Wine, Dine, and Bribe

MARCH 18, 2014  | by BOB DICK

"Today's featured wine has notes of bureacracy, boondoggles, and waste, with a lingering aftertaste of corruption. May I interest you in this PLCB blend?"

Unlike a fine wine, the PLCB seems to get worse with age.  The latest revelation concerning the booze bureaucracy comes to us via the Pennsylvania State Ethics Commission.  The commission found three former PLCB officials violated state ethics laws.

The violations include: accepting gifts from vendors who had ongoing contracts with the PLCB, using a position in government for personal benefit, and failing to disclose gifts on annual financial interest statements.  The three officials, former CEO Joe Conti, former PLCB Board Chairman Patrick Stapleton and Director of Marketing Jim Short were showered with numerous gifts during their respective tenures.  The gifts included invitations to golf outings, sporting events, meals, lodging, and alcoholic beverages.   

Many of these violations occurred on the taxpayer’s dime with officials attending functions and accepting gifts during work hours.  Not only that, but taxpayers were actually billed for some of the expenses related to these social functions.  How many of you get to bill your employer for non-work related golf outings?

The findings of the Ethics Commission aren't the only things troubling taxpayers—so are the punishments. Chris Comisac of Capitolwire (subscription required) reports that some good government watchdogs are questioning why the penalties for these public officials are so light.

"It encourages public officials to roll the dice and take the chance they won't get caught," said Barry Kauffman, executive director for Pennsylvania Common Cause. But beyond that, Kauffman said it also creates a situation where those giving the gifts are buying access to those public officials, and at least the possibility of getting what they want from those officials.


"The only real penalty is that they have to pay for what they already have," added Kauffman. "That's really not much of penalty at all."

The corruption at the PLCB is a symptom of a larger problem.  When a government monopoly has the sole authority to determine what products are sold on state store shelves, it shouldn’t come as a surprise that some businesses will try to influence those with such authority.  Moreover, these same officials are tasked with regulating and enforcing the state's liquor laws.  It's an inherent conflict of interest, and they serve neither purpose well.

This is just one of the many reasons Pennsylvania needs full privatization. Leaving goverment in the booze business will leave the door open for more corruption.

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Senator Uses Public Money for Politics – So What?

MARCH 14, 2014  | by JOHN BOUDER

All this hyperventilating over allegations that State Senator LeAnna Washington’s summer birthday bash included some surreptitious use of taxpayer resources for campaign fundraising is really a bit much...

Sure, she may have pressured her campaign staff into violating the “bright line” between public money and partisan politics—what of it? Campaign contributions were tallied and envelopes stuffed and stamped on the taxpayers’ dime? Nothing to see here.

What’s all this talk of 12 years in prison and other criminal penalties? Surely she could just offer to reimburse the state for any public expense incurred and all would be forgotten, right?

The history of Pennsylvania politicians using public funds for personal gain goes back decades. They’ve been at it so long—can’t we just ignore it by now?

Those must be the thoughts running through government union leaders’ heads upon the announcement of Sen. Washington’s public corruption charges.

Because when it comes to violating the integrity of public resources, her alleged misdeeds pale in comparison to the way government union leaders use their special legal carve out to fund their own political agendas.

Publically-funded payroll systems collect and bundle government union members' dues and campaign contributions, then send them to union accounts on a daily basis in Pennsylvania. Physical checks are even printed, signed, and mailed using public funds—sound familiar, Sen. Washington?

In 2012, the line between public funds and partisan politics was violated by government unions with nearly $5 million in members’ dues spent on political activity and lobbying. Add to that nearly $4 million in government union PAC contributions given directly to political candidates.

That's $9 million spent on politics, the vast majority collected using taxpayer resources. Sounds like cause for legitimate outrage—maybe even more than an ill-advised birthday fundraiser.

But government union leaders say they've offered to reimburse the state for any expense involved in automatic deduction. That makes it ok, right? Wrong.

Regardless of cost, 80 percent of union households agree that taxpayer resources should not be used to collect campaign contributions. Principles matter. Sen. Washington's abuses will not be forgotten if she reimburses the state for her fundraiser expenses.

But, union bosses say, we’ve been doing it this way for years—why change things now? When is the last time decades of wrongs eventually made a right? By that logic, former House speaker John Perzel should never have been jailed for using public resources for politics. He was just another in long history of bad actors.

John Micek at PennLive puts his thoughts on the latest political corruption scandal rather emphatically (bolding in original), "It. Is. Illegal. For. You. To. Use. Taxpayer. Resources. For. Political. Purposes."

Today, that applies to you, me, Sen. Washington and everyone in the state—except for government union bosses.

Shouldn't the same principle apply to everyone equally?

Tell your legislators to take a highlighter to that “bright line” both union members and taxpayers agree on. Tell them to separate public resources from politics once and for all by passing paycheck protection.

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Risky Business: Bonds Alone Could Worsen Pension Crisis


Is your family ready to bend their budget to pay for Pennsylvania's pension crisis? State pension costs are set to drive up the average family's taxes by nearly $900 annually, but Senate Democrats claim to have a solution. This week they proposed borrowing $9 billion in pension obligation bonds to invest and drive down more than $47 billion in unfunded liabilities of the two state pension systems (PSERS for teachers and SERS for state workers).

Unfortunately, as the saying goes: If it sounds to good to be true, it probably is. Pension obligation bond's are a risky proposition. Issuing bonds without pension reforms, could put taxpayers on the hook for billions more.

Senator Pat Browne notes in Capitolwire [subscription required], "The history of pension obligations bonds is they represent a tremendous amount of risk. Across the country, when they have been used, there have been very mixed results."

For example, under then-Mayor Rendell, Philadelphia issued $1.29 billion in pension bonds to balance the budget. But underfunding continued and pension liabilities grew higher still.

The experience of Philadelphia shows that pension obligation bonds alone are not the answer to Pennsylvania's pension woes. And it's because they fail remove politics from pensions. To achieve that, any pension reform plan should include a defined contribution feature to avoid future crises.

In a defined contribution plan, funds are deposited into an employee's personal account, and it becomes impossible to increase benefits without paying for it. Underfunding requires telling workers that required deposits aren't being made into their accounts. Such a transparent plan prevents political manipulation and wouldn't take any benefits already earned away from retirees or current workers.

It's commendable to see Senate Democrats acknowledging the pension crisis, but their proposed solution is a risk taxpayers can't afford to take.

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Super PAC will Super Size Union Dues in Politics


You may have read articles about a federal judge allowing a "Super PAC" to operate in Pennsylvania to attack Republicans. Effectively, Super PACs can collect and spend unlimited amounts of money to influence elections. They can't give directly to candidates or coordinate their efforts with candidates, but can run TV and radio ads or mailers supporting or attacking candidates.

What is noteworthy is this ruling allows the "Super PAC" to collect an unlimited amount of union dues to influence elections. These dues are currently being collected at taxpayer expense.

The group spent $8 million in New Jersey last year, and could do much more in Pennsylvania, as both state and national unions have already named Pennsylvania a key state for 2014, even going so far to admit they will use union dues to help to put Democrats in control of the legislature.

While unions have every right to spend money on politics, they should compete on a level playing field and collect their own political money, rather than using taxpayer resources.

Tell your lawmakers to help stop the use of taxpayer resources to support partisan politics.

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Fact Check, Please! Anti-Liquor Privatization Study Falls Short

MARCH 12, 2014  | by BRUCE CORNIBE

PA State Liquor Stores

As several states (Pennsylvania, Virginia, and Oregon) look to rid themselves of antiquated government-run liquor systems, the defenders of state-control status quo are fighting back harder than ever.  And some aren't letting facts get in the way of their arguments.

More than a year ago, Washington state privatized liquor sales.  Opponents of privatization in Oregon are nervously looking north, and touting a new "study" that shows emergency room visits in Washington have increased, as have thefts of liquor stores and alcohol accessibility to minors.  The study, though, was actually a PowerPoint presentation by longtime liquor privatization opponents.  Last week in Forbes, Donald Rieck, Executive Director of Statistical Assessment Service noted that many of the study’s claims are dubious at best and ignore general positive trends following privatization in Washington state.

In fact, according to the Washington Health Youth Survey, binge drinking (at historic lows) and other levels of problem drinking declined for grades 8, 10, and 12.  There continues to be growing awareness among the same age group of alcohol’s harmful effects.  As for the other questionable claims, Rieck notes, "the preponderance of data on the effects of privatization on Washington State suggests the exact opposite of the meaning conveyed by the [study]."

As we have continually detailed, liquor privatization does not lead to an increase in social problems, nor is there a correlation between government control of liquor and safety.  Thankfully, the rhetoric here in Pennsylvania about the collapsing of society’s social fabric isn't fooling anyone: More than 60 percent of Pennsylvanians support liquor privatization.

It’s time to end the conflict of interest ingrained in Pennsylvania’s state system that promotes and regulates alcohol.

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State House to Tackle Union Violence


Federal charges of racketeering and arson against several Philadelphia union members, who called themselves The Helpful Union Guys (or T.H.U.G.s) has renewed interest in closing a loophole in state law, exempting parties in a labor dispute from prosecution.

Under current law, anyone involved in a labor dispute is exempted from laws against stalking, harassment, and even threatening to use weapons of mass destruction (WMDs). In a recent court case, charges of harassment against a union leader stemming from threats made at a restaurant were dismissed on grounds that it was related to a union dispute.

HB 1154 would remove these exemptions. Shockingly, union leaders defend the exemptions. They argue that stalking, harassment, and threatening to use WMDs are somehow vital to free speech. They also offer the defense "hey businesses do it too."

As National Review reports:

"We think the law works," Pennsylvania AFL-CIO president Rick Bloomingdale said to reporters last week, explaining that the exemption is necessary to protect labor free speech rights. ...

Frank Snyder, secretary-treasurer of the Pennsylvania AFL-CIO, tells the Lehigh Valley Morning Call the exemptions protect free speech and claims National Labor Relations Board figures "show employers routinely, and with total disregard for the law, intimidate, harass, stalk and even fire people who try to form unions."

There's a huge flaw in Mr. Snyder's logic. HB 1154 would remove the exemption for all parties in a labor dispute, both unions and employers. If he truly believes that business owners are getting away with harassment, he should support removing that loophole from the law to crack down on abuses.

The Pittsburgh-Post Gazette reports that HB 1154 could be voted on in the Pennsylvania House this week.

Find out more about the issue at


Union Dues Still Fund Politics & Union Members Don't Like It


Last night, I spoke with ABC 27 about polling that shows the vast majority of union household support ending taxpayer collection of union political money.

See the video below:

In response, Rep. Mike Sturla makes the claim that union dues aren't used on politics. As we've explained before, there are two reasons why he is wrong.

First, public resources are used to collect union campaign contributions that are given to candidates for office, through the same payroll deduction process. Government union PACs contributed nearly $4 million to state candidates in 2011-12.

Second, while union dues can't be directly given to candidates, they are used to fund political TV and radio ads, mailers supporting or opposing candidates, lobbying, fundraising for union PACs, and independent expenditures supporting a candidate in an election. We've chronicled a list of union political spending here. Just today, we highlighted a union-funded ad which distorts state education funding.

Union dues also fund other political organizations, such as Keystone Progress (the group claiming Gov. Corbett is murdering people), the Keystone Research Center, and "Pennsylvanians for Accountability," a group running anti-Republican attack pieces.

Taxpayer resources are used to collect union dues and campaign contributions, union dues are being used for politics, and union members don't like it!

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The $1 Billion Lie Exposed


The American Federation of Teachers (AFT) took out full-page, color ads in several major state newspapers last week proclaiming Gov. Corbett "closed neighborhood schools" and laid off teachers in Philadelphia through massive education funding cuts. In the western part of the state the ad warns, "Don’t let Allegheny County be the next Philadelphia."

These ads were grossly misleading. State funding for public schools is at an all-time high. The $1 billion in "cuts" was the expiration of temporary federal stimulus money. 

So we ran our own ad today correcting the record.

AFT claims Gov. Corbett and state lawmakers "cut $1 billion" in education spending in the state budget. But the real facts about education spending are something else entirely.

The 2013-14 budget spends nearly $10 billion and the proposed 2014-15 budget calls for $10.1 billion for PreK-12 schools—an all-time high, even exceeding when the state budget included federal stimulus funds. As you can see in the chart below, the AFT's claims are simply untrue.

$1 billion cut ed graph

But the worst part of the AFT's misleading campaign is how it was funded—by teachers' dues collected using taxpayer resources. It’s time unions are held accountable for dishonest political ads they run at the expense of educators and taxpayers across the state.

We should stop this practice which gives government unions an unfair political privilege to engage in politics.

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Almost $2 Billion in Welfare Waste Weeded Out


Fix Welfare

Lottery winners on welfare, millionaires on food stamps and supervisors that turn a blind eye to fraud; these are the stories that drive Pennsylvanians crazy. But the Department of Public Welfare (DPW) has good news. Thanks to efforts preventing abuse, the department has saved almost $2 billion since 2011.

That’s billions of dollars that will go to the truly needy instead of those “working the system.” Savings include:

  • $338 million from partnering with the Office of Inspector General:
    • $233.7 million in "cost avoidance," or the cost of fraud for six months. The administration assumes all 75,698 cases deemed high-risk since January 2011 would have resulted in some type of fraud.
    • $97.5 million from actual overpayment recoveries,
    • and $6.7 million from program disqualifications after 3,879 fraud actions, 2,944 of which were criminal complaints, according to DPW.
  • $476 million through DPW's integrity efforts, including:
    • $10.9 million from reviewing out-of-state Electronic Benefit Transfer card use,
    • $6.9 million from cross-checking federal and state income and benefit information,
    • plus casualty, health insurance and estate audit recoveries.
  • $1.1 billion from cost avoidance, or stopping fraud before it begins via recipient restrictions programs, reviewing managed care organizations and making sure Medicaid is the payer of last resort.

DPW Budget Director David Spishock noted, “We will try to save dollars up front to save the money before it goes out the door instead of going back and paying and chasing the money later on.”

The transition from pay and chase to upfront detection is a welcome development. In addition, legislation sponsored by Rep. C. Adam Harris to restrict welfare for lottery winners passed the state house. And forthcoming legislation by Senators Argall and Scarnati to increase fraud penalties, address lottery winners, cut down on EBT card fraud and adjust the food stamp (SNAP) asset test would add deterrents for those out to game the system.

However, Pennsylvania can make the welfare system even more secure and, most importantly, more effective at alleviating poverty by restructuring programs to encourage employment and ultimately independence. How? By continuing to pursue more flexibility from the federal government to customize anti-poverty programs and tackling the welfare cliff, where families’ lose income for taking a promotion or working longer hours.

DPW Welfare Waste, Fraud & Abuse Savings

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Plagiarism: Union Style (Part 2)

FEBRUARY 28, 2014  | by BOB DICK

recent letter to the editor in reaction to my op-ed on paycheck protection starts:

I live in the Malvern area, served 24 years in the military and this year started my 15th year of public school teaching in the Phoenixville Area. After having read the op-ed by Bob Dick, I felt compelled to respond to what I feel is an example of misleading and slanted writing that I would not allow my students to submit for a grade.

But the author never gets around to addressing any "misleading and slanted" claims in my op-ed. This is understandable because the rest of his letter is almost an exact copy of another that appeared in a different paper under a different name.

The first letter was published by The Delaware County Daily Times on February 24. It’s signed by a retired teacher from Springfield—a couple of sample paragraphs follow:

But Gov. Tom Corbett and his special interest allies, along with some members of the General Assembly, are pushing a legislative attack on workers’ voluntary deductions, for two simple reasons – to silence the voice of the workers, and improve his re-election chances.

Pennsylvania is just the latest state for this political scheme. Out-of-state billionaires and corporate special interest groups, who are working behind the scenes in Harrisburg, have pushed similar legislation in other states. Here in Pennsylvania, one of the front groups is the right-wing Commonwealth Foundation. Bob Dick, a representative of that group, recently claimed in an op-ed that opponents of this scheme were not truthful – strange words coming from an organization that refuses to identify its wealthy donors.

The other letter, signed by a current public school teacher, was published in The Mercury a day later. Notice anything familiar? 

But Gov. Tom Corbett and his special interest allies, along with some members of the General Assembly, are pushing a legislative attack on workers’ voluntary payroll deductions, for two simple reasons — to silence the voices of workers, and improve his re-election chances.

Pennsylvania is just the latest state for this political scheme. Out-of-state billionaires and corporate special interest groups, who are working behind the scenes in Harrisburg, have pushed similar legislation in other states. Here in Pennsylvania, one of the front groups is the right-wing Commonwealth Foundation. Bob Dick, a representative of that group, recently claimed in an op-ed that opponents of this scheme were not truthful — strange words coming from an organization which refuses to identify its wealthy donors.

Aside from the introductory paragraph, the letters are identical.

Unfortunately, this isn't the first time unions have resorted to plagiarizing to misinform the public. And of all people, teachers should know better.

Clearly, we are supposed to believe that teachers around the state are up in arms over paycheck protection legislation. But 80 percent of union households don’t think taxpayer resources should be used to collect campaign contributions.

I can only hope that these teachers and their unions set better examples of integrity and honesty for our students in the future.

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The Commonwealth Foundation is Pennsylvania's free-market think tank.  The Commonwealth Foundation crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.