Union Sleaze Reaches New Heights

I don’t want the folks who created the mess to do a lot of talking. I want them to get out of the way so we can clean up the mess. I don’t mind cleaning up after them, but don’t do a lot of talking.

• Pres. Obama, August 6, 2009
  

Pres. Obama’s illiberal penchant for suppressing dissent aside, beggars shouldn’t be choosers. The beneficiaries of bailouts – the UAW, Fannie Mae, the various banks who have only partially repaid their debt – should not be the architects of their own bailouts. While the business of Washington is to take from the many and give to the few, Obama was at least drawing some sort of line with his comment when it came to inside political dealing. That is until the public employee unions entered the bailout game. As it turns out Obama’s masters are above his simple rule.

Last week, Sen. Casey introduced a $165 bln bailout for underfunded union pensions. Like most savings, these pensions were hit by the collapse of 2008. Further complicating matters, a properly run pension must reduce its risk when underfunded, so many pensions did not benefit as much from the bull run of 2009. Unlike ordinary people, when a union’s savings are lost, there is no belt tightening or even a slowdown in spending growth. If the Democrats have their way before November, the unions will get a full bailout.

Just as Fannie spent millions lobbying Washington right up to the moment of its collapse, unions spend hundreds of millions each presidential election cycle supporting sympathetic candidates and ballot measures. Unions have no compunction toward assessing special political dues from their membership to fund these lavish campaigns that nearly exclusively benefit Democrats. Clearly union bosses think their membership have disposable income to fund politics, but not to shore up their pensions; not a peep from the unions about moderating salaries to shift total compensation toward underfunded pensions.

The union bosses have concluded that investing in lobbying has a higher return than fully funding their pension plans. Fannie’s bailout is a good indication that the Washington way does indeed pay off. Unlike Fannie’s Wall Street cousins, Fannie has done nothing to pay back its bailout loans; indeed Fannie has just asked for billions more. Likewise, the union bailout will never be repaid. Also unlike Wall Street, Congress is doing nothing to reign in Fannie’s risk taking. To suggest that unions should reign in their lobbying or benefits costs to shore up their own finances seems quaint.

As long as the Washington bosses can wet their beaks on graft from the union bosses, the comfy cycle of corruption can go on. $165 bln in union bailouts with no strings attached is a small price to pay to keep the Democrats’ biggest gravy train on its tracks. Rather than ask November’s candidates their position on 40 year old civil rights laws, perhaps NPR could ask something about this bill and why Americans should give billions to union bosses only so they can funnel more money back to Washington insiders.

To borrow from Sen. Bob Dole, “where is the outrage?”