Redistribution of Wealth – The Reality

While Washington distracts and divides Americans with class warfare, pitting the 1% against the 99%, there is indeed a redistribution of wealth happening in this country, but it’s not between the rich and the poor.  Two recent, unrelated stories peeled away the curtain and exposed who’s really thriving at the expense of taxpayers. 

The first report gave the details of a $5.9 million grant that was issued by Health and Human Services (HHS) to a University of Chicago Medical Center program, the Urban Health Initiative (UHI), which is run by Eric Whitaker, a longtime close friend of President Barack Obama. According to the article, “The UHI was one of only 26 programs — out of 3,000 applications — to receive a slice of the $1 billion in taxpayer money from the executive’s ‘We Can’t Wait’ initiative…” UHI and the University of Chicago also have direct ties to the president’s wife, Michelle, the president’s senior advisor, Valerie Jarrett, and long-term advisor David Axelrod.

Of course HHS denies the White House had any influence on the decision to grant UHI the money.  But, this denial rings a bit hollow after the exposure that 80% of DOE Green Energy Loans Went to Obama Backers, including George Kaiser of Solyndra. And, after the Center for Public Integrity documented that nearly 200 Obama bundlers had received direct payments from the federal government, access to federal officials, or appointments to key administration positions.  One example is Ronald Ratner, the president and chief executive of Cleveland-based real estate giant Forest City Residential Group, who bundled $200,000-$500,000 for the 2008 Obama campaign, and as of the end of 2011, had already bundled the same amount for his reelection campaign.  Is it a coincidence that Mr. Ratner’s company just recently signed a 50-year real estate deal with the Unites States Air Force worth well over $300 million?

The second report came from the education politics category, but ironically also took place in Illinois.  Earlier this week, State House Speaker Michael Madigan introduced legislation that would “divert more than $1 billion from local governments to help plug a hole in the state’s underfunded Teachers Retirement System.”  Similar things are happening right here in Pennsylvania.  According to analysis done by Leadership for Liberty and the Pennsylvania School Board Coalition, over 90% of the state education funding increases to school districts across the state are going to the Pennsylvania School Employee Retirement System (PSERS), leaving only 9% for the children.

This transfer of wealth to the public sector unions is no different than the preferential treatment given to the unions during the auto bailouts and the subsequent bankruptcies of Chrysler and General Motors that protected UAW at the expense of shareholders.  While the UAW retirees maintained their pension benefits, non-union, salaried retirees of GM’s suppliers lost theirs.

None of this should be surprising, since it is the unions that are the biggest “outside” contributors to political campaigns.  According to a recent National Review Online article, during the last two elections:

● Big Labor spent nearly $450 million in the 2008 elections electing Obama and the Democrats (New York Times)

● Three of the top five spending political groups in the 2010 midterms were labor unions (Wall Street Journal)

● One union alone, the American Federation of State, County, and Municipal Employees, spent $93 million on the 2010 elections (Associated Press)

And 2012 is shaping up to be no exception.  Opensecrets.org revealed in March that the single organization that gave the most to super PACs in March was the National Education Association, which gave $3 million to its own super PAC.

Is it any wonder that after all of the money labor unions have spent to buy politicians, who then pass legislation that financially benefits or protects the unions, that union bosses are amongst the very “1%” that they so demonize?  Jimmy Hoffa, Jr.  head of the Teamster’s, for example makes about $300,000 per year.  And, according to the Education Action Group, “American Federation of Teachers President Randi Weingarten, makes the princely sum of $493,859 and NEA President Dennis Van Roekel makes a combined $397,721 in salary and benefits.”  These union leaders are “pushing for higher taxes on the wealthy…to help bail out the nation’s public schools, many of which spend 80 percent of their budgets on Big Labor costs.”

And that’s how cronyism works.  The image created by CronyCronicles.org below sums up how wealth is redistributed from the taxpayers to special interest groups like unions, corporations, and wealthy donors, and the politicians themselves.  These special interests spend tons of money electing politicians who then pass legislation that benefits the special interest at the expense of taxpayers.  The cycle continues and the politicians and the special interests siphon money away from taxpayers and put it into their own pockets, thereby strengthening themselves and weakening the taxpayer.

More Debt from Republicans...

Our friends at Citizens Alliance of PA understand the real problem we face as citizens.  The real battle is not about which party is in control of government.  The real battle is electing principled, citizen reformers who will LEAD.  At LfL, we think the real solution will come from our fellow citizens who lead and shape public opinion, not who is elected.  But every effort to advance the cause of liberty and limited government is important.

But acknowledging reality is the first step.  Understanding that Big Government politicians are the problem, not which letter is by their name, is the most important step for real reform.

In a previous blog, “Government shocker: Debt increases, credit worsens!”, LfL pointed out that Harrisburg added a ton of debt last year and are adding a lot more this year.  Also, it must be noted, Harrisburg is 100% controlled by Republicans.  Does it really matter which party is in charge…?

Here is an email from CAP:

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More Debt for Taxpayers?

May 16, 2012: Between now and July 1, the major debates in Harrisburg will focus on the general fund budget. On one side, you will have voices calling for responsible budgeting; on the other, there will be voices crying out for more tax dollars. Although the general fund budget will garner the lion’s share of attention, it isn’t the only game in town. A second little-discussed budget will also be released -- the capital budget.

The capital budget in recent history has been a goody bag for lobbyists and corporate special interests. Act 130 of 2011, last year’s Capital Budget, added$1.6 billion in debt to the Commonwealth’s balance sheet. Taxpayers financed projects like: The Arlen Spector Library ($1.97 million); the John P. Murtha Center for Public Policy ($10 Million); Laborers District Council Union Office Building ($2 million); and a host of projects with debatable economic impact (like soccer stadiums).

The Senate’s proposed 2012-2013 capital budget, SB 1480, will add another $1.67 billion in debt to the balance sheet. However, taxpayers will not find out exactly which projects are being funded until the money is disbursed (the House and the Senate pass a wish list, but the executive branch ultimately writes the check).

According to fiscal note for SB 1480, the funds will be allocated as follows:

• Public Improvement Projects: $995,000,00
• Furniture and Equipment Projects: $40,000,000
• Transportation Assistance Projects: $210,000,00
• Redevelopment Assistance Projects: $345,000,000
• Bridge Projects: $ 85,000,000

It is important to note two things when you look at this list. First,“Transportation Assistance Projects” are not necessarily road projects; they could be something like intermodal transit stations. Second, Pennsylvania has the third largest number of structurally deficient bridges in the country, but bridge projects garner just over 5% of the funds.

Keep in mind that we aren’t committing just tax dollars to these projects. The Commonwealth is borrowing money to spend on them and indebting future generations to cover the costs. Pennsylvania’s interest payments already exceed $1 billion per year. As interest rates rise and the debt load increases, interest payments will consume a greater and greater proportion of the general fund budget.

While it could be reasonably argued that government plays a necessary role in creating infrastructure, forcing taxpayers to finance projects for private corporations is unconscionable and far exceeds the proper role of government. The House and the Senate should a) reconsider the wisdom of adding over $1 billion in new debt to the books and b) seriously reevaluate the necessity of the projects that taxpayers will be responsible for far into the future. No family or business would spend money so irresponsibly without going bankrupt. The General Assembly needs to use common sense and prioritize spending, especially when saddling taxpayers with even more debt.

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What can you do?  LfL suggests that you contact the Governor and the Senate and House leadership!  Tell Republican Leadership to stop spending and to stop borrowing!

Governor Corbett  email (Go to bottom right of page "Contact Us" and click on "email")

PA Senate Leadership List  (Click on name to get to their page, can send email, facebook, twitter, or call!)

PA House Leadership List  (Same instructions as Senate)