Tea Party Coalition Declares War on Corporate Welfare

Tea Party Coalition of WNY

Allen Coniglio, Chair

Tea Party Coalition Declares War on Corporate Welfare

Buffalo, NY. July 1, 2010. Five years before the nationwide tea party movement formed in response to corporate bailouts, a movement against big government started in Western New York which became known as “the tax revolt.” Like the tea party movement, it started out as a protest against corporate welfare. On November 29, 2004, Buffalo attorney James Ostrowski announced the formation of a people’s think tank, Free Buffalo (now Free New York, Inc.), and denounced a deal announced that very day to give Bass Pro millions of taxpayer dollars to locate a sporting goods store in Buffalo.

In 2008, Free New York’s Niagara County Chairman, Lee Bordeleau, asked Ostrowski if he could mount a legal challenge to a state subsidy to the Hyatt Hotel (owned by Paul Snyder) of $14 million. Ostrowski responded that the New York Constitution contained a ban on subsidies to private firms and that he had wanted to file a court challenge of corporate handouts for many years. Bordeleau eventually put together a team of fifty plaintiffs from around the state including many tax revolt and future tea party activists. They raised about $7000 to fund the suit, knowing that the defendants would spend hundreds of thousands of dollars to beat them.

In August 2008, Ostrowski travelled to Albany and filed suit against the entire political leadership of New York including Governor David Paterson, Speaker Sheldon Silver and then Majority Leader Dean Skelos. They also sued proposed recipients of large grants including IBM, Advanced Micro Devices and the Hyatt Hotel in Buffalo.

The defendants were represented by four large laws firms including Attorney General Andrew Cuomo’s office and Cravath, Swaine and Moore, a powerful Wall Street law firm. Cravath’s lawyer threatened to bury Ostrowski with paperwork. Ostrowski replied, in effect, “Bring it on.”

Since the plaintiffs were asking the trial court to order the state to stop spending billions on favored corporations, it was not surprising that the trial judge dismissed the suit and left the matter for a higher court to resolve.

An appeal was filed in the Third Department Appellate Division in Albany, the state’s second highest court. Oral argument went well for the plaintiff and a unanimous reversal was predicted by attorney Peter Reese who attended the argument.

On June 24th, the court reversed the trial judge and sent the case back to the trial court with a clear direction to rule that the state’s gimmick of setting up public benefit corporations to launder the money through as an end run around the constitution would no longer be tolerated.


Thus, while the court’s decision does not guarantee ultimate victory, the plaintiffs feel they have the wind at their backs and are optimistic about winning in the end.

This win would put an end to the insidious practice of politicians giving cash grants to favored corporations with the politicians usually receiving kickbacks in the form of campaign donations.

To say that this lawsuit, which we call the Pork Lawsuit, is a worthy goal that all members of the tea party movement should support would be an understatement. The truth is, opposition to corporate welfare is the very essence and origin of the tea party movement.

Consider that the Pork Lawsuit is based on the Jeffersonian New York Constitution of 1846 which in turn was a reaction to the Hamiltonian pork barrel projects (“internal improvements”) which nearly bankrupted the state in the preceding decades. Only within a Jeffersonian framework can the stated goals of the tea party movement—limited government, fiscal responsibility and free markets–be achieved. The nation is experiencing a remarkable rebirth of Jeffersonian thought after an extremely long period in which Hamilton’s mercantilist ideas have dominated and in fact created the modern American economy–the corporate state–which both parties support.

The Tea Party Coalition of WNY was founded in May, 2009, to bring greater coordination and an improved strategic approach to the WNY tea party movement. Several of the co-founders were involved with the Pork Lawsuit. The Coalition is famous for its independence from the Republican Party machine.

The Coalition is asking all tea party groups and activists throughout the nation to endorse and support the Coalition’s Declaration of War on Corporate Welfare and the corporate state. We have met the enemy and it is the corporate state, the marriage of big government and big business.

Instead of putting all our eggs in one strategic basket—running candidates—the Coalition is proposing a multifaceted strategy that involves court action, lobbying, education, electoral politics and direct citizen action.

The goal is to end all forms of corporate welfare at all levels of government, federal, state and local.

What is corporate welfare? We define it in the broadest sense as any alleged economic development policy that favors business firms over the regular citizen. While some forms of corporate welfare are less odious than others, all forms involve a violation of the principle of equal protection of the laws and therefore encourage a government that divides people into victims and exploiters. The main forms of corporate welfare are:

1. Cash grants
2. Loans at reduced rates
3. Loan guarantees
4. Special tax breaks
5. Enterprise zones
6. Job training grants
7. Export subsidies

Jim Ostrowski, co-founder of the Coalition, has written in detail about the evils of corporate welfare and its corrupting influence on our political system. Those articles are collected at http://politicalclassdismissed.com/?p=10624

Here’s a quick summary:

1. Corporate welfare—grants or special tax breaks to specific businesses—is illegal. The NY State Constitution bans gifts to private corporations. The equal protection clause bars special treatment for some citizens at the expense of others.

2. Corporate welfare is a form of central planning that doesn’t work. Politicians and bureaucrats lack the competence to pick winners in the marketplace. Since, unlike entrepreneurs, they are not risking their own capital and will not directly profit from the success of these enterprises, they lack the incentive to make the right choices in the allocation of scarce capital. Also, entrepreneurs have money in the first place because they have been successful in past enterprises and have shown their skill and thus are likely to be successful in the future. Bureaucrats in contrast can fail for decades as the current ones have and still have the political power to be in charge of corporate welfare decision-making. When entrepreneurs fail, their assets are quickly transferred to other entrepreneurs who are evidently better (because they have the money to bail them out). Thus, the market is a continuous process of discovering what people want. In contrast, corporate welfare projects like the Buffalo Hyatt Hotel keep getting bailed out year after year when the market would and should have liquidated them.

3. Every subsidy is an argument for every other subsidy so corporate welfare is used as a rationale to support every other big government program.

4. Corporate welfare allows the business class to escape from the high taxes the rest of us are fighting. Virtually no prominent business people have supported the WNY tax revolt. They don’t have to. Corporate welfare allows them to escape the high taxes the working class supporters of the tea party movement have to pay.

5. Corporate welfare corrupts the political process and keeps the incumbents in power. Shiny new projects funded by corporate welfare help convince the public that things are changing and that progress is being made. That is an illusion that keeps the politicians in office year after year. The reality is that these are zero sum games that benefit some at the expense of others. Since they do not create new wealth, they usually fail for want of consumers with good jobs having the money to fund them, and they need to be subsidized continually like the Hyatt Hotel. Recipients of corporate welfare are among the leading donors to politicians. Corporate welfare helps keep the regime in power!

6. Corporate welfare crowds out real change such as lower taxes. It’s like taking a pain reliever for stomach cancer instead of having surgery. It is not a good short-term solution to our economic problems. It’s what we do instead of dealing with our problem. It’s not the solution; it is in many ways the problem itself.
For an excellent summary of the case against corporate welfare on the federal level, see, “Ending Corporate Welfare As We Know It,” by Stephen Moore and Dean Stansel—


Bottom line. Corporate welfare is a great evil that is essentially the glue that holds the current political regime in New York and the United States together and must be fought at all costs.

What can we do now to end corporate welfare?

First and foremost, remember that our movement is grassroots, bottom-up and driven by your own creativity and initiative. That said, here are some ideas to get us started.

1. Since this movement against corporate welfare started as a protest against Bass Pro trying to mulct the taxpayer in Buffalo as they have done in many places around the country, we are calling for a nationwide tea party boycott against Bass Pro effective immediately! We instead urge people to buy their goods at Gander Mountain or another company that refuses to accept subsidies.

2. Insist that any candidate seeking your support pledge opposition to all forms of corporate welfare.

3. Educate the public on the nature of the policies that lead to true economic growth by distributing the Free New York study guide, Economics in Five Lessons, to every household in the United States. (Well over 2000 copies have been distributed in WNY using funds raised at a March 2009 Buffalo tea party.) We will make the PDF file available free to anyone who wishes to print copies.

4. Send a copy of the Pork Lawsuit decision to every NY state legislator and ask them to immediately repeal all corporate subsidies and use the savings to pass an across-the-board tax cut for all citizens.

5. Prepare a brief position paper and send to each member of Congress and ask them also to take a stand against corporate welfare.

6. Specifically, in NY, which has a severe budget deficit, NY tea party activists can lobby their legislators to balance the budget by abolishing all corporate grants and eliminating the so-called Department of Economic Development whose main job is funneling illegal grants to politically-connected firms.

7. Start compiling a list of firms that habitually accept cash grants to lay the groundwork for future consumer boycotts against such firms.

8. In NY, we will need support for the Pork Lawsuit which will now be litigated in Albany Supreme Court. We need to pack the courtroom at all proceedings. We will also be filing a suit against local governments in NY that engage in illegal corporate welfare. There is a separate but identical clause that applies to them.

There is plenty to do to win this war against corporate welfare. It is important that the tea party movement use a variety of strategies and tactics and not solely rely on electoral politics. Politics is a rigged game and in many areas of the country including Buffalo, the local GOP is trying to co-opt our movement. They have played that game many times over the decades to neutralize the grassroots liberty movement and keep the power in the hands of the GOP machine and the country club Republicans who love our votes and donations but hate the bold principles we stand for.

This war on corporate welfare, declared by the Tea Party Coalition of WNY, whose founders were fighting for the tea party cause five years before the movement began, gives the national movement what it badly needs right now: a strategic pivot that will catch our opponents by surprise and be impossible to stop.

Please join us! We look forward to hearing your own creative thoughts on how to win this fight.

There is a tide in the affairs of men
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.


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