January 2012

Big Labor Pension Strategy: United States of Argentina?

by Ivan Osorio on April 19, 2010

in Bailout Watch, Economy, Labor, Regulation

Service Employees International Union (SEIU) President Andrew Stern made a big splash last week, when he announced his retirement from leading what is arguably America’s most powerful union. As I noted then, Stern leaves SEIU with the union’s pensions for rank-and-file members seriously underfunded.

Yet he may have a plan to bail out those pensions — at taxpayer expense. Worse, Stern and his labor allies are working with the Obama administration to facilitate a direct government takeover of pensions. (It’s worth noting that the Obama administration includes a lot of organized labor appointees, especially from SEIU, as well as Vice President Joe Biden’s chief economic adviser, Jared Bernstein, who was previously chief economist at the labor-backed Economic Policy Institute.)

As The Washington Examiner‘s Mark Hemingway explains, one vehicle being used to push this agenda is the  White House’s Middle Class Task Force.

The section of the [Task Force's] report devoted to “Protecting Workers and Creating Middle-Class Jobs” reads like organized labor’s policy wish list. It pushes expensive “high road” federal contracting, plans for project labor agreements, enforcing labor standards, a “National Equal Pay Enforcement Task Force” and, most perniciously, “retirement security.”

Social Security is bankrupt and the average union pension plan only covers 62 percent of its liabilities, well below the 65 percent threshold at which the government considers the plan “endangered.” Given these facts, the Economic Policy Institute has teamed up with two of the most powerful unions in the country — the AFL-CIO and Service Employees International Union — to push something called “Retirement USA” (visit Retirement-USA.org).

Retirement USA looks like a scheme to prop up trillions of dollars worth of failing pension plans by seizing your personal savings. It would create a universal retirement plan for all Americans that centralizes all existing retirement plans — including your personal 401(k) savings and private pension plans — into the same retirement system.

Free-market advocates often accuse those on the Left of trying to turn America into France, but would follow a model even more bureaucratic and dysfunctional: Argentina, where the government of President Cristina Fernandez (pictured above) has seized pensions to pay for its profligacy. Kirchner seems to have learned little from her country’s epic economic decline during the 20th century, which was due largely to abysmal policies. For America to consider something even slightly similar today is terrifying.

For more on pensions, see here, here, and here.

CEI Weekly: Ten Thousand More Commandments in 2010

by Charles Huang on April 16, 2010

in CEI Projects, Economy, Energy, Environment, Features, Zeitgeist

CEI Weekly is a compilation of articles and blog posts from CEI’s fellows and associates sent out via e-mail every Friday. Also included in the Weekly newsletter is a brief description of CEI’s weekly podcast and a feature on a major CEI breakthrough made during the week. To sign up for CEI Weekly, go to http://cei.org/newsletters.


CEI Weekly
April 16, 2010


>>CEI Releases it’s 2010 study on the regulatory state
CEI’s Wayne Crews unveiled his study on the growth of the regulatory state on tax day, April 15th. Crews covers not just the $1.349 trillion projected deficit in 2010, but the hidden taxes that occur because of the inundation of new regulations each year. Read about the study here. CEI’s Crews and Ryan Young covered some of their findings in an op-ed in AOL Times.


>>Shaping the Debate
VAT Chance
Wayne Crews and Ryan Young’s op-ed in the Daily Caller

Don’t Be Afraid to Drink the Water
Iain Murray’s op-ed in NPR

Short-Sighted Ban Endangers Food Supply
Angela Logomasini’s op-ed in the Washington Examiner

The Constitutional Issues of Cloud Computing
Ryan Radia’s citation in MSNBC

Over the Counter Goes Under
John Berlau’s op-ed in the American Spectator


>>Best of the Blogs
Do we Really Want to be Like Europe?
by Fred Smith
With the passage of ObamaCare, we’ve taken another giant step towards Europeanizing America. Tragically, our history shows a steady trend in that direction, with government spending as a percentage of GDP steadily increasing from 20% in the 1930s to over 35% in the last two decades. From the first success of the Progressives in the late 19th century, the United States has tended toward the European regulatory-welfare state model. Is this convergence wise?

Stern Jumps off Sinking Pension Ship
by Ivan Osorio
Service Employees International Union (SEIU) President Andrew Stern plans to retire as head of the union that he helped to transform into the most powerful in America. Considering the access he enjoys to the Obama administration — he was the most frequent visitor to the White House last year — the timing of his departure seems odd. While it could be seen as a case of knowing when to quit so as to go out on top, or of riding into the sunset following SEIU’s huge victory in helping ram Obamacare through Congress, there may be another, much less triumphant reason for Stern to quit now.


>>LibertyWeek Podcast
Episode 88: Facebook Confidential
Richard Morrison, Jeremy Lott and Marc Scribner bring you Episode 88 of the LibertyWeek podcast. We take on utility bureaucrats in the Southland, wine freedom in New York, Facebook privacy fears and World Series scandal.


>>Support CEI

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Charles Huang

Web and Media Associate

Competitive Enterprise Institute

chuang@cei.org

http://www.cei.org

http://www.openmarket.org

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CEI in the News: April 16, 2010

by Richard Morrison on April 16, 2010

in Video, Zeitgeist

[youtube:http://www.youtube.com/watch?v=GKL-pA02mOc 285 234]

Taxpayers Take Another Hit from Obama; Administration Panders Yet Again to Big Labor

by Hans Bader on April 16, 2010 · 2 comments

in Economy, Employment, Labor, Politics as Usual, Regulation, Sanctimony, Stimulus to Nowhere, Zeitgeist

Taxpayers will pay billions more due to an executive order signed by President Obama that effectively restricts federal construction contracts to the minority of construction firms whose workers are unionized.  That will encourage them to jack up their prices, by shielding them from having to compete with lower bids from non-union construction firms.

As the Examiner notes, “President Obama signed Executive Order 13502 directing federal agencies taking bids for government construction projects to accept only those from contractors who agree in advance to a project labor agreement that requires a union work force. Obama’s new order applies to all federal construction projects with price tags of $25 million or more, and it means all such contracts will only be awarded to companies with unionized work forces.”

This will exclude the vast majority of contractors from bidding on government contracts: “Barely 15 percent of all construction-industry workers in the United States are union members, while the remaining 85 percent are nonunion.”

Obama’s $800 billion stimulus package also contains pay-offs for Big Labor, like prevailing wage regulations.  Obama claimed the stimulus package was needed to prevent the economy from suffering from “irreversible decline,” but the Congressional Budget Office admitted that the stimulus package would shrink the economy “in the long run.” The stimulus package has since destroyed thousands of jobs in America’s export sector, and subsidized countless examples of government waste and corruption.  The Obama Administration also pandered to Big Labor by giving ownership of Chrysler to the United Auto Workers Union at the expense of employee pension funds, taxpayers, and banks, in a maneuver that circumvented federal bankruptcy laws.

Justice Stevens Retires; Left-Wing Law Professor Nominated to Federal Appeals Court

by Hans Bader on April 16, 2010

in Economy, Legal, Nanny State, Personal Liberty, Politics as Usual, Regulation, Sanctimony, Stimulus to Nowhere, Zeitgeist

Justice John Paul Stevens, the leader of the Supreme Court’s liberal bloc, is retiring.  His most famous ruling is probably the 5-to-4 Kelo decision, which ruled that homes and other properties can be seized and demolished by the government so that it can give the land to politically-connected private interests for redevelopment, even though the Constitution’s Takings Clause says that property can only be taken for “public use.”  The Examiner‘s Timothy Carney describes Justice Stevens’ jurisprudence here.

Carney notes that the seizure that Stevens upheld in his Kelo ruling left a “bulldozed neighborhood” in its wake that “is still rubble” today, and that neither the jobs nor the hotel that the seizure’s backers claimed would result from the seizure and demolition have ever materialized, contrary to Stevens’ claims that we should trust the government and show “deference” towards its claims about the benefits of such seizures.

Stevens’ Kelo decision violated basic axioms of constitutional interpretation.

President Obama will now nominate a replacement for Justice Stevens on the Supreme Court.  Obama praised Justice Stevens and promised to pick another justice “like Justice Stevens” in terms of judicial philosophy.  (Stevens started out as a moderate justice, and became very liberal.  Stevens claims to have not changed over the years in his judicial philosophy, but even the liberal New Republic notes that he is in fact liberal, and that he has shifted to the left on many issues over the years, despite his claims to the contrary.)

Obama has not chosen a replacement for Stevens yet, but he has nominated to a federal appeals court a radical law professor, Goodwin Liu, who supports racial quotas and a constitutional right to welfare.  (Obama’s stimulus package largely repealed welfare reform.)  Liu is hostile to “’free enterprise, private ownership of property, and limited government.’ According to Liu, these are ‘code words for an ideological agenda hostile to environmental, workplace, and consumer protections.’”

Online gambling opponents play the Abramoff card

by Michelle Minton on April 16, 2010

in Legal, Nanny State, Personal Liberty, Privacy, Tech & Telecom

Gambling as an activity for fun has been around since the dawn of human civilzation. When man first discovered fire, there were probably cavemen huddled at a distance, wagering on how long it would stay aflame. Yet, it seems that some in congress think combining this innate human desire for risk and reward with Internet technology could hearken the end of  life as we know it and they’ll use any possible weapon to ban Internet gambling.cave-roulette1

As more states increase regulated and taxed gambling activities, an online gambling draws closer to an explicit federal allowance,  the anti-tax set on capitol hill are scrambling for any kind of evidence to connect online gambling with illegal activities–anything to prove that it is a threat to the public good. The latest stretch-of-the-imagination by opponents of Internet gaming (led by Representative Spencer  Bauchus; R-Ala.) is a memo connecting the legalization efforts with the Abramoff scandal. If you don’t remember, back in 2006 Jack Abramoff, a prominent lobbyist in D.C. admitted to misusing funds and attempting to bribe members of congress. Sure, old Jackie boy’s firm took money from pro-gambling organizations and yes, he definitely had dubious financial dealings, but before seeing the actual memo I am still sitting here asking myself what has that got to do with the legality of online wagering? If anything, the memo simply serves as evidence that something is horribly wrong with the way our representational government has been operating if a lobbyist can buy legislators that easily.

Citing lobbying disclosure records, the GOP memo asserts that Internet gambling interests paid “Team Abramoff” nearly $5 million from 2001 to 2004, including clients such as the Interactive Gaming Council of Vancouver, which is helping to lead efforts to legalize online gambling in the United States. “While Jack himself is now imprisoned, many of his former associates continue to carry out Abramoff’s plan to legalize Internet gambling in the United States,” the GOP memo reads.

Setting aside the charges for fraud and laundering, Abramoff was just doing his job. Furthermore, lobbyists wouldn’t exist if they didn’t work–that is if representatives made principled decisions based on the defense of individual rights rather than on whim and whatever will net them them the most tax dollars. The first time a Congressman wrote up legislation to “help” one business or improve the “public good” by harming another business, leveling the playing field, or taxing one, but not the other, the lobbying industry was born. If regulators are going to pick “winners” and “losers” with their policy decisions then corporate entities have just as much right as voters to have their say in the most convincing manner possible.

The Unlawful Internet Gambling Enforcement Act (UIGEA) which was set to go into effect in December has effectively killed the Online gaming industry in the US, costing many millions in lost revenue, legal costs, and years in prison for people who simply offered an activity to willing consumers. Even though implementation of the regulation has been delayed until June, and legalization appears nigh, there are those in congress with who willfully disregard the fact that gambling online is a voluntary act, it does not infringe upon any individual’s rights and is a contract between the business (the online gaming platform) and the consumer (the gambler) therefore there is no need for the government to come in and deem it illegal or legal.

The arguments expressed in memos like the one connecting Internet gambling to the Abramoff scandal simply demonstrate why legislators should be restricted to protecting individual rights and nothing else. Does it protect anyone if we ban an activity that 86% of Americans have chosen to engage in? We could protect a lot of people from harming themselves if we banned chocolate–but we don’t do that because Americans have the right to make choices about their own lives (to a certain extent…for now). We have a right to our own lives, liberty, and the pursuit of happiness as we see it, so long as it doesn’t infringe on the rights of other individuals–when our actions do impede other individuals’ ability to pursue life, liberty, and happiness that is when Spencer Bachus should start thinking about “protecting” people.

The best option now is to put Internet gambling back into the regulatory gray area by reversing UIGEA and regulating the industry just as any other business–no new legislation required.

Obama-Dodd financial bill would further enrich Goldman Sachs

by John Berlau on April 16, 2010 · 35 comments

in Bailout Watch, Politics as Usual

Today, the SEC charged giant investment bank Goldman Sachs with more than $1 billion worth of securities fraud for its dealings in the subprime mortgage market.

Ironically, at the same time the SEC is seeking justice for Goldman’s alleged victims, President Obama and Senate Banking Committee Chairman Chris Dodd (D-Conn.) are pushing a bill would reward the firm with potentially billions of dollars by instituting a so-called “resolution authority” that would, in practice, be a permanent bailout fund.

Supporters of Dodd’s bill maintain that it does not create bailouts because the failing firm’s shareholders would be wiped out and its managers would be fired. But what they don’t say is that the money from the $50 billion resolution fund would be used to frequently give creditors of this firm a better deal than they would have in bankruptcy.

Recall that during the financial implosion of late 2008, Goldman was not bailed out directly by taxpayers, but instead received tax dollars as a creditor of AIG. Goldman received $12.9 billion in the “backdoor bailout” of AIG because of the credit default swaps it owned that AIG had insured. Goldman and other of AIG’s counterparties were paid by the government 100 cents on the dollar in this bailout, whereas creditors in bankruptcy court often get less than 50 cents on the dollar.

So as American Enterprise Institute scholar and Financial Crisis Inquiry Commission member Peter Wallison puts it: “That act—paying off the creditors when the government takes over a failing firm—is a bailout. It doesn’t matter that the management lose their jobs, or that the shareholders get nothing. When the creditors are aware that they will get a better deal with the failure of a large company than they will get with a small one that goes the ordinary route to bankruptcy, that is a bailout.”

To top it off, the fees for the Dodd bill’s resolution fund that would pay off a failing firm’s creditors would come not just from banks but from a broad array of Main Street businesses. Stable life, auto and home insurance companies would have to pay into this fund to subsidize the failure of the next high-roller, and the fees they pay would likely be passed on in the premiums their policy holders pay. And the bill’s definition of  “nonbank financial company” is so broad that it could cover manufacturers only tangentially involved in extending credit, such as those that lease equipment to their customers. This would raise prices and cost Main Street jobs.

All in all, the Goldman indictment should serve as a wakeup call to those who want to ram a bill through Congress without looking at who both its victims and beneficiaries would ultimately be.

Ideas for Regulatory Reform

by Ryan Young on April 16, 2010

in Deregulate to Stimulate, Economy, Regulation

Tax Freedom Day was April 9. But when you factor in the cost of regulation (on which more here), it turns out we work nearly half the year just to pay for government. Wayne Crews and I give the details, as well as some ideas for regulatory reform, over at Fox Forum. The three we give are:

-Disclosure. Each year’s federal budget, or the annual “Economic Report of the President,” should include in-depth chapters exploring the regulatory state, along the lines of Ten Thousand Commandments. The more the public and policymakers know about regulatory costs, the more likely they are to do something about them.

-Eliminate obsolete rules. Congress should task the Office of Management and Budget with identifying rules to eliminate each year. Congress should also implement its own bipartisan packages of cuts to be voted on, up or down, without amendment. Mandatory 5-year sunsets for all new rules would also help. Congress can reauthorize useful rules, while obsolete or harmful ones would automatically expire.

-Most important of all, Congress needs to reassume its lawmaking responsibilities. It passed 125 bills last year—but federal agencies passed 3,503 final rules. This “regulation without representation” should end. There is too little accountability when it comes to regulation.

Ten Thousand Commandments

by Ryan Young on April 15, 2010

in Deregulate to Stimulate, Economy, Regulation

Last year Americans paid $989 billion in income taxes (Happy Tax Day!). What you probably don’t know is that federal regulations cost as much as the income tax plus another quarter-trillion — $1.24 trillion in all.

Wayne Crews catalogues the damage in the freshly-released 2010 edition of “Ten Thousand Commandments.” Well worth a read.

If you don’t have time to read the full study,  Wayne and I summarize the main findings over at AOL News.

A few numbers you should be aware of: 3,503 new regulations passed last year. Hardly any were repealed. More than 95 percent of the cost is off-budget, since the private sector pays for regulatory compliance costs. That means the burden of government is about a third higher than what it spends — in all, about 30 percent of the economy goes to paying for the federal government

My Commentary on James Hansen’s Huffington Post Column

by Marlo Lewis on April 15, 2010

in Global Warming

Is tax-and-dividend (aka “carbon fee and green check”) a morally compelling alternative to cap-and-trade?

Is it the path to presidential greatness?

Will it be good for the economy?

Will China adopt it if we do?

Yes to all of the above, climatologist James Hansen argues in the Huffington Post.

No, says your humble servant, today on MasterResource.Org.

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