STOCKTON, Calif. (CBS) -- Later today, Stockton, California could become the largest American city ever to file for bankruptcy and economists are warning that other large U.S. cities could be next.

Stockton, California was a city with big dreams. In the mid 2000's it overhauled its marina, built new parking garages, bought a new city hall, and put up a new arena. The housing market was on fire and tax revenues were pouring in so the city took out $190 million in bonds and loans to pay for their projects.

Bradley Koster owned a bar in downtown. He says, "On Friday and Saturday night the hockey team played and we packed the place."

But then the great recession came to Stockton. Unemployment is nearly 20 percent and the foreclosure rate is one of the highest in the nation. Tax revenues have plummeted and the city is facing a $26 million deficit. The bank just took back those parking lots and the future city hall.

City manager bob dies says Stockton can't afford its boom time borrowing because it also has skyrocketing pension costs and city employees who get free health care for life. Ben Tracy asks, "You're also staring at more than $400 million in unfunded health care liabilities. How do you ever pay that if you don't change the system?" Dies says, "We just don't see it as viable that we could ever pay that off."

California state law requires that the city negotiate with its unions including its police officers for up to 90 days. There's been no agreement so now Stockton faces its ultimate plan B, bankruptcy.

Economist Peter Navarro says, "There's a long queue out there of cities that are going to be doing the same thing."

Navarro points to other cities such as Vallejo, California and Central Falls, Rhode Island which also went bankrupt largely because of unfunded pensions. Jefferson County, Alabama filed for chapter 9 sinking in $3 billion worth of debt. Navarro says, "And this is not a story about Stockton. It's a story about the failure of our national economy."

In Stockton Bradley Koster just closed down his bar. He says, "I had loyal people that worked for me for years so it hurts." And it's one more business Stockton cannot afford to lose.