July 19, 2012
Public-Sector Unions In ChargeBy Michael Bargo Jr.
Chicago's Mayor Daley (1955-1976) was the most powerful American mayor of the 20th century. He accumulated power by expanding Chicago's city and county payrolls with "patronage workers." Those workers, along with their families and relatives, would work for his campaigns and vote for him. This dependence on public-sector union workers established a permanent symbiotic relationship between elected officials and government hiring1.
Now the public-sector unions are much larger and more influential: since 1989, of the ten largest national campaign contributors, four are public-sector unions. The AFT (American Federation of Teachers) now has 1.5 million members in more than 3,000 local affiliates nationwide.
As a result, the power dynamics have changed; while Daley put people under obligation2 to him for their jobs, unions have recently made the Democratic Party beholden to them for campaign money and votes.
What do public-sector union members receive in return for supporting Democrats? The answer is best found in Illinois, since it has the most governmental units of any state at 6,0393. Because President Obama learned politics there, his national actions are best understood in the Illinois context.
In Illinois, the largest campaign contributors are teacher unions4. Their public-sector power provides a case study of union control taken to the extreme. Teachers in Illinois public schools are required by state law to contribute 9.4% of their pay to the TRS (teacher retirement system). But a study by the Illinois Policy Institute found that while there are 867 school districts in Illinois, in 555 of them, the teachers pay only some or none of that 9.4%. Their 9.4% contribution is paid for by income and property taxes. And this exploitive arrangement was made in secret, with no input from the local homeowners. College administrators continue to hide their income and benefits from taxpayers.
By comparison, workers in private sector jobs must pay into Social Security. Consider the differences between the pension deal public-sector unions get in Illinois and the one for those who pay Social Security. In 1960 the Supreme Court ruled that Social Security is not a contractual arrangement between Congress and working Americans. Congress, the high court ruled, has the right to "amend and revise" the Social Security entitlement program at any time.
But those pension agreements made with public-sector workers cannot be changed. In fact, the 1970 Illinois state constitution (Article XIII, Section 5) states that "[m]embership in any retirement or pension system of the State, any unit of local government or school district ... shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired."
The same type of contractual pension arrangement exists in Pennsylvania. The mayor of Scranton said the public-sector union pensions and benefits must be paid. All cities undergoing bankruptcy procedures say that their pension liabilities are a major cause of the bankruptcy. Unions in Pennsylvania, Illinois, and California are using lawsuits to get their benefits; even though those benefit packages caused the bankruptcies in the first place.
So average workers in the private sector are paying for their own Social Security, which is not a contractual agreement, plus the pension of public-sector workers, whose pension is a contractual agreement. Similarly most federal employees have their own pension programs, including those who work at the Social Security Administration.
After many Democrats lost elections in 2010, public-sector unions have gone on the offensive to retain their power. In Wisconsin, when newly elected Republican Governor Walker asked the state legislature to pass a bill that would weaken public unions' collective bargaining powers, union bosses ordered Democrats to aggressively defend their status. Fourteen Democrats cowered before their union bosses and obediently walked out of the state. They boycotted the legislative process.
In Indiana, the same thing happened when its Republican Governor Daniels proposed a change to union bargaining rules: Democratic legislators fled the state capitol and refused to vote on the legislation.
Since the public-sector unions' reach extends to Washington, the unions' contracts are now financed at the national level. After Democrats lost congressional seats in the 2010 election, frustrated Democrats sought to reassure the union bosses that their programs would still receive federal funding.
Governor Perdue of North Carolina suggested that the nation "suspend congressional elections," while Congressman Jesse Jackson, Jr. recommended that the president unilaterally raise the debt ceiling to "bail out cities and states." Congressman Jackson wanted to continue to send money to city and state public unions. The gigantic Stimulus and ARRA (recovery and reinvestment act) spending programs went primarily to fill up the public-sector union coffers of cities and states. The authors of "Guaranteed to Fail" stated that it was a concern to keep money flowing to cities and states that caused the policy changes that led to the mortgage meltdown5. And I have explained here that the primary beneficiaries of illegal immigration -- Chicago was the first official Sanctuary City -- are public-sector unions.
It cannot be said that both political parties pander to public unions. AFSCME, for example, gives 92% of its campaign money to Democrats; the SEIU, 75%. Neither one gives more than 2% to Republicans. In states like Illinois, they are the biggest contributors of campaign money to Democrats6. So it's not possible for Democrats to deny responsibility for this quid-pro-quo arrangement by saying that both parties do it.
Because they have so much power, this super-duper-PAC of public-sector unions now has complete control of many units of government at the state, local, and national levels. And they will not allow their pensions to be reduced. Every city government that is going bankrupt is proof of this.
The majority of public-sector pension plans can be most accurately described as Ponzi schemes: where the first members to enroll pay little into the system, and in later decades, the obligations to taxpayers become enormous. Moody's estimated that public pensions have $2.2 trillion in obligations. This is why municipalities are now going bankrupt. It is not illegal for public-sector union pensions to be Ponzi schemes -- only private sector investment plans, such as that perpetrated by Bernie Madoff.
Since the public-sector unions now control the legislators in most states and Washington, they, not the taxpayers, are in control of government. They tell the politicians how much your property tax bill will be, and they keep the money. In effect, a super-PAC of public-sector union bosses, including the SEIU, AFSCME, American Federal of Teachers, and other Teachers Unions, now control the U.S. and its economy.
1Rakove, p. 248.
2Rakove, p. 6.
3Nowlan et al. p. 161.
4Nowlan et al. p. 33.
5Acharyla et al. p. 5.
Acharyla, Viral V., Richardson, Matthew, Nieuwerburgh, Stijn Van, and White, Lawrence J. 2011. Guaranteed to Fail: Fannie Mae, Freddie Mac, and the debacle of mortgage finance. Princeton, NJ: Princeton U. Press.
Nowlan, James D., Samuel K. Gove, and Richard J. Winkel, Jr. 2010. Illinois Politics: A citizen's guide. Urbana and Chicago: U. of Illinois Press.
Rakove, Milton. 1979. We Don't Want Nobody Nobody Sent. Bloomington, IN: Indiana U. Press.
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