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Monthly Archives: June 2017
Does Donald Trump believe in man-made climate change? – PolitiFact
Posted: June 6, 2017 at 6:46 am
U.S. Ambassador to the United Nations Nikki Haley says President Donald Trump believes the climate is changing and believes pollutants are part of the equation. (CBS/Reuters)
Since President Donald Trump pulled the United States out of the Paris climate agreement last week, reporters have pressed the administration about whether Trump believes in man-made climate change.
Again and again, top officials have sidestepped those questions or offered responses inconsistent with Trumps record.
"Yes or no, does the president believe that climate change is real and a threat to the United States?" ABC reporter Mary Bruce asked Environmental Protection Agency Director Scott Pruitt June 2.
"All the discussions that we had through the last several weeks have been focused on one singular issue. Is Paris good or not for this country? That's the discussions I've had with the president. So, that's been my focus," Pruitt responded, sidestepping Bruces question.
Ambassador to the United Nations Nikki Haley faced the question on CBS'sFace the Nation on June 4.
"The president believes the climate is changing, and he does know that pollutants are a part of that equation," she said.
But Trumps comments from the past seven years show that he has long dismissed the scientific evidence that man-made climate change is real going so far as to call it a "con," a "hoax" and "bull----."
2009-10: Praising Obama, dissing Gore
In December 2009, Trumps name appeared alongside other American business leaders in a full-page ad in the New York Times uncovered by environmental media site The Grist that actually praised then-President Barack Obama for his efforts to curb carbon emissions and fight climate change.
Something must have changed his opinion, though. Just a couple months later, in February 2010, Trump said, perhaps jokingly, that former Vice President Al Gore should lose the Nobel Peace Prize he won for his climate change activism.
He then told Fox News host Neil Cavuto that he was skeptical of climate change science because it might be a "con," and "a lot of people like me have been saying this for a long time."
Since then, Trumps position has been pretty consistent.
2011-14: its a hoax, its a hoax, its a hoax
Trump tweeted dozens of times between 2011 and 2014 about his skepticism and sometimes outright denial of climate change, especially when his hometown of New York experienced unseasonably cold weather.
"It snowed over 4 inches this past weekend in New York City. It is still October. So much for Global Warming," he tweeted in 2011.
For the record, unusually cold weather does not negate climate change. Theres a difference between day-to-day weather in a particular location and the overall, long-term climate (and warmth) of the entire planet. That said, climate change could result in more extreme weather events, both hot and cold.
In 2012, Trump blamed China for "mythical" global warming.
"Let's continue to destroy the competitiveness of our factories & manufacturing so we can fight mythical global warming. China is so happy!"
"The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive."
In 2013, Trump tweeted that global warming is an "expensive hoax," and in 2014 he called it "bull----."
"We should be focused on magnificently clean and healthy air and not distracted by the expensive hoax that is global warming!"
"Give me clean, beautiful and healthy air - not the same old climate change (global warming) bull----! I am tired of hearing this nonsense."
2015-16: The election
After Trump launched his presidential campaign in 2015, reporters regularly asked him about his position on climate change. Trump consistently said he thinks humans may have some impact on the environment, but he generally doesnt believe in man-made climate change.
On June 17, 2015, the day after launching his campaign, Trump told political analyst Mark Halperin, "There could be a little bit of something having to do with factories and smoke and things. But for the most part I'm not a believer in (man-made climate change)."
"I'm a huge believer in clean air," Trump told CNNs Jake Tapper in July 2015, complaining about pollution in China. "I'm not a huge believer in the global warming phenomena."
Trump also said several times that he was much more concerned with nuclear war than climate change.
"The only global warming I'm worried about is nuclear global warming, because that's the single biggest threat," he said at a Republican debate in March 2016.
Since the election, Trump met with Gore at Trump Tower. And he told the New York Times editorial board that he would have an "open mind" on climate change, though he remained skeptical.
"You know, you can make lots of cases for different views," he said. "I have a totally open mind."
Many of Trumps public policy positions are notoriously hard to pin down. But it appears that on the topic of man-made climate change, hes expressed doubt more often than not.
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Donald Trump is wrecking US alliance with Europe – USA TODAY
Posted: at 6:46 am
Nicholas Burns, Opinion contributor Published 3:18 a.m. ET June 6, 2017 | Updated 32 minutes ago
President Donald Trump is expected to make a key endorsement at a NATO summit Thursday. Video provided by Newsy Newslook
President Trump attends the NATO submit in Brussels in May 2017.(Photo: Matt Dunham, AFP/Getty Images)
The 70th anniversary of the Marshall Plan this week should be a celebration of the trans-Atlantic alliance the most powerful and successful in modern history. Secretary of State George Marshalls speech at the Harvard commencement on June 5, 1947, set in motion the historic U.S. aid program to revive Europes shattered economies. It also set the stage for the creation of the North Atlantic Treaty Organization, the Common Market and eventually the European Union.
Instead of celebrating, however, Americaand Europe are experiencing their most significant crisis in decades.President Trumps recent visit to NATO and the EU was the least successful of any U.S.president in seven decades, exposing deep ideological divisions and a widening gulf of trust across the Atlantic. Last weekends terrorist attacks in London had the same effect. Trump repeatedly criticized London Mayor Sadiq Khan for telling citizens not to be alarmed by the attacks, when Khan actually saidthey should not be alarmed by a heavy police presence. Trumps tweets did not go down well in stoic Britain, where the World War II maxim, keep calm and carry on, still holds.
The policy differences alone are profound.European leaders want a historic free trade agreement with America, but Trumps nationalist economic strategy led him to reject it.German Chancellor Angela Merkel is determined to maintain tough EU and U.S. sanctions on Russia over its occupation of Ukraine.Trump appears more interested in a rapprochement with Russian President Vladimir Putin.The chasm is deepest and most emotional on climate change.Trumps announcement that Americawill pull out of the historic 2015 Paris Agreement is deepening distrust among European citizens and their governments, which consider it an urgent priority.
When I served as U.S. ambassador to NATO, Americahad a bruising argument with France and Germany over the Iraq War in 2003.We buried the hatchet eventually by joining forces in Afghanistan and negotiating a nuclear deal with Iran.We knew the NATO alliance was worth preserving.Trump has downplayed the importance of those longstanding ties according to Politico, even to the point of removing from his prepared speech an affirmation of NATO's Article 5, thecommitment by member nations to defend one another.
Pulling out of Paris climate agreement kills U.S. leadership
A real national security budget will keep the peace
That is why the current crisis is far more threatening to the long-term future of the alliance than past disagreements.Trumps ambivalence about NATO and skepticism about the EU are seen by European leaders as an open break with 70 years of U.S.commitment to the continent.
The heart of the problem is Trumps view of Europe, and Germany in particular, as an economic competitor rather than a strategic partner.This is a sea change in American attitudes towards Europe.All of Trumps predecessors datingto PresidentTruman have prized Europes political and military alliance with America.Trumps boorish behavior in Brussels and his intemperate tweets criticizing Merkel (and now Khan) have only reinforced the doubts about him in Europe.
If Trump sticks to this course, there will be real costs for the United States.Europe remains our leading trade partner and the most important investor in the U.S.economy.The 27 European members of NATO remain the largest group of U.S. allies in the world.On nearly every important U.S. global priority, Europe is a key partner.We need the United Kingdom, France and Germany to persuadeIran to adhere to the 2015 nuclear deal.Trump may soon ask Europe to contribute additional troops to NATOs Afghan mission.The U.S. fight against the Islamic State ofIraq and Syria will be seriously undermined without British and French support. AmericaneedsNATO allies to hold the line against Putins territorial ambitions in Eastern Europe.
All this argues for a White House reassessment of its dramatic distancing from Europe. Trump was right to strengthen ties with Saudi Arabia and the other Persian Gulf States on his first foreign trip.But our alliance with Europe is far more important to us. In contrast to Arab authoritarian leaders, we share with Europe a commitment to democracy, the rule of law and human rights.Despite their persistent, public spin to the contrary, the more experienced White House hands have to realize the magnitude of theproblem Trump has created.
Donald Trump can strengthen America by dumping Paris agreement: Sen. Inhofe
POLICING THE USA:Alook atrace, justice, media
To be fair, Europe can do more to meet its own obligations to America.Trump is right to ask the allies to step more resolutely into the fight against ISIS.He has the American public behind him in asking Germany and the European nationsto increase defense spending.All modern U.S. presidents have insisted NATOs European members should meet the alliance defense spending standard of 2%of gross domestic product.
But Trumps bull-in-a-china-shop approach has backfired.He would do better to push the allies in private but acknowledge publicly that the majority of them actually increased defense spending afterPutins annexation of Crimea in 2014.All, including Germany, have pledged to reach the 2% target by 2024.Pushing on this open door would have been more effective than lecturing leaders such asMerkel in an election year.
The creation of NATO and support for European unity remain among Americas greatest foreign policy achievements.At a time of Russian assertiveness in Eastern Europe and dangerous instability in the Middle East, Americaneeds its European allies in NATO more than ever.
That is why cooler heads in the administration must steer the impulsive, inexperienced Trump back to an effective relationship with NATO and the EU.Without such a sharp recalibration over the coming months, Trumps bumbling Europe strategy couldturn out to be one of the most significant U.S.foreign policy failures of the post-World War II era.
Nicholas Burns is a Harvard professor and former under secretary of State who served presidents of both parties in his foreign service career. He was U.S. ambassador to NATO from 2001 to 2005. Follow him on Twitter:@RNicholasBurns
You can read diverse opinions from ourBoard of Contributorsand other writers on theOpinion front page, on Twitter@USATOpinionand in our dailyOpinion newsletter. To submit a letter, comment or column, check oursubmission guidelines.
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Trump’s legislative director acknowledges Russia is overwhelming his agenda – Politico
Posted: at 6:46 am
While President Donald Trump has dismissed the Russia investigations as a "witch hunt," even White House officials are admitting the probe is a serious distraction. | Getty
President Donald Trump's legislative director is acknowledging that the ongoing investigations into Russian interference in the 2016 election are overwhelming his legislative agenda as former FBI Director James Comey is set to appear at a blockbuster Senate hearing later this week.
Theres no doubt that keeping members focused on investigations detracts from our legislative agenda, detracts from what were trying to deliver for the American people, said Marc Short, Trumps director of legislative affairs, in a briefing with reporters on Monday night.
Story Continued Below
More than four months into Trumps presidency and despite total GOP control of Washington Trump has achieved very little on Capitol Hill, in part because the Russia scandal leaves little room for anything else. Republicans now face the prospect of going into the 2018 midterms with little to show voters, despite huge promises by Trump.
Obamacare is still the law of the land, funding for a border wall with Mexico is bogged down in partisan fighting, Trumps budget proposal was dead on arrival, and the White House is way behind schedule on sending executive-branch nominees to the Senate for consideration.
With the Comey hearing looming on Thursday, Trump unveiled a plan to privatize the nations air traffic control system on Monday. On Tuesday, hes set to meet with Senate Majority Leader Mitch McConnell (R-Ky.) and Speaker Paul Ryan (R-Wis.) to discuss the state of play inside Congress. Senate Republicans will also hold a key meeting on whether they can move on an Obamacare repeal bill.
But even Trump's top legislative aide is admitting Russia is a serious distraction, though White House officials blame media bias for much of the problem. Trump has dismissed the investigations as a witch hunt.
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Short also warned that Trump will play hardball with Democrats and GOP moderates on his spending priorities come the fall, when government funding runs out, even if that provokes a shutdown.
Look, I dont think that anybody is in favor of a government shutdown. I think that what the president is expressing is the frustration that a lot of Americans felt, and there are certain priorities that he campaigned on, the American people want, Short said. And so you will see him very engaged this fall and continuing to push for funding for our border security as well as rebuilding the military.
He added: And I think that he views it as all options for leverage are available, but that doesnt mean thats something he wishes for or that its great. We all believe that a government shutdown is not ideal.
Its an interesting play Trump triangulating against his own majority in Congress. It shows, however, how frustrated White House officials are by the lack of progress on their own agenda.
Trump had signaled his openness to a shutdown in early May, writing on Twitter: Our country needs a good 'shutdown' in September to fix mess!
It remains unclear, though, if shutdown saber-rattling will be enough to jolt Congress. Both chambers are increasingly distracted by investigations into possible collusion between Russia and the Trump campaign.
Funding for government agencies runs out on Sept. 30. Ryan and other top House GOP leaders have already warned that they are four months behind in drafting a 2018 budget because of the internal fight in that chamber over the Obamacare repeal and they will need short-term funding bills to avoid a shutdown come October.
The House Budget Committee is expected to unveil a budget plan in the next few weeks, although there are huge splits inside the GOP over those who want to boost Pentagon funding and spending hard-liners who want to cut government. And that doesnt even begin to address the partisan fight with Democrats.
Meanwhile, the White House wants health care passed by the end of the summer and a tax reform bill introduced after Labor Day, Short said. There is no timeline as yet for infrastructure, he added, but the White House would like to have a plan out this calendar year.
Another fight going on inside the White House and within the GOP on Capitol Hill is over the debt ceiling. Treasury Secretary Steven Mnuchin is among those calling for a clean bill to raise the debt ceiling, which is expected to be hit early this fall. Yet Mick Mulvaney, director of the Office of Management and Budget, and other administration officials and some hard-line conservative Republicans in Congress want to see fiscal reforms tied to the debt ceiling.
Short admitted there is a debate going on within the administration over that issue, and he said Trump had not taken a position.
What I think he will understand from both of them is the need to raise the debt ceiling before Congress adjourns this summer, and that is the deadline and the timeline we have given to Congress, Short said.
Failure to raise the debt ceiling, or a prolonged fight over the issue, like what occurred in 2011, could rattle Wall Street and the credit markets, and potentially hurt the U.S. economy.
But the neatly laid out agenda that the White House presented has a habit of running up against Trumps own habit of seizing the message: Just as he did Monday morning by kicking off a planned week focused on infrastructure with a series of inflammatory tweets about his controversial travel ban.
The American people are anxious to see progress in this town, Short said Monday night when pressed about Trumps sometimes divergent messaging strategies. He may not have a conventional style in doing that, but many of his efforts are extremely helpful to, I think, getting our legislation accomplished.
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How Trump is stalling his own nominees – Politico
Posted: at 6:46 am
President Donald Trump is lashing out at Democrats for allegedly stalling his appointments and agenda, but its his own administration that is frequently sitting on the necessary paperwork for nominees.
Trump tapped Kevin McAleenan on March 30 to lead Customs and Border Protection, a critical position for his drive to revamp U.S. immigration policy. But the White House didnt formally submit his nomination to the Senate for confirmation until May 22, nearly eight weeks later.
Story Continued Below
And McAleenans nomination is far from alone in taking weeks to be sent to the Senate, where Republicans are growing impatient and bewildered with the Trump White Houses historic lag in filling administration posts.
Trumps two nominees for the Export-Import Bank board ex-GOP Reps. Scott Garrett and Spencer Bachus havent been submitted to the Senate, despite being named April 14. Trump rolled out a batch of 10 judicial nominations to much fanfare on May 8, but two of them have yet to arrive on Capitol Hill.
And Dan Brouillette, nominated by Trump to be Rick Perrys chief deputy at the Energy Department, was announced on April 3, yet his nomination wasnt sent by the White House until May 16.
Do I know why its taken so long for any of them? responded Sen. Lisa Murkowski (R-Alaska), when asked about Brouillettes delay.
I dont know what happens, the chairwoman of the Senate Energy and Natural Resources Committee added. They go into some dark hole. And eventually they come out. But still.
Its unclear exactly why the Trump White House has been so slow to officially submit some nominees paperwork, but it comes amid broader struggles by the new president to vet senior officials and staff his administration.
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South Dakota Sen. John Thune, the third-ranking Senate Republican, said some nominations may have been bottlenecked at the Office of Government Ethics, which helps hash out ethics agreements for government appointees.
But an OGE spokesman suggested the White House has been slow to send them nominees financial information. OGE can't review reports until we receive them, a spokesman said. Once we have received them, OGE has been moving these reports faster than we did in the 2009 transition.
Thune also speculated that the administration may be intentionally slow in naming nominees because it does not want to fill those positions in the first place. The White House did not respond to a request for comment.
Meanwhile, Trump himself is looking squarely at Democrats for the delays, tweeting on Monday that Dems are taking forever to approve my people, including Ambassadors. They are nothing but OBSTRUCTIONISTS! Want approvals.
Senate Minority Leader Chuck Schumer quickly responded in a statement that Trump only has himself to blame, adding, It was the Senates responsibility to give a thorough vetting for such important positions, with many of the nominees having conflicts of interest and incomplete ethics agreements when they were named.
At least 17 of Trumps nominees took more than a month to be officially sent to the Senate, at which point the vetting by senators and aides can begin in earnest, according to a POLITICO analysis. (One of the 17 nominations, Jim Donovan to be Trumps deputy Treasury secretary, has since been withdrawn).
And those figures dont account for slots that are far from being filled. As of Monday, the Trump White House has only named candidates for 117 of 559 key administration positions, per figures from the nonpartisan Partnership for Public Service and The Washington Post. More than 1,200 positions throughout the federal government must be confirmed by the Senate.
Our members are frustrated, said Thune, who is supposed to shepherd dozens of key nominations through the Senate as Commerce Committee chairman. Were kind of waiting. In many cases, theres nobody on deck.
Several prominent vacancies have become more conspicuous. Trump fired FBI director James Comey nearly a month ago and is still interviewing candidates to lead the bureau. Although Trump said in January that he would nominate New York Jets owner Robert Woody Johnson as the U.S. ambassador to the United Kingdom the target of multiple recent terrorist attacks Johnsons nomination has still not been sent to the Senate, more than four months later.
Jon Huntsmans nomination to become U.S. ambassador to Russia has still not formally materialized, although administration sources said in early March that the former Utah governor and erstwhile Trump antagonist had been tapped for the diplomatic post.
And while Kevin Hassett was named April 7 as Trumps nominee to be chairman of the White House Council of Economic Advisers considered the West Wings lead economist his paperwork wasnt sent until May 16. Obamas first candidate for that role, Christina Romer, was confirmed Jan. 28, 2009.
Some Trump nominees have run into hiccups deeper in the confirmation process. The nomination of Makan Delrahim, whos been tapped to lead the Justice Departments antitrust division, was abruptly pulled off the agenda minutes before his confirmation hearing was supposed to begin, because of issues with his ethics paperwork. His hearing was eventually rescheduled for two weeks later, and he is expected to get a vote in the Judiciary Committee this week.
We wouldnt nominate people until they were cleared by OGE and maybe theyre not doing that, said Christopher Kang, who served as deputy counsel in the Obama White House. I dont see any strategic reason or any reason, really to take this long to send up the official paperwork.
Despite the lag on some nominations early in Obamas tenure, Kang said by 2011, paperwork for judicial candidates were usually sent to the Senate on the same day they were formally announced by the White House. Executive branch nominations who require OGE signoff, while judicial nominees do not sometimes faced short delays, but rarely as long as a month.
Once the nominations hit the Senate, many face political hurdles. Although Democrats can no longer defeat nominees through the filibuster, they are still pulling all the procedural levers they can to extract key concessions from the administration. One example is the nomination of Sigal Mandelker, a top Treasury Department official, which Democrats have held up to try to obtain documents involving Russias financial dealings with Trump associates.
Using 30 hours [of floor debate] for a secretary is one thing, but using 30 hours for an under [secretary] or assistant [secretary] is, its a real point of leverage, said Sen. Brian Schatz (D-Hawaii). And we dont intend to overuse it.
That means Senate Republicans are getting squeezed from both ends of Pennsylvania Avenue when it comes to nominations: A White House that seems unwilling to name key administration personnel, and Democrats who are ready to run even obscure nominees through the procedural wringer.
We need to get more names up here so we can work on them, Senate Majority Whip John Cornyn of Texas said. We need to get Democrats to quit dragging their feet.
Despite their sporadic blockades of nominees, Senate Democrats are still urging the administration to fill key posts as soon as possible. Schatz, along with a half-dozen other Democratic senators, wrote to the White House last month noting that more than 100 critical State Department positions need to be filled, even as Secretary of State Rex Tillerson restructures the organization of personnel at Foggy Bottom.
Slow. Its very, very slow, said Missouri Sen. Claire McCaskill, the top Democrat on the Senate Homeland Security and Governmental Affairs Committee. Theres a lot of jobs, important jobs, that have not been filled.
Her GOP counterpart, Chairman Ron Johnson of Wisconsin, had no clue why McAleenan, now serving as CBPs acting commissioner, took so long to be formally submitted: But were going to try to move nominations as quickly as possible.
Elana Schor contributed to this story.
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4 Reasons Why Puerto Rico’s ‘Bankruptcy’ Process Matters to U.S. … – NBCNews.com
Posted: at 6:46 am
The Capitol building is seen in San Juan, Puerto Rico May 4, 2017. ALVIN BAEZ / Reuters
Puerto Rico has been under an economic recession for over 10 years, which has prompted more than 10 percent of its residents to move to the U.S. It's expected the islands recession will continue, given that the Boards fiscal plan expects to shrink the island's economy, at least for the next 2 years. This will most likely result in more Puerto Ricans continuing to migrate to the continental U.S.
There are now over 1 million Puerto Ricans living in the state of Florida alone, and it is almost certain that Florida and other states will see many more residents from the island arriving to their jurisdictions in search of work and a fresh start.
The U.S. Virgin Islands, another U.S. territory with just over 100,000 residents, is under a $2 billion debt. Consequently, they will be watching how Puerto Ricos court process unfolds to determine if it is in their interests to seek Congressional protection. Furthermore, states with high debt or pension obligations might look to Puerto Ricos Title III process to see if they can eventually have a similar remedy made available to them.
May 17 was a historic day for both Puerto Rico and the United States, as the U.S. District Court there held its first hearing on the island's bankruptcy, thus officially starting the first case under the
This law created a process combining elements of traditional Chapter 9 and 11 bankruptcies that will permit U.S. owned territories to adjust their debts. Previously, U.S. law did not give territories the remedy used by state municipalities such as Detroit to restructure their debts.
Puerto Rico, an island obtained by the United States after the 1898 Spanish American War, is the first territory to use this process, expected to have far reaching implications not only for the island and its inhabitants, but also across the U.S. financial markets and pension systems.
This process is regulated in Title III of PROMESA, and it's presided by New York district judge Laura Taylor Swain. She was appointed to the case by Supreme Court Chief Justice John Roberts, who, under PROMESA, is the person authorized to select the Judge.
The Title III process differs from a traditional bankruptcy case in several aspects. PROMESA establishes that a 7-person Oversight Board, whose members were recommended by Congress and officially selected by President Obama in 2016, will act as the islands representative.
However, this does not mean that the Board is required to act in the islands best interests, as PROMESA does not impose any fiduciary duties to it. It mainly requires the Board to develop a plan that helps Puerto Rico achieve fiscal responsibility and eventually regain access to capital markets.
Furthermore, PROMESA gave the Boards members immunity for all actions they carry under the Act, and they can override Puerto Ricos laws and elected officials.
Under Title III, the Board will work with Puerto Ricos creditors to renegotiate the islands debts. Once this is done, they will present a Debt Adjustment Plan to the court for approval. This Plan will be approved if it complies with the requirements set in Section 314 of PROMESA.
One requirement of note is the one in Section 314(b)(6), which establishes that the plan will be approved if it is feasible and in the best interests of creditors, which shall require the court to consider whether available remedies under the non-bankruptcy laws and constitution of the territory would result in a greater recovery for the creditors than is provided by such plan.
This section is likely to give Judge Taylor Swain more power over Puerto Rico than she would have in a traditional Chapter 9 bankruptcy process, under which a similar plan would be approved if it is in the best interests of creditors and is feasible. It is unknown why this additional requirement was added to Title III.
In order to protect the best interests of the creditors, the Court is authorized to allow the Oversight Board to interfere with Puerto Ricos political or governmental powers and alter its properties, revenues or the use of its income producing properties.
This Section gives powers to the Board that are unique in U.S. law, as, they appear to give it the ability to, for example, potentially dispose of Puerto Ricos assets and properties and have a say in the way the island government provides basic services to its 3.5 million residents, even though it was not elected to do so by the Puerto Rican people. Judge Swain seemed to be aware of this power during the hearing, when she remarked that this case must lead to a better future for Puerto Rico.
Judge Swain scheduled hearings through December. In addition, the Judge issued an order yesterday requiring Puerto Rico to file a Creditor Matrix by June 30, 2017, and to file a list of all its creditors by August 30, 2017.
However, this process is expected to last several years and become the largest municipal bankruptcy in U.S. history, easily surpassing Detroits $20 billion dollar default, and perhaps come close to matching Argentinas historic 2001 default of over $150 billion dollars.
Who will pay for this bankruptcy process estimated to cost tens of millions of dollars? It will come out of Puerto Rico's pockets, in a process that will fundamentally transform the future of the island, its obligations towards its residents and its relationship to the United States.
In sum, Puerto Rico finds itself in uncharted legal waters. As this case unfolds, it will be important to see how Judge Swain and the Board protect the islands residents and ensure that Puerto Rico can develop a sustainable economic plan to transform and grow its economy without jeopardizing its residents.
Furthermore, it will be essential that Judge Swain orders a full audit of the debt as part of this process, so there can be a clear understanding of which individuals, elected officials and businesses were responsible for this financial catastrophe so they can be held accountable.
Finally, in order to protect the best interests of both Puerto Ricos and US residents, it's vital that this process and the audit of the debt moves authorities to enact legal reforms that end any unscrupulous, unethical or illegal financial practices that led to this tragic situation.
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Puerto Rico Bankruptcy Storm Heading for Mainland America … – Townhall
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Posted: Jun 05, 2017 11:15 AM
The Financial Oversight and Management Board for Puerto Rico, a federal board tasked with managing the island commonwealths course out of fiscal emergency, declared failure onMay 3, filing paperwork to begin court proceedings restructuring the government debt.
Territory government agencies, such as the Puerto Rico Electric Power Authority, are likely to follow the government into bankruptcy court,leaving investors to potentially lose as much as 65 percent of their original investments.
In 2015, Puerto Rico Gov. Garca Padilla warned of an impending death spiral if territory lawmakers did not make pro-growth reforms. They did not, and Padillas warning has come to pass.
Puerto Rico is circling the drain, financially speaking, but its not too late for mainland lawmakers to learn from the islands mistakes.
Puerto Rico owes creditors about $70 billionabout $19,729 per residentin debt to creditors and investors, more than five times larger than the 2013 Detroit, Michigan bankruptcy filing.
Over the past 10 years, people have been exiting Puerto Rico in droves, leaving rock-bottom economic prospects behind for more opportunities and lower taxes in the mainland.Between 2004 and 2016, the islands population declined by about 400,000, or about 11 percent.
Its easy to see why: Prospects for prosperity on the island are dismal. In March,115 out of every 1,000 Puerto Rican adults were unemployed, an unemployment rate of 11.5 percent, according to the U.S. Department of Labors Bureau of Labor Statistics. Of the 880,800 Puerto Ricans who had jobs, about one out of every four individuals were employed by the government, and about 1.37 million people receive food stamps from the federal government.
In other words, there are many more takers than makers on the island.
One of the causes of Puerto Ricos meltdown is the excessive cost of doing business in the territory, leading to crippling dependency on government handouts.
The litany of mandatory fringe benefits for employees, treated as bonuses elsewhere in the United States, encourages businesses to relocate to other states, because labor costs exceed the value of employees productivity.
Puerto Rico is a precautionary lesson for states that are pursuing similar policies. States such as Connecticut have taken on a massive amount of public debt. Adding up the cost of postponed payments to pension and health care programs, public bonds, government deficits, and spending liabilities, Constitution State lawmakers have racked up about $36 billion in debt, or about $10,025 per person in the state.
Unsurprisingly, many Connecticut residents are deciding to become ex-residents, moving to regions with friendlier tax policies. Between July 2015 and July 2016, 29,880 more people packed up and left the state than moved in.
As demonstrated by Puerto Rico and Connecticut, higher taxes chase away new business investments and encourage companies and entrepreneurs to leave. They also incentivize other people to move to states with a better tax environment, because of the lack of available jobs and high levels of public debt.
It may be too late for the Island of Enchantment, but it is not too late for states to stop treating taxpayers like ATMs and to start enacting pro-taxpayer, pro-growth reforms that encourage in-migration and economic prosperity.
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Puerto Rico Bankruptcy Storm Heading for Mainland America ... - Townhall
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Rooster Energy Seeks Bankruptcy Protection Amid Lender Fight – Wall Street Journal (subscription)
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Rooster Energy Seeks Bankruptcy Protection Amid Lender Fight Wall Street Journal (subscription) Rooster Energy LLC, embroiled in a squabble with one of its lenders, has sought bankruptcy protection. The oil-and-gas company said in court papers filed Friday that it is in the midst of liquidity crises caused by plummeting commodities prices and ... |
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Gymboree is one step closer to bankruptcy – MarketWatch – MarketWatch
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An earlier version of this article had an incorrect grace period for Gymboree to be in default in the second paragraph. It has been corrected.
Childrens clothing retailer Gymboree is expected to file for bankruptcy in the coming weeks or even days, after it elected not to make an interest payment on $171 million of bonds that was due on Thursday.
The troubled company, which has been in talks with investment banks and advisers on ways to repair its balance sheet since January, has a 30-day grace period before it is officially in default. But its expected to announce some kind of prearranged or prepackaged filing in the near term that will allow it to proceed in an orderly fashion, said Reshmi Basu, associate editor of restructuring at Debtwire.
Its a story that has been playing out for some time, she told MarketWatch. Now, well see the lenders take control, they will reset the footprint and work with advisers on which unprofitable locations should be closed down.
Like rivals, Gymboree has been suffering from the many factors currently clobbering the retail sector, from weak mall traffic trends to changing consumer behavior to the onslaught from Amazon.com Inc AMZN, +0.46% The rise of e-commerce is forcing many to invest heavily in their own online and delivery technology, at a time when sales are under pressure.
Gymboree is expected to keep its Janie & Jack line, which is still successful, but to ditch its Crazy 8 brand, which is flailing, said Basu. The company is in talks to retain Great American Group and Tiger Group, two companies that specialize in asset appraisals, liquidations and inventory auctions, she said.
In case you missed it: Stressed retailers like J. Crew and Neiman Marcus are doing something unusual to manage debt
Related: J.C. Penney, Gymboree and J. Crew at risk -- and its not all Amazons fault
They will probably liquidate unprofitable brands and leverage the Janie & Jack line and beef up their e-commerce, she said.
Gymboree is another retailer that is saddled with debt taken on in a leveraged buyout. The company was acquired by Mitt Romneys former firm Bain Capital in 2010 for $1.8 billion. Today, the company has $1.043 billion of debt, split between a $769 million term loan, the $171 million of 9125% senior secured notes due December of 2018, an $80 million ABL revolving credit facility and a $49 million first-lien ABL term loan.
It had $22 million cash and cash equivalents as of Jan. 28, plus $73 million of restricted cash, according to a regulatory filing. Its leverage is more than 12 times, which is hard to sustain, said Basu.
Dont miss: Retail carnage continues as sectors job growth falls for fourth straight month
The companys bonds were last trading at 8.729 cents on the dollar, according to MarketAxess, deep into distressed territory. Its term loan was quoted at 44 cents to 46 cents on the dollar, according to Debtwire.
See also: Neiman Marcus is now borrowing money to make interest payments on its debt
Gymboree is one of the companies on Fitch Ratings list of loans and bonds of concern, which features those issuers with a significant risk of defaulting on their borrowings within the next 12 months.
In March, the company posted a $324.9 million loss for its fiscal second quarter, which included a $368.1 million noncash goodwill and intangible asset impairment charge and an $11.6 million charge related to excess inventories. Same-store sales fell 5% in the period.
But same-store sales for the Janie and Jack brand alone rose 11%, while same-store sales at Crazy 8 fell 6%.
The SPDR S&P Retail exchange-traded fund XRT, -0.02% has fallen 6% in 2017 so far while the S&P 500 SPX, -0.12% has gained 9%.
See also: From a risk-of-bankruptcy standpoint, the retail business is the new oil and gas
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Gymboree Misses $171 Million Interest PaymentBankruptcy Next? – Retail TouchPoints
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Childrens apparel retailer Gymboree is expected to file for bankruptcy in the coming weeks after missing a $171 million interest payment due June 1. As of June 2, Gymboree has a 30-day grace period to make a belated payment, according to an SEC filing.
The retailer has been in talks with investment banks and advisors on ways to repair its balance sheet since January 2017. With the missed payment, valued at a 9.125% rate through 2018, S&P Global Ratings lowered the companys debt rating to "D" for default. Roughly $872 million of the company's roughly $1.1 billion total debt is due within 12 months, with S&P noting that operating trends continue to deteriorate.
The combination of massive debt and weak financial results has made Gymboree a prime candidate for bankruptcy. In February 2017, Moodys Investors Service named Gymboree asone of 19 retailers with a very high credit risk. Recently bankrupt Rue21 made the list, as well as troubled brands such as Sears Holdings, Bon-Ton Stores, J.Crew and Claires Stores.
If it is unable to make the payment, Gymboree would join a long list of other retailers that have filed for bankruptcy in 2017, includingPayless ShoeSource, Rue21,BCBG Max Azria, hhgregg,The Limited,RadioShack,Wet Seal,Eastern Outfitters,Gordmans,Gander MountainandMC Sports.
Gymboree operates approximately 1,300 stores under three brands: Gymboree, Janie & Jack and Crazy 8. The retailer has posted losses for the last several years amid increased competition from online retailers and discount/off-price brands. In Q2, the company posted a 5% decline in same-store sales. Net sales declined 6.4% to $356.8 million, while the brand took a$368.1 million goodwill and intangible asset impairment charge and an $11.6 million charge related to excess inventories.
In May, Gymboree appointed a new CEO, Daniel Griesemer, who had run teen apparel retailer Tillys for approximately five years until 2015. Griesemer will have the difficult position of restructuring the retailer out of its debt, which may or may not include a decision to file for bankruptcy protection.
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Report: Asbestos suits against Kaiser Gypsum dropped after bankruptcy, putting pressure on solvent companies – Madison County Record
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A consulting firm that analyzes asbestos litigation across the U.S. has found that as soon as Kaiser Gypsum (KG) sought bankruptcy protection in September 2016, the number of lawsuits filed against this "major" defendant dropped signficantly.
The problem, according to Washington-based KCIC founder Jonathan Terrell, is that as evidence of exposure to KG products - drywall, joint compounds and cements - disappears from the tort system pressure mounts on solvent defendants to pay larger sums in court case settlement.
In Madison County, the nation's busiest asbestos court, the rate of filings naming KG dropped to 7 percent in the fourth quarter of 2016, after sustaining a rate between 40 and 46 percent in 2015 through the second quarter of 2016, the report states.
In the third quarter of 2016 in Madison County, it shows the rate dropped to 29 percent.
KCIC estimates that it reviews 90 percent of all asbestos lawsuits filed in the U.S.
Its analysis shows that other top jurisdictions in which KG is named as a major defendant produced similarly significant reductions in the rate of filings after the company filed for bankruptcy.
In Baltimore City, Md., where the rate of filing against KG had been the highest, for instance, the number of suits filed in the fourth quarter of 2016 fell to zero. In 2015 through the third quarter of 2015 the rate of filing there ranged between 46 and 79 percent.
Terrell wrote earlier this year that an ad hoc committee of plaintiff firms was formed prior to KG's bankruptcy filing to "engage in discussions with the Debtors regarding the terms of a consensual plan of reorganization," also known as a "pre-packed" bankruptcy.
"The notion that plaintiff firms, largely responsible for KGs bankruptcy, should have a seat at the table is a little jarring, but such is the nature of the bankruptcy process," he wrote.
He went on to assert that keeping bankrupt companies in evidence in the tort system is not in the financial interest of plaintiffs.
"Firstly, as was well established in the Garlock case, plaintiffs have a potential for double recovery by obtaining full relief from solvent defendants in the tort system and then later making claims to the various post-bankruptcy trusts," he wrote.
"More significantly, if evidence is kept in the tort system, they face the considerable downside of a bankrupt company being awarded a share on the verdict sheet, thereby exposing the plaintiff and his counsel to the financial consequences of a missing share."
KCIC also reviewed the percentage of suits against KG filed by attorneys on the plaintiffs' ad hoc committee which shows a decline in filings at the end of 2015 and then "plummeting" as the bankruptcy was made public, its report states.
"And while KG is protected by Chapter 11 from actual litigation, there is nothing preventing plaintiffs counsel from continuing to name them on complaints," the report states. "If KG was named so frequently in the past, why the sudden change? Suspicious minds could be forgiven for thinking of the self-interest of the plaintiffs bar."
He wrote that it is unsurprising that exposure evidence of bankrupt companies "rapidly disappears" from the tort system given the financial incentives to keep it out.
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