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

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Image by ogimogi  CC Flikr

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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.

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.)

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.

 

 

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.

State “Shared Taxes” Cuts have been Drowning Detroit: is Grover Norquist laughing yet?

norquist_drown_government

norquist_drown_governmentThe Bankruptcy Court judge overseeing Detroit’s “restructuring” is moving really, really fast.

And – at least so far – he’s following the schedule proposed by “Emergency Manager” Kevyn Orr and the law firm Jones Day.

  • Read more about Kevyn Orr here.
  • Read more about Jones Day here.

This Friday, August 2nd, the judge is expected to rule on Orr’s motion that a hand-picked “Committee of Retirees” be allowed to make decisions on behalf of the more than 20,000 retired city employees.

How’s this shaping up?  It looks a lot like what just happened in Stockton, California – where a similar committee just accepted $5.1 million as full “payment” for future medical benefits estimated to be worth hundreds of millions of dollars.

And now that steamroller is headed straight for all those people who spent their lives working for the citizens of Detroit.

One of the many, many things that are wrong with this situation is: how completely the mainstream media has swallowed the spin offered by Michigan’s Republican Governor, Rick Snyder.

First, blame the unions.  (The Wall Street Journal’s “How the Unions Killed Detroit” is here.)

Next, blame “60 years of decline” – particularly the decline of the [unionized] auto industry.  (Watch Gov. Snyder on NBC’s Meet the Press here.)

Then, inflate the numbers.  All of a sudden, they’re not talking about annual deficits – not even the total accumulated annual deficits – they’re talking about “total debt”.   That includes bonds for the Water and Sewer systems.  For renovations to the Convention Center.  For the city’s Building Authority, and its Downtown Development Authority.  Its Transportation and Parking Funds.

Yeah, when you add it all up, that looks like a lot of debt.  But municipalities traditionally borrow the costs of capital projects, usually for terms of 20 to 30 years.  Just like most middle class families don’t pay cash when they buy a house.

But that “$18 billion” total debt number sure makes it seem like Detroit can’t possibly avoid bankruptcy, and can’t afford to keep its promises to its workers.

Great spin.

But what do Detroit’s auditors say?  Quoting directly from the city’s 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.                                                                         

$326 million… $18 billion… Gotta admit: Rick Snyder sure knows how to spin things.

Let’s look at Detroit’s problem from another direction, for a minute.  Let’s consider – just for a minute – that maybe Detroit doesn’t have “a spending problem”, maybe it has a revenue problem.

The reality is, all around the country, municipalities depend on state revenue-sharing to make their budgets work.  Those of us who lived through New Hampshire’s Bill O’Brien years know this all too well.  State tax cuts and budget cuts “trickle down” and hit municipalities where it hurts.

For Detroit, state “shared taxes” used to provide 16% of city revenues.  That means one out of every six dollars that Detroit budgeted came from the State of Michigan.

Then GOP right-wingers declared war on our government.

Look at how different Detroit’s revenues would have been, if the amount of “shared taxes” had stayed the same as it was when George Bush became President:

Detroit Shared Taxes

Data from Detroit Combined Annual Financial Reports available at http://www.detroitmi.gov/Departments/Finance/tabid/86/Default.aspx

An interesting math exercise: if the state had continued to pay the same amount of “shared taxes” as it did in 2001, Detroit would have received $4.1 billion in additional revenue over the years.  (And maybe the city wouldn’t have had to borrow quite so much to finance capital projects…?)

Just in FY2012, Detroit would have received $470 million more in “shared taxes” revenue – if the State had still been sharing revenue like it did in 2001.

And that would have been more than enough to wipe out the $326 million in accumulated operating deficits that Detroit’s auditor cited in the 2012 CAFR.

So maybe Detroit’s financial problems weren’t caused by the unions – or “60 years of decline.”  Maybe it’s not a “spending problem” – maybe it’s a “revenue problem”.

Maybe the problem is that the extreme wing of the GOP declared war on government back in 2001… and they’re still planning to “drown it in the bathtub.”

 

 

Adding ‘Headroom’ to the Debt Limit? Thank our Federal Employees and Postal Carriers

US Capitol

US CapitolA few days ago, Treasury Secretary Timothy Geithner told Congress that the federal government would reach its debt limit at the end of this year.  As of January 1st, Secretary Geithner will be taking “extraordinary measures” to buy another two months’ time  for Congress to resolve its self-created fiscal cliff/debt limit crisis.

What are those “extraordinary measures”?  Almost all of them involve using the retirement funds of federal employees and postal workers to create artificial “headroom” under the debt limit.  You can read the details here.

Create your own fiscal crisis… then use it as justification to borrow from employees’ retirement funds (while complaining that long-promised retirement benefits are “not affordable”).  That’s what politicians tried to do here in New Hampshire, back in the early 1980s.

We’re having déjà vu all over again, watching the same scenario play out on the national stage all these decades later.

As of Tuesday, federal and postal employees’ retirement funds will become “headroom” under the debt limit.  Maybe the extra two months will give Speaker Boehner time to reconsider the GOP’s  allegiance to the ultra-rich.  Maybe it will give Congress time to fix the crisis it created.

In the meantime: to all those federal employees and postal carriers out there, “Thanks for the headroom!”

Read more about political attacks on federal employees here.

Read more about political attacks on the US Postal Service here.

 

Using Retirement Funds to Balance the Budget

treasury


Up here in New Hampshire, we have some experience with politicians trying to use public workers’ retirement funds to balance the budget.

Back when Craig Benson was Governor, he wanted to use money from the public employee retirement system to balance the state budget.

But up here in New Hampshire, the public didn’t let him get away with that.  In 1984, Granite State voters amended our state Constitution to protect our employees’ retirement benefits.  New Hampshire Constitution Article 36-a [Use of Retirement Funds] provides:

“The employer contributions certified as payable to the New Hampshire retirement system … shall be appropriated each fiscal year … All of the assets and proceeds, and income there from, of the New Hampshire retirement system … shall be held, invested or disbursed as in trust for the exclusive purpose of providing for such benefits and shall not be encumbered for, or diverted to, any other purposes.”

Down in Washington DC, the federal government hasn’t been quite so careful.  Down in DC, public employee retirement funds are regularly used to balance the budget.

In fact, when the federal government hit the debt ceiling in May 2011, public employee retirement contributions were used to keep the federal government going for more than two months (until Congressional Republicans finally agreed to increase the debt limit).

At last report,

  • more than $800 billion of the federal debt was owed to the federal employees’ retirement system;
  • more than $600 billion of the federal debt was owed to military employees’ retirement programs;
  • more than $45 billion of the federal debt was owed to the Postal Service Retiree Health Benefits Fund.

State and local employees also own a significant chunk of the federal debt.  At last report, pension systems for state and local government employees held almost $190 billion in Treasury securities.

Adding it all up, the nation owes about $1.6 trillion to the various public employees’ retirement systems.  (That’s direct debt – not including unfunded liabilities.)

That’s only slightly more than what tax cuts for the wealthiest 5% have cost the Treasury since 2001.

Should we really be surprised that right-wing Republicans are trying so hard to “reform” public pensions?

The business lobbying group ALEC (“American Legislative Exchange Council”) has led the crusade.  “Taxpayers are no longer willing to bear the increasing cost of these plans… They are demanding reforms that will bring these plans into line with pension and OPEB benefits offered in the private sector.”  (What an interesting comparison!  Federal law generally prohibits private sector pension plans from loaning money to the company that sponsors the plan.)

As Chairman of the House Budget Committee, Rep. Paul Ryan followed ALEC’s lead – almost word-for-word.

Up here in the Granite State, we believe that government should fulfill the promises it has made to its employees.  We even amended our state constitution to ensure that public employees’ retirement funds would be used only to pay retirement benefits.

It’s time for the country to stop using public employee retirement funds to pay the cost of extending tax cuts for the wealthy.

It’s time for Congressional Republicans to stop trying to weasel out of their obligations to federal employees.

It’s time to keep the country’s promises.  (Now that’s a conservative value.)

——————————————————————–

Wait!  That $45 billion borrowed from the Postal Service Retiree Health Benefits Fund deserves a closer look.

The Post Office is losing money.  Most of that deficit is being caused by Congressionally-mandated payments to the Postal Service Retiree Health Benefits Fund.   That mandate dates back to the Postal Accountability and Enhancement Act of 2006.

Guess what else happened in 2006?  Just months before Congress decided to have the Postal Service pre-fund retiree benefits (and loan that money to the US Treasury), the country had hit the debt ceiling, and had borrowed from the federal employees’ retirement system to pay the bills.

(No, by the time 2006 rolled around, the Bush tax cuts hadn’t “jump started” the economy or started to erase the federal debt.  So Congress used federal employees’ retirement contributions as a Rainy Day Fund.)

Kind of convenient, isn’t it?  The country needs to borrow money, and suddenly there’s a new Fund to borrow from.

Only now, that Fund is drowning the Postal Service in debt.