Stockton, California: America's Largest City to Go Bankrupt
A lawyer for Stockton, Calif., said Monday that the city can file for bankruptcy, making it the largest American city to ever go bankrupt.
The city is one of the most discussed in a state gaining notoriety for its towns dealing with financial mismanagement. Stockton, for example, filed for bankruptcy as the only way out of over $1 billion of debt they accumulated.
How exactly does a town rack up such debt, you ask?
The folks on 'Fox and Friends' this morning took up the topic, saying that one of the driving factors was Stockton's over-generous health care policy, which dictated that regardless of how long a person was employed by the city, he or she would be entitled to health care benefits for life, including one dependent. And pensions? Well, the city calculates 90 percent of an employee or former employee's top-year earnings, and that is what he or she would earn for the rest of his or her life.
So, what precedent does this bankruptcy set for other cash-strapped cities across the country?