About Liz Iacobucci

Liz Iacobucci is the former Public Information Officer for the State Employees’ Association of New Hampshire, SEIU Local 1984. Over the past three decades, she has served in government at the federal, state and municipal levels; and she has worked for both Democratic and Republican politicians.

Feel Like There’s A Target On Your Back? Multiple Lawsuits Target Unions

Image by ogimogi 
CC Flikr
Image by ogimogi  CC Flikr

Image by ogimogi
CC Flikr

All these lawsuits asking the Courts to rule against unions?  They’re NOT about First Amendment rights.

And now, one of the groups behind the lawsuits is admitting that.  And they’re saying it’s about stopping public sector unions. 

And they’re even portraying it as a strategic assault. 

Read it for yourself in this week’s National Law Journal: “Courts Should Seize the Opportunity To Disempower Public-Worker Unions” (free registration required).

They’re looking at this as a one-two punch. First: Harris v. Quinn (Supreme Court ruling expected any day now). Then, the NLJ editorial suggests, Friedrichs v. California Teachers Association could deliver the final blow.

“Although there may not be five votes to end compulsory dues in the Harris case, Friedrichs v. CTA could provide the pivotal fifth vote for fundamentally re-ordering of public-employee union law.”

While you’re reading… don’t forget to translate!

  1. “Compulsory dues” translates to “union agency fees” (which cover the costs of negotiating and administering the contract, and nothing else.  Agency fees are NOT union “member dues”.).
  2. “Law that requires all public employees to join and support a union as a condition of employment” actually refers to California Government Code Chapter 10, which establishes a framework for teachers to collectively bargain – if they want to.  (Just like NH RSA 273-A provides a framework for collective bargaining; yet New Hampshire has lots of public workers who are not represented by any union.)

Don’t forget to look at the players!

  1. Plaintiffs in the Harris case are being represented by the National Right to Work Legal Defense Foundation… which is affiliated with the National Right to Work Committee… which those of us here in the Granite State know all-too-well, right?
  2. According to the NLJ editorial, plaintiffs in the Friedrichs case are being represented by the Center for Individual Rights.  Read the Sourcewatch article here.
  3. But according to the actual Court filings in the Friedrichs case… plaintiffs are being represented by the law firm Jones Day.

Yeah, Jones Day.  Seems they’ve been quite active lately. The City of Detroit bankruptcy. The Patriot Coal bankruptcy. The Hostess Brands bankruptcy.   Verizon’s “de-risking” of its pension obligation.

And, can’t forget the Court case over nominations to the National Labor Relations Board.  (Read “How They Won It: Jones Day Invalidates Obama’s NLRB Picks” here.)

Are you feeling targeted yet?

Remember: you’re not the only one being targeted these days, you’ve got lots of company.  Public employees everywhere.  Anyone with a union pension or health care benefits.  Workers, in general.  The middle class.

Education is the best way to fight disinformation campaigns. Please share this with your friends on Facebook, or Twitter, Google, LinkedIn, or other social media.  It’s really easy; just click the buttons on the left.

No, It’s About Profits, Not “Free Speech”

US Corporate Profits 1947-2013

Don’t be fooled.  Yesterday’s Supreme Court hearing in Harris v. Quinn was about corporate profits – the cold, hard cash that employers can save when they break their workers’ union.

No, it wasn’t about employees’ First Amendment rights.  You can safely ignore all that flowery rhetoric from the Plaintiffs’ lawyers (who are from the National Right to Work Legal Defense Foundation… are you beginning to get the picture?)

If those lawyers actually cared about First Amendment rights, they would be challenging the Hatch Act or all those state-level laws that restrict the political activity of public employees.  Or they would be standing up for some of the workers who have been fired by private employers for “talking politics” at work.  (Guess what?  In most states, discrimination because of personal political actions or affiliations IS LEGAL.)

But no, no, those lawyers are going after union agency fees.  Basically, they’re trying to impose so-called “Right to Work” across the nation through a court decision – bypassing all those state legislatures, and asking the Supreme Court to become “activist judges” and overturn long-settled federal labor law.

Whodathunkit, from supposed “conservatives”?

Whodathunk that “conservatives” would want to restrict employers’ rights to deal with their own employees in the way they see fit?  Fact is: the employer decides whether or not to agree to fee-payer arrangements in a union contract.  If employers don’t want to have all their workers paying a fair share of collective bargaining costs… well, there lots of other things to bargain about (like, maybe, better health benefits; or job security).

Nope.  This isn’t an argument about highfalutin ideals, or anybody’s rights.  (It’s well-settled law that workers give up some of their First Amendment rights, just by accepting a job.)

This is simply about the fact that prohibiting union agency fees effectively cuts wages – by about $1,500 per employee per year – and that adds to corporate profit margins.

Which are already “at an All-Time Record Peak and Expected to Grow in 2014.”

Got the picture?

 

Racing to Blame Public Workers for State Finances

Suffolk Downs

Suffolk DownsAnd… they’re off, on a new round of attacks on public pension systems nationwide.

When you hear about this week’s Mercatus Center report on the financial condition of all 50 states… start by considering the source.  Mercatus is housed at George Mason University, so it has a veneer of academic credibility.  But here’s what SourceWatch has to say:

“The Mercatus Center was founded and is funded by the Koch Family Foundations. According to financial records, the Koch family has contributed more than thirty million dollars to George Mason, much of which has gone to the Mercatus Center, a nonprofit organization.”

The last time George Mason University really hit the headlines was in 2012, when a faculty economist authored a doomsday report about how horribly Sequester cuts would affect… the Defense Industry.

(Meanwhile, military contractors seem to be doing just fine.  Back in November’s budget compromise, Congress gave the Pentagon more than $1.3 billion for programs it didn’t want.  And according to Reuters, there’s not much oversight of all that money.  “The Pentagon … has not complied with a law that requires annual audits of all government departments. That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for.”)

But I digress.

The thing that strikes me, about this week’s Mercatus report, is that once again it tries to blame public workers for whatever is wrong with state finances.

  • It doesn’t say a thing about corporate giveaways, such as Washington state’s recent biggest-in-US-history giveaway of $8.7 billion to Boeing.

According to a New York Times analysis, these so-called “economic incentives” add up to big money: “Oklahoma and West Virginia give up amounts equal to about one-third of their budgets, and Maine allocates nearly a fifth.”   But do these incentives actually work?  The Times couldn’t find any evidence.

  • It doesn’t say a thing about revenues.  Just try Googling “state tax cuts”.  Out in Wisconsin, Scott Walker’s going to cut taxes (even more than he already has).  Chris Christie wants to cut taxes (even more).  Dave Heineman, out in Nebraska, is going to cut taxes.  Even Andrew Cuomo is pitching tax cuts.

But, let me digress again.  Out there in Nebraska, they actually studied the “economic stimulus” effect of tax cuts.  Here’s what they found:  even accounting for the “stimulus effect”, a $100 million reduction in regressive sales/use taxes would have a “net revenue impact” of (negative) $79.45 million… while a $100 million cut in income taxes would have an impact of (negative) $93.58 million. That’s right, neither of these types of tax cuts would be good for the state budget; but one of them is much worse than the other.  So, guess which type of taxes Governor Heineman wants to cut (rather than expanding Medicaid).

  • It doesn’t say a thing about how Wall Street’s “robust recovery” has affected public pension funds.  After losing a TRILLION dollars between October 2007 and October 2008, public pension trust funds are finally beginning to recover.  Here in New Hampshire, last year, investment returns added $818 million to our Retirement System Trust Fund.  How big is that number?  The NHRS Trust Fund started the year with less than $6 billion.  It paid benefits totaling about $630 million.  Do the math yourself: last year, investment returns paid for every single penny of benefits… and still increased the Trust Fund.

So yeah, maybe you should take all those Mercatus Center headlines with a grain of salt.

Or a bushel.

As Amy Traub says: your mailman didn’t make the economy collapse.

And public employees aren’t responsible for the damage that has been done to their state budgets.  (We’re just the workers, remember?  It’s the elected officials who decide how many billions to give away to private corporations.)

Worried About The Size of The Federal Debt? There’s Another Number That Should Really Scare You.

Fat Chance - Banks Take Responsibility for the Financial Crisis by Michael Smith via Flikr

Fat Chance - Banks Take Responsibility for the Financial Crisis by Michael Smith via Flikr

$53 trillion.

More than THREE TIMES the entire federal debt.

According to Saturday’s New York Times, that’s the amount of money currently held by US-based “too-big-to-fail” financial institutions.

“Too-big-to-fail” has been around for a while.  It dates back to the Reagan administration’s takeover of Continental Illinois National Bank and Trust Company, which was then the seventh-largest US bank.

And it’s been a growing problem ever since.

Here’s why: “TBTF” distorts the economy.  In theory, in a capitalist economy, there should be a relationship between risk and reward.  In theory, people who can’t afford to lose their money will chose “safe” investments, even though they have a lower rate of return; and even those people who can afford to lose money will take fewer risks.

But that’s only in theory.  In reality, TBTF has separated “risk” from “reward”.  The financial industry is now operating on the belief that if the loss is big enough, the government will step in.

It’s sort of like insurance… only, the financial industry doesn’t have to pay for it.

A year and a half ago, one Federal Reserve Bank economist estimated the TBTF effect is worth between $450 and $900 billion a year.

“The existence of the implicit subsidy enabled these companies to become larger and more complex than otherwise would have been the case. TBTF institutions respond to the subsidy by increasing their risk through either engaging in riskier activities or increasing their leverage. While these actions may be privately optimal, the response to the TBTF subsidy is not socially optimal, as it can pose huge risks to the financial system.”

(Gotta love that economist-speak…“Not socially optimal,” indeed.)

Even since the 2007 Wall Street meltdown, financial institutions have continued to take advantage of their TBTF status.  TBTF institutions are still getting bigger and taking more risks.  Here’s how Forbes described the situation last year:  “Banks today are bigger and more opaque than ever, and they continue to trade in derivatives in many of the same ways they did before the crash, but on a larger scale and with precisely the same unknown risks.”

And now, a half-decade after the bailout, the TBTF institutions are worth $53 trillion.

So why am I comparing the size of the financial industry with the size of the federal debt?

I was trying to figure out the current level of taxpayer exposure, in this “not socially optimal” arrangement.  In other words: if the financial industry implodes again, how much government money is it going to cost us?  And I figured the best way to figure that out was to look at what happened in the most-recent TBTF bailout.

As near as I could figure, from what’s easily available on the Internet: back before the 2007 meltdown, TBTF institutions were worth a total of about $2 trillion.  The 2008 bailout bill appropriated $700 billion to deal with the crisis — or, roughly one-third of the total value of TBTF institutions, before they started to fail.

The federal budget was already running a deficit.  That means: in order to fund the bailout, Congress had to borrow an amount equal to one-third of the pre-crisis value of those TBTF institutions (using my “as near as I can figure” estimate).

But those TBTF institutions are bigger now; and that means if they fail, any federal government bailout would need to be bigger, too.

TBTF are now worth $53 trillion. Do the math.  If there is another Wall Street meltdown; and another bailout; and this next bailout also requires the government to borrow an amount equal to one-third of what TBTF institutions are worth now…

Well…one-third of $53 trillion is…almost exactly the current amount of the federal debt.

In other words, the next financial meltdown could double the national debt.

Are you scared yet?

Excuse me, Mr. Donohue, WHO is “Taking from the Young”?!!

grandfather

grandfatherNo.  Just…no.

As a parent, I am absolutely revolted by Tom Donohue’s apparent attempt to incite a political war between the generations.

Yes, I understand that as America’s top business lobbyist, he would prefer the federal government to cut spending on Social Security and Medicare.

And yes, if the federal government spends less money taking care of our senior citizens, there will be more money available for corporate handouts.

But from my own perspective, the federal government already spends enough money on corporate handouts.  The average American family is now paying $6,000 a year in subsidies to big business.

Yet, based on yesterday’s speech, it looks to me like Mr. Donohue is willing to pit children against their grandparents, in order to get even more.

wealth share 1983-2010Mr. Donohue: it’s not our senior citizens who are “taking” wealth away from the next generation.

Look at what’s happened to the distribution of wealth since Ronald Reagan was President. 

Sixty percent of households LOST wealth… while those at the top of the economic ladder gained massively.

Look at what’s happened to annual income since Ronald Reagan was President.

income gains 1986-2008All the growth went to the richest 10%, while incomes for the bottom 90% declined.

The pattern holds true even during the current economic “recovery”.  According to economist Emmanuel Saez, “The top 1% captured 95% of the income gains.”

So yes, Mr. Donohue, it looks like this next generation will end up with a lot less than their grandparents had.

But no, Mr. Donohue.  It’s not our senior citizens who are “taking” that wealth away.

And you’re not going to start an inter-generational political war, to distract us from what’s really going on.

The Rules change that could end gridlock in the US House

GOP pretzels

Record dysfunction in Congress: it’s NOT just the Senate, and NOT just the filibuster.

Republican extremists in the House have also been using parliamentary tricks to block legislation – including bills that had bipartisan support and would have passed if our elected Representatives were actually allowed to vote.

“The use of ‘closed rules’ has excluded most House members from full participation in the legislative process,” Rep. Louise Slaughter, ranking Democrat on the House Rules Committee, wrote earlier this week.

“Under a closed rule, no amendments are allowed on the House floor. As a result, House Republicans are able to pursue a politically driven agenda without allowing commonsense amendments that could achieve bipartisan compromise.  This approach has also empowered the most extreme members of the House to pursue narrow policy goals at all costs.”

Like, say, the government shutdown.

“On Sept. 30 — the eve of the government shutdown — Republicans on the House Rules Committee changed the rule so only House Majority Leader Eric Cantor (R-Va.) could call up a Senate-passed clean funding bill — a bill that has the votes to pass the House and would end the shutdown, if it were given a vote.”

One man, standing in the way of a vote that impacts millions of Americans.  (Remind you of anything?  Such as: then-Senator Scott Brown single-handedly blocking an extension of unemployment benefits, back in 2010?  The Senate couldn’t vote until they added an extension of Bush-era tax cuts for the wealthy.)

This is what’s REALLY wrong with Congress:  our elected Representatives aren’t being allowed to vote on legislation that has bipartisan support.

GOP leadership is using the “closed rule” process to keep the House from passing legislation.  Last year was the most “closed” year in House history.  “In fact, the House GOP passed as many closed rules in a single week in October as during the entire last year of Rep. Nancy Pelosi’s (D-Calif.) speakership.”

The Senate is finally reforming the filibuster.

Isn’t it time for the House to reform the “closed rule” process?

Is Detroit REALLY “broke”? Because The Math Does Not Add Up

Louis-Philippe Duc d' Orleans Saluting His Army on the Battlefield

Louis-Philippe Duc d' Orleans Saluting His Army on the BattlefieldCan’t help wondering about this scenario.

The City of Detroit owns one of the finest art museums in the world.  On Wednesday, Christie’s auction house released its appraisal of… just 5% of Detroit’s artwork.  According to Christie’s, that small fraction of the collection is worth somewhere between $452 and $866 million.  Earlier, outside experts had given a ballpark estimate of $2.5 billion – for just 38 of the museum’s 66,000 pieces.

But Detroit can’t afford to pay its retirees’ pensions?

Far more troubling is the fact that the city apparently didn’t seek federal grant money before seeking bankruptcy.

Imagine yourself in the shoes of Kevyn Orr, the “Emergency Manager” that Governor Rick Snyder appointed back in March.  If YOU were walking into a place that was in fiscal trouble, wouldn’t you look around for revenues?  (Anybody else remember “Mediscam”?)

Yeah, well, that’s apparently NOT what Kevyn Orr did.

Back in September, federal officials identified more than $300 million in grant monies that Detroit was eligible for… but somehow… hadn’t gotten.

Democratic  Sen. Carl Levin: “There are dozens and dozens of programs available – some they haven’t applied for… some have been granted and are simply sitting there waiting for the city to do what they need to be doing.”

Yep, that’s what he said: “simply sitting there, waiting for the city” (which is now headed by Emergency Manager Kevyn Orr) to do what needs to be done.

Think about all the press stories you’ve seen, about Detroit’s financial situation.  Then look at the money that was “simply sitting there” waiting for federal officials to point it out:

  • Public safety concerns? Turns out there was $28 million in federal money available to hire police and firefighters, purchase equipment and pay for programs.  Plus about another $2 million available from private foundations.
  • Public transportation issues?  There was more than $130 million in federal money to repair buses, install security cameras and expand service to areas outside the city.  Plus another $3.3 million in private foundation monies.
  • Neighborhood blight?  More than $85 million in federal money to rehab (or demolish) housing units, clean up brownfields and otherwise fight blight.  Plus another $13 million from private foundations.
  • Bleak future?  Federal officials identified another $32 million in private grant monies to help Detroit plan for its future, upgrade its technology, train its residents and bring retail and creative industries back to the city.

Now, think again about Mediscam.  In New Hampshire, public officials faced with fiscal problems got (ahem) “creative” in order to maximize federal funds.

But in Detroit, Emergency Manager Kevyn Orr left more than $300 million in grant monies… sitting there.

Now, let’s look one more level down.

All the press reports about Detroit focus on that “$18 billion” of total debt.  That includes not just pensions and retiree health care liabilities, but also all the usual long term bonds that large municipalities have (about $3.7 trillion total, nationwide).

In a bankruptcy proceeding, the question shouldn’t be “How much does Detroit owe?”  The question SHOULD be “Can Detroit afford to pay its bills?”

And – with different political leadership – the answer to that question could easily be “yes”.

At the end of each fiscal year, public entities prepare a “Combined Annual Financial Report” that provides useful information about their finances.  Detroit hasn’t released its 2013 CAFR yet (even though the fiscal year ended more than five months ago).  But here’s what Detroit’s auditors said, in their 2012 Comprehensive Annual Financial Report:  “The City has an accumulated unassigned deficit in the General Fund of $326.6 million as of June 30, 2012, which has resulted from operating deficits over the last several years.”

So… as I do the math… those operating deficits have been accumulating over several years… but just ONE year’s worth of those grants (which have been “just sitting there”)… could almost completely offset that accumulated deficit.

Whoa… without even touching that art collection?  (And without restoring state revenue-sharing that was cut under Governor Rick Snyder?)

Maybe it’s just me… but I can’t help suspecting there is something else going on here, OTHER than fixing Detroit’s finances.

 

 

Today, public employee retirements; Tomorrow, the rest of America

constitution

constitution
Yesterday was NOT a good day for public sector workers who think they can rely on long-promised pension benefits.

  • Detroit: Yesterday, a federal bankruptcy judge ruled that even the state constitution did not protect workers’ retirement benefits.
  • Illinois: Yesterday, the state Legislature passed a law reducing pension benefits and prohibiting collective bargaining on pensions.

Both of these violations of workers’ rights are being justified on the theory that the retirement systems are in such “dire” shape.  The rhetorical focus is on the “funding ratio”: comparing what the system has now, in assets, with the total benefits it will have to pay out in the future.

In household budget terms, this is like comparing your current bank balance with the total amount of the mortgage or rent payments you are expected to make over the next 20 years.  (Try doing that math, and you’ll understand how the “pension reform” disciples come up with their doomsday scenarios.  They’re doing it with Social Security, too; so what is happening to public employees now will probably happen to the rest of America very, very soon.)

Ok, so… maybe the retirement systems’ current funding ratio is “dire”.  Whose fault is that?

During the 2007-2008 Wall Street meltdown, public pension systems across America lost more than a trillion dollars in value.  (Yes, that’s “trillion” – with a “T”.)  Most public pension systems had already lost millions or billions in the 2001 recession.

But now that public pensions are a trillion dollars underfunded, they’re being attacked as “unaffordable” – and somehow, it’s all the fault of public workers.

  • Illinois:  In FY2000, back before the first Bush recession, the State Employees’ Retirement System was more than 80% funded, and the Teachers’ Retirement System was almost 70% funded.

But… instead of going after all those Wall Street folks who lost all that public pension fund money… our politicians are going after rank-and-file public employees.  (By the way: Wall Street bonuses are gong up by 5% to 15%, this year.)

Think this isn’t your fight? because it’s all the way out in Detroit?  or because it’s “just” public employee unions?

Think again.

The same folks who have been busy “reforming” public sector retirement benefits are also out to “reform” Social Security.

 

 

Judge’s ruling: giving more power to Congress, jeopardizing Detroit retirees

IOU in a piggy bank by Images of Money via Flikr

IOU in a piggy bank by Images of Money via FlikrSo, earlier today a federal judge ruled that Detroit’s “Emergency Manager” could go ahead with bankruptcy proceedings – and, as part of the bankruptcy, cut public pension benefits that would otherwise be protected by Michigan’s state Constitution.

Judge Rhodes ruled Tuesday that Michigan’s [constitutional] protections for public pensions “do not apply to the federal bankruptcy court,” adding that pensions are not entitled to “any extraordinary attention” compared with other debts.  (Read the New York Times article here.)

Think about that, carefully – because to me, that is the single most frightening part of this whole situation.  The judge held that federal bankruptcy law trumps a state constitution.

One more time: according to this morning’s ruling, a law passed by Congress can invalidate a provision of a state constitution.

Take a minute and look at all those rights guaranteed by the New Hampshire Constitution.  (Read it here.)

Now, think about what it means, if Congress has the power to take those freedoms away.

Article 7 of the New Hampshire Constitution:
The people of this state have the sole and exclusive right of governing themselves as a free, sovereign, and independent state; and do, and forever hereafter shall, exercise and enjoy every power, jurisdiction, and right, pertaining thereto, which is not, or may not hereafter be, by them expressly delegated to the United States of America in congress assembled.

How does that work, if state constitutions can be trumped by a federal law?

Read previous NH Labor News coverage of the Detroit situation here.

Read the statement from AFT President Randi Weingarten on this ruling here.

———-

Meanwhile, in Illinois, the state Legislature is meeting behind closed doors to discuss a legislative proposal to cut public pension benefits.  The bill was formally filed yesterday.  The vote is expected later today.

Read yesterday’s NH Labor News story about Illinois here.

 

Will the Illinois Legislature Steal Public Workers’ Retirement Security?

Smashed Piggy Bank Retirement

Smashed Piggy Bank RetirementAnd so the campaign to eliminate our retirement security continues.

As everyone was leaving for Thanksgiving weekend, Illinois legislators announced a “bipartisan” plan to “bail out” the state’s public pension funds.

That was Wednesday.  (LATE Wednesday.)

Details of the plan weren’t released until Friday.  (Increased retirement age.  Limits on COLAs.  Prohibits collective bargaining regarding pensions.  Prohibits use of pension funds for retiree health care. Etc.)

The actual bill was released today. (All 325 pages of it.)

The Legislature is expected to vote on the plan tomorrow (Tuesday).

And Chicago hedge fund honcho Ken Griffin spent Thanksgiving weekend beating his PR drums about the “the dire state of our pension situation.”  (Yeah, that WOULD be the very same Ken Griffin who, along with his wife: “were the top donors in the 2010 election cycle to Republicans running for Illinois legislative seats.”  That’s according to a Chicago Tribune analysis, which also tallied millions of dollars in other political contributions the Griffins have made to conservative political organizations.)

Can’t help but notice another context to the timing.  Today is the filing deadline for next year’s elections.  When legislators vote on the pension system revisions tomorrow, they will know what candidates they will be facing when they campaign for reelection.

Hey, I’ll agree with one thing Ken Griffin said in his weekend PR blitz: “We need political courage and a willingness to face painful truths.”

The “painful truth” here is: this is being pitched as a “bipartisan proposal” authored by the Democratic legislative leadership.

And it’s clearly the next step on the path toward eliminating retirement security… not just for public employees in Detroit, or Illinois… but also for Social Security participants throughout the country.  (Remember the “bipartisan proposal” from Simpson/Bowles?)

———-

Read “Going behind the rhetoric on public employee pensions” here.

Read “Detroit’s pension systems: not ‘unaffordable’, just battered by Wall Street” here.