Frank LaGrotta – 3/7/06

This page was last updated on March 12, 2006.

Corporate welfare at its worst; State Rep. Frank LaGrotta (D-10); Beaver County Times; March 7, 2006.

In his last letter, Mr. LaGrotta told us how wonderful it would be to raise the Pennsylvania minimum wage.

I probably shouldn’t admit this, but I love it when Mr. LaGrotta – and most politicians – writes letters. In addition to this critique, shown below is a published letter I wrote to the Times.

Below is a detailed critique of the subject letter.

“Friday’s article ‘Nearly 16% of Wal-Mart employees are getting Medicaid’ highlighted the pressing need for legislation.

“Two colleagues and I in the state House of Representatives are proposing to establish the Pennsylvania Health Care Accessibility and Insurance Responsibility Act, which would require large, profitable companies in Pennsylvania to help pay for health insurance coverage for employees and their families.”

[RWC] Why should businesses be required to provide specific benefits to its employees? What’s next, requirements for clothing, food, housing, cable TV, et cetera?

Mr. LaGrotta believes it’s government’s responsibility to provide us with healthcare, though I couldn’t find it mentioned in either the Pennsylvania or U.S. constitutions. This belief flows from a worldview in which we hapless individuals can’t be trusted to make the right choices and thus need the government to be our nanny.

Need evidence? About his own parents, Mr. LaGrotta told InformationWeek (March 15, 2004), “If my parents didn’t have Social Security around to take their money and invest it for them, and if they’d have had to make their own investment decisions, they would have lost it all.” I don’t know Mr. LaGrotta or his parents, but I think it’s sad he has no little confidence in them.

“Under our bill, private and nonprofit companies with 10,000 or more employees will be required to spend at least 9 percent (for private companies) or 7 percent (for nonprofits) of their payroll on employee health benefits, or they must contribute an equal amount to the state to subsidize Medical Assistance, the Children’s Health Insurance Program and adultBasic.”

[RWC] “Private and nonprofit?” Earth to Mr. LaGrotta; many (most?) nonprofits are private. What Mr. LaGrotta should have written was “for profit” and “not for profit.”

This is a backdoor effort to implement so-called “universal healthcare.” Here’s my prediction. If this travesty is passed, Mr. LaGrotta and his fellow travelers will be back to reduce the trigger level from 10,000 to something lower. If Mr. LaGrotta et al have their way, this process will continue until the state has a law mandating every employer provide healthcare insurance.

Of course, these economic geniuses ignore the fact that employees ultimately pay for all benefits. If businesses are forced to spend money on one form of compensation, they will react by reducing other forms of compensation, like pay, vacation days, life insurance, et cetera. For example, if the economic value of a person’s job is $10/hour, businesses will find a way to make sure that’s all they pay. If your business continuously pays in excess of the free market value of a resource, whether that resource is labor or raw material, your business will fail

“Experts estimate that U.S. taxpayers may be paying as much as $8 billion annually to provide state-sponsored health care to people who hold full-time jobs but are forced to rely on the government for health coverage.”

[RWC] Who forces anyone to run to the government for anything?

“As the article pointed out, one of every six Wal-Mart employees in Pennsylvania is enrolled in the state’s Medicaid program, making the retail giant responsible for the highest percentage of employees on Medicaid out of the state’s 10 largest private-sector employers.

“While its profits continue to rise, Pennsylvania taxpayers are forced to provide health care for those who are most responsible for those profits - Wal-Mart’s employees.”

[RWC] I hate to break it to Mr. LaGrotta, but it is his General Assembly that forces Pennsylvania taxpayers to pay for someone else’s healthcare.

“This is corporate welfare at its worst, and my colleagues and I are committed to ending it in Pennsylvania.”

[RWC] While Mr. LaGrotta attacks something that is not corporate welfare, he has no trouble with the real thing. Here are some examples.

· Government-run, taxpayer-funded healthcare programs like Medicaid are corporate welfare for the healthcare industry. Why? These programs guarantee the healthcare industry a revenue stream and allow these businesses to raise prices above that we’d see in a true free market. Gov. Rendell’s 2006-2007 budget proposes throwing nearly $5 billion at the healthcare industry.

· According to the Beaver County Times, recently the state threw $3.5 million at five Beaver County businesses.

· Last year Mr. LaGrotta happily announced nearly $100,000 of corporate welfare for Kasgro Specialty Rail Car Solutions.

· Mr. LaGrotta voted for corporate welfare for the Pirates, Steelers, construction companies, et cetera over the explicit objections of voters. It’s also another example of his view that we can’t be trusted to make the right choices.

· Keystone Opportunity Zones are corporate welfare.

· Under the euphemism “economic development,” the 2006-2007 budget proposes over $500 million of corporate welfare.

“Similar legislation just passed in Maryland; however, the Republican governor vetoed it. In Pennsylvania, Gov. Ed Rendell is pledged to support the legislation that will help working people and relieve taxpayers of some of the burden of subsidizing large corporations such as Wal-Mart.”

[RWC] For whatever reason, Mr. LaGrotta failed to tell us the Democrat controlled Maryland General Assembly overrode the veto back on January 12^th. The Maryland law forces businesses with more than 10,000 employees to spend 8% on employee healthcare. According to a radio interview I heard, there is already a bill being proposed that would reduce the employee breakpoint to something less than 10,000. As I noted above, the ultimate goal is to make employer-based healthcare insurance the law of the land.

“It is time for Wal-Mart, and all large corporations in Pennsylvania to start playing PHAIR both with their employees and the taxpayers of Pennsylvania.”

[RWC] Partisan he is, Mr. LaGrotta will never recognize “what’s right” as long as it differs from his economic, political, and social views of the world.

Note the use of “large corporations” meant to imply the law would never ensnare small businesses. Make no mistake about it; as I noted above, I believe Mr. LaGrotta and his fellow travelers will eventually come for all businesses regardless of size. To socialists, all businesses are evil, whether they are “mom and pop” proprietorships or multinational corporations. If you make profit, you are bad.

My letter below was entitled “Let’s talk corporate welfare” by the Times and was published on March 12, 2006.

I don’t have enough space to detail the all the errors in principle and logic displayed in State Rep. Frank LaGrotta’s (D-10) letter (‘Corporate welfare at its worst,’ March 7^th), so I’ll stick to only two of the issues he raised.

First, Mr. LaGrotta believes it’s government’s responsibility to provide us with healthcare, though I couldn’t find it mentioned in either the Pennsylvania or U.S. constitutions. This belief flows from a worldview in which we hapless individuals can’t be trusted to make the right choices and thus need the government to be our nanny.

Second, while Mr. LaGrotta rails at imagined corporate welfare, the examples below show he supports the real thing.

Government-run, taxpayer-funded healthcare programs like Medicaid and Mr. LaGrotta’s PHARCE are corporate welfare for the healthcare industry.

Why? These programs guarantee the healthcare industry a multi-billion dollar revenue stream and foster prices above those we’d see in a true free market.

Last year Mr. LaGrotta happily announced nearly $100,000 of corporate welfare for Kasgro Specialty Rail Car Solutions.

Mr. LaGrotta didn’t complain when the state recently threw $3.5 million in corporate welfare at five Beaver County businesses.

Mr. LaGrotta voted for corporate welfare for the Pirates, Steelers, construction companies, et cetera over the explicit objections of voters. It’s also another example of his view that we can’t be trusted to make the right choices.

Please remember these points the next time Mr. LaGrotta and his fellow career politicians feign opposition to corporate welfare.