Posted by: Debby Durkee | March 4, 2010

Two sides of protesting.

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Two sides of protesting.

Today the focus is on two stories in the news. First, the riots in Berkeley, CA over the state raising tuition costs to deal with the debt crisis. Then, residents of Atlanta are suing the city over “illegally” increased benefits for city employees. Which protest type will be more effective? Both involve citizens complaining about either the use of tax money or of not using enough. But, both stem from public sector politicians spending more money than they should have, and now the bill has come due. So can we expect more of this throughout the country? These stories should serve as a cautionary tale.

Shades of Greece at Berkeley?

To deal with the state of California’s exploding debt, tuition and fees have been raised across the board in state universities. In what looks like a case of “if we can’t squeeze blood from a turnip, we’re going to riot” – Berkeley broke out into a Greek-type riot this past Friday. So, I guess California really is our Greece. This is from a website called

Violence breaks out as students at the flagship school of the University of California protest stiff tuition hikes.

Students at the University of California’s flagship Berkeley campus took to the streets on Friday night, vandalizing university buildings, burning trash cans and clashing with police in the latest expression of frustration over cuts to the educational budget in California. Snip –

Schools across the state are planning mass protests on March 4 to protest the $17 billion in cuts to education budgets expected over the next two years.

Be prepared for more today in California. In all fairness, tuition did rise 36 percent at Berkeley, so this isn’t just a tweak. However, moving to another state is always an option. In Greece, they don’t have that option. You can read more about the story and view a five-minute video here:

Hat Tip:

Atlanta residents sue the city over raising pension benefits.

Pension benefits have been and will continue to be in the news. Public employee unions have been at the heart of a growing fiscal crisis in cities and states throughout the country. The huge pension allowances (up to 80 percent of the last salary in this case) are bankrupting cities and states. The question arises, who in their right minds thought this wasn’t going to end badly? This is from the Atlanta Journal Constitution.

A group of Atlanta homeowners has filed a class-action lawsuit against the city, charging its elected officials illegally increased pension benefits for its employees in 2001 and 2005, putting the city’s finances at risk.

The residents want the city to stop contributing into the three pension funds and instead put the money into a court registry for safekeeping. The city is expected to contribute about $125 million, more than one-fifth of its general fund budget, into the pension plans during the 12-month period that ends June 30. Atlanta has a pension fund for police officers, fire rescue workers and general employees.

Unless Atlanta is stopped from making “illegal” contributions into those funds, the lawsuit says “the city will continue to face severe fiscal and financial crisis and could be forced into insolvency.”   Snip –        

The lawsuit says the city didn’t follow its guidelines in 2001 and 2005 when it made changes to its formula that resulted in higher employee pensions. The plaintiffs argue the changes were made without required written recommendations by the city attorney and chief financial officer.

Since 2001, the unfunded liability in Atlanta’s pension funds has skyrocketed from $321 million to about $1.5 billion, according to a report released last week on city pensions by a special panel studying ways to reform the system. The benefit changes contributed about $160 million of that increase, the report says. The report attributes the bulk of the increase, an estimated $652 million, to the performance of the funds.

In 2002, the city spent about $36 million on pensions. That total is expected to quadruple to $160 million by 2015, according to the report.

I like the idea of suing the city. At least this is going where it needs to go – the court system. However, perhaps it should be considered a criminal instead of a civil matter, but this is a good first step. When city mayors and aldermen start going to jail over stuff like this, that’s when things might actually start to change. I also suggest that perhaps federal lawmakers should be headed toward jail for their continual abuse of taxpayer funds and their current running up of the federal debt in complete defiance of the will of the American people. Read it all here:

Similar stories about the abuse of the taxpayers’ money can be found in cities and states (and, of course, the biggest abuser, the federal government) throughout the country. Americans have been asleep at the wheel while irresponsible politicians have been running up their credit cards. The pension balloon is about to burst in many cities and states as the public sector grapples with insolvency. Perhaps the tax spenders should have to report to the shareholders (taxpayers) as this previous post suggests:

In the business world, the SEC requires publicly owned companies to disclose their financial data to their shareholders. Companies send a report directly to each stockholder on a yearly basis, regardless of how much equity in the company each person owns. CEOs must explain how and why they are spending their shareholders’ money. They also have to explain the bottom line, as well as the future outlook of the company’s finances. The federal government should be held to similar standards.

That should also apply to state and local governments. Since the American taxpayers are held liable for the debts created by those in the public sector, we deserve to know where each dollar is going. Americans are tired of being treated like a broken piggy bank. You can read this post here:


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