The Common Theme of Public Corruption: You're The One Paying For It!

*Read all of David's writing and watch his fantastic videos at Pepperspectives!

By David Pepper

Believe it or not, among the biggest contributors to the Ohio GOP and politicians like Mike DeWine are….Ohioans struggling to make ends meet.

We’re talking HUGE contributors—collectively, at least.

Year after year.

But there’s a catch…

Most have no clue their own dollars are playing such a big role in Ohio politics. Still, struggling Ohioans have been bankrolling the campaigns of powerful Ohio politicians for years.

How?

Because as I describe in Laboratories of Autocracy, one of the biggest instances of pay to play in Ohio involves who gets to do debt collection work for the Ohio Attorney General.

And due to blatant pay to play, everyday Ohioans’ dollars end up in the hands of Ohio politicians through a simple waterfall scheme:

• 

  Those who collect debt on behalf of the Ohio Attorney General (the AG office selects vendors to do this work) make millions from their “cut” of the debt they collect; and,

• To secure that lucrative opportunity, those collectors continuously hand over a portion of their “take” as political donations to Ohio’s Attorney General (either directly or indirectly, via the state party or sometimes a county party)—while the Ohio AG keeps that collection work flowing through those collectors.
• 
  

In this way, small streams of dollars from thousands of individual Ohioans’ debt payments flow together into a flood of riches for both the collectors and the politicians —totaling millions of dollars in donations, year after year. Lobbyists also have found a way to profit from this river of money, now routinely hired by the collectors as middle men to ensure that the work from the Attorney Generals’ office keeps coming their clients’ way. (One such lobbyist, an old friend of Mike DeWine, now sits on the Ohio State Board of Trustees).

So that’s how Ohioans who are paying off college debt and medical debt and tax debt (struggling to the point where they are in collections) are forking over some portion of their debt to politicians, via the collections process.

It’s like a tithe, but one they don’t know they’re paying. Let alone know what their tithe is paying for--attack ads on TV, digital ads, salaries of staff, you name it.

It’s a Pattern

When I first saw this for what it is, I was horrified. And still am. What a twisted system!
But then I looked around.

And I found that this reality—that the hard-earned dollars of everyday Ohioans are the major source of political dollars and power for Ohio politicians—is everywhere. The same essential pattern takes place in so many different ways. It looks like this:\

Think about all the scandals of late:

All those dollars that fueled the First Energy scandal—all the bribes and the payoffs and the secret “consulting” deals being paid to the person who was supposed to be “regulating” First Energy and other utilities. The huge bailout to that plant in Indiana, still being paid.

Who’s the source of all that money?

Is it some big executive? Some multi-millionaire or billionaire?

Sometimes it looks that way on the surface.

But ultimately, it’s you the ratepayer paying for it all. Those millionaires siphoned some of your hard-earned dollars to pay for all they did. And raised your rates in the process.

More than $500,000 per day…still! This website keeps track of it! (Usually, no one even does that.)

How about ECOT?

The online and for-profit/scam “school” grew larger than most Ohio colleges and universities, while making money to “teach” kids that it couldn’t even prove were attending its “classes.”

One of the largest pay-to-play scandals in the history of Ohio. More than a billion dollars diverted its way.

Made possible because the school’s founder became one of the largest donors to the Ohio GOP and politicians for a number of years. DeWine, Husted (pictured here getting an ECOT honorary degree for all his support), Yost and others all swimming in ECOT money.

But again, while the name on those contributions was William Lager (ECOT’s founder), where did his money come from?

YOU!

Some of the tax dollars everyday Ohioans across the state thought you were paying for schools instead went to this corrupt for-profit scam, with a portion of the diverted funds then going back to the politicians.

Why? Because the politicians sent it ECOT’s way—so they happily accept some of your treasure back as campaign donations.

Another tithe YOU were paying for…you just didn’t know it.

And I keep thinking about this same pattern as I watch the current scandal over the Ohio teachers’ pension scandal.

Whenever I see a politician like DeWine make moves as aggressive and egregious as firing a pension board member on the eve of an election result being announced—and, from my (and a magistrate’s) reading of the law, egregiously violating Ohio law in the process—my experience tells me that big money is at work somewhere behind the scenes.

And in this pension board’s case, we’re talking about tens of billions of dollars.

The pension board showdown is ultimately a fight over how those funds are being invested—and who profits from them (by investing them, or receiving some portion of the fund’s investment). Large public pensions like the Ohio teachers’ pension fund are among the biggest sources of funds fueling Wall Street and private equity. They can be career makers for those who land an opportunity to gain just a tiny slice of pension fund dollars. To quote Bud Fox from Wall Street, if you land a major pension fund, you just “bagged the elephant.”

And where do all those billions that enrich so many come from? Who makes that elephant so enormous?

Teachers and retirees all over Ohio, kicking in contributions over decades of tireless work and dedicated public service. That’s who!

And which pension board election outcome did DeWine essentially negate when he fired his pension board appointee? A seat determined by the vote of those retirees—y’know, the ones who fund the whole damn thing.

(One other thing—another of the biggest pay-to-play operations in Ohio involves the decision of which lawyers gets to sue on behalf of these pension funds when an investment goes awry. If the Ohio Attorney General selects your law firm to represent that pension fund in a lawsuit over a bad investment, you too just bagged the elephant. And again, DeWine converted that pension-driven opportunity into massive contributions for his campaigns, often getting contributions from lawyers and law firms as they bid on that very work)The Big Picture

See the picture now?

The funds that fuel so much of the power and, yes, corruption and broken politics of states like Ohio (sadly, this is the pattern way beyond Ohio) may seem like they come from the most wealthy and well-connected people in these states.

That’s often the impression that’s left, isn’t it?

But the truth is, those funds usually come from the people themselves. And the bigger the scandal, it seems, the more likely that is to be the case. Because huge numbers of everyday Americans, each pitching in some funds, are what lead to the enormous sums of money that some at the top are so eager to get their hands on.

All of this shows you how public corruption really works in states like Ohio.

Like that debt collection model, it’s basically politicians and other entities positioning themselves amid that ocean of public money so that they can direct where some of those funds can flow. Of course, getting elected is what gives the politicians the initial power to direct these funds. But taking steps such as removing transparency, checks and balances, bidding processes, and independent oversight also are key tools that facilitate it all (such as getting rid of the independent state school board, the separate oversight of charter schools that once existed, or eliminating the meaningful regulation of utilities).

Once there, politicians diverting even a small (percentage-wise) stream of that ocean of public funds to private players—or in a direction that private players want them to—can mean millions, tens of millions or billions for those private players.

And when even a portion of those diverted funds are then converted back into contributions to those politicians, you’re talking hundreds of thousands or millions more for the politicians.

So that’s your basic pay to play model—resulting in everyday Americans directly or indirectly funding politicians and their campaigns. (Yes, it’s ironic that many of these politicians oppose public financing of campaigns when many of them are essentially publicly funded in the way I just described).

Now widen the lens just a little bit, and think of other public assets as well. Assets with value.

Public parks—now being tapped into in Ohio for fracking.

Other public funds—now being diverted to support private schools in the hundreds of millions, or even billions.

Other forms of public power (regulations)—being put to work for private interests, and not the public. Example: the Governor and Lt Governor of Ohio pushing the consultant hand-picked by First Energy to oversee the utility commission that regulates…First Energy.

It’s all the same model. Politicians putting public assets to work for private interests.

While you pay for it all.

The Broader Corruption of Public Service

So when I talk about corruption in states, I’m not just talking about the fact that occasionally, politicians go even further than all this and decide to use some of these funds for their personal gain (beyond their campaign accounts). Needless to say, that takes the corruption to an even higher level. It also puts an especially juicy target on the back of whoever does that, and makes it far easier to prosecute, which is why these are often the only cases we hear about.

As bad as these crimes are, my concern is actually far broader than those cases.

Because the true rot—and by far the most damage—comes even before such personal bribes or graft are involved, or even if they never are involved at all. It comes from the broader corruption taking place—the corruption of public service itself, where public funds and assets and powers are put to work for private players (including the inevitable transfer of some dollars back to the politicians) as opposed to supporting the public interest and common good.

That’s the corruption that truly robs the public of the benefit and positive outcomes that are supposed to come from their dollars:

And that broader corruption of public service has become accepted as business as usual in far too many places. When it too must be rooted out.

That’s why, in the case of First Energy in Ohio, of course I want to know when Governor DeWine first knew about the $4 million First Energy payment to the consultant he put in charge of the utility commission. But I’m even more concerned about the the fact that when a massive company that had played a key role in DeWine’s election (giving huge amounts to the Republican Governor’s Association) asked him at a private dinner to seat their hand-picked person in the most important position that regulates them, he agreed!

THAT act itself was the turning over of a public good to a private interest, and all the problems that ensued flowed from that moment. That act was the broader corruption of public service.And again, YOU are paying for it all.Why Gerrymandering Makes It Worse

So, people may ask: If politicians are diverting public funds and powers to these private ends, why don’t the people stand up and vote those politicians out?

First, so much of these details are taking place below the public radar. People may know corruption is out there, but they too rarely see that their own money is fueling so much of it.

Second, the amount of dollars flowing to politicians through these various pay-to-play schemes is enormous—giving them a huge advantage in campaigns for as long as they keep diverting those funds to those who kick some of it back. (Trust me, I lived that first-hand when I ran for Attorney General; every filing, you can see all that pay-to-play money flow into the incumbent’s campaign account).

Third, this is where gerrymandering comes in.

The rigging of districts plays a key role in locking this corruption into place. Because even though everyday people’s funds are being diverted in all the ways I outlined above, gerrymandering cuts off the people’s opportunity to hold accountable those doing the diverting.

The people may be paying the higher energy bills, the school taxes, the debt, the pension contributions. And all that money may fuel everything else—providing the source of so much power for the politicians.

But just like DeWine negated the votes of those retired teachers, gerrymandering systematically does the same thing to everyday Americans. It keeps most from being able to protect their public dollars by casting meaningful votes—at least at the state legislative level. (And the state legislative level is where a large number of these decisions are being made).

So your money’s all in, but your power as a voter is often completely cut off from the decisionmaking about your money.

Which also means the things you generally care about suffer. So you pay the price in this way as well.The Final Irony

One other maddening irony: if you watch closely, the very politicians who accumulate campaign dollars and power by giving away these public funds often show little to no respect for the very people paying those funds.

DeWine’s negating of the votes of those teacher retirees is a perfect example.

But it goes much further than that.

Think about the disrespect and the non-stop attacks on public school teachers in this country. Pilloried. Defamed as so-called “groomers” by the right. Accused of indoctrinating kids. Their efforts to demand better wages and stronger schools through collective bargaining, dismissed with the most union-bashing language. The very schools they work for being undermined by the explosion of vouchers propping up private schools. Teaching has become such a tough profession due to all this and more.

Yet the money those teachers build through their pension contributions is so important—of such value—that a Governor looks to have broken the law to assert more control over it.

If only teachers’ themselves were valued as much by political bigwigs as the sum total of their pension contributions.

And what about those struggling Ohioans who are paying all that debt? How do the politicians in power treat them—the original source of so much money that lands in party and candidate accounts?

Let’s look at college debt in particular.

Due to budgeting decisions, Ohio is one of the worst states when it comes to college affordability, which also means it is one of the worst-ranked states in the country when it comes to student debt owed by young Ohioans. Already shabby treatment.

And what happened when Joe Biden tried to help young Ohioans caught in this uniquely deep debt trap? Ohio’s Attorney General (Yost), whose campaign account receives a big chunk of funds from all that debt through the waterfall I described above, filed a brief with the United States Supreme Court to halt that debt relief effort.

You’d think he’d treat his donors better than that! Then again, if all that debt were to disappear, there would be less to collect, and therefore….

Bottom line: there is a systematic corruption of public service itself in states across the country. Lack of accountability back to everyday Americans is sustaining it even as it delivers poor results for those footing the bill.

If we are not pushing policies and politics that address this corruption at its core, we will keep seeing the same meager and twisted results.

And yes, we will keep paying for all of it—including unwittingly funding the campaigns of the very people who keep it all going.

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