It's apparent to me the city would not be able to perform its obligations to its citizens on fundamental public safety as well as other basic government services without the ability to have the muscle of the contract-impairing power of federal bankruptcy law," Klein said.

A statement released by creditors said the group "respectfully disagrees with the court's ruling." The legal team for those creditors declined to say whether it would ask Klein for permission to appeal his decision — a requirement of bankruptcy code.

Stockton has tried to restructure some debt by slashing employment, renegotiating labor contracts, and cutting health benefits for workers. Library and recreation funding have been halved, and the scaled-down Police Department only responds to emergencies in progress. The city crime rate is among the highest in the nation.

Since cities can't liquidate assets, those that declare bankruptcy must come up with a plan for creditors to forgive some of the debt.

Holders of the biggest portion of Stockton's debt insured $165 million in bonds the city issued in 2007 to keep up with payments to the California Public Employees Retirement System as property taxes plummeted during the recession.

Stockton now owes CalPERS about $900 million to cover pension promises, far the city's largest financial obligation. Many struggling cities across California are in the same situation.

So far, Stockton has kept up with pension payments while reneging on other debts, maintaining it needs a strong pension plan to retain its pared-down workforce.

Attorneys for creditors argued that it was unfair for their clients to accept reduced payments while the pensions negotiated in flush times went untouched. They argued that employees who shared the wealth during good times should bow have to endure some of the pain with cuts to their pensions.

Legal observers expect the creditors to aggressively challenge the repayment plan presented by Stockton in the next phase of the process.

"That's where it will be precedent-setting," said Karol Denniston, a municipal restructuring expert who monitored the trial. "Does bankruptcy code apply to CalPERS or not? If bankruptcy code trumps state law, then that's huge and it has huge implications in terms of what happens next for other municipalities across California."

The state pension plan manages $255 billion in assets but was underfunded by $87 billion in 2011, the last time calculations were made. CalPERS is in the process of setting new rates to close the liability, said spokeswoman Amy Norris.

The changes could further strain at least two dozen other financially strapped cities, including San Bernardino, San Jose, Compton, Fairfield, Watsonville, Atwater.

"Just about everybody has an unfunded liability," Norris said.

Legal observers of the first-ever Chapter 9 bankruptcy case questioning state pension obligations expect an appeal to decide whether the 10th Amendment that gives rights to states is more powerful than federal bankruptcy code

Even Judge Klein, who was inclined at first to approve bankruptcy without a trial, said he was going forward with the hearing that ended Monday to create an appellate record.

Now the city of nearly 300,000 people begins a months-long process of negotiations over debt repayment. Already Stockton has spent $2 million on mediation and up to $5 million on the eligibility case, said Bob Deis, Stockton's city manager.

"There's nothing to celebrate about bankruptcy," he said. "But it is a vindication of what we've been saying for nine months."

Iron Lady Margret Thatcher Passes

The world is a little bit of a lesser place to live as Iron Lady Margret Thatcher passes away.

From a CNN report on Monday 8 April 2013. Former British Prime Minister Margaret Thatcher, a towering figure in postwar British and world politics and the only woman to become British prime minister, has died at the age of 87.

She suffered a stroke Monday, her spokeswoman said.

Thatcher's funeral will be at St. Paul's Cathedral, with full military honors, followed by a private cremation, the British prime minister's office announced.

Thatcher served from 1975 to 1990 as leader of the Conservative Party. She was called the "Iron Lady" for her personal and political toughness.

Former world leaders Margaret Thatcher and Ronald Reagan met many times as partners in diplomacy and policy-making and developed a public friendship. "We have lost a great president, a great American and a great man. And I have lost a dear friend," Thatcher said at Reagan's funeral in 2004.

Thatcher won the nation's top job only six years after declaring in a television interview, "I don't think there will be a woman prime minister in my lifetime."

During her time at the helm of the British government, she emphasized moral absolutism, nationalism, and the rights of the individual versus those of the state -- famously declaring "There is no such thing as society" in 1987.

Nicknamed the "Iron Lady" by the Soviet press after a 1976 speech declaring that "the Russians are bent on world dominance," Thatcher later enjoyed a close working relationship with U.S. President Reagan, with whom she shared similar conservative views.

But the British cold warrior played a key role in ending the conflict by giving her stamp of approval to Soviet Communist reformer Mikhail Gorbachev shortly before he came to power.

"I like Mr. Gorbachev. We can do business together," she declared in December 1984, three months before he became Soviet leader.

Having been right about Gorbachev, Thatcher came down on the wrong side of history after the Berlin Wall fell in 1989, arguing against the reunification of East and West Germany.

Allowing the countries created in the aftermath of World War II to merge would be destabilizing to the European status quo, and East Germany was not ready to become part of Western Europe, she insisted in January 1990.

"East Germany has been under Nazism or Communism since 1930. You are not going to go overnight to democratic structures and a freer market economy," Thatcher insisted in a key interview, arguing that peace, security and stability "can only be achieved through our existing alliances negotiating with others internationally."

West German leader Helmut Kohl was furious about the interview, seeing Thatcher as a "protector of Gobachev," according to notes made that day by his close aide Horst Teltschik.

The two Germanies reunited by the end of that year.

A grocer's daughter

Thatcher -- born in October 1925 in the small eastern England market town of Grantham -- came from a modest background, taking pride in being known as a grocer's daughter. She studied chemistry at Oxford, but was involved in politics from a young age, giving her first political speech at 20, according to her official biography.

She was elected leader of the Conservative Party in 1975, when the party was in opposition.

She made history four years later, becoming prime minister when the Conservatives won the elections of 1979, the first of three election victories to which she led her party.

As British leader, Thatcher took a firm stance with the European Community -- the forerunner of the European Union -- demanding a rebate of money London contributed to Brussels.

Her positions on other issues, both domestic and foreign, were just as firm, and in one of her most famous phrases, she declared at a Conservative Party conference that she had no intention of changing her mind.

The Iron Lady indeed.

Paul Ryan's Proposed Budget Cuts

This is a list of what Congressman Paul Ryan and the Republicans proposed to cut from the Federal Budget,....not nearly enough, but a decent start in our book. And note that the popular Democrat talking points, lies actually, that Ryan wants to cut Social Security and military spending, are not on this list. Let's compare to President Obama's budget looks like, supposedly coming out the day after tomorrow.

* Corporation for Public Broadcasting Subsidy -- $445 million annual savings.

* Save America 's Treasures Program -- $25 million annual savings.

* International Fund for Ireland -- $17 million annual savings.

* Legal Services Corporation -- $420 million annual savings.

* National Endowment for the Arts -- $167.5 million annual savings.

* National Endowment for the Humanities -- $167.5 million annual savings.

* Hope VI Program -- $250 million annual savings.

* Amtrak Subsidies -- $1.565 billion annual savings.

* Eliminate duplicating education programs -- H.R. 2274 (in last Congress), authored by Rep. McKeon, eliminates 68 at a savings of $1.3 billion annually.

* U.S. Trade Development Agency -- $55 million annual savings.

* Woodrow Wilson Center Subsidy -- $20 million annual savings.

* Cut in half funding for congressional printing and binding -- $47 million annual savings.

* John C. Stennis Center Subsidy -- $430,000 annual savings.

* Community Development Fund -- $4.5 billion annual savings.

* Heritage Area Grants and Statutory Aid -- $24 million annual savings.

* Cut Federal Travel Budget in Half -- $7.5 billion annual savings.

* Trim Federal Vehicle Budget by 20% -- $600 million annual savings.

* Essential Air Service -- $150 million annual savings.

* Technology Innovation Program -- $70 million annual savings.

* Manufacturing Extension Partnership (MEP) Program -- $125 million annual savings.

* Department of Energy Grants to States for Weatherization -- $530 million annual savings.

* Beach Replenishment -- $95 million annual savings.

* New Starts Transit -- $2 billion annual savings.

* Exchange Programs for Alaska Natives, Native Hawaiians, and Their Historical Trading Partners in Massachusetts -- $9 million annual savings.

* Intercity and High Speed Rail Grants -- $2.5 billion annual savings.

* Title X Family Planning -- $318 million annual savings.

* Appalachian Regional Commission -- $76 million annual savings.

* Economic Development Administration -- $293 million annual savings.

* Programs under the National and Community Services Act -- $1.15 billion annual savings.

* Applied Research at Department of Energy -- $1.27 billion annual savings.

* Freedom CAR and Fuel Partnership -- $200 million annual savings.

* Energy Star Program -- $52 million annual savings.

*Economic Assistance to Egypt -- $250 million annually.

* U.S.Agency for International Development -- $1.39 billion annual savings.

* General Assistance to District of Columbia -- $210 million annual savings.

* Subsidy for Washington Metropolitan Area Transit Authority -- $150 million annual savings.

*Presidential Campaign Fund -- $775 million savings over ten years.

* No funding for federal office space acquisition -- $864 million annual savings.

* End prohibitions on competitive sourcing of government services.

* Repeal the Davis-Bacon Act -- More than $1 billion annually.

* IRS Direct Deposit: Require the IRS to deposit fees for some services it offers (such as processing payment plans for taxpayers) to the Treasury, instead of allowing it to remain as part of its budget -- $1.8 billion savings over ten years.

* Require collection of unpaid taxes by federal employees -- $1 billion total savings.WHAT THE HELL IS THIS ABOUT?

* Prohibit taxpayer funded union activities by federal employees -- $1.2 billion savings over ten years.

* Sell excess federal properties the government does not make use of -- $15 billion total savings.

* Eliminate death gratuity for Members of Congress. WHAT???

* Eliminate Mohair Subsidies -- $1 million annual savings.

Eliminate taxpayer subsidies to the United Nations Intergovernmental Panel on Climate Change -- $12.5 million annual savings. WELL ISN'T THAT SPECIAL

* Eliminate Market Access Program -- $200 million annual savings.

* USDA Sugar Program -- $14 million annual savings.

* Subsidy to Organization for Economic Co-operation and Development (OECD) -- $93 million annual savings.

* Eliminate the National Organic Certification Cost-Share Program -- $56.2 million annual savings.

* Eliminate fund for Obamacare administrative costs-- $900 million savings.

* Ready to Learn TV Program -- $27 million savings.

* HUD Ph.D. Program.

* Deficit Reduction Check-Off Act.

* TOTAL SAVINGS: $2.5 Trillion over Ten Years

My question is, what is all this doing in the budget in the first place? Maybe this is why the Democrats are attacking Paul Ryan. Be Paul Revere - let people know about this.