An earlier article described how Valerie Jarrett, best known as President Obama’s most intimate White House Advisor, turned a job in the Chicago mayor’s office into a personal real estate holding worth as much as $5 million. This is not unusual. Big real estate deals in major American cities are the mother’s milk of politics. Developers get rich from special tax and other deals, politicians get campaign contributions, and former politicians or former aides charge for access.
Here is one way it is done:
Step 1: Collect property taxes in a “redevelopment” agency.
Step 2: Use these funds to subsidize favored developers or businesses.
Step 3: Or use these funds to build major projects which favored developers or businesses can buy at deep discounts.
Step 4: Waive property taxes.
Step 5: In some cases, promise payments to a new business coming in equal to whatever their employees pay in state or local taxes.
All this and more has happened in Los Angeles. No wonder local retail developer Jose de Jesus Legaspi says “It’s extremely difficult to do business in Los Angeles. . . . Everyone has to kiss the rings of the [City Hall politicians.]”
Sometimes, like Valerie Jarrett, the political dons do not wait to leave office before enriching themselves personally. And sometimes this is not done with any subtlety. In the town of Bell, CA, the city manager was caught paying himself $1.5 million (salary and benefits) a year, with a $600,000-a-year pension obligation. An assistant manager was paid $845,960, the police chief $700,000 (while laying off police), and city councilmen $100,000 for part-time “work.” After all this came to light, the top three offenders were forced out and the city councilmen cut to $10,000.
To emphasize the point that not all state and local cronyism involves unions, one need only look at union-unfriendly Texas. Here is what Dave Nalle, secretary of the in-state Republican Liberty Caucus, says about Republican Governor Rick Perry:
Perry . . . loves to use taxpayer money to subsidize his business cronies. . . . His supposed belief in limited government and in states’ rights conveniently disappears whenever it conflicts with the demands of the special interests and corporate cronies he serves.346
Nalle also recounts how Perry set up the Texas Enterprise Fund and Texas Emerging Growth Fund which enabled him to pour at least $43 million of the $700 million funds into alleged crony businesses.
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