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Monday, August 27, 2012

Public Sector and Teachers Unions are Bankrupting America

“All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.” Franklin Delano Roosevelt, letter to Luther C. Steward, President of the National Federation of Federal Employees, of August 16, 1937.

In his August 19, 1937 letter to Luther C. Steward, the president of the National Federation of Public Employees F.D.R. went on to say:

“All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees. Upon employees in the Federal service rests the obligation to serve the whole people, whose interests and welfare require orderliness and continuity in the conduct of Government activities. This obligation is paramount. Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable. It is, therefore, with a feeling of gratification that I have noted in the constitution of the National Federation of Federal Employees the provision that "under no circumstances shall this Federation engage in or support strikes against the United States Government."

In 1955 George Meany, considered by many to be the father of the labor movement in the United States, said this about public sector unions:

“Nothing could be further from the truth. The main function of American trade unions is collective bargaining. It is impossible to bargain collectively with the government. Unions, as well as employers, would vastly prefer to have even Government regulation of labor-management relations reduced to a minimum consistent with the protection of the public welfare.”

That wasn’t Newt Gingrich, or Ron Paul, or Ronald Reagan talking. That was George Meany — the former president of the A.F.L.-C.I.O — in 1955. Government unions are unremarkable today, but the labor movement once thought the idea absurd.

The founders of the labor movement viewed unions as a vehicle to get workers more of the profits they help create. Government workers, however, don’t generate profits. They merely negotiate for more tax money. When government unions strike, they strike against taxpayers. F.D.R. considered this “unthinkable and intolerable.”

Government collective bargaining means voters do not have the final say on public policy. Instead their elected representatives must negotiate spending and policy decisions with unions. That is not exactly democratic — a fact that unions once recognized.

George Meany was not alone. Up through the 1950s, unions widely agreed that collective bargaining had no place in government. But starting with Wisconsin in 1959, states began to allow collective bargaining in government. The influx of dues and members quickly changed the union movement’s tune, and collective bargaining in government is now widespread. As a result unions can now insist on laws that serve their interests — at the expense of the common good.

In 1977 State Senator Ralph C. Dills (Democrat-32nd California Senatorial District authored the infamous act bearing his name authorizing collective bargaining for public sector unions in California. The bill was signed into law by Governor Jerry Brown in 1978, and as Frederic Bastiat stated; the unseen consequences began.

California is the nation's shameful example of what happens when Democrats influenced by big-government labor rule the statehouse for forty years. Jane Jamison wrote a very comprehensive article of the effects of the Dills’ Act in American Thinker in 2010:

With 12.5% unemployment (up from 4.5% a mere three years ago) and a "recognized" budget deficit of $21 billion, California has just found that out it is in much, much more financial trouble than anyone, especially a Democrat, really wants to admit.

California's governor Schwarzenegger commissioned a study by Stanford University, which has found that California's three public employee pension funds (The California Public Employees' Retirement System [CalPERS], California State Teachers' Retirement System [CalSTRS], and University of California Retirement System [UCRS]) lost $109.7 billion in portfolio value in one year (June '08 to June '09) and are currently in shortfall of "more than half a trillion dollars."

By law, California taxpayers are required to pay the public employees' pensions shortfalls that may occur. Local governments cannot "print money" as the federal government does to cover budget deficits.

What should have been considered a huge scandal in the state pension fund system in the past year got little attention but is more pertinent now: The two largest plans, CalPERS and CalSTRS, were reportedly near bankruptcy in 2009 after it was learned the funds had lost from 25%-41% of their value due to risky investments in real estate and the stock market. Former employees of the state plans were accused in January of getting huge fees to direct pension investments to certain banks or ventures.”


“Since Brown gave them a green light in the 1970s, public employee unions have become a muscular, dominating force in California politics. State employee unions spent a whopping $31.7 million on state races just from 2001-2006, according to the California Fair Political Practices commission -- higher than any other group, including corporations. The majority-Democrat California legislature has voted accordingly.”

There is a great new book available that explores the effects of government workers unions on our economy and politics. In his book, Government Unions and the Bankrupting of America, Daniel DiSalvo explains how Government-workers unions have been political juggernauts in the U.S. since the collective bargaining rights revolution of the 1960s and 70s. DiSalvo exposes how these unions have created cartels with their political allies, mostly in the Democratic Party, to the detriment of the taxpaying public.

Daniel DiSalvo, a political scientist at City University of New York and a senior fellow at the Manhattan Institute, is worried that public employee unions upset the balance of power in a democracy. While the title suggests the topic is about unions bankrupting government, the actual focus of the book is on how unions give undue political power to public servants. The effects of generous retirement benefits and paychecks on state and local budgets are only one part of his argument. It is a thesis worth considering.

In brief, DiSalvo suggests that public employee unions differ from private sector unions (as did George Meany and F.D.R.) in that they have the power to elect their own bosses. This means that the adversarial relationship that characterizes private sector unions and businesses can be replaced by a more cooperative relationship. Moreover, government jobs do not include the same restrictions as private service jobs. If a union demands too much from a private firm, they may raise that firm's costs enough to force it out of business. As a result, unions in the private sector have some limits on what they can ask for. German unions have known this for years and have a saying; “Du sollst nicht töten die Gans, die goldene Eier legt” – “Don’t kill the goose that lays the golden egg.”

By contrast, in the public sector employees do not have to worry about driving the government out of business, though state and local budgets do provide some limits to their ability to bargain. And the elected officials who approve their contracts do not have to pay out of their own profits: the money comes from taxpayers. Finally, a portion of this money winds up as public service union dues, and is used to fund political activities and candidates who will continue to support the interests of the union. For the most part, DiSalvo argues, these candidates and causes are synonymous with the Democratic Party.

The following video, prepared by Declaration Entertainment gives a brief, but great overview, of the problem facing America today of the influence and dangers of the public sector unions.

Daniel DiSalvo exposes how these unions have created cartels with their political allies, mostly in the Democratic Party, to the detriment of the taxpaying public

Usually it takes a national government to spend itself into a debt measured in the trillions. Yet it comes as little surprise that the same profligacy that pervades the corridors of federal power infects this country’s 87,000 state, county and municipal governments and school districts. By 2013, the amount of retirement money promised to employees of these public entities will exceed cash on hand by more than a trillion dollars.

An April 23, 2010 Washington Times editorial states:

“The reason pension plans are headed toward financial disaster is simple. Ever-expanding public-sector unions have flexed their political muscle and larded up with lavish benefits to be be paid out decades from now. In a properly run, private-sector business, future retirement benefits are paid for using present-day contributions. This is not the case when lawmakers have the power to boost public-employee benefit packages while using accounting gimmicks to conceal and pass on the debt to future generations.

California’s public-employee retirement system stands in the most perilous condition, facing a half-trillion in unfunded liabilities. That’s not surprising when you consider a California highway patrol officer can retire at age 50 and collect up to 90 percent of his salary for the rest of his life. According to the agency’s website, a typical officer’s pay will reach $109,147 after just five years on duty - an amount that can rise significantly with overtime benefits. That means a fit and healthy 50-year-old “retiree” who began work at age 20 would receive $98,232 a year from taxpayers for the rest of his life, and nothing prevents him from taking another government job to collect two paychecks. This form of double-dipping is rampant.

While most private-sector firms have trimmed their work force during the recession to achieve more efficient and profitable operations, public agencies have expanded. State and local governments employ about 15 million individuals, a figure that has jumped up 40 percent from 1992. By 2016, the number of state and local bureaucrats is projected to reach 20 million. Too many of these people are being promised far too much money, leaving state and local systems as bankrupt as Social Security, Medicare and other multitrillion-dollar federal entitlements.”

Steven Malanga, a senior fellow with the Manhattan Institute, wrote in Real Clear Markets in February, 2011 why Collective Bargaining Doesn't Work In the Public Sector:

Shortly after California voters passed Proposition 13 in 1978, open warfare broke out in the union movement between leaders of public and private worker groups.

In the Washington Post, an anonymous lieutenant of AFL-CIO president George Meany criticized the aggressive stance of Jerry Wurf, head of American Federation of State County and Municipal workers, in trying to defeat Prop 13, which capped property taxes. The problem, the Post pointed out, was that the AFL-CIO's members were the "taxpaying employers" of Wurf's workers and favored the tax and spending limitations of Prop. 13. "Jerry's big problem with the tax thing lies in convincing the rest of the trade union movement of the legitimacy of the positions he has taken," said the AFL-CIO official.

What a difference a few decades makes. Today, public sector unions dominate the union movement, including the AFL-CIO, and have become the chief lobbyists for higher taxes and more government spending in America. Meanwhile, defenders of government unions argue that any attack on them is an attack on unionization in general. So Wisconsin Gov. Scott Walker's efforts to trim collective bargaining for state workers has elicited a host of apocalyptic declarations from politicians heavily supported by government unions, including President Obama, who called Walker's agenda, "an assault on unions."


“George Meany himself once declared that "you can't collectively bargain with government,' and as government workers lobbied increasingly for unionization throughout the 1950s some private sector labor leaders resented the argument of their public sector counterparts that government workers were somehow oppressed and desperately in need of union protection. The period was one of reform, in which cities were already enacting civil service laws protecting government workers from being summarily fired, and employee associations rose to testify for public worker rights even, though these groups didn't have bargaining rights.

But the public sector union movement gained traction because of changing political currents. Unionization came to be associated increasingly during that period with the Democratic Party thanks to legislation like the 1935 Wagner Act, sponsored by New York Democratic Senator Robert F. Wagner, which gave private sector workers the right to bargain. As unions played an increasingly important role in the Democratic Party in the 1940s and 1950s, their political value became apparent to elected officials like Sen. Wagner's son, New York City Mayor Robert F. Wagner, Jr. Mayor Wagner jolted the public sector union movement into life when in 1958 he gave city employees the right to collectively bargain, in the process making them valuable political allies in his reelection bid and igniting a series of similar moves by other politicians in cities and states across America.

What happened next confirmed the fears of many critics. The 1960s were a time of government strikes, including several dozen in September of 1966 by teachers that shut down school systems in some of our largest cities. When cities and states responded with laws outlawing strikes among government workers, unions developed a new strategy, concentrating their firepower in state capitals and city halls to elect leaders sympathetic to their cause. Over time they've become the biggest players in places like Sacramento, Albany and Madison, and such a permanent presence that every effort at reform is eventually undermined.

In the late 1970s, for instance, New York State enacted changes to its pension system for state and local workers after rich employee perks played a role in New York City's near bankruptcy. But over time public workers clawed back their benefits so that today, as Gov. Andrew Cuomo said during his election campaign, public pensions are unsustainable in the Empire State. In New York City alone pension contributions in one decade have gone from $1.5 billion annually to $7 billion, straining the city's budget.

California enacted pension reforms in 1991 which limited the impact of pensions on the state budget. But in 1999, Gov. Gray Davis and the state's Democratically controlled legislature wiped out those reforms, retroactively putting everyone who had joined the state's workforce in the 1990s into a new, richer system so that today California has unfunded pension liabilities ranging from $200 billion to $500 billion.

That's become a strategy of public worker unions. They fight reforms, but if they lose they wait 'till they can elect a new set of more sympathetic legislators and then reclaim their gains.

Public unions are bolstered by the fact that government never goes away, unlike private businesses where unions overreach. In the public sector, there are always taxpayers to turn to when a pension system or health care plan needs to be bailed out thanks to rich giveaways to unions.”

According to the laws of the federal government and most states strikes are illegal for federal workers and many state and local government workers, but that does not prevent strikes from happening. New York City transit workers, Tacoma Washington teachers, Detroit teachers, and postal workers have all gone on strike illegally. When the Professional Air Traffic Controllers struck in 1981, in violation of federal law, PATCO president Robert Poli snapped: “The only illegal strike is an unsuccessful one.” PATCO’s strike was unsuccessful because President Reagan fired all the air traffic controllers who refused to follow his order to return to work.

On August 3, 1981, the union declared a strike, seeking better working conditions, better pay and a 32-hour workweek. In addition, PATCO no longer wanted to be included within the civil service clauses that had haunted it for decades. In doing so, the union violated a law — 5 U.S.C. (Supp. III 1956) 118p. — that banned strikes by government unions. Ronald Reagan declared the PATCO strike a "peril to national safety" and ordered them back to work under the terms of the Taft-Hartley Act of 1947. Only 1,300 of the nearly 13,000 controllers returned to work.[4] Subsequently, Reagan demanded those remaining on strike return to work within 48 hours, otherwise their jobs would be forfeited. At the same time, Transportation Secretary Drew Lewis organized for replacements and started contingency plans. By prioritizing and cutting flights severely, and even adopting methods of air traffic management that PATCO had previously lobbied for, the government was initially able to have 50% of flights available.[4]

On August 5, following the PATCO workers' refusal to return to work, Reagan fired the 11,345 striking air traffic controllers who had ignored the order, and banned them from federal service for life. In the wake of the strike and mass firings, the FAA was faced with the task of hiring and training enough controllers to replace those that had been fired, a hard problem to fix as, at the time, it took three years in normal conditions to train a new controller. They were replaced initially with nonparticipating controllers, supervisors, staff personnel, some nonrated personnel, and in some cases by controllers transferred temporarily from other facilities. Some military controllers were also used until replacements could be trained. The FAA had initially claimed that staffing levels would be restored within two years; however, it would take closer to ten years before the overall staffing levels returned to normal. PATCO was decertified from its right to represent workers by the Federal Labor Relations Authority on October 22, 1981. The decision was appealed.

Some former striking controllers were allowed to reapply after 1986 and were rehired; they and their replacements are now represented by the National Air Traffic Controllers Association, which was organized in 1987 and had no connection with PATCO. The civil service ban on the remaining strike participants was lifted by President Bill Clinton in 1993.

But how would another federal worker strike transpire on President Obama’s watch?

According to Mallory Factor writing in National Security Unions represent a threat to America’s safety:

“Most people believe that while many other classes of government workers are represented by Big Labor, our military and national security employees cannot be unionized. But is that really true?

Could President Obama unionize our armed forces? Our active duty military, comprising about 1.5 million servicemen and women, cannot be unionized under current law. But our full-time national defense includes more than 700,000 civilians who are integral to our military. These civilian Defense Department employees are already almost 60 percent unionized. This means that our entire full-time military, including civilians, is more than 20 percent unionized. As former Pentagon chief Donald Rumsfeld told me: “Even the Department of Defense has come under the influence of unions.” Government unions are on our military bases and inside the Pentagon, determining workplace rules and norms, filing grievances, and influencing personnel decisions in these sensitive job sites.

What about national-security workers? The 1978 Civil Service Reform Act explicitly bars collective bargaining among CIA, FBI, NSA, and Secret Service employees. But many staffers who work for other sensitive security agencies have already been unionized.

Transportation Security Administration (TSA) baggage screeners could not bargain collectively until President Obama’s TSA Administrator, John Pistole, subjected them to unionization in 2011. Although less than 40 percent of TSA workers voted in the runoff election between two unions seeking to represent them, all 44,000 TSA baggage screeners today, and all future screeners hired will be spoken for by the winning union — the American Federation of Government Employees (AFGE) — absent an unlikely union-decertification election. That is how government unions work — once a union wins certification in a workplace, the union is the exclusive representative of that group of employees in perpetuity with no further vote required. Ever.”


“If national-security employee unions haven’t created enough policy concerns already, President Obama is giving government employee union unprecedented input into policies affecting the federal workplace. Early in his administration, President Obama issued Executive Order 13,522, which requires federal departments and agencies to consult with these unions before setting almost any workplace policy—even on matters over which these unions cannot lawfully bargain. Never before have government officials needed to first consult union officials before making workplace rules and personnel policies. It is hard to imagine what greater powers the president could give these unions over the federal workforce and workplace. The one certainty, however, is that greater union control will be on the agenda of a second Obama Administration.

As more and more sensitive civilian national security and military jobs are unionized, this sets the terrible precedent to change the law and unionize our active-duty GIs, CIA members, FBI agents, and any other federal security workers not yet captured by the labor bosses. While the government-employee unions would love to swell their ranks and dues income, Americans must resist the temptation to let any private interest, especially strike-happy unions, wrest control of our critical and sensitive government workplaces.”

While the power and influence of private sector unions decline in the United States due to outsourcing public employee unions are on the rise, and have been for the past 20 to 30 years. Industries such a steel, auto, electrical appliances, computers, and rubber tires have gone out of business or moved their operations to India, China, or Mexico. Foreign and domestic manufactures have moved their operations out of the traditional “rust belt” states to southern climes where there are right to work laws and they do not have to deal with unions and their demands. In essence the goose of our traditional manufacturing sector died years ago.

According to a new report Co-authored by former Secretary of Homeland Security Tom Ridge and former Assistant Secretary for Infrastructure Protection Robert B. Stephan From 2000 to 2011, nearly 66,484 U.S. factories closed, and millions of skilled manufacturing workers lost their jobs. We've lost capacity to make drywall, steel, concrete, antibiotics, high-tech circuit boards--the list goes on. Most of these were private sector union jobs,yet the union drones will continue to support the Democratic Party.

On the other hand a new goose was born — and this goose is named the American Taxpayer. The public sector unions have a goose with an unending supply of golden eggs – or at least until the nation or state goes bankrupt. They will continue taking more and more of these eggs and giving some to the politicians that will give more opportunities to plunder the taxpayer as long as the unions will keep them in power.

Unless the voters come to realize that this cycle of public sector unions and bureaucrats supporting politicians and politicians handing out golden eggs to the public sector unions can be broken we will continue to amass more and more public debt and unfunded liabilities. Scott Walker has shown us the way, but it will be tough row to hoe. If you have any doubts just watch the upcoming Democratic National Convention and see all of the special interest groups (including public sector unions) laying their claims on the Democratic Party.

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