SEIU

What Government Unions Want: One, Two, Many Californias

by Ivan Osorio on January 6, 2011 · 1 comment

in Economy, Employment, Labor, Regulation

That the large Republican gains in the 2010 midterm elections pose a setback for organized labor’s agenda is hardly news. What will be newsworthy is how incoming policy makers at both the federal and state level will fight back against union power — especially government union privileges — over the next couple of years, and to what extent they succeed.

The Economist sums up the challenge elected officials face as they stare down the government union political machine (and offers a good overview of the global nature of this problem):

It would be a mistake to write off the public-sector unions. They are masters of diverting attention from strategic to tactical questions. Undoubtedly the unions will lose some of their privileges over the coming years; the scale of the debt crisis makes this inevitable. But will governments have the courage to tackle the root causes of the problem (such as pensions) rather than dealing with secondary problems (such as wages)? And will they dare to tackle questions of power rather than just pay and perks? If they are to claim victory in the coming fight, they need not just to restore the public finances to health. They also need to breathe the spirit of innovation into Leviathan.

And not all politicians challenging government unions are Republicans. As The New York Times reported this week:

State officials from both parties are wrestling with ways to curb the salaries and pensions of government employees, which typically make up a significant percentage of state budgets. On Wednesday, for example, New York’s new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor’s traditional clout in Albany.

Indeed, as I noted recently, the longstanding alliance between government employee unions and Democratic politicians has become strained. Public sector unions may be among the Democratic Party’s most loyal constituencies, but the gaping budget deficits to which unionized government employees’ generous compensation packages have substantially contributed bear no party label.

And it’s not as if bloated state budgets guarantee a high quality and adequate supply of public services. As Arnold Kling puts it so well in EconLog blog:

If you do not have enough sanitation workers because you cannot fill job openings at the current level of pay, then those government workers are underpaid.

On the other hand, if you do not have enough sanitation workers because your budget is busted by the ones you have, then those government workers are overpaid.

Thus, the bipartisan nature of this pushback should not be that surprising — yet it has taken government union leaders by surprise, being unaccustomed as they are to finding themselves on the defensive. Naturally, they plan a response.

And what the unions want should worry anybody who cares about fiscal sanity. As Politico reports:

Labor leaders take hope in the story of California, where Schwarzenegger arrived after a recall with an apparent mandate for dramatic change and, in 2005, moved to shift state employees from a defined benefit to a defined contribution pension plan — the goal of many Republicans, but anathema to unions that see it as a threat to traditionally secure retirements.

Instead, Schwarzenegger found himself stymied by a state Legislature whose Democrats were tightly tied to labor, as well as by failures at the polls. Most public workers ultimately negotiated new benefit “tiers” with Schwarzenegger, but the changes fell far short of the Republican wish list, and the governor leaves his Democratic successor, Jerry Brown, a large budget gap.

We all know how that turned out.

(Hat tip: F. Vincent Vernuccio)

For more on public sector unions, see here and here.

New York Snow Debacle Shows: It’s Government Unions vs. Taxpayers

by Ivan Osorio on January 5, 2011 · 1 comment

in Deregulate to Stimulate, Economy, Employment, Labor, Regulation

The longstanding alliance between Democratic politicians and government employee unions has come under increasing strain, as I recently noted in a Washington Times op ed. Now the New York City snow cleanup slowdown is adding to that strain.

As state and local governments face large and growing budget shortfalls, the individuals who lead those governments are having to make hard decisions on where to cut spending. And the area with the most room to cut is public employee compensation, which has far outstripped that in the private sector. Thus, simply eliminating waste in other parts of city and state budgets won’t bring the books into balance. As the Manhattan Institute’s Nicole Gelinas notes in City Journal:

Only if state and local politicians identify the true culprit behind the botched post-storm cleanup: the misguided idea that management expertise can overcome the benefits costs that are consuming the city budget.

If money could melt snow, Mayor Bloomberg would be basking in victory over the storm. When he took office in 2002, Gotham spent $1.3 billion annually on the Department of Sanitation. Today, the city spends more than $2.2 billion on “New York’s Strongest.” That increase during Bloomberg’s tenure was almost three and a half times the inflation rate. It follows that we should have a sanitation army well equipped to clean the white stuff up fast. Not quite. Today’s budgeted sanitation force—from supervisors to garbage collectors—is 392 people smaller than it was nine years ago, a 4 percent decline even as population is up. And the department is shrinking further, as Deputy Mayor Stephen Goldsmith knocks 200 people off the rolls to save $21 million by moving supervisors into front-line jobs.

So where has the city’s swelling sanitation budget gone? Not into better services but into workers’ health care and pensions, as well as borrowing to fund infrastructure, which would otherwise be unaffordable because of those sky-high benefits. Taxpayers now spend $144,000 on salary and benefits for each sanitation worker, up from $79,000 nearly a decade ago. Nine years ago, taxpayers contributed about $10.5 million annually to support sanitation pensions; this year, they’ll cost $240 million—a more than twentyfold increase (the final number may be lower, though, as some changes to the pension funds, which push up contribution rates, may not go into effect until next year).

Such generous government employee compensation packages are not only expensive — they are impervious to economic downturns. So, as private businesses retrench or cut back hours, governments must carry on, even as tax revenues fall, until they reach a crisis stage at which draconian measures become necessary. Yet even then, government employee unions are wont to push back against any curbs in compensation, as the New York snow cleanup slowdown painfully shows. Thus, elected officials have no option but to face government unions head on, as Gelinas recommends.

Bloomberg should direct his innovators to focus on where the money is, reducing taxpayers’ commitments to pay future retiree benefits before they consume even more of the budget. He could run a media campaign, for example, to help the public understand that Governor Andrew Cuomo must do wholesale pension change so that new workers, not taxpayers, take more responsibility for their retirements. Further, as union workers would chafe under a serious effort to pare back health benefits in future contracts, the mayor needs an old-fashioned labor-wars veteran to make sure that employees aren’t executing stealthy work slowdowns, as some sanitation workers may have done last week.

That course of action will be difficult, but if carried out effectively, likely would meet widespread  support among the general public — from whom government unions are also becoming increasingly disconnected. As Wall Street Journal columnist William McGurn notes:

In theory, of course, organized labor is all about fraternal solidarity. For many years, it is true, private-sector unions supported collective-bargaining rights and better benefits for government workers, while public-employee unions supported the private-sector unions in their opposition to legislation such as the North American Free Trade Agreement in the 1990s.

Suddenly, it’s a different world. In this recession, for example, construction workers are suffering from unemployment levels roughly double the national rate, according to a recent analysis of federal jobs data by the Associated General Contractors of America. They are relearning, the hard way, that without a growing economy, all the labor-friendly laws and regulations in the world won’t keep them working.

What’s more, “blue-collar union workers are beginning to appreciate that the generous pensions and health benefits going to their counterparts in state and local government are coming out of their pockets,” says Steven Malanga, a senior fellow at the Manhattan Institute. “Not only that, they are beginning to understand the dysfunctional relationship between collective bargaining for government employees and their own job prospects.”

It’s no coincidence that states that have barred collective bargaining for government employees, such as Virginia, have found it much easier to keep their finances in order. That’s the least the taxpaying public should expect.

For more on government employee unions, see here and here.

Unions’ Shifting Lame Duck and NLRB Agenda

by Ivan Osorio on November 22, 2010

in Bailout Watch, Economy, Labor, Regulation

With Democrats losing control of the House of Representatives and a substantial number of seats in the Senate, organized labor’s hopes of seeing its legislative agenda enacted are fading fast. But that won’t keep union bosses from trying, in two ways. First, a last-ditch push in the current lame-duck session of Congress; and second, shifting efforts away from the legislative to the regulatory process, specifically in the National Labor Relations Board (NLRB). Thankfully, this shift in union strategy is getting some public attention — and more is needed.

In Congress, Big Labor’s allies are most likely to focus on passing bills bailing out underfunded union pensions and forcibly unionizing state and local government public safety employees. As my colleague F. Vincent Vernuccio and I noted recently in Forbes regarding the proposed bailout:

During the lame duck session, the main Big Labor priority to watch out for is a union pension bailout. Introduced in the House (Create Jobs and Save Benefits Act, H.R. 3936) by Rep. Earl Pomeroy (D-N.D.) and in the Senate (Create Jobs and Save Benefits Act, S. 3157) by Rep. Robert Casey (D-Penn.), this legislation would create a new fund within the Pension Benefit Guaranty Corporation ( GRTYA.PK - news -people ) (PBGC), through which it would direct taxpayer dollars to shore up some underfunded union pension plans. The use of public funds to insure private pension plans is a first for PBGC and stark departure from the way it has operated since its creation in 1974.

Earl Pomeroy lost his reelection bid, which makes the prospects for his legislation dim. However, just because unions lost one champion of this legislation does not mean they cannot find another. Pomeroy was an odd sponsor of such legislation anyway; unions are not exactly political powerhouses in North Dakota, which is a right to work state.

The so-called Public Safety Employer-Employee Cooperation Act (S. 3194, H.R. 413) would corral public safety — police, firefighter, and EMT personnel — into unions. For organized labor, this may be its best option for a long-term growth strategy, now that more union members works for governments than for private businesses. But states and cities struggling to balance their overstretched budgets, higher labor costs is the last thing they need. As National Right to Work Committee President Mark Mix notes in The Washington Examiner:

Last year, even as the nation’s economy endured a severe recession, state and local employee real compensation rose by nearly 3 percent. Meanwhile, businesses whose revenues were plummeting had no choice but to cut back real compensation for private-sector employees by 4 percent.

Incredibly, Reid and many likeminded senators and representatives now appear eager to put an even more onerous burden on private-sector employees and employers so that already bloated unionized government payrolls can keep expanding.

The Public Safety Employer-Employee Cooperation Act would force countless policemen, firefighters and emergency medical technicians to accept as their monopoly-bargaining agent a union they never voted for, and want nothing to do with. All contrary state laws and local policies would be overridden.

Even in many states that already authorize public-safety union monopolies, the bill would widen their scope. That’s why the vast majority of the 50 states will be forced either to rewrite their public-sector labor statutes, or hand over control of their public-safety officers to the federal government, if it becomes law.

Moreover, as former Service Employees International Union second-in-command Anna Burger has boasted, it would “create a national collective,” i.e. monopoly, “bargaining standard for all [state and local] public workers.”

Meanwhile, the fight over card check and other pro-union legislation is shifting to the NLRB, where Board members Craig Becker and Mark Gaston Pearce — both recess-appointed by President Obama — are likely to push Big Labor’s agenda. As Katie Gage of the Workforce Fairness Institute notes in The Daily Caller:

Recently, the NLRB has taken action to favor labor bosses over employees and employers. Obama’s appointees to the board are carrying Big Labor’s water, and our freedoms and jobs are at risk.

Cases that have been decided and closed for years are now being reopened by these new board members, who aim to change pro-worker and pro-small business decisions into pro-union boss ones.

For example, most recently, the board backed unions in their practice of holding protest signs at small businesses who use contract workers, claiming that the signs are not coercive.

In addition, the NLRB is now considering implementing electronic voting services for remote elections as opposed to worksite elections where physical ballots are both cast and counted, a move that would open elections to potential fraud and workers to intimidation.

And now there is discussion that this “independent federal agency” will shorten the amount of time for workplace elections even though most take place within a month. While Big Labor bosses could begin planning and organizing months ahead of an election being called, small business owners could be caught unaware and have only a few days to make their case to their own employees.

The lame-duck session ends next month, but Becker’s and Pearce’s recess appointments run through the end of the next session of Congress, so they’ll be on the Board through 2011. The NLRB bears watching.

For more on labor, see here and here.

Obama’s Nativist Scare Tactics May Backfire on Him

by Hans Bader on October 19, 2010

in Environment, Global Warming, International, Politics as Usual, Sanctimony, Trade, Zeitgeist

President Obama has made the baseless claim that the Chamber of Commerce is spending foreign money on political campaigns. This claim was widely disseminated to the general public through a hysterical ad campaign by the Democratic National Committee accusing the Chamber of Commerce of “stealing our democracy” and featuring an “ominous shot of Chinese currency,” suggesting that Chinese people are trying to take over America. Not only was this claim this untrue, but stoking nativism may backfire on Obama politically, since liberal interest groups that back Obama, like unions, receive large amounts of foreign money, and Obama himself has used regulations and subsidies to ship American jobs overseas.

As one writer notes in The Washington Post, “Labor unions are spending millions to tar Republican candidates — and they take in far more foreign cash than the Chamber.” “The Service Employees International Union (SEIU), which is spending lavishly to elect Democrats. . . takes in nearly $9.2 million per year from foreign nationals, compared to the mere “$100,000,” none of it used for political campaigns, that the Chamber “receives from its affiliates abroad” — less than 1/20th of 1 percent of the Chamber’s budget. Moreover, most foreign PAC money is going to Democrats, not Republicans.

And Obama’s policies have shipped American jobs overseas. Of the green-jobs funding contained in the $800 billion stimulus package, 79 percent went to foreign firms, aggravating the nation’s trade deficit. Meanwhile, the administration has paid $150 million a year to Brazilian cotton farmers, and supported a cap-and-trade global warming bill that would drive hundreds of thousands of jobs overseas.  (Although Obama and other backers of this “cap-and-trade” concept claim it will cut greenhouse gas emissions, it may perversely increase them by driving industry abroad to countries with fewer environmental regulations, resulting in dirtier air, and damage to forests and water supplies.)  Stoking anti-foreign sentiment may further increase public outrage over administration policies that help foreigners at the expense of Americans — like its backdoor bailouts of foreign banks, and the $6 billion Obama spent bailing out socialist Greece.

Obama’s attacks on foreign money may also remind Americans of Obama’s own 2008 receipt of foreign campaign contributions, which resulted from his campaign’s deliberate disabling of computer software that would have thwarted such contributions, as The Wall Street Journal‘s John Fund and others have pointed out: “As the Washington Post reported, the Obama campaign had turned off its Address Verification System, or AVS, at its Web site. That program should have stopped contributions coming in from citizens of foreign countries — a violation of federal law. Clearly, the Obama campaign’s decision to abandon filters had consequences — the campaign was forced to refund $33,000 to two Palestinian brothers in the Gaza Strip.”

The Dead Weight Loss of Union Disputes

by Ivan Osorio on September 14, 2010

in Economy, Employment, Labor

At Reason Hit & Run, Tim Cavanaugh provides a good observation on the ongoing dispute between the powerful Service Employees International Union (SEIU) and its breakaway local, National Union of Healthcare Workers (NUHW), which entered a new phase yesterday, as voting began at Kaiser Permanente facilities in Northern California, for workers to decide whether to be represented by SEIU, NUHW, or no union at all.

NUHW president Sal Rosselli, who used to head SEIU’s affiliate in Oakland, has loudly complained of the SEIU national leadership’s efforts to forcibly merge his local with a scandal-ridden Los Angeles-based local. He’s got a good point. However, as Cavanaugh points out, in terms of the broader economy,  SEIU and NUHW are essentially fighting over the deck furniture on the Titanic.

[I]t’s not clear how having more choice in union leadership decisions would do much to end the exploitation of the proletariat. The more time you spend choosing between Rosselli and [SEIU President Mary Kay] Henry, the less time you have to, maybe, build some value for the people who pay you 100 percent of your income (not counting moonlighting), or even check out Craigslist to find a better job.

Even worse, your union dues may actually hurt your future job prospects, as they go to help elect and reelect politicians who support economically destructive policies intended to keep unions afloat.

For more on the SEIU-NUHW dispute, see here and here.

For more on SEIU, see here and here.

Two Health Care Unions Battle Each Other for Members

by Ivan Osorio on September 13, 2010 · 2 comments

in Economy, Employment, Labor

Voting began today in one of the most disputed union elections in recent years. The contest pits the powerful Service Employees International Union (SEIU) against the upstart National Union of Healthcare Workers (NUHW), which was created last year by former officials of a SEIU affiliate in Oakland, California. At stake are 44,000 at Kaiser Permanente health care facilities throughout Northern California.

SEIU’s national leadership placed its Oakland affiliate, United Healthcare Workers-West (UHW), in trusteeship in January 2009, alleging “financial wrongdoing” by then-UHW President Sal Rosselli. In response, Rosselli accused then-SEIU President Andrew Stern of using trusteeship to forcibly seize his local and merge it with a scandal-ridden Los Angeles-based local, whose president, Tyrone Freeman, had stepped down amid serious corruption allegations.

SEIU suffered a loss to NUHW in Southern California in January, so the current contest is major test for SEIU’s new national president, Mary Kay Henry, who took over from her notorious predecessor Andy Stern last May. Henry seems committed to this fight, and for good reason. She worked alongside Stern during his tenure as president, and helped to implement some of his more controversial policies, including his efforts to create a handful of giant mega-locals, through mergers such as the one imposed on SEIU’s California health care affiliates.

Union power struggles are nothing new, and, as in most, the dispute between SEIU and NUHW has its share of egos. But this fight also centers on the future of unionism in the private sector, where organized labor is a fading force. To revive unions’ sagging private sector numbers, SEIU, under Stern’s leadership, has pursued a strategy of increasing union “density,” which entails increasing the number of union members in the overall workforce to gain greater clout in negotiations. This often has meant compromising on contract terms to lessen employer resistance.

Rosselli, by contrast, has preferred to drive a hard bargain to gain the best contract terms for existing members, even while trying to organize new ones. Throughout this conflict, Henry worked alongside Stern to pursue the goal of greater “density,” which Rosselli has derided as “organizing workers for the sake of numbers.”

Whichever strategy wins out, it’s safe to say that the leaders of SEIU and NUHW can agree on at least one thing: support for the so-called Employee Free Choice Act (EFCA), which can help both their goals. EFCA’s card check provision would both allow unions to organize members more easily by effectively eliminating the secret ballot in organizing elections, while its binding arbitration provision would allow union negotiators to drive a harder bargain in the expectation that after 120 days a federally appointed arbitrator could step in to impose an agreement that is bound to be no worse for the union than management’s final offer.

Voting ends on October 4 and the vote count begins two days later. This is a contest well worth watching.

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

Around the Country with Public Sector Unions

by Ivan Osorio on August 10, 2010 · 1 comment

in Bailout Watch, Economy, Employment, Labor

It’s often a sign that a problem is turning into a crisis when the public outcry over it becomes ubiquitous. That seems to be the case with the stress that government employee compensation is placing on government budgets at all levels, as several news items today indicate.

In a front-page story, USA Today reports that federal employees earn far above their private sector counterparts, and that gap has widened considerably in recent years.

Federal workers have been awarded bigger average pay and benefit increases than private employees for nine years in a row. The compensation gap between federal and private workers has doubled in the past decade.

Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis. The data are the latest available.

The federal compensation advantage has grown from $30,415 in 2000 to $61,998 last year.

Public employee unions say the compensation gap reflects the increasingly high level of skill and education required for most federal jobs and the government contracting out lower-paid jobs to the private sector in recent years.

However, as Reason‘s Nick Gillespie rightly notes, such touting of government employees’ education credentials “probably reflects credentialism run amok as a demonstrated need for specialized skills.”

Moreover, higher salaries are just the beginning. In addition to generous benefits, many government workers enjoy retirement benefits that most private sector workers can only dream of. Negotiated as part of collective bargaining agreements, lavish pensions allow union-friendly politicians to keep their organized labor supporters happy, while they get to kick the can down the road to their successors — when the bill comes due, it becomes the new office holders’ problem.

And how lavish can those pensions get? Take the city of Bell, California,  where, The Wall Street Journal notes in an editorial, “City Manager Robert Rizzo stepped down after news broke that he was making $800,000 a year to oversee the blue-collar town of 40,000.”  And he’s just the tip of the iceberg.

According to the California Foundation for Fiscal Responsibility, a nonprofit that advocates pension reform, Mr. Rizzo is hardly alone. The foundation lists 9,111 retired California government workers receiving pensions in excess of $100,000 a year. The top earner, one Bruce Malkenhorst, receives $510,000 a year for his tenure as city administrator of Vernon, California (population, 91). Not including health benefits.

These paydays are the inevitable result of the dominance of government unions in city and state politics. While most private workers have 401(k)-type plans that rise and fall in value with economic growth, unions negotiate guaranteed payouts that stay lucrative whether or not the cities can afford them. California Attorney General Jerry Brown is investigating the Bell episode, but he’d enhance his chances to become the next Governor if he proposed more ambitious pension reform.

That is bad enough, but making that situation even worse is the fact that those same politicians who negotiated those generous pensions have neglected to adequately fund them, while setting up rules that could be gamed to increase payouts — sometimes even beyond retirees’ former salaries. Now those states face huge financial shortfalls, which underfunded pension obligations are making far worse. As the Mercatus Center’s Eileen Norcross and Todd Zywicki note in The New York Daily News:

At 44, Hugo Tassone retired from the Yonkers police force with an annual pension of $101,333 – thanks to overtime pay he tacked on to his $74,000 salary. Tassone told The New York Times it was the pension he could collect after 20 years of service that attracted him to the job in the first place.

He’s not alone. In the last decade, half of the police and firefighters who retired in Yonkers collected pensions that exceeded their base pay, in (at least one case) by as much as 75%.

Don’t blame the officers. New York’s pension rules make it pay more to retire than to work.

[...]

But loopholes and gamesmanship aren’t the only reason why public pension systems nationwide face massive funding shortfalls. They are the result of a perfect storm of flawed accounting, which fueled unrealistic employee demands that were then underfunded by politicians. In plans across the country, during booming years of the late 1990s, many workers were promised retirement payouts that were “too good to be true” and, thus, impossible to make good on.

New York’s budget situation is bad. In California, it’s reached a point that Governor Arnold Schwarzenegger calls “unsustainable.” He lays out the numbers in a Los Angeles Times op ed:

We have $500 billion in government-employee pension debt alone, a mind-numbing figure that is six times the size of our entire state budget and 10 times the amount we spend on education.

[...]

We must also reform California’s pension system for government employees, whose costs to taxpayers for just one of our major pension funds have skyrocketed from $150 million a year a decade ago to almost $4 billion this year. Private-sector workers already struggle to pay for their own retirement. Now they are being forced to pay more and more for the government workers’ retirement, at the very time their own retirement accounts have declined. What is worse, in five years those pension costs will grow to well over $10 billion per year, and keep growing from there.

Fixing this will not be easy, but public attention turning to this crisis is a welcome first step.

For more on public sector unions, see here and here.

Halter’s Loss a Major Blow for Big Labor

by Ivan Osorio on June 9, 2010 · 1 comment

in Economy, Employment, Labor, Zeitgeist

Arkansas Lieutenant Governor Bill Halter’s failure to win his state’s Democratic nomination is a crushing defeat for organized labor, which went all-out in supporting Halter in order to punish incumbent Democratic Senator Blanche Lincoln for her failure to support the unions’ top legislative priority, the so-called Employee Free Choice Act, which was unpopular in her fairly conservative state.

Big Labor did get something out of this, in that it gave Lincoln enough of a scare to make other Democrats think twice before crossing the unions, but her having won shows Democrats that placing their constituents’ priorities over those of their party’s most powerful interest group can be a winning strategy. This is to the good, as politicians of both major parties, especially at the state level, now need to confront some powerful public sector unions — which now represent the majority of all unionized workers — to bring government budgets under control. And across the nation, more and more citizens seem to support imposing such fiscal discipline.

A political tide that has helped fuel the growth of government finally seems to be turning in favor of taxpayers. With the nation’s unemployment rate still hovering at just below 10 percent, the public is turning its anger on a protected class of workers who have largely escaped the economic uncertainty, at everybody else’s expense: government employees.

State and local politicians are listening, and some are proposing reforms to curb extremely generous public employee compensation packages that are beyond anything available in the private sector. In short, they are trying to deal with the mess left behind by their predecessors. During the 1990s boom years, many state and local governments, buoyed by increased revenues, spent those new tax dollars as soon as they came in, without much forethought of possible future downturns.

Even worse, a lot of the benefits came in the form of pensions. While the possibility of taxpayer backlash may have put some sort of check on how much union-supported politicians can pay their union supporters in the present, it provided little incentive for such caution into the future. When the bill for those pensions would come due, the politicians who approved those benefits would be out of office, and figuring out how to pay for those benefits would be somebody else’s problem.

Such reckless spending made today’s state and local government budget crises inevitable in an economic downturn. Now that a downturn has come to pass,  many state and local policy makers have no choice but to try to get their states and municipalities off the road to financial catastrophe. That’s commendable, however belated, and it will be difficult. Yet the time to act is now. The consequences of doing nothing are now apparent, which underscores the urgency of the situation.

And it is fitting that both Republicans and Democrats are coming around to addressing it — because they both helped create it. As Politico reporters Maggie Haberman and Ben Smith note, “local Republicans from coast to coast have often accepted the support of unions and defended their perks.” However, “That day appears to be over, at least for now.”

State and local politicians who want to establish themselves as fiscally responsible stewards of their constituents’ tax dollars now need to show results. There are already some encouraging signs. Recently, the California State Senate approved a bill to address the problems known as double dipping and pension spiking, and the Illinois General Assembly approved a bill to address double dipping and cap pension benefits. Double dipping is the phenomenon whereby a government employee “retires” from one job and then takes on a different government job, while collecting the pension from the first job. Pension spiking occurs when a government employee who is about to retire boosts his income during his last year of employment — either by putting in a huge amount of overtime or temporarily taking a higher paying job — thus freezing that final year’s income into pension benefit amounts that are based on an employee’s final year salary.

That’s a good start, but much more needs to be done.

As a final note on Halter, this video, in which he refuses to answer a question on card check, is worth remembering.

For more on public sector unions, see here and here.

Obama Administration Pushes More Bailouts at Taxpayer Expense; America to Bail Out Corrupt Union Pension Funds

by Hans Bader on June 2, 2010 · 2 comments

in Bailout Watch, Economy, Employment, International, Personal Liberty, Regulation, Stimulus to Nowhere

The Obama administration and its congressional allies are now pushing for billions more in bailouts for mismanaged union pension  funds, and teachers unions.

The union pension bailout bill “would transfer tens of billions of dollars worth of retiree liabilities” from unions “to taxpayers.”  It would bail out the massively underfunded pension fund of the SEIU, a corrupt left-wing union that uses mobs to intimidate, and occasionally beat up, its critics and creditors. (The SEIU serves as a security force for Obama allies and liberal Congressmen seeking to keep Tea Party protesters away from their events.)  The union pension funds are estimated to be underfunded by $165 billion.

The Obama administration is also proposing a multi-billion dollar teacher bailout sought by the teachers’ unions.  Although education spending per student has quadrupled, after inflation, since 1960, and teacher class sizes have shrunk considerably, the Obama administration wants to increase spending even further to prevent states from laying off any teachers.  Even the The Washington Post, which endorsed Obama and has endorsed every Democratic presidential candidate since 1952, considers this unwise and financially reckless “wasteful spending.”  (The SAT has been “recentered” in recent years to hide the fact that SAT scores have effectively gone down even as education spending has skyrocketed.  My 1986 SAT score of 1520 out of 1600 would be a perfect 1600 on the relevant portions of today’s SAT, thanks to “recentering.”)  Ironically, no additional spending would be needed to prevent layoffs if teachers would simply accept small pay cuts.  (The average school teacher in Montgomery County, Maryland, makes $76,483 in base pay–which hasn’t stopped school officials from threatening to sue the County for supposedly inadequate school funding.)

While pushing an unnecessary teacher bailout, the administration has shown little interest in the plight of the unemployed.  It deliberately removed from the $800 billion stimulus package billions in transportation spending that would have stimulated the economy, after feminist leaders complained that such projects would employ blue-collar men, many of whom are now unemployed (80 percent of those who have lost their jobs in the recession are men).   The transportation spending was replaced with wasteful welfare spending, and other provisions of the stimulus package largely repealed the limits on welfare passed in the reforms of 1996.

The Obama administration earlier lifted a $400 billion limit on bailouts for Fannie Mae and Freddie Mac, two mortgage giants known as the Government-Sponsored Enterprises (GSEs). It was just the beginning: “Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie,” reports The New York Times.

At the direction of the Obama administration, Freddie Mac ran up more than $30 billion in losses to bail out mortgage borrowers, some of whom have high incomes. Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.

Fannie and Freddie helped spawn the mortgage crisis by buying up risky mortgages and repackaging them as prime mortgages, thus creating an artificial market for junk. ”From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime.” They paid their CEOs millions, and engaged in massive accounting fraud–$6.3 billion at Fannie Mae alone–to increase the size of their managers’ bonuses. As Government-Sponsored Enterprises, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.

The Obama administration refuses to reform these mortgage giants, saying it is “too hard” to do. Earlier, Senate Democrats blocked reform of the mortgage giants in a party-line vote.

(Obama received $125,000 in contributions from these mortgage giants as a Senator, second only to the corrupt Senator Chris Dodd, who is retiring this year due to his financial scandals. Dodd is the chief drafter of the financial “reform” bill.)

The financial “reform” bills recently passed by the House and Senate do nothing to reform Fannie Mae and Freddie Mac. But they will increase pressure on banks to make risky loans in depressed neighborhoods, and increase credit card costs.

The Obama administration also recently provided billions for the international bailout of Greece, which came close to bankruptcy thanks to its socialist policies and pensions for people who retire as early as age 50 (in many ordinary occupations, like hairdressers).

Preempting State Pension Bailouts

by Ivan Osorio on May 17, 2010 · 1 comment

in Bailout Watch, Economy, Employment, Labor, Regulation

Congress has long used its control of the federal government’s purse strings as a club with which to force states to change laws that fall under state governments’ traditional police powers, such as speed limits and legal drinking ages, by threatening to cut federal highway funds. Given the current trend in government growth, I expect the categories of funds so manipulated to expand.

The two most notorious policies so crammed down states’ throats — the 55-mph speed limit and the 21 legal drinking age — constituted nanny-state social engineering of the worst kind: government forcing behavior on certain citizens for their own good.

However, when it is the money of the nation’s taxpayers, rather than behavior politicians don’t like, that is at stake, pulling such funding may be called for. In his Washington Examiner column today, Hugh Hewitt proposes such a solution to prevent a federal bailout of underfunded state public employee pensions.

Federal spending power was used to oblige states to lower their speed limits to 55 miles per hour a few years back. The same authority could be employed to oblige states to curtail public employee pensions. A new federal statute, stating simply that the Treasury will not be sending assistance to any state awarding any new six-figure pensions under any circumstances, would be approved by overwhelming margins.

The federal government discouraging state government profligacy is very different from its manipulating federal funds to enact state-level policies over which it should have no authority. For that reason, comparing the two is troubling, even when accomplished by similar means. Still, if the federal government is ever to withdraw funding for any reason, it should be to rein in its own, and other governments’, power.

For more on public sector unions, see here and here.

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