Right to Work Blog

The L.A. Times finds SEIU President Andrew Stern’s presidential access unusual.  Stern inside access allows him to influence federal powers to increase forced unionism:

When the president met privately with the health industry leaders that day, Stern and a second Service Employees International Union official were the only labor representatives in the room. 

In a fractious labor movement fraught with rivalries and mutual suspicion, Stern’s close association with Obama has given him cachet that may prove important in the fierce competition to lure new members.

But Stern’s access to the White House has also provoked jealousies. His opponents paint him as a polarizing figure that Obama elevates at his own peril.

The Obama-Stern relationship has emerged as one of the most curious within the young administration.

Stern can boast that union officials are scattered throughout the Obama administration. White House political director Patrick Gaspard is a former executive at an SEIU local based in New York. No other union has placed anyone at such a high level in the White House.

Anna Burger, SEIU secretary-treasurer, was appointed to Obama’s economic recovery board. And union associate counsel John Sullivan was named to the six-member Federal Election Commission. 

Moreover, Stern has enjoyed considerable entree to the new administration — starting on Inauguration Day, when he joined Obama and the new president’s family on the reviewing stand outside the White House to watch the inaugural parade.

The big government health care power grab moving through Congress contains a special interest provision aimed to help the union bosses.  The Investor’s Business Daily takes note:

Spending a trillion dollars as a down payment for a government takeover of health care is a dream of many Democrats. The current plan in Congress would create a government insurance plan that would drive out the private ones.

The problem, though, is the cost. Even moderate Democrats are having second thoughts about that, as well as all the quality problems associated with socialized medicine. Even so, health care nationalization’s biggest boosters are cooking up bad new plans.

Sen. Max Baucus, D-Mont., and Sen. Ted Kennedy, D-Mass., both would like to slap a tax on private health plans to pay for a new government one.

But they’ve carved out one very big exception: unions and their gold-plated benefit packages. This effectively gives Big Labor an advantage in the market and forces nonunion workers to subsidize unions for their share of this bad idea.

The logic behind this tax giveaway is that union health plans, which are lavish, would be subject to higher taxes than those of workers with regular private sector health care plans.

According to news reports, if unions get a special tax break for themselves on health care taxes, they’ll gladly muscle “their” Congress members into supporting a “public option” health care bill.

In short, it’s little more than a political payoff to unions for spending $400 million in campaign cash to elect Democrats to Congress and the White House last year. As if the outrageous favors they’ve received from the auto bailouts aren’t enough.

But unions don’t just get a tax break. They also get a great recruiting tool. After all, nationalizing health care in itself undermines any reason to belong to a union, since unions exist to squeeze more out of companies. If a company is no longer involved in health care and thus can no longer be squeezed, why belong to a union? The answer: special tax privileges.

This will artificially beef up union membership. Who wouldn’t want tax-free health care over subsidizing someone else’s as the current congressional bills dictate?

With the Employee Free Choice Act to coerce workers into unions now dead in the water, this could be a backdoor means of doing the same thing — while bringing in more campaign cash to Democrats.

This may be great for the Democrats and their union backers, but it’s bad for the rest of us. By creating a two-tier system of pricing for health care, and with it privileges for party elites, it’s fundamentally unfair to the public as a whole. The people who will get the short end of the stick on this — the rationing, the shortages, the wait lists — will be the very ones forced into paying for other people’s health care. Unions will get a free ride.

Remember that whenever health care is “free” or subsidized to consumers, it distorts the market and creates disincentives to cut costs. So under the Kennedy-Baucus plan, union health care costs will soar without restraint. And ordinary Americans will pay.

This will turn unions, whose members comprise only 6% of U.S. workers, into a privileged caste, for no other reason than their political muscle with Democrats.

There’s a word for this: Peronism. That was the populist political patronage system that took Argentina from one of the richest countries in the world in the early 20th century to the economically troubled nation it is today. It’s a bad model for the U.S. to follow.

Spending big, carving out tax niches for no other reason than campaign contributions, and creating two-tiered pricing systems, is little more than a kind of corruption. It will lay us low, too.

It won’t be long that the union bosses will be asking for their own federal bailout if the Wall Street Journal is correct:

We spent a fortune to elect Barack Obama,” declared Andy Stern last month, and the president of the Service Employees International Union wasn’t exaggerating. The SEIU and AFL-CIO have been spending so much on politics that they’re going deeply into debt.

That news comes courtesy of federal disclosure forms that unions file each year with the Department of Labor. The Bush Administration toughened the enforcement of those disclosure rules, but under pressure from unions the Obama Labor shop is slashing funding for such enforcement. Without such disclosure, workers wouldn’t be able to see how their union chiefs are managing their mandatory dues money.

Alarm is coming even from inside the AFL-CIO — specifically, from Tom Buffenbarger, president of the International Association of Machinists and Aerospace Workers, who sits on the AFL-CIO’s finance committee. Bloomberg News reports that he is circulating a report claiming the AFL-CIO engaged in “creative accounting” to conceal financial difficulties heading into last year’s Presidential election. As recently as 2000, the union consortium of 8.5 million members had a $45 million surplus. By June of last year it had $90.6 million in liabilities, or $2.3 million more than its $88.3 million in assets. “If we are not careful, insolvency may be right around the corner,” Mr. Buffenbarger warned.

Machinist spokesman Frank Larkin says the report is a private document and declined to share it with us. But he didn’t deny the Bloomberg story, which said that Mr. Buffenbarger cites in particular the AFL-CIO’s reliance on its Union Plus credit-card program. In the mid-1990s, the AFL-CIO struck a deal with Household Bank to market the cards to union members in return for royalties. In the year ending June 30, 2008, the AFL-CIO earned $35 million from Household, about half the $74 million it collects in union dues. The deal has been a windfall for the union, but that may not last amid rising credit-card losses and flat consumer spending.

As for the SEIU, as recently as 2002 total SEIU liabilities were about $8 million. According to its 2008 disclosure form, the union owed more than $156 million, a 30% increase over the $120 million it owed in 2007. Its liabilities now equal more than 80% of its $189 million in assets. Net assets fell by nearly half last year, to $34 million, from $64 million in 2007. The debt includes an $80 million loan the SEIU took out in 2003 to purchase a new headquarters in downtown Washington, D.C. But the liabilities also stem from political spending, including at least $67 million last year on political and lobbying expenses, twice what it spent in 2007.

The SEIU added to its debt burden last year with $25 million in new bank loans, including $15 million from Amalgamated Bank of New York. Amalgamated is the nation’s only union-owned bank and its chairman is Bruce Raynor, who until recently was also general president of Unite-Here. Mr. Raynor has been fighting for control of that textile-hotel union, and he helped Mr. Stern conduct a raid on Unite-Here members before bolting to the SEIU.

By the end of 2008, the SEIU also owed Bank of America nearly $88 million, including its headquarters loan and another $10 million for unspecified purposes. This is the same BofA that the union has spent the past months attacking as the face of Wall Street excess. The SEIU has protested outside of Bank of America offices and demanded the resignation of CEO Ken Lewis. We assume no one forced the SEIU to invest in real estate or borrow from a bank to finance it.

An SEIU spokeswoman says the union works on a four-year cycle, in which it goes “all out for the presidential election” and then rebuilds its finances. She adds the union has paid back more than $10 million of the $25 million it borrowed last year. But it’s nonetheless true that the SEIU’s liabilities have continued to climb each year from 2003 to 2008.

One irony here is that the SEIU’s Mr. Stern, the most powerful labor leader in America, loudly broke from the AFL-CIO in 2005 because he said it spent too much in Washington and not enough on organizing. But unions can’t resist the lure of the Beltway precisely because they fare so poorly in the private marketplace. The union red ink helps explain why Mr. Stern and AFL-CIO chief John Sweeney are lobbying so hard for Congress to rig the rules to make it easier for unions to gather more dues-paying members.

The other lesson concerns union governance and transparency. Unions have a long history of corruption in part because they mix large amounts of cash from dues with political purposes and little oversight. Yet the same union leaders who denounce failures of corporate governance bitterly resisted the Bush Administration’s expanded disclosure, and now they want the Obama Administration to water down those rules. The news about rising union debt shows why that transparency is more necessary than ever.

The Sacramento Bee investigative team finds that big labor contributors got deals from the California Retirement Fund while a union boss sat on the board of directors.  This all begs the question:  why else would companies make hundreds of thousands of contributions to a union campaign fund?

Projo quote of the day:

“This was a big mistake by the Obama administration,” said Cochran. “In 77 years, never has not one federal official attended the mayors’ annual meeting.”

Saul Anuzi gives a short history lesson about the brutal history of big labor in Michigan:

The reason that the great American tradition of making cars in my home state has now gone belly up is due in large part to the irrational and unreasonable demands made by UAW chief Ron Gettelfinger, former UAW chief Frank Garrison, and the union leaders that came before them. And the rest of it lies with the management of the Big 3 who made promises they knew they couldn’t keep, and the politicians who continued to enable this to happen.

Democrat gubernatorial candidate Terry McAuliffe’s biggest single contribution is from … drum roll please … big labor.  The American Federation of County and Municipal Employees gave McAuliffe an astounding $870,000.  The union bosses would love to roll back Virginia’s Right to Work law and they are spending millions this year to get it done.

Guess who is pouring massive amounts of campaign cash into the Virginia elections?  That’s right the “emboldened union bosses are “investing” in order to secure “leverage” in the Right to Work state.  The Washington Post reports:

Organized labor is attempting to capitalize on Virginia’s shifting political landscape by investing as never before in the race for governor, a gamble union leaders are hoping will bring them leverage in a state that has long resisted their influence.

After helping Barack Obama capture Virginia in last year’s presidential race, trade unions are emboldened. They are pouring in millions of dollars and placing armies of volunteers on the ground in the run-up to Tuesday’s primary. Union members are making phone calls and staking signs in all parts of the state.

Union officials hope recent elections have brought lasting change and will produce a more labor-friendly administration in Richmond. But as they have become more bold, Democrats have been forced to balance that against their own effort to hold onto the centrist, business-minded voters who helped create their electoral majority.

Organized labor’s largest investment has been made to start an early assault on the Republican nominee, Robert F. McDonnell. Unions have injected $1.15 million into the Democratic Governors Association, which has financed an ad campaign designed to define McDonnell as an enemy of working people, even before Democrats have chosen a candidate.

Most of the direct contributions have gone to Terry McAuliffe, a former chairman of the Democratic National Committee whose long-standing ties to national unions appear to be paying off. McAuliffe has collected $733,000 from unions, including an unprecedented $600,000 from the American Federation of State, County and Municipal Employees. He has also racked up a half-dozen labor endorsements.

His opponents, former state delegate Brian Moran of Alexandria and R. Creigh Deeds, a state senator from Bath County, have amassed a small fraction of that. Moran has collected $31,000; Deeds, $16,000. But they, too, have collected their share of endorsements.

“We see this election as an opportunity for unions to have a seat at the table,” said John Niemiec, president of the Fairfax County Professional Fire Fighters and Paramedics, which has endorsed McAuliffe.

Despite such pronouncements, labor’s presence in Virginia politics has required some fancy footwork by the unions and those they support. The state’s most popular Democrats, Gov. Timothy M. Kaine and U.S. Sen. Mark R. Warner, have succeeded with a centrist, pro-business message. Democratic candidates this year say they are not abandoning that. But Republicans have pounced, saying union-backed Democrats will erode the state’s business-friendly environment.

Last year, 4.1 percent of Virginia workers were union members, according to the Bureau of Labor Statistics. Only three states ranked lower: North Carolina (3.5 percent), Georgia (3.7 percent) and South Carolina (3.9 percent).

The debate might shape the role of unions in elections — and Virginia policy — for years to come.

Robert D. Holsworth, a political scientist and author of the blog VirginiaTomorrow, said the ground is shifting. “More people in Virginia consider themselves Democrats than Republicans,” he said. “Most people are in the center. Do people consider unions a big threat? I think it’s not so clear anymore.”

Union activists have long been present in state politics, donating and providing elbow grease for Democratic candidates by knocking on doors, making calls and distributing leaflets. But there is ample evidence that this year is different. Beyond donations and endorsements, the three candidates have presented much more public support for unions than have past candidates.

In January, the three visited a picket line at the Hilton Crystal City at Reagan National Airport. And then there’s the discussion of the Employee Free Choice Act, legislation before Congress that would allow unions to gain recognition by getting a majority of workers to sign cards indicating their support.

It is a contentious proposal and one that most business organizations oppose — including many in business-friendly Virginia. McDonnell, who will face the winner of Tuesday’s primary, has pressed all three candidates to stake out a position on the “job-killing” card-check bill, which would eliminate the need for secret balloting to organize workers. And he has made much of their refusal to do so, even producing a video making light of it.

McDonnell spokesman Tucker Martin said the issue offers evidence of union pressure and labor’s increasing sway in a right-to-work state, which prohibits agreements between trade groups and employers that would require union dues as a condition of employment.

The phrase of the week has been “life experience” regarding President Obama’s Supreme Court nomination.  So today’s National Right To Work Committee alert looks at the real “life experience” of Federal Election Board nominee John Sullivan.  (See the video alert below or on this YouTube link.  Download full John J. Sullivan alert.)

From his time as a Steelworkers Union President (1978) through today, Sullivan’s working life experience has been focused on defending labor union boss actions and promoting their forced-dues power. 

Even during his brief time as a Teamsters election officer counsel, the public record available indicates that his actions supported power grabs by corrupt, incumbent union bosses.   In one case, he represented the Election Officer in his demand to disclose personal information about those who supported the incumbent Teamster boss’ opponents. 

Sullivan’s legal positions must have impressed some Teamster union bosses because soon-to-be barred-for-life Teamster Boss Ron Carey hired Sullivan to be the Teamster Associate General Counsel.  While Sullivan was Teamster counsel, the Teamsters and multiple organizations, including the Clinton White House and the Democrat National Committee, devised and pursued a multi-million dollar election campaign finance money laundering scheme. This scheme directly involved familiar names like Terry McAuliffe and Harold Ickes.

Despite the legal efforts of Sullivan and other Teamsters lawyers, the Federal government took the extreme and rare step of barring Sullivan’s boss, Ron Carey, for life from the teamsters union.

After this scandal at the Teamsters, Service Employees Union’s (SEIU) Andy Stern hired Sullivan.  Sullivan immediately became heavily involved in SEIU’s political activities, including SEIU affiliated groups like ACORN and America Coming Together. 

America Coming Together (ACT), a George Soros and Andy Stern creation eventually receive one of the largest fines in Federal Election Commission history – $775,000. 

“We similarly are concerned that the amount of the penalty imposed against ACT in this case represents only a tiny fraction of the nearly $100 million that the FEC found ACT illegally spent to influence the 2004 election,” wrote the Center for Responsive Politics.   

Sullivan’s life experiences with the Teamsters and America Coming Together indicate that Sullivan should be kept far away from the Federal Election Commission; certainly not appointed to the Commission’s Board as President Obama intends. 

Download and read our John J. Sullivan alert for more information and forward it to friends.  And, contact your U.S. Seantors and let them know that Sullivan is wrong for the Federal Election Commission.

Steve Malanga compares the effects the economy has had on the private and public sectors in the Wall Street Journal and the comparison is startling.  While private companies are forced to cancel bonuses, freeze salaries and sometimes layoff workers, public sector workers are thriving, thanks to the political force of big labor who continue to squeeze taxpayers.

Malanga insightfully notes:

Call it a tale of two economies. Private-sector workers — unionized and nonunion alike — can largely see that without compromises they may be forced to join unemployment lines. Not so in the public sector.

Government unions used their influence this winter in Washington to ensure that a healthy chunk of the federal stimulus package was sent to states and cities to preserve public jobs. Now they are fighting tenacious and largely successful local battles to safeguard salaries and benefits. Their gains, of course, can only come at the expense of taxpayers, which is one reason why states and cities are approving tens of billions of dollars in tax increases.

It’s not as if we haven’t seen this coming. When the movement among public-sector workers to unionize began gathering momentum in the 1950s, some critics, including private-sector labor leaders such as George Meany, observed that government is a monopoly not subject to the discipline of the marketplace. Allowing these workers — many already protected by civil-service law — to organize and bargain collectively might ultimately give them the power to hold politicians and taxpayers hostage.

It wasn’t long before such fears were realized. By the mid-1960s, dozens of cities across America were wracked by teachers’ strikes that closed school systems. Groups like New York City’s transit workers walked off the job in 1966, bringing business in Gotham to a near halt. The United Federation of Teachers led an illegal strike which closed down New York City schools in 1968.

Widespread ire against strikes by public workers produced legislation in many states outlawing them. That prompted government workers to retreat from the picket lines into the halls of government. In Washington, they organized political action committees, set up sophisticated lobbying efforts, and used their muscle to help elect sympathetic public officials.

Today, public-sector unions sit atop lists of organizations that devote the most money to lobbying and campaign contributions.

In Pennsylvania, a local think tank, the Commonwealth Foundation, counted the resources of the state’s teachers union a few years ago. It had 11 regional offices, 275 employees and $66 million in annual dues. In Connecticut, representatives of the teachers union camped outside the legislators’ doors in 2005 to keep tabs on school reformers who were calling on these officials to expand school choice.

And in California, unions spent more than $50 million in 2005 to defeat a series of ballot proposals that would have capped growth in the state’s budget. Now the state’s teachers union is putting its clout behind a ballot initiative, to be voted on next week, that would restore more than $9 billion in educational spending cut from the state’s budget.

The results of such efforts are evident in the rich rewards that public-sector employees now enjoy. A study in 2005 by the nonpartisan Employee Benefit Research Institute estimated that the average public-sector worker earned 46% more in salary and benefits than comparable private-sector workers. The gap has only continued to grow. For example, state and local worker pay and benefits rose 3.1% in the last year, compared to 1.9% in the private sector, according to the Bureau of Labor Statistics (BLS).

But the real power of the public sector is showing through in this economic crisis. Some five million private-sector workers have lost their jobs in the last year alone, and their unemployment rate is above 9% according to the BLS. By contrast, public-sector employment has grown in virtually every month of the recession, and the jobless rate for government workers is a mere 2.8%. For anyone who thinks such low unemployment numbers are good news, remember that the bulging public sector must be paid for with revenues that most governments don’t currently have. This is one reason for a spate of state and local tax increases, such as $5 billion in tax increases New York state passed in April, and $12 billion in tax increases California’s legislature agreed to in February that will only become law if voters pass a series of ballot initiatives next week.

The next lesson we are likely to learn is that voter revolts against new taxes are no longer effective because of the might that these public- sector groups now wield. The tax-cut uprising of the late 1970s began in California with Proposition 13 capping property taxes. It then spread to more than a dozen states before it became a national movement that helped elect Ronald Reagan. The next tax revolt, during the recession of the early 1990s, helped sink officials like New Jersey Gov. James Florio and produced ballot propositions in places like Colorado that capped spending or made tax increases more difficult.

Now powerful and savvy, public unions have moved effectively to quash antitax movements. In New Jersey, public unions derailed a taxpayer revolt in 2005 by using their legislative clout to water down a bill that would have created a state constitutional convention to enact property-tax reform. Meanwhile, under pressure from unions, state legislatures in places like Florida have been tightening rules and requirements for passing voter initiatives and referenda — blunting a favorite tool of antitax groups.

In states like Iowa where public unionization rates are still low government workers have had to accept concessions. But allies of the unions in Washington are working to rectify that situation with union-friendly legislation like the card check bill, which will make organizing much easier.

In the private sector such efforts will still be subject to the demands of the marketplace. Employers who are too generous with pay and benefits will be punished. In the public sector, however, more union members means more voters. And more voters means more dollars for political campaigns to elect sympathetic politicians who will enact higher taxes to foot the bill for the upward arc of government spending on workers. That will be the pattern for the indefinite future unless taxpayers find a way to roll back the enormous power public workers have acquired.