Judge clears way for Detroit to confront billions in debt in next phase of epic bankruptcy
DETROIT (AP) -- A federal judge ruled Tuesday that Detroit can use bankruptcy to cut employee pensions and relieve itself of other crushing debts, handing a defeat to the city’s unions and retirees and shifting the case into a delicate new phase.
Judge Steven Rhodes, who wondered aloud why the bankruptcy had not happened years ago, said pensions can be altered just like any contract because the Michigan Constitution does not offer bulletproof protection for employee benefits. But he signaled a desire for a measured approach and warned city officials that they must be prepared to defend any deep reductions.
"This once proud and prosperous city can’t pay its debts. It’s insolvent," Rhodes said in formally granting Detroit the largest public bankruptcy in U.S. history. "At the same time, it also has an opportunity for a fresh start."
The ruling came more than four months after Detroit filed for Chapter 9 protection.
Rhodes agreed with unions and pension funds that the city’s emergency manager, Kevyn Orr, had not negotiated in good faith in the weeks ahead of the July filing, a key condition under federal law. But he said the number of creditors -- more than 100,000 -- and a wide array of competing interests probably made that "impossible."
For decades, Detroit paid its bills by borrowing money while struggling to provide the most basic of services for its residents. The city, which was about to default on a good chunk of a long-term debt exceeding $18 billion, now will get a second chance in a federal bankruptcy court-led restructuring. Detroit’s budget deficit this year alone is estimated at roughly $300 million, and Kevyn Orr, its state-appointed emergency manager, chose bankruptcy over diverting money from police, fire and other services to make debt payments. The move conserves cash so the city can operate, but it will hurt Detroit’s image for years. It also leaves creditors with pennies on the dollar and places in jeopardy the pension benefits of thousands of city retirees.
It took decades of decay to bring down the once-mighty industrial giant that put the world on wheels. The city grew to 1.8 million people in the 1950s, luring them with plentiful jobs that paid good wages to stamp out automobiles for sale across the globe. But like many American cities, Detroit’s fall began late that decade as developers starting building suburbs. Then came the 1967 riots that accelerated the number of white residents who moved to the cities north of Eight Mile Road, considered the region’s racial dividing line. At the same time, auto companies began opening plants in other cities, and the rise of autos imported from Japan started to cut the size of the U.S. auto industry. Detroit’s property values fell, tax revenue dropped, police couldn’t control a growing murder rate, and many middle-class blacks fled the city for safer suburbs with better schools. By 2009, the auto industry collapsed along with the economy as a whole, eventually pulling the city down with it.
Illinois Legislature approves
fix for $100 billion state
pension shortfall, nation’s worst
SPRINGFIELD, Ill. (AP) -- The Illinois Legislature approved a historic plan Tuesday to eliminate the state’s $100 billion pension shortfall, with a vote that drew threats of a legal challenge from labor unions but that supporters said was crucial to repairing Illinois’ deeply troubled finances.
The House voted 62-53 in favor of the plan, sending it to Gov. Pat Quinn, who has said he will sign it. The Senate approved the measure 30-24 just minutes earlier.
"The message is this is not a one-sided bill. There will be changes here, much-needed changes, but this bill is a well thought out, well balanced bill that deserves the support of this body, the state Senate and the approval of Gov. Quinn," House Speaker Michael Madigan said at the start of the House debate. "Something’s got to be done. We can’t go on dedicating so much of our resources to this one sector of pensions."
Public employee unions, who oppose the bill, vowed to quickly take legal action. They say the legislation is unfair to workers and retirees who for years made faithful contributions to retirement systems but now will see benefits cut because of government mismanagement. They also argue parts of the measure are unconstitutional.
Illinois’ unfunded pension problem is considered the worst in the nation, primarily because lawmakers failed for decades to make the state’s full payments to the funds. The massive unfunded liability has led the major credit rating agencies to downgrade Illinois’ rating to the lowest of any state in the nation. It’s also siphoned money from education, roads and other areas.
Union official: Engineer caught himself nodding at controls before deadly NYC train derailment
YONKERS, N.Y. (AP) -- A rail union official says a commuter train engineer caught himself nodding at the controls before the train started to veer off its tracks and derailed in New York City, killing four people.
Union leader Anthony Bottalico (boh-TAL’-ih-koh) said Tuesday that William Rockefeller "caught himself, but he caught himself too late."
Bottalico says Rockefeller told him he "nodded," akin to a momentary lapse while driving a car.
The National Transportation Safety Board is interviewing Rockefeller. Member Earl Weener says it’s too soon to say whether the engineer was fully conscious around the time of Sunday’s wreck in the Bronx.
He says it’s too soon to say whether the wreck was the result of human error or a mechanical problem.
Obama declares health care law is working, says benefits have been overshadowed by web woes
WASHINGTON (AP) -- Seeking to regroup from his health care law’s disastrous rollout, President Barack Obama on Tuesday insisted that the sweeping overhaul is working and warned Republican critics that he would fight any efforts to strip away its protections.
"We’re not repealing it as long as I’m president," Obama said during a health care event at the White House. "If I have to fight another three years to make sure this law works, then that’s what I’ll do."
Earlier Tuesday, the administration released a 50-state report saying that nearly 1.5 million people were found eligible for Medicaid during October. As website problems depressed sign-ups for subsidized private coverage, that safety-net program for low-income people saw a nearly 16 percent increase in states that have agreed to expand it, according to the Department of Health and Human Services.
The White House is trying to cast the health care law in a positive light after the first two months of enrollment for the centerpiece insurance exchanges were marred with technical problems. With the majority of problems with the sign-up website resolved, by the accounting of administration officials, Obama and his team plan to spend much of December trying to remind Americans why the administration fought for the law in the first place.
"We believe that in America, nobody should have to worry about going broke because somebody in their family or they got sick," Obama said, flanked by people the White House says have benefited from the law.
Man survives 3 days at bottom of Atlantic, rescued after finding air pocket in tugboat
LAGOS, Nigeria (AP) -- Entombed at the bottom of the Atlantic Ocean in an upended tugboat for three days, Harrison Odjegba Okene begged God for a miracle.
The Nigerian cook survived by breathing an ever-dwindling supply of oxygen in an air pocket. A video of Okene’s rescue in May -- http://www.youtube.com/watch?vArWGILmKCqE -- that was posted on the Internet more than six months later has gone viral this week.
As the temperature dropped to freezing, Okene, dressed only in boxer shorts, recited the last psalm his wife had sent by text message, sometimes called the Prayer for Deliverance: "Oh God, by your name, save me. ... The Lord sustains my life."
To this day, Okene believes his rescue after 72 hours underwater at a depth of 30 meters (about 100 feet) is a sign of divine deliverance. The other 11 seamen aboard the Jascon 4 died.
Divers sent to the scene were looking only for bodies, according to Tony Walker, project manager for the Dutch company DCN Diving.
Aid workers prepare Syrian refugee camp in Jordanian desert for another harsh winter
ZAATARI CAMP, Jordan (AP) -- Cranes are lifting trailers into place and tents are being packed away as international aid workers rush to winterize a Syrian refugee camp in Jordan -- trying to avoid a repeat of last year when three days of torrential rain turned the massive site into a muddy swamp.
Warm clothing, blankets and electric heaters are being prepared for distribution to the desert camp’s 120,000 residents, mostly women and children.
In January 2013, howling winds tore down some tents and flooding piled more misery on those who fled Syria’s civil war. Hundreds were displaced from their temporary shelters in the Zaatari camp. Exposed to freezing temperatures, some refugees attacked aid workers at a food distribution center, injuring a dozen before being dispersed by Jordanian riot police.
Aid workers said they have a better winter plan this year.
A drainage system was set up to dump floodwaters outside the camp and efforts are being made to keep the refugees warm and dry, said Kilian Kleinschmidt, who runs Zaatari for the U.N. refugee agency.
American detained in North Korea supervised hated guerrilla group during war, ex-fighters say
SEOUL, South Korea (AP) -- An 85-year-old U.S. veteran being held in North Korea spent his war years there in one of the Army’s first special forces unit, helping a clandestine group of Korean partisans who were fighting and spying well behind enemy lines.
Now South Koreans who served with Merrill Newman, who is beginning his sixth week in detention, say their unit was perhaps the most hated and feared by the North and his association with them may be the reason he’s being held.
"Why did he go to North Korea?" asked Park Boo Seo, a former member of unit known in Korea as Kuwol, which is still loathed in Pyongyang and glorified in Seoul for the damage it inflicted on the North during the war. "The North Koreans still gnash their teeth at the Kuwol unit."
Some of those guerrillas, interviewed this week by The Associated Press, remember Newman as a handsome, thin American lieutenant who got them rice, clothes and weapons during the later stages of the 1950-53 war, but largely left the fighting to them.
Newman was scheduled to visit South Korea to meet former Kuwol fighters following his North Korea trip. Park said about 30 elderly former guerrillas, some carrying bouquets of flowers, waited in vain for several hours for him at Incheon International Airport, west of Seoul, on Oct. 27 before news of his detention was released.
Ukraine opposition vows to keep up mass protests after government wins confidence vote
KIEV, Ukraine (AP) -- Ukraine appeared mired in a political standoff Tuesday, as massive protest rallies showed no sign of letting up and the government warned of its capability for force after a failed attempt to take it down.
The opposition lost its attempt to topple the government by parliamentary means when a vote of no-confidence failed by a sizeable margin.
President Viktor Yanukovych left on an official visit to China, where he is expected to sign an array of economic agreements, his office said. He is expected to be gone until Friday and the prospects for a definitive development in the next few days seem small.
Protest leaders vowed to continue their demonstrations, which have brought as many as 300,000 people to the streets of Kiev, in the largest outpouring of public anger since the 2004 Orange Revolution.
Soon after Tuesday’s vote, about 5,000 protesters gathered outside the presidential administration building, then moved to the capital’s central Independence Square, where the crowd grew to more than 10,000, according to police estimates.
Billy Joel announces Madison Square Garden residency; to perform once a month as fans demand
NEW YORK (AP) -- Billy Joel will perform once a month at Madison Square Garden -- as long as the fans will have him.
The Grammy Award-winning icon announced Tuesday that he’ll perform a residency at the famed NYC venue every month for as long as New Yorkers demand. He’s set to perform sold-out shows on Jan. 27, Feb. 3, March 21 and April 28. He will also perform on his 65th birthday, which is May 9. Tickets go on sale Saturday.
"We’re gonna dust off some stuff. We’re gonna feature more of the album tracks, more obscure songs. We’ll still do some songs people are familiar with and like, but we’re gonna change it up. It gives you an edge," he said in an interview after the press conference.
Joel was introduced by New York Gov. Andrew Cuomo, who called the singer a "worldwide superstar who values most that he is a hometown hero," citing Joel’s participation in the Concert for New York City after the Sept. 11 attacks and the 12-12-12 concert for Hurricane Sandy relief.
The Bronx-born Joel first performed at MSG in 1978. Since then, he has played at the venue 46 times.