Democrats plan union pension bailout

President Obama declared that there would be no more government bailouts, so his congressional minions had to think of a clever disguise for the next big boondoggle coming your way.  Try this misnomer:  "Create Jobs and Save Benefits Act."  Sponsored by Pennsylvania Democratic Senator Bob Casey, it's a bailout of union-run pension plans. Period.  The Wall Street Journal explains:

Mr. Casey is gathering support for his curiously named "Create Jobs and Save Benefits Act," a bailout for union-run retirement plans. Similar to House legislation from North Dakota Democrat Earl Pomeroy and Ohio Republican Patrick Tiberi, the bill would transfer tens of billions of dollars worth of retiree liabilities to the Pension Benefit Guaranty Corporation, i.e., to taxpayers.

At issue are multi-employer pension plans, in which companies across an industry pay into a single pension pool. The plans are predominately run by unions and for years have distinguished themselves by poor management. The Labor Department in 2008 listed 230 multi-employer plans that were either endangered (less than 80% funded), or critical (less than 65% funded), or that had applied to government for funding relief. By 2009 that number had soared to 640.

The financial crash is partly to blame, but even before 2006 only about 6% of multi-employer plans were fully funded, compared to about 31% of single-employer plans. The real problem is that multi-employer plans have become a sort of pension Ponzi scheme.

Unions love multi-employer plans because they let workers keep their retirement benefits even if they switch jobs to another participating company. This encourages lifelong union membership. Unions are less enthusiastic about paying the bills. The negotiating priority of union leaders is to get hefty wage increases and benefits for current workers, leaving the scraps to the pensions of retirees who no longer vote in union elections.

When a company in an industry goes out of business, meanwhile, the remaining firms are still on the hook for all costs of the multi-employer plan. This explains why the trucking industry is backing Mr. Casey's bill, and why Mr. Casey announced his legislation at a Pennsylvania facility of YRC Worldwide, a Kansas trucking outfit. Someone has to pay for years of the industry agreeing to Teamster demands.

Mr. Casey's bill would cordon off "orphaned" pensions—those for which an employer has stopped contributing or withdrawn from a multi-employer fund—and put them into a separate account. Surviving companies would pay benefits to these orphans for five years, after which they'd get kicked to the PBGC, which would shoulder the benefits until the last retiree or beneficiary dies. The remaining multi-employer plan would be back in the black, free to start the negative-feedback loop of underpayments and overpromises again.

Senator Casey claims his bailout scheme will cost "only" $8 billion, but in a September 2009 report, Moody's estimated that multi-employer plans were $165 billion underfunded. In a March post, Jeff Dunetz at RedState listed 103 union pension plans that were rated endangered or critical.  The Journal describes this bailout as a "consolation prize" to the unions to compensate for the failure to get "card check" legislation passed.  Andrew Langer at The Washington Times thinks it amounts to a big union payout for a relatively small $400 million bet:

At this point, it would be unfair to say definitively that part of the $165 billion going to unions to help their struggling pension funds will go toward the millions they plan to spend to retain incumbent Democrats in Congress. However, considering that unions gave nearly $400 million to Mr. Obama and the Democrats in 2008 for campaign contributions, as well as millions more for in-kind contributions, it is fair to suspect that the bailout is political payback for support during the election.

All of this begs an interesting question: If the unions had $400 million to give to Mr. Obama to help him get elected, why didn't they use that money to prop up their own pension funds? Granted, it wouldn't have made much of a dent in the $165 billion they'll be getting from the taxpayers, but it would have made a slight one. The answer: because it's a calculated bet. They chose to invest that $400 million in a situation that would garner them a larger payoff in the future once the bailout occurred.

This should infuriate taxpayers forced to pay for this kind of gamble and the rank-and-file union members who pay their dues only to have their promised pension money used in some sort of twisted version of Vegas blackjack. Is the intent to use some of the bailout money to ensure that those rank-and-file union members - many of whom are out of work along with their non-union brethren - will vote the right way during the November election? After all, there would be no better way to ensure incumbency protection than by convincing the local voters that the party of the big bailout is the one that has their backs in November.

Obama Labor nominee fails in senate vote

The Senate has voted against invoking cloture on Craig Becker, Obama's embatted nominee to the National Labor Relations Board.  By a vote of 52-33, Becker failed to get the needed 60 votes that would allow his nomination to come to the floor.  All Republicans and Democrats, Ben Nelson and Blanche Lincoln voted no.  Nelson had signaled his intent to support the filibuster yesterday.  From his website:

“Mr. Becker’s previous statements strongly indicate that he would take an aggressive personal agenda to the NLRB, and that he would pursue a personal agenda there, rather than that of the Administration,” said Senator Nelson. “This is of great concern, considering that the Board’s main responsibility is to resolve labor disputes with an even and impartial hand. In addition, the nominee’s statements fly in the face of Nebraska’s Right to Work laws, which have been credited in part with our excellent business climate that has attracted employers and many good jobs to Nebraska. Considering these matters, I will oppose the upcoming cloture motion and the nomination.”

In a compelling post, Don Loos appealed to Big Government readers today to oppose Becker's nomination on the basis of his history of advocacy for SEIU and ACORN and an apparent lack of candor:

One recent piece of evidence to add to the growing Becker rap sheet:

In last week’s U.S. Senate Health, Education, Labor, and Pensions Committee hearing, Obama nominee Craig Becker clearly tried to put distance between himself and his former client ACORN:

Sen. John McCain (R-Ariz.) asked Becker this question:

“Do you perform work for and provide advice to ACORN or ACORN-affiliated groups while employed by your current employers or on a volunteer basis?”

Becker responded, “Senator McCain, I have never done so.” (Emphasis added)[2]

Becker statement to the Senate Committee is that he has never provided legal advice to ACORN or to an ACORN affiliate while employed by SEIU; but, an ACORN produced report directly conflicts Becker’s statement.

ACORN’s “2006 YEAR ENDING – YEAR BEGINNING REPORTS” publication (a compilation of reports filed by ACORN organizations) declared that Becker while serving as SEIU Counsel was also a counsel for ACORN:

“Legal Representation – In the past we have used Steve Bachmann and the CCI legal team; SEIU counsel, Craig Becker; Art Martin in Southern Illinois…” (Emphasis added)[3]

In addition as the National Right To Work Committee’s report on Becker noted, ACORN’s Founder Wade Rathke produced some interesting commentary about Becker that contradicts his statement as well:

“Here’s a big win no matter how you shake and bake it: Craig Becker being nominated for a seat on the National Labor Relations Board (NLRB)! … having crossed paths with Craig for more than 20 years, finally we have a situation where a brilliant, effective, and pro-worker/pro-union lawyer will be on the NLRB. …

Other critics have expressed concern that Becker would try to implement provisions of the card check bill through regulatory maneuvers, outside of the legislative process.  The Wall Street Journal reports:

Mr. Becker's nomination has also become linked to the debate over the Employee Free Choice Act, also known as the "card check" bill. The measure would make it easier for unions to organize by allowing them to bypass secret-ballot elections in favor of a process that requires workers merely to sign cards agreeing to join. Unions say the bill is needed to limit employer harassment of pro-union employees, while businesses say it would rob them of adequate time to argue their case against unionizing.

The bill has been stuck in the Senate. At a hearing earlier this month, Georgia Republican Sen. Johnny Isakson expressed concern that Mr. Becker's writings "indicated a belief that the NLRB has the power to make some of the dramatic changes in the card-check bill" even if it doesn't pass. Mr. Becker suggested he now doesn't believe the board could take such steps. He said his writings were "intended to be provocative and to ask fundamental questions in order for scholars and others to re-evaluate."

In the absence of a risky recess appointment by President Obama, Becker's nomination to the NLRB is dead. This vote likely (and hopefully) signals the death of card check legislation as well.

Second stimulus (jobs) bill a job killer

Today's Morning Bell from the Heritage Foundation explains why the second stimulus bill (disguised as a jobs bill) will be a job killer:

The Las Vegas Sun reported this weekend that big labor leaders are pushing to include their long-sought “card check” provisions into Obama’s Second Stimulus. This legislation would effectively end a worker’s right to fight unionization through secret ballot elections, would give the federal government the power to run small businesses and would cost the American economy thousands of jobs.

The other major provisions of Obama’s second stimulus are also job killers. The $5,000 new worker tax credit does not create any incentive for already-struggling companies to begin long-term hiring. What’s worse, it could even increase unemployment; companies would delay existing plans to create jobs so they could take advantage of the tax credit. And it would add to our national debt. Then there’s the TARP-funded government-subsidized loans for small businesses. It’s a big-government program destined to fail since the Small Business Administration has a terrible record of effectively allocating capital to the private sector.

The card check bill, with the risible name Employee Free Choice Act (EFCA) would deprive employees of a secret ballot vote when considering whether to join a union.  But James Sherk at the Heritage Foundation asserts that the bill would also circumvent the collective bargaining process and give unfettered power to the federal government in the private sector workplace:

EFCA replaces good faith bargaining with government imposed contracts. Under Section 3 of the act (misleadingly titled "Facilitating Initial Collective Bargaining Agreements"), EFCA provides that—after unions organize a business—the company has 10 days to meet with union officials to begin collective bargaining. After 90 days of bargaining, either party may request mediation by the Federal Mediation and Conciliation Service (FMCS). Thirty days later, if the parties have not settled on a contract or agreed to extend negotiations, the FMCS

shall refer the dispute to an arbitration board established in accordance with such regulations as may be prescribed by the Service. The arbitration panel shall render a decision settling the dispute and such decision shall be binding upon the parties for a period of two years, unless amended during such period by written consent of the parties.[1]

This government-imposed arbitration radically departs from the foundation of the collective bargaining process: the principle of mutual consent. In place of the agreement of both parties, government arbitrators would simply impose working conditions on both employers and employees, whether such conditions are workable or not.

Sherk concludes:

EFCA does more than take away workers rights to vote in privacy. It also gives control of the workplace to government bureaucrats. Government officials would write the collective bargaining agreements of most newly organized companies. The government would set not just wages and benefits but all business operations that significantly affect workers, such as promotion procedures, retirement plans, health benefits, subcontracting, mergers, work assignments, even the machines used to run a plant. Employers would lose the ability to pursue their business strategies, and workers would lose all say about their workplace for two years. EFCA effectively constitutes a government takeover of America's workplaces.

Organized labor lost 10% of its members in the private sector in 2009 and lost its 60-vote union friendly Democratic supermajority in the Senate last month. Labor leaders are desperate to enact card check provisions which would make it easier to organize unions, and reverse the decline in union membership and influence.  The Republicans would be wise to keep a close eye on the fine print in the stimulus/jobs proposals that will emerge in the coming weeks and months.  They would also be wise to just say no.

Card Check equals a blank check for unions

As mentioned in a previous post, last night I had the privilege of attending a panel discussion and dinner hosted by the Atlanta Committee for Heritage and sponsored by the Heritage Foundation.  The featured speaker was Stephen Moore, Senior Economics Writer for the editorial page of the Wall Street Journal and a member of the Journal's editorial board.

Dinner was preceded by a panel discussion, Rescuing Enterprise and Free Markets in America, featuring Heritage fellows, James Gattuso and James Sherk, and Heritage Center for Data Analysis Director, Bill Beach.  I will post a video link of the event as soon as I find it.

Each speaker was informative and entertaining, but I was particularly struck by James Sherk's discussion of labor unions and the Employee Free Choice Act.  Let me take the liberty of condensing and paraphrasing his message:

Labor unions are cartels.  Just like OPEC, they endeavor to control prices (wages) by restricting the supply of their product (union labor).  Every job reserved for an inflated-wage-earning union member removes more than one non-union job from the marketplace.

Unions are experiencing a long term decline in membership.  Fifty years ago one in three Americans working in the private sector was a labor union member.  Today union membership among non-government workers is about 8%. According to the Cato Institute:

Labor leaders blame the decline on union-busting corporations, years of hostile Republican rule in Washington, and a flood of imports from low-wage countries such as China, but the main reason behind the decline of private sector labor unions in recent decades is the anti-competitive nature of unions themselves. Like a virus, labor unions have been slowly sapping the lifeblood of the very industries and companies that employ their members.

Sherk estimates that unions spent $1 billion dollars to elect liberal Democrats in the last election cycle.  A BILLION DOLLARS.  That money comes from member dues...members who often have no choice about paying the dues, and little say about how the money is spent.  This obscene total will only increase if the Employee Free Choice Act (Card Check) is passed, because it abolishes the secret ballot, making it easier for Unions to intimidate workers into joining, whether they want to or not.

If Card Check becomes law, Unions will be able to effectively "buy" elections into the forseeable future, presenting a potentially insurmountable obstacle to conservative candidates.