“Freindly Fire Zone”

How this affects you: the new contracts for unionized state employees will cost $164 million as workers get an 11 percent raise, with no pension reform, while the private sector continues to get rocked.

In case you have been living under a rock, here’s a newsflash: we are experiencing one of the most severe recessions in our history, and there are no greener pastures in the immediate future.

So common sense dictates that with high unemployment, decreased tax revenues, large deficits, and, most significantly, massive pension obligations, governors would take whatever steps were necessary to ensure that their states, and its citizens, remain solvent, especially when it comes to negotiating public-sector union contracts.

That happened in places like Wisconsin, Indiana and Ohio, where true Republicans are in charge. Governors Scott Walker, Mitch Daniels and John Kasich took the heat and did what they had to do, reeling in the out-of-control taxpayer largess afforded to these unions.

But most amazing of all is New Jersey Governor Chris Christie’s remarkable success. Just last week, he pushed through a monumental union pension and benefit reform package that will save taxpayers over $120 billion --- and did so with heavily Democratic, pro-union legislative majorities.  So effective was Christie that alongside him at the bill-signing was the Senate President --- a longtime union member.

Contrast that to the deal just reached by Pennsylvania Governor Tom Corbett with the largest state unions. Instead of acting in the best interests of the taxpayers footing the bill, he simply continued the Rendell legacy of keeping the cash register door wide open.

It’s bad enough the Governor rolled over on all the sweeping concessions he was seeking, but he ended up giving the unions a sweetheart deal.

Over the next four years, unionized state employees will receive an almost 11 percent raise and a guarantee of no furloughs.  And remember, this significant bump is in addition to their three percent raise two years ago, four percent raise last year --- and three annual step increases which averaged 2.25 percent during that time. Cha-ching!

Must be nice to have such staunch advocates like Governors Rendell and Onorato --- sorry, I meant Corbett --- fighting for you.

And how do these pay raises compare to those in the private sector?  With such high unemployment and underemployment rates, do you really have to ask?  Most are receiving no raises at all, not even cost of living adjustments.  And those fortunate enough to still have a job have no choice but to hang on for dear life, praying they survive the next round of layoffs.  Making matters worse, many have to also shoulder ever increasing healthcare costs, if they have coverage at all.

In addition to substantial retirement benefits, state workers have guaranteed healthcare, too.  And while they will pay a bit more with this new contract, it’s still at a level way below many in the private sector.

It used to be that working in the public sector was a trade-off.  You wouldn’t make as much money as in the business world, but the benefits were good and contracts were guaranteed.  But all that changed as union contracts exploded upward --- at the expense of taxpayers.

Now, in many cases, unionized public employees make more than their peers in the private sector, and retire on pensions and benefit packages that would make Wall Street financiers blush with envy.  Of course, that has come with a price, especially in Pennsylvania, and now it’s time to pay the piper.  State pension obligations go through the roof over the next several years, as annual taxpayer-funded contributions to the two state pension funds increase exponentially, ballooning from $800 million now --- to billions per year.

The last Governor and legislature kicked the can down the road last year, but that only gets you so far, and, in the process, devastates the future of our children and grandchildren.

By caving in to the unions, giving them a contact that would be way too generous even in a strong economy, this Governor has chosen not to address the reforms necessary to keep Pennsylvania on solid ground, which will eventually lead to higher state borrowing costs and push the state closer to the abyss.

And while we’re on the subject of the state’s finances, let’s set the facts straight about the current budget. Reducing the budget by four percent is a good thing, but was inevitable after the loss of federal stimulus dollars.  Had he won the governorship, Dan Onorato would have signed a budget almost exactly the same as the one Corbett did.  For that matter, even Governor Spendell, who never saw a spending increase he didn’t like, would have been forced to reduce the budget to close the $4.2 billion budget deficit.

Which, in reality, is closer to $7 billion because no one in Harrisburg wants to address the real fiscal situation.  The budget, which is constitutionally required to be balanced, was passed last year on ghost revenue: $400 million from the tolling of Interstate 80 (which never got tolled);  $800 million raided from the MCARE fund (used to offset high medical malpractice rates) which, in all likelihood, will be ordered repaid by the state Supreme Court; federal Medicaid dollars that were budgeted to be $800 million but in actuality amounted to $595 million; and a $1.1 billion revenue shortfall after ten months of last year’s fiscal year. 

This shortfall seems to have simply vanished off the books.  Of course, do that with your own business --- and you go to jail.  So with the looming pension bomb and the real state deficit, it’s not a pretty picture for Pennsylvania’s future.

There was a way to address these issues and begin to reverse the state’s decline.  Governor Corbett could have mandated a situation whereby union members would negotiate with their prospective employer individually, and free market-type incentives would allow for a fair offer --- fair for the employee, and fair for the “employer” (the taxpayer).

So an offer would be made --- salary, healthcare, benefits --- and the individual could choose to accept or decline it.  Which is exactly how it’s done in the free market.  And for those who would claim it wouldn’t be “fair” to the state worker, you know what?  There would be a line a mile long of qualified individuals ready and willing to accept such an offer. Accountability and efficiencies would increase, and unmotivated, bureaucratic sloths would be eliminated in favor of those willing to be good stewards of taxpayer money.

Sound simple and fair enough?  It is, and it’s called the elimination of collective bargaining.  It’s something successfully implemented in other states, but was incomprehensibly taken off the table by Corbett three months ago --- while getting absolutely nothing in return. 

The result?  No pension reform, and a lucrative union contract that the Governor says will be a net cost to the taxpayers of $164 million (which means that figure can be safely doubled).

The Wall Street Journal just labeled Corbett as leader of Keystone Cops.  After this latest debacle, it’s hard to disagree.

Chris Friend is an independent columnist, television commentator, and investigative reporter who operates his own news bureau, www.FreindlyFireZone.com

Readers of his column, “Freindly Fire,” hail from six continents, thirty countries

and all fifty states. His work has been referenced in numerous publications including

The Wall Street Journal, National Review Online, foreign newspapers, and in Dick

Morris' recent bestseller "Catastrophe."

Freind, whose column appears regularly in Philadelphia Magazine and nationally in

Newsmax, also serves as a frequent guest commentator on talk radio and state/national

television, most notably on FOX Philadelphia.  He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Pennsylvania Governor Tom Corbett’s “day of reckoning” budget, containing substantial cuts and rolling back spending to 2008 levels, may well pass the GOP-dominated legislature without major changes. 

But just because the state constitution requires a balanced budget doesn’t mean it always happens that way.

Take the budgets of the last two years, which former Governor Ed Rendell championed, and were passed by a Democratic House and Republican Senate.

In 2009, $400 million in revenue was budgeted from the tolling of Interstate 80.  Except that the tolling never happened.  Put that in the debit column.

And last year, the budget was passed on federal Medicaid dollars that hadn’t yet been appropriated (and ended up being $255 million less than budgeted) and a Rendell-promised Marcellus Shale gas tax that would generate hundreds of millions --- but which never materialized.
And the forecasted general tax revenue was over a billion dollars short. 

But that’s not all.  The legislature and Rendell raided MCARE in 2009 --- the fund to offset Pennsylvania doctors’ skyrocketing medical malpractice insurance rates --- to the tune of $800 million.  A Commonwealth Court ordered the money repaid, but the Rendell Administration appealed.  Odds are the state Supreme Court will uphold that decision.  The hole deepens.

So despite some cuts last fall, we’re still looking at a $3 billion revenue gap which, by the way, is not factored into the acknowledged $4 billion deficit.   The fact that no one wants to talk about this is not surprising, since it’s not in the interest of the politicians, and most of the media doesn’t do its homework.

Let’s put this type of maneuvering into perspective.  What would happen if a publicly-traded pharmaceutical company, in an attempt to placate Wall Street, added billions to its books to reflect a medicine it hadn’t yet produced? 

People would go to jail.

But in Harrisburg, it’s called Business As Usual. Instead of solving the real problem, the state’s leaders have resorted to what they do best: bury their heads in the sand.

Just because you pretend a problem doesn’t exist, though, doesn’t mean it’s not there.  The can is being kicked, yet again, down the road.  But the road is quickly coming to an end.

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Overall, the budget rates a B-, assuming that you believe the numbers --- and that’s a big assumption.

There is nothing particularly special about this budget, since spending cuts were imminent after the federal stimulus money dried up.  It gets the job done at a basic level, and Pennsylvania will continue to limp along. 

While there were clearly some elements in the Governor’s address that could help Pennsylvania re-invent itself into an economic and industrial powerhouse, the speech lacked the break-out vision that is essential in selling those ideas to the public.  No one expects Corbett to have the jazz of New Jersey Governor Chris Christie, but Pennsylvanians need to be inspired if their state is to forge ahead.

A prime example would have been explaining why the Marcellus Shale holds such so much promise for Pennsylvania’s future, from the thousands of sustainable jobs it creates (and the accompanying houses bought and income spent in-state), to untold millions in tax revenue, to the manufacturing boom it can foster by providing extremely cheap energy.  

Corbett could have showcased manufacturing companies that drill wells on-site and, as a result, now realize incredible cost savings for what is always the largest line item: energy.  This directly translates into business expansion, more hiring, and a way to finally compete with China.

Or he could have decreed that from this moment, all future state vehicles will run on natural gas, currently about one-seventh the cost of gasoline, with zero emissions. This would be a win-win by increasing demand for natural gas --- and if that doesn’t happen soon, the industry will start packing up by next year --- and saving taxpayer money.  And what a boom to the entire economy if we had an alternative to $4/gallon gasoline.

But that didn’t happen.  So all the public knows is what they see in the headlines: “We’re Getting Drilled,” “How Corbett Fracked Pennsylvania’s Middle Class,” and “Big Budget Cuts?  We Smell Gas,” along with editorials about how much the industry contributed to the Governor’s campaign.

Reality is now setting in; what a Republican candidate said on the campaign trail in October 2010 --- a landslide election year for the GOP--- was easy.  Now the rubber meets road.

The question isn’t if Tom Corbett can get this budget passed, but whether can he sell it to the people, and at what cost to his agenda and Party, particularly since 2012 will prove a better year for the Democrats. His deliberate strategy to remain silent for four months has resulted in lost opportunities to earn much-needed political capital needed to sell his budget cuts to the public.

To reverse that, he must now barnstorm across the state, a la Christie, attending everything from natural gas forums, explaining why an extraction tax will hurt the state, to school board meetings, where he can push his idea of teacher salary concessions.  Time will tell whether he will effectively be that messenger.

There were a number of common sense proposals that, based on the legislature’s make-up, should come to fruition: the reduced spending and no new taxes; legal reform targeting frivolous lawsuits (the Fair Share Act); school choice in which competition and accountability would be injected into the educational system; the phase out of the Capital Stock and Franchise Tax, the elimination of pork-barrel walking around money (WAMs); and calls for pay freezes and give-backs by public workers.

Likewise, there are a number of problem areas:

-Eliminating 1,500 jobs is a good start, but since reports state that 1,000 of them aren’t filled, the real number is only 500 jobs, which isn’t a huge budgetary factor. So why the gimmick?

-The assumption that revenue will grow by 4.7 percent, while not impossible, is hugely optimistic.  Inflated revenue has been a hallmark of past budgets to make the numbers work on paper. In reality, they came up short, adding to rolling deficits.  Without substantial growth in Pennsylvania, that rosy figure will prove unattainable.

-Calling for cuts to higher education by 50 percent, while increasing welfare spending substantially, will also be an extremely hard sell, for two reasons. First, many will frame the issue simply as education versus welfare, and which provides the better return on investment. Second, state-related schools, such as Temple, Penn State, Pitt and Lincoln, have immensely powerful lobbying operations, including parents and students, who will deluge their elected officials in opposition.  Look for that figure to drop substantially, to be made up somewhere else.

-One item that is noticeably absent from the budget is the privatization of liquor stores, which is curious since it was the one issue on which the majority of Pennsylvanians agree.  Instead, a blue-ribbon commission was formed to study privatization.  Here’s a newsflash.  Voters elect politicians to solve the problems, not authorize more meaningless commissions.  A major chip in the fight has been shelved, shifting the momentum to the unions which support the status quo.

-Other areas left out but still mandatory for a healthy business climate were the reduction of the corporate net income tax (2nd highest in nation) and the looming pension issues, which may be addressed as public sector union contracts are negotiated this spring.  The Governor has taken the elimination of collective bargaining off the table though, a concession that simply didn’t have to be made this early. They received nothing in return from that move. Another head-scratcher.

-There are also several inconsistencies that the Governor must address.  While he advocated salary freezes and reductions, he raised the salaries of all his executive staff, and the budget of the Lieutenant Governor’s office increased 30 percent. And despite de-funding the adultBasic program, which provided healthcare to working poor on the premise that there was no more money, he found a way to bail out the Philadelphia Shipyard to build ships with no buyers. 

Saying all the right things about fiscal discipline, free enterprise and removing government from where it doesn’t belong rings a bit hollow in light of some recent Corbett Administration decisions.

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The Governor used the analogy of reviving an apple tree to explain why the cuts are necessary, stating that if the tree isn't tended, it will grow into a tangle of limbs and bear no fruit. The pruning (hard cutting) was needed so the tree could once again bear fruit.

In keeping with the theme, here’s a piece of advice: if you're afraid of getting a rotten apple, don't go to the barrel. Get it off the tree.
The Governor is right: we need to revive the tree.  But as of now, too much of this budget is coming from the same old barrel.

Chris Freind is an independent columnist, television commentator, and investigative
reporter who operates his own news bureau, www.FreindlyFireZone.com

Readers of his column, “Freindly Fire,” hail from six continents, thirty countries
and all fifty states. His work has been referenced in numerous publications including
The Wall Street Journal, National Review Online, foreign newspapers, and in Dick
Morris' recent bestseller "Catastrophe."

Freind, whose column appears regularly in Philadelphia Magazine and nationally in
Newsmax, also serves as a frequent guest commentator on talk radio and state/national
television, most notably on FOX Philadelphia.  He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it