October 17, 2011
New York State was once known to the world as the Empire State. After decades of government mismanagement and corporate plunder, the beleaguered taxpayer needs and deserves substantial relief. Pouring public funds into corporate coffers as “gifts” for the honor of having these enterprises conduct their trade is a practice that enriches the few, while sucking the economic life out of impoverished residents. The racket of “Corporate Welfare” gives new meaning to those famous words of General Jack D. Ripper – “A foreign substance is introduced into our precious bodily fluids without the knowledge of the individual, and certainly without any choice”.
This government “Dr. Stranglove” pattern of providing for the defense of crony capitalism is obscene. The insidious rewarding of favorite chums with civic money is steeped, not only in conflicts of interest, but more importantly, breeds a culture of corruption that taints elected officials and bureaucratic facilitators. The insane notion of corporate personhood is used to rationalize a defective economic development policy that results in huge budget deficits with little benefit to state residents.
The “Mother of All Lawsuits”, publically known as the Pork Lawsuit is a significant watershed in restoring constitutional government in a state long known for protecting cartels and campaign contributors. Watch the video – The “Mother of all Taxpayer Lawsuits” and note that this action was filed back in 2008.
Attorney and columnist for Lewrockwell.com James Ostrowski is the driving force behind this noble effort to hold state officials constitutionally accountable. The name of his site Political Class Dismissed is taken from a well-received book by the same title.
On October 12, 2011, the Pork Lawsuit was argued in NYS highest judicial court of law, the Court of Appeals. The first impact gained from the architecturally impressive courthouse is that you are entering a very sober environment immersed in history and privilege. The mere fact that such an august body of jurists heard the serious nature of the Pork Lawsuit pleading bodes well for the merits of the case. The previous Appellate level decision was 5-0 in favor of Mr. Ostrowski’s action. As the legion of corporate lawyers gather together to defend their ill-gotten gain of preferences, the image of a David and Goliath struggle emerges.
Michael Rebmann provides comments, NYS Court of Appeals Pork Lawsuit Summary.
In this declaratory judgment action, 50 New York taxpayers challenge the constitutionality of state appropriations to the Department of Agriculture and Markets and two public benefit corporations (PBCs) for ultimate distribution to private entities for economic development projects. They argue, in part, that this funding violates article VII, § 8(1) of the State Constitution, which prohibits gifts or loans of state money or credit to private entities. The challenged appropriations and grants included funding through Ag & Markets for promotional activities by the New York Apple Growers Association and the Long Island Wine Council to encourage consumption of New York agricultural products, and funding through PBCs for semiconductor manufacturing facilities in Saratoga, Albany and Dutchess Counties and renovation of a hotel in downtown Buffalo. The plaintiffs sued the State, its Urban Development Corp. (UDC) and Erie Canal Harbor Development Corp., and six private companies, including International Business Machines Corp., West Genesee Hotel Associates, and GlobalFoundries U.S., Inc.
Supreme Court dismissed the suit, ruling there was no violation of the gift or loan provision. It said, “The State is authorized to provide funding to a public benefit corporation, including [UDC]…. The very purpose of the [UDC] is to promote the State’s policy of enhancing job opportunities, urban renewal and economic development…. A review of the [UDC] projects at issue here shows that each speaks to a viable public, economic development purpose….” It said Ag & Markets “is expressly authorized to aid in the promotion and marketing of New York’s wine and grape products” and its appropriations to fund promotional contracts with non-profit agricultural organizations are not barred under Article VII, § 8.
The Appellate Division, Third Department modified by reinstating the claim that the appropriations “indirectly gave state funds to private entities in violation of … article VII, § 8(1) by passing the funds through [Ag & Markets] and the PBCs before disbursement.” It said, “Giving the funds to private entities by channeling them through authorized public entities will not shield these appropriations from challenge, for the State may not do “‘indirectly that which cannot be done directly”‘….” It said the constitutionality of the appropriations does not depend on whether they served a public purpose, but “whether their public benefits constitute sufficient consideration while the private benefits are merely incidental.” The question was not resolved as a matter of law by the defendants’ submissions “showing their public purposes,” it said, and remitted the matter to Supreme Court for further proceedings.
The defendants argue that “appropriations for the public purpose of promoting economic development” do not violate article VII, § 8. “Recent precedents establish that an appropriation is valid … so long as it has a predominant public purpose and any private benefit is purely incidental,” the State says, claiming the challenged appropriations meet this standard. It also argues the appropriations “were not gifts at all because the recipients agreed to create jobs or provided other valuable consideration to the State in exchange for the funds.”
Prior to entering the coffered ceiling courtroom and before the questioning by the seven justices, Mr. Ostrowski made a dynamic public appeal at the Capital Building. His remarks included.
Corporate welfare is banned by the State Constitution: “The money of the state shall not be given or loaned to or in aid of any private corporation…” Art. VII. Like many states, New York got burned by past wasteful corporate welfare and pork barrel projects so we made it illegal. This hasn’t stopped anyone. After all, if you are willing to steal other people’s money, you would also be willing to flaunt the law.
Corporate welfare converts normally feisty business people into gutless toadies to politicians they would never hire at their own firms, and silences them from criticizing the regime or supporting real change lest they be cut off from the subsidies they feel they need in New York’s hostile business climate. That explains why the WNY tax revolt and tea party movements have virtually no support from private business firms above the level of mom and pop shops.
The politicians also love corporate welfare because it gives them a tool to bamboozle the public about how they are supporting economic development. But it’s yet another big lie. How does stealing your money and preventing you from using it to support businesses whose products best fit your needs and wants improve the economy? How does it stimulate economic growth to prevent you from using your money to start and grow your own company, and instead give your money to a company that bought a politician with a campaign donation?
. . . we filed the Pork Lawsuit and we are winning! If we win this appeal, we can shut down billions of dollars in corporate welfare and return that money to the people. How about getting rid of the regressive state gas tax which forces the poor and working class in NY to play the highest gas prices in the country outside of Hawaii? If we win this suit, we will immediately file another one to bar 1000 local governments from giving away our money.
The national implication of this Pork Lawsuit is that most state constitutions have the same gift and loan provisions in their own charter. This language is clear, but the courts need to confirm that banning public subsidies is an essential duty of legitimate government. The Solyndra Scandal is not an isolated abnormality. Many state governments are pumping scarce financial resources into suspect projects. A vivid example of this Enron prototype scam is documented in An Ill First Wind Hits the Public in the Pocketbook.
The First Wind project is a primary focus of the citizen group Cohocton Wind Watch. As a petitioner to the Pork Lawsuit, CWW stands shoulder to shoulder with the other plaintiffs in an effort to stop the foolish and ineffective policy that is bankrupting our state budgets.
Seldom does good news penetrate the media cycle. This is a saga of a legal battle that all of us share and everyone will benefit from when corporate subsidies are declared illegal. Get behind this fight. Expand this challenge in other states and force the courts to put an end to the rip-off. Old Jack Ripper is crying from the grave that we all regain our precious bodily fluids. It is time to end the dominance of that fictional coke machine. Break the cartel and demand our money back. The public deserves better . . .