Posts

The Government Union Political Class: Today California, Tomorrow America

Government unions in California collect and spend over $1.0 billion per year. That’s just government unions. That’s just California. They use a small fraction of this money to engage in collective bargaining. They use about a third of it to engage in politics – that’s nearly $700 million per election cycle. The rest, well over a billion per election cycle, goes to “educate” the public.

A billion dollars a year to pursue the government union agenda. You can argue this figure. Maybe it’s $800 million. Maybe, and more likely, it’s $1.2 billion. Nobody knows for sure, because government unions are required to reveal even less about their operations than private unions or public corporations. In an attempt to obtain more accurate membership and dues numbers, we spoke with an expert on public sector unions at Pepperdine University. He said that California has over 6,000 “locals” that have organized government workers into unions. In many cases, each of these locals files their own 990 form with the IRS. Our own analysis, stated in a California Policy Center study “Understanding the Financial Disclosure Requirements of Public Sector Unions,” summed it up as follows:

To amalgamate the financial information provided by literally thousands of local public sector union affiliates across every department and agency throughout California’s 478 incorporated cities and 57 counties would be a herculean task, but it is reasonable to assume that the total annual dues revenue and expenditures of California’s public sector unions is at least twice the total derived from totaling these 16 major organization’s 990 data. Put another way, at the end of 2010, following a lively election season, California’s public sector unions, collectively, were probably still sitting on well over $200 million in cash, and had just spent nearly $1.0 billion dollars on collective bargaining and political activity. It is left to the reader to ascertain why any spending to pursue the agenda of organized government workers is not intrinsically political, but dissecting actual political spending from the sparse data provided in 990 forms is an exercise in futility.

With this kind of money, you can hire a full time, professional army. And they have. When political candidates who are not backed by government unions decide to run for office, they either have to be independently wealthy, or they have to spend nearly all of their time soliciting donations. Campaign “reform” has made it impossible for a candidate to find just one wealthy donor, so unless they’re personally rich, they are in perpetual fundraising mode. The government union backed candidates, on the other hand, are often recruited to run for office by these unions, and have to do nothing more than sign a few forms that have been prepared for them in advance. The unions then run a turn-key operation to put them in office, telling them what to say and where to appear.

That’s not how politics is supposed to work in a democracy. No wonder government unions have taken over nearly every city, county and school district in California, along with the state legislature.

When it comes to “educational” efforts, the government unions spend even more money than they spend on direct political action. From Sacramento outwards to cities, counties and school districts, they hire the most capable consultants that money can buy. The finest attorneys, the most creative and capable public relations professionals, academic experts, polling wizards, media gurus. And, of course, these government unions fund “Think Tanks” that promote their agenda relentlessly.

Without this billion-dollar-a-year torrent of money, political advocacy and policy analysis works the way it’s supposed to work. Political campaigns and policy shops alike are required to present their vision to donors who then decide whether or not to support them. But when these interests, sustained by capricious pittances, are pitted against the government union machine, the outcome is predictable. They lose. And lose. And lose. California is Exhibit A for how a democracy is destroyed by a government that serves itself.

If there wasn’t an intrinsic conflict of interests between what government unions advocate – more power for government agencies and more wealth for government workers, with the welfare of private citizens a secondary concern – perhaps none of this would matter. But California, where government unions have ruled for decades, is a trendsetting travesty of how a democracy is supposed to function. It is a state where appeasing the government unions is a prerequisite for success in business. It is a state where giving up and living on government entitlements is increasingly preferable to trying to make a living when everything – housing, transportation, energy, water, and perpetually rising taxes – is punitively expensive thanks to bad policy choices. And it is a state where unionized government workers earn pay and benefits that average twice as much as what private sector workers earn, rendering them relatively immune to the consequences of their unionized government agenda.

This is America’s future if government unions are not stopped.

 *   *   *

Ed Ring is the president of the California Policy Center.

 

California Needs Infrastructure, and Unions Should be Helping

“Infrastructure” is a perennial topic that enters and leaves California’s public consciousness in the following manner: A politician says “we must rebuild our crumbling infrastructure,” journalists report it, almost nothing is done, and the infrastructure continues to crumble. The talking point is made. Check the box. Repeat. Decades pass.

If you’ve driven west on Interstate 580 from California’s central valley into the San Francisco Bay Area, “infrastructure” becomes more than a hard-to-pronounce, sort of awkward sounding four syllable word that emanates from the mouths of politicians every election cycle. Because the divots, pot-holes, fissures and bumps on Interstate 580 west are impossible to ignore. The road is literally falling apart.

It isn’t enough to marvel at how Californians tolerate this negligence. Because it harms our quality of life. Today the failure is measured in terms of how many cars and trucks require far more frequent maintenance to repair their battered suspensions because we can’t fix our roads. Today it’s short showers and annoying light switches that turn off automatically because we won’t build new water and power infrastructure. But tomorrow it could be a catastrophe, as entire regions are potentially denied water, power or transportation, because over time, less and less viable infrastructure became critical to supporting more and more people.

Why? Why have California’s policymakers paid lip service to infrastructure for the last 20-30 years, all the while watching it crumble? Here are three reasons:

(1) Environmentalists provide the moral cover for neglect. There isn’t a road, a bridge, a power plant, a port upgrade, new housing, a water treatment plant – not one scratch in the ground that isn’t bitterly contested by the environmentalist lobby. Powerful environmentalist organizations, often receiving government funds, with opportunistic trial lawyers populating their boards of directors, have an incentive to tie every possible infrastructure investment up in knots. While some environmental oversight is necessary, the challenge of complying with every environmentalist objection deters all but the wealthiest corporations, and creates costly delays that last for decades.

(2) Many corporate special interests benefit from neglect. Corporations who own existing sources of supply can charge higher prices and generate higher profits. Utilities are the obvious examples of this – ever since “decoupling” legislation was passed in California, the only way utilities can generate higher profits is to raise unit costs, since unit output and profit percentages are fixed by law. So if water costs $2.00 per CCU instead of $0.25, or if electricity costs $0.50 per KWH instead of $0.05, utility companies make a killing for their shareholders. Similarly, owners of land that has finally been approved for development, or quarries that got operating permits before the regulations made them prohibitive, are able to sell their inventory at fantastic markups.

(3) Public sector unions also benefit from infrastructure neglect. Taxpayer funds that ought to be paying to construct and upgrade roads and bridges end up being allocated instead to pay government workers higher salaries and fund generous pensions. These unions also benefit from the legislated and entirely artificial scarcity that drives up prices for land and homes, because it increases property tax revenue. And of course, every additional environmentalist inspired regulation and code means more unionized government inspectors and enforcement officers can be hired. Government over-management and mismanagement always benefits public sector unions.

So where is California’s private sector labor movement when it comes to infrastructure? Here is a quote from the California Labor Federation’s website, under “Advocacy / Key Issues.” Revealingly, this is number ten of ten on their “issues” page:

“Invest in California’s Infrastructure: We must have a comprehensive strategy for making investments in infrastructure and a sustainable, equitable way to finance them. We need to restore our public transportation systems, modernize our rail system and rebuild our roads and waterways. We must double our efforts to build high speed rail in California.”

Apart from “high speed rail,” a project that fails to justify itself under any rational cost/benefit analysis, this all sounds good. But where’s the follow up?

When scoping meetings are held to approve infrastructure projects, whether it is widening a highway, approving a new subdivision, repairing a bridge, or building the Temperance Flat or Sites reservoirs, where are the unions? Why aren’t hundreds of them showing up two hours early to these meetings, elbowing the environmentalist trial lawyers and their zealous puppets out of the room? Why aren’t they packing the out-of-control California Air Resources Board meetings to show solidarity with the workers in dairies, agriculture, manufacturing, mining and timber, trucking, and countless other industries who employ hundreds of thousands of Californians?

Instead California’s labor unions typically resort to “greenmail,” a tactic that goes as follows: Pick a project that the environmentalist lobby doesn’t actually object to, then sue the developer on environmentalist grounds until they concede to enact a project labor agreement, than drop the lawsuit.

Is this the best they can do?

California’s private sector labor movement should consider how environmentalism, married with the special interests of monopolistic corporations, allied with government labor whose agenda is utterly different than their own, have destroyed literally millions of good jobs in this state. They should consider how close California is to becoming an authoritarian wasteland, where land, water, energy, housing and transportation are cynically rationed by this alliance of oligarchs and elitists. They need to wake up and fight for their core principles – the welfare of workers and their families.

An essential point that union leaders and their members ought to understand is the cost of building infrastructure in California is prohibitive for reasons that go far beyond paying a prevailing wage, or even the cost of hiring a few extra employees on a project to comply with union work rules. The costs are prohibitive because oligarchs and elitists have colluded to make every element of a project more expensive – the land, power, materials, transportation, staging, permits, and time-delays. The compounding effect of these pernicious barriers have enriched oligarchs, government workers, and the trial lawyers representing the environmentalists. They’ve made the rest of us poorer, and they’re the real reason we don’t have more good jobs.

To take one dramatic example, consider the Carlsbad desalination plant, which – not even including distribution pipes to move the water into the municipal supply – was built at at a capital cost of $12,733 per acre foot of annual capacity. Compare that to the Sorek desalination plant, completed in Israel in 2013 at a capital cost of $4,111 per acre foot of annual capacity, less than one-third as much! This was accomplished in a nation where labor is not cheap, nor is the government a paragon of free market deregulation. This is not an isolated case.

It is a crime against all Californians that other developed nations can build infrastructure for less than one-third what it costs here, and that other states in the U.S. can build infrastructure for less than half what it costs in California. Labor costs occupy a dwindling percentage of what infrastructure projects cost, which means that unions should start lobbying aggressively for infrastructure investment, instead of playing petty greenmail games. They may not win every project labor agreement battle. But they will win the war to create millions of good new jobs, and change California from a land of authoritarian scarcity back into a land of opportunity and abundance.

 *   *   *

Ed Ring is the president of the California Policy Center.

RELATED ARTICLES

California’s Misguided Water Conservation Priorities, August 17, 2016

Government Unions Benefit from the Asset Bubble that Harms Workers, July 19, 2016

How Gov’t Unions and Crony Capitalists Exploit Global Warming Concerns, June 21, 2016

The Alternative to Crony Capitalism and Phony Shortages, June 15, 2016

Government Unions and the Financialization of America, May 24, 2016

California’s Economically Illiterate Legislature, April 5, 2016

Practical Reforms to “Right-Size” Government Unions, March 29, 2016

Investing in Infrastructure to Lower the Cost of Living, March 14, 2016

The Future of Unions in the Post-Scalia Era, February 16, 2016

In Search of a Legitimate Labor Movement, January 19, 2016

The Alliance Between Wall Street and Public Unions, December 1, 2015

Why Aren’t Unions Fighting California’s Bullet Train Boondoggle?, November 24, 2015

When Will Unions Fight to Lower the Cost of Living?, October 27, 2015

Why Pension Reform is Inevitable, and How Reforms Can Benefit the Economy, July 21, 2015

Libertarians, Government Unions, and Infrastructure Development, May 5, 2015

Desalination Plants vs. Bullet Trains and Pensions, April 7, 2015

Raise the Minimum Wage, or Lower the Cost of Living?, March 31, 2015

The Abundance Choice, December 24, 2014

An Economic Win-Win For California – Lower the Cost of Living, December 3, 2014

How to Create Affordable Abundance in California, July 1, 2014

California’s Green Bantustans, May 21, 2014

How Government Unions are Hypocrites that Betray the Public

Government unions are not unions in any traditional sense of the word. They elect the bosses they “negotiate” with. They are paid through compulsory taxes rather than via a company that has to earn a profit in the competitive market. And they operate the machinery of government which allows them extraordinary latitude to intimidate any business interests who may challenge their agenda.

Among the informed, these assertions are beyond serious debate. Even supporters of government unions acknowledge them – just not on the record. But to inform the public, it is probably too abstract to question the legitimacy of government unions because they “elect their own bosses,” “use taxpayers money instead of earned profits,” or “control the bureaucracy.” Perhaps instead it is better to explain how union control of government harms people in their everyday lives.

To that end, here is a partial list of how the actions of government unions contradict their rhetoric, and betray the public they are supposed to serve:

(1) Demonizing “Profits.” From the classroom teacher to the professionally prepared press release, the rhetoric of government unions promotes the idea that “corporate profits” are unjust. The academic focus from primary school through public universities is invariably swayed, thanks to government unions, to challenge the capitalist system. Yet without profits there are no tax revenues. Governments survive financially because corporations make profits. Government unions support legislation that has made California the toughest state in the U.S. to do business. The impact: Brainwashed youth, and fewer successful companies offering fewer good jobs.

(2)  Demonizing “Millionaires and Billionaires.” Government union rhetoric frequently resorts to accusing anyone who wants to expose their destructive hypocrisy as funded by “millionaires and billionaires,” as if that should automatically nullify their arguments. These unions have carefully nurtured a public hostility and resentment towards individual wealth. The problem, however, is that almost anyone who retires after a full career in public service is a millionaire – often many times over. The average full career pension for California’s state and local government workers is over $70,000 per year. The ordinary private sector worker would have to save at least $1.5 million to generate a $70,000 annuity for the rest of their life – with no guarantees. The impact: Higher taxes and reduced services to support government worker pensions that make them all millionaires, leaving the rest of us behind to pay for it.

(3) Defending “Working Families.” That is one of the mantras of the government unions. Fighting for the “working families.” But how does this work in reality? California is one of the hardest states to practice a profession or trade. Certifications and licenses require prohibitive amounts of time and money, excluding the most deserving, aspiring citizens. Workman’s Compensation insurance rates are among the highest in the U.S., making it much harder for small companies to compete and grow their businesses. Crippling regulations. Absurdly time consuming and expensive permitting processes. The impact: Reduced upward mobility, far less opportunities for low income entrepreneurs.

(4) Always “For the Children.” The level of hypocrisy here almost defies description. Government unions have imposed their agenda on education, turning public schools into propaganda mills, indoctrinating students to believe their success or failure in life is primarily determined by whether or not they have “privilege,” and whether or not the state provides sufficient benefits, instead of teaching them the skills they will need to succeed in life on their own. Government unions have defeated any meaningful attempts to hold teachers accountable, or allow principals and superintendents to effectively manage. What they have done to California’s rising generation of students can be accurately characterized as child abuse. The impact: A generation of Californians who are unprepared to assume the responsibilities of adulthood.

(5) Respect for “Contracts.” The selective moral outrage mustered by government unions when it comes to “contracts” is exemplified by their response to pension reformers who want to lower the pension benefit formulas – just for work to be performed in the future. Because back in 1999, these same unions lobbied successfully to raise pension benefit formulas not just from then on, but back to the day each active government worker began their career. According to the same body of California contract law, they claim these retroactive benefit increases were justified, yet they fight – and win – in court whenever anyone tries to decrease these same benefits only from now on. The impact: Taxpayers are condemned to bail out these financially unsustainable pensions.

(6)  Fighting “Big Money in Politics.” The problem with this ersatz fight by government unions is simple: In state and local elections in California, nobody spends as much money as government unions. Just government unions, just in California, collect and spend over $1.0 billion per year in dues. About one-third of that, nearly $700 million every election cycle, is spend explicitly on politics and lobbying. An equal share probably goes to public education campaigns designed to promote the government union agenda. There is no special interest anywhere with the means, much less the desire, to challenge these unions. They are active in every political contest, no matter how small or how big, with access to as much cash as they need. The impact: Unions are the “big money in politics,” and their interests trump the public interest.

(7) Fighting “Big Business.” By now it should be clear enough – “big business” has no interest in challenging government unions. They collude instead, in a partnership where the government unions – who control legislation that will either favor or thwart business interests – are the dominant partner. And why shouldn’t big business partner with government unions? When oppressive regulations drive innovative competitors out of business, the monopolistic established corporations have the financial resources to comply. Why not let excessive government regulations destroy the competition? The impact: Less innovation, fewer new jobs, higher prices to consumers.

(8) Fighting “Wall Street.” This is the most ridiculous claim of all by government unions. Because when government unions successfully negotiate pay, benefit and hiring decisions that cause government deficits, Wall Street firms make billions underwriting new bond issues. And when government unions negotiate pension benefit enhancements, the union controlled pension funds invest even more money with Wall Street firms including hedge funds and private equity funds. Government is Wall Street’s biggest customer. The Wall Street influenced policies that have destroyed the ability of ordinary Americans to save for retirement or buy an affordable home have been a boon to the super rich and the pension funds. The impact: The government union alliance with Wall Street is a major factor in the hollowing out of America’s middle class.

The fact that most Californians still don’t understand the difference between government unions and private sector unions should come as no surprise. Government unions have spent literally billions of dollars over the past decades, hiring the best professional public relations talent in the world, to convince Californians they are on their side. But they’re not. Quite the contrary. Their hypocrisy is only matched by their corrosive impact on our economy, our freedom, and our democracy.

 *   *   *

Ed Ring is the president of the California Policy Center.

RELATED POSTS

Government Unions Benefit from the Asset Bubble that Harms Workers, July 19, 2016

Government Unions and the Financialization of America, May 24, 2016

The Hypocrisy of Public Sector Unions, March 15, 2016

Public Unions ARE the Political “Establishment,” February 23, 2016

In Search of a Legitimate Labor Movement, January 19, 2016

The Alliance Between Wall Street and Public Unions, December 1, 2015

Moral Values That Underlie Opposition to Government Unions, October 13, 2015

How Government Unions Are Destroying America, September 22, 2015

Deceptive and Misleading Claims – How Government Unions Fool the Public, September 8, 2015

The Ideology of Public Sector Unions vs. Private Sector Unions, February 20, 2012

The Differences Between Public and Private Sector Unions, May 13, 2011

Anaheim to Award Biggest Tax Subsidy in City History to Disney, but Union Leaders Remain Quiet

ANAHEIM, Calif. — There’s evidence of a very California coup in the city of Anaheim, where an unusual alliance of city officials, government union leaders and developers is advancing its own financial interests at the expense of everyone else. Their current goal: a council vote Tuesday night by the Anaheim city council to offer major corporations, including Disney, the largest tax subsidies in Anaheim history.

That agenda item came as a surprise to Mayor Tom Tait, the man you might figure should know everything at City Hall. A long-time critic of taxpayer subsidies to business, Tait says city staff, including City Manager Paul Emery, worked to keep the deal under wraps. “I inquired multiple times about a new potential Disney property,” Tait told us. “When asked, he (Emery) denied any knowledge of this proposal.”

20160712-UW-Disney1

               How Disney wants Anaheim residents to end up?

In an email, Emery told us he notified Tait and other council members about the Disney subsidies on June 8. But that was one day after the Orange County Register reported the Disney deal. By then, Tait says, he’d already heard the news elsewhere. “I had to hear it from the Disney president after it was announced,” Tait says. “At some point, (Emery) should have called me to let me know.”

Anaheim spokesperson Mike Lyster said there was nothing unusual in communications to Tait.

“To brief council members before an application has been filed is premature, as some inquiries may never result in a formal application, or a project may change significantly before an application is submitted,” he said in an email. Even when that pending application is from Disney? Requesting a historic $267 million subsidy? Maybe even especially then: “We don’t want to treat Disney any differently than we treat everybody else,” Lyster said.

Disney and two other luxury hoteliers are seeking a total of about half a billion dollars in new hotel subsidies. Leaders of the Orange County Employee Association (OCEA) once routinely opposed such subsidies, fearing they imperil rising government worker pay and benefits.

But now? Radio silence.

In January 2012, OCEA rallied to block subsidies to the proposed GardenWalk hotels – two four-star hotels in the resort district. OCEA attacked council members supporting the subsidies in mailers condemning the “Giveaway Three.” The group was the main muscle behind the signature gathering drive for Let The People Vote, a campaign to put hotel subsidies before a general vote.

A year after fighting public giveaways, union leaders were suddenly pro-subsidy, their fear of future shortfalls apparently eliminated. OCEA walked away from Let the People Vote; the campaign fizzled. When the Anaheim city council voted for the same GardenWalk subsidy in 2013, OCEA was silent. In 2015, fire and police union leaders actually endorsed a measure that would stop the city from taxing gate receipts at Disneyland for the next 45 years.

20160712-UW-Disney2

                                           Anaheim’s future?               

What changed? Multiple sources told us the unions’ conversion came in April 2012 after a meeting between Nick Berardino, head of the OCEA; Carrie Nocella, Disneyland’s government relations and minority business development director; and Todd Ament, Anaheim Chamber of Commerce president. After that meeting, Anaheim was a kind of Tomorrowland of happy relations between corporate, union and City Hall representatives.

OCEA officials did not respond to requests for comment. At the time, Berardino told the Voice of OC the meeting was called “to discuss better ways to handle divisive issues like taxpayer subsidies. Any talk that a labor deal was worked out in that meeting amounts to speculation run amok, he said.”

“We didn’t talk about delivering anything to [city] employees,” Berardino reportedly declared.

But in June 2012, just two months after the summit, the Anaheim city council approved a contract with workers covered by OCEA: no outsourcing of government jobs, no layoffs, no furloughs, and $2,200 to each employee who had taken furlough days. Tait was the lone dissenter.

A few months later, in November 2012, the City Council voted 4-1 to keep firefighter pension rates high – even as other California municipal officials were slashing government worker pay and benefits. Again, Tait was the lone dissenter. A few months after that, with Tait again in the minority, the council cut a similar deal with police. In January 2016, the city council was at it again, voting 4-1 to raise firefighter salaries by 10 percent by mid-2017. Of course, Tait was again the lone no vote.

20160712-UW-Disney3

                            Tom Tait: Standing up to Disney

On Tuesday, hotel developers including Disney will ask Anaheim taxpayers for subsidies amounting to a half-billion dollars. The city’s top elected official was boxed out of discussions—blindsided, he says, on what will be the largest subsidy in Anaheim history. If precedent means anything, union leaders will support the subsidies, despite the likelihood that doing so will undermine the city’s financial health and harm its own workers.

If you live in Anaheim, the story is clear: city officials, public employee unions and powerful businesses continue to give away hundreds of millions of dollars at the expense of the taxpayer.

There’s nothing remarkable about special-interest groups—like union leaders and big business—advocating for themselves. But you don’t have to be an idealist to expect that the city council will serve all residents, not just the rich and powerful.

Of course, Anaheim isn’t alone in taxing its residents on behalf of corporations and government unions. But there is something unique in the fact that all this is playing out in the shadow of the Matterhorn.

About the Authors:  David Schwartzman is a rising junior at Hillsdale College, and Matt Smith is a graduate student at Princeton. Ethan Musser (Mississippi State) and Blake Dixon (Yale) also contributed to this report. They are participants in the investigative reporting summer internship at the California Policy Center in Tustin. This article was first published in OC (Orange County) Weekly.

Populist Candidates Still Ignore Government Unions

Nearly every objection that supporters of presidential candidates Trump and Sanders raise to the establishment are intimately associated with government unions. But neither the people’s voice, or that voice as it is reflected back to them by their populist heroes, articulates this fact.

(1) Do you want to reform Wall Street?

You’ll have to go through the government unions. Their union controlled pension funds are the biggest players on Wall Street. The union controlled cities that issue hundreds of billions in municipal bonds every year are a close second. Government unions benefit from the financialization of the American economy, even as it has wiped out the middle class. Low interest loans elevate prices for homes, which stimulates borrowing and consumer spending, which enriches corporations and the pension funds who invest in their stocks. High home prices raise property tax revenues. Low interest loans mean families can borrow more for college tuition – so unionized professors can continue to make six figure salaries for teaching a few hours a week, a few months a year.

(2) Do you want to restore reasonableness to America’s environmental regulations?

You’ll have to go through the government unions. In California, state and local jobs, from bus drivers to code inspectors, are being redefined to incorporate “global warming mitigation.” This is so they can share in the plunder associated with “carbon emission offset auction proceeds,” billions, soon to be tens of billions, in annual taxes by any other name, hidden in your utility bills and in the cost of manufactured goods – all ran quietly through a Delaware corporation. And why widen a freeway, when you can create thousands of government union jobs in mass transit?

(3) Do you want to reform campaign finance laws?

Forget about it. The government unions are by far the biggest single political spenders. Thanks to their legislated opacity – less disclosure is required for government unions than for private unions, believe it or not – we can only guess, but government unions collect and spend at least a billion dollars per year, just in California. Depending on how you define it, you can argue that ALL of that money is spent on politics. A billion per year – put to very effective use. And by the way, unions have benefit from the supposedly infamous “Citizens United” ruling just as much as corporations and wealthy individuals.

(4) Do you feel that big business exploits consumers?

Do you resent crony capitalists monopolizing entire industries and artificially raising the costs of goods in a market where they’ve used government rules to eliminate emerging competitors? In California, you can blame the government unions. Businesses doing business anywhere in California know that if they adhere to the union’s political agenda, they will get favorable legislation passed, and if they don’t, they will be targeted. Government unions are the brokers and enablers of corporate abuse.

(5) Do you support immigration reform?

Specifically, do you think it is reasonable to limit most immigration to skilled individuals, at a pace that will not challenge the ability of our society to culturally and economically assimilate the newcomers? Do you feel there should at least be a meaningful discussion on this issue? Forget about it. Because you’d have to go through the government unions, who want unlimited immigration; especially those most destitute and unlikely to assimilate. The more dependency there is in America, the more unionized government jobs are created. Police, prison guards, social workers – and an entire crony corporate infrastructure to support them. All paid for by the middle class.

(6) Do you want to rebuild America’s roads and bridges?

Are you even one of those heretics who believes, gasp, that we should develop our energy resources, build more power plants, store more storm runoff, and recycle 100% of our sewage, so that we can have energy and water abundance? Dream on. Government unions want scarcity, because with artificial scarcity there will be more government jobs enforcing what is effectively rationing. And never forget, if we were to spend tax revenue on infrastructure, there would be less money to cover pay and benefit packages for unionized government workers that average, in California, TWICE what the average private sector worker earns.

(7) Do you want to see the next generation properly educated?

Fat chance. Unionized public schools protect incompetent teachers instead of putting children first. And they promote curricula designed to alienate young people from American culture instead of encouraging them to feel proud and privileged to be American. If you want to have any chance to fix America’s public schools, you have to take down the teachers union.

(8) Do you fear America’s federal, state and local governments drifting towards authoritarianism?

You’d better, because not only is that the common thread underlying this entire litany of government dysfunction, but technology is making it easier than ever to enforce authoritarian laws. Where you drive. How far you drive. When you use electricity. How much water you consume. What products you buy. Who you know. And of course, every detail of your interactions with the internet or cable television. It’s all monitored. And who protects the corrupt enforcers, the bad apples? The unions. And who has an inherent interest in bigger, more intrusive government, no matter if it’s good or bad for the public at large? The unions.

If Bernie Sanders or Donald Trump had the courage and the vision to tell that truth, they might ignite a populist uprising that would be utterly bipartisan. But that revolution will have to wait for another day.

 *   *   *

Ed Ring is the president of the California Policy Center.

RELATED POSTS

Government Unions and the Financialization of America, May 24, 2016

Public Safety Unions and the Financial Apocalypse, May 17, 2016

Unionize the Personal Assistants to the One-tenth-of-one-percenters, May 3, 2016

California’s Economically Illiterate Legislature, April 5, 2016

Practical Reforms to “Right-Size” Government Unions, March 29, 2016

The Challenges Facing Conservatives Who Support Public Safety, March 22, 2016

Public Unions ARE the Political “Establishment”, February 23, 2016

The Future of Unions in the Post-Scalia Era, February 16, 2016

In Search of a Legitimate Labor Movement, January 19, 2016

The Alliance Between Wall Street and Public Unions, December 1, 2015

How Government Unions Are Destroying America, September 22, 2015

When Will Unions Fight to Lower the Cost of Living?, October 27, 2015

Moral Values That Underlie Opposition to Government Unions, October 13, 2015

The Abundance Choice, December 23, 2014

An Economic Win-Win For California – Lower the Cost of Living, December 3, 2014

The Challenge Libertarians Face to Win American Hearts, October 14, 2014

Reinventing America’s Unions for the 21st Century, September 2, 2014

California’s Green Bantustans, May 21, 2014

A “Left-Right Alliance” Against Public Sector Unions?. May 20, 2014

The Unholy Trinity of Public Sector Unions, Environmentalists, and Wall Street, May 6, 2014

Construction Unions Should Fight for Infrastructure that Helps the Economy, April 1, 2014

Forming a Bipartisan Consensus for Public Sector Union Reform, January 28, 2014

A Policy Agenda for Union Reformers Stuck Inside Unions, November 5, 2013

Why the Democratic Party Cannot Embrace Public Sector Union Reform, October 15, 2013

Exponential Technological Advances and the Role of Unions, July 23, 2013

The Prosperity Agenda, April 2, 2013

Calling for Public Sector Union Reform is Not Anti-Union, January 29, 2013

The Ideology of Public Sector Unions vs. Private Sector Unions, February 20, 2012

America’s Atlas Generation – The Forgotten 33%, January 9, 2012

The Challenges Facing Conservatives Who Support Public Safety

Everyone supports public safety, but conservatives are a special case. In modern times, it was conservatives, reacting against the rebellious sixties and the lawless seventies, who supported law enforcement when it was fashionable for liberals to see them as pawns of a discredited establishment. It was also during the 1960’s and ’70’s that we saw public safety unions acquire far more political power and influence, a rise fueled in part by an entirely justifiable resentment they felt at how they were treated by the media and in popular culture.

It’s a different world now. The riots of the sixties and the crime waves of the seventies have been replaced by new threats. Now we have global terrorist groups with access to new technologies that can unleash destruction at a scale unimaginable a generation ago. We have organized crime of unprecedented sophistication; drug cartels, cyber criminals, modern-day slavery networks. The United States, statistically, is a safer place than it’s ever been, but it doesn’t feel that way, and continual reminders at home and abroad reinforce these feelings of insecurity.

Conservatives have traditionally focused on prioritizing law and order for good reasons. They understand that when crime directly affects an individual, often with tragic consequences, all the statistics that prove we are safer than ever become meaningless. Conservatives understand this without having to necessarily have personally experienced the trauma of crime or conflagration. Their empathy, powerful and enduring, extends both to the victims who need protection, and to those individuals who risk their lives to perform jobs in public safety.

Along with supporting law and order, however, conservatives also cherish the values of financial sustainability and organizational efficiency. Moreover, conservatives are as zealous as conscientious liberals when it comes to supporting individual rights and fighting corruption. And for these reasons, while conservatives may support the institutions of public safety and the individuals who work in public safety, they can find themselves objecting to the power and influence of the unions that represent public safety.

The challenge facing conservatives who support public safety comes down to this: The unions that represent police and firefighters have the same problematic essence as every other union representing government workers. They use massive amounts of taxpayer-sourced money – more than $1.0 billion in dues collected each year by state and local government unions just in California – to elect the politicians who they then “negotiate” with. There are no natural checks on how much they can ask for in pay and benefits, because unlike unions in the private sector, they don’t work for organizations that have to earn a precarious profit by convincing consumers to voluntarily buy their product in a competitive market. They are a monopoly. And, of course, they can use government itself to intimidate their critics, especially business interests who might otherwise oppose their agenda.

It’s hard to do, but conservatives who want to get taxes and spending under control in the cities and counties where they live are going to have to differentiate between their respect for men and women in uniform, and the agenda of the unions who represent them. They will have to confront a fundamental union premise, that pay and benefits must always rise, and can never fall to reflect economic realities and other service priorities.

If conservatives want to fight corruption, they are going to have to stand up to the unions who make it difficult if not impossible to discipline or fire that small minority of public safety employees – inevitably found in any large organization of any kind – who are criminals or incompetents.

And if conservatives want to slow the growth of government and the growth of burdensome regulations that have made California among the most difficult states in America to run a business or afford a home, they have to recognize that more laws means more law enforcement – for things that go well beyond public safety, yet represent more power and influence for public safety unions.

For their part, members of public safety unions, and their leadership, might try to remember that the issues where some conservatives may disagree with the union agenda are not as significant as the issues where they agree. And they might acknowledge that opposition to parts of their political agenda, or calls to restrict the bargaining scope of their union, or even calls to abolish their union altogether, do not signify a lack of respect, support or empathy for the men and women of law enforcement.

 *   *   *

Ed Ring is the president of the California Policy Center.

RELATED POSTS

San Jose City Council Capitulates to Police Union Power, August 18, 2015

Can Unionized Police Be Held Accountable for Misconduct?, June 23, 2015

Pension Reformers are not “The Enemy” of Public Safety, April 20, 2015

Police Unions in America, December 9, 2014

How Much Does Professionalism Cost?, March 11, 2014

Conservative Politicians and Public Safety Unions, May 13, 2014

 

 

The Hypocrisy of Public Sector Unions

During the industrial age, labor unions played a vital role in protecting the rights of workers. Skeptics may argue that enlightened management played an equally if not greater role, such as when Henry Ford famously raised the wages of his workers so they could afford to buy the cars they made, but few would argue that labor unions were of no benefit. Today, in the private sector, the labor movement still has a vital role to play. There may be vigorous debate regarding how private sector unions should be regulated and what restrictions should be placed on their activity, but again, few people would argue they should not exist.

Public sector unions are a completely different story.

The differences between public and private sector unions are well documented. They operate in monopolistic environments, in organizations that are funded through compulsory taxes. They elect their bosses. They operate the machinery of government and can use that power to intimidate their political opponents.

Despite these fundamental differences in how they operate, public unions benefit from the still common perception that they are indistinguishable from private unions, that they make common cause with all workers, that they are looking out for us. This is hypocrisy on an epic scale.

Hypocrites regarding the welfare of our children

The most obvious example of public sector union hypocrisy is in education, where the teachers unions almost invariably put the interests of the union ahead of the interests of teachers, and put the interests of students last. This was brought to light during the Vergara case, which the California Teachers Association (CTA) claimed was a “meritless lawsuit.” What did the plaintiffs ask for? They wanted to (1) modify hiring policies so excellence rather than seniority would be the criteria for dismissal during layoffs, (2) they wanted to extend the period before granting tenure which in its current form permits less than two years of actual classroom observation, and (3) they wanted to make it easier to dismiss teachers who were incompetents or criminals.

When the Vergara case was argued in court, as can be seen in this mesmerizing video of the attorney for the plaintiffs’ closing arguments, the expert testimony he referred to again and again was from the witnesses called by the defense! When the plaintiffs can rely on the testimony of defense witnesses, the defendants have no case. But in their appeal, the defense attorneys are fighting on. Using your money and mine.

The teachers unions oppose reforms like Vergara, they oppose free speech lawsuits like Friedrichs vs. the CTA, they oppose charter schools, they fight any attempts to invoke the Parent Trigger Law, and they are continually agitating for more taxes “for the children,” when in reality virtually all new tax revenue for education is poured into the insatiable maw of Wall Street to shore up public sector pension funds. No wonder education reform, which inevitably requires fighting the teachers unions, has become an utterly nonpartisan issue.

Hypocrites regarding the management of our economy

Less obvious but more profound are the many examples of public union hypocrisy on the issue of pensions. To wit:

(1)  Public pension systems don’t have to comply with ERISA, which means they are able to use much higher rate-of-return assumptions. Private sector pensions are required to make conservative investments and offer modest but financially sustainable pensions. Public pensions operate under a double standard. They make aggressive investment assumptions in order to reduce required contributions by their members, then hit up taxpayers to cover the difference.

(2)  One of the reasons you haven’t seen the much ballyhooed extension of pension opportunities to all workers in California is because the chances they’ll offer a plan where the fund promises a return of 7.0% per year are ZERO. Once they’re forced to disclose the actual rate-of-return assumptions they’re prepared to offer, and why, the naked hypocrisy of the public sector pension plans using higher rate-of-return assumptions will be revealed in terms everyone can understand.

(3)  When the internet bubble was still inflating back in the late 1990’s, and stock values were soaring, public sector unions didn’t just agitate for, and receive, enhancements to pension benefit formulas. They received benefit enhancements that were applied retroactively. Public pensions are calculated by multiplying the number of years someone worked by a “multiplier,” and that product is then multiplied by their final salary (or average of the last few years salary) to calculate their pension. Retroactive enhancements meant that this multiplier, which was increased by 50% in most cases, was applied to past years worked, increasing pensions for imminent retirees by 50%. Now, with pension funds struggling financially, reformers want to decrease the multiplier, but not retroactively, which would be fair per the example set by the unions, but only for years still to be worked – only prospectively. And even that is off the table according to the unions and their attorneys. This is obscenely hypocritical.

(4)  Take a look at this CTA webpage that supports the “Occupy Wall Street” movement. What the CTA conveniently ignores is that the pension systems they defend are themselves the biggest players on Wall Street. In an era of negative interest rates and global deleveraging, public employee pension funds rampage across the globe, investing over $4.0 trillion in assets with the expectation of earning 7.0% per year. To do this they condone what Elias Isquith, writing for Salon, describes as “shameless financial strip-mining.” These funds benefit from corporate stock buy backs, which is inevitably paid for by workers. They invest with hedge funds and private equity funds, they speculate in real estate – more generally, pension systems with unrealistic rate-of-return expectations require asset bubbles to continue to expand even though that is killing the middle class in the United States. This gives them common cause with the global financial elites who they claim they are protecting us from.

(5)  In America today most workers are required to pay into Social Security, a system that is progressive whereby high income people get less back as a percentage of what they put in, a system that is adjustable whereby benefits can be reduced to ensure solvency, a system that never speculates on the global investment market. You may hate it or love it, but as long as private citizens are required to participate in Social Security, public servants should also be required to participate. That they have negotiated for themselves a far more generous level of retirement security is hypocritical.

The hypocrisy of public sector unions isn’t just deplorable, it’s dangerous. Because public unions have used the unfair advantages that accrue when they operate in the public sector to acquire power that is almost impossible to counter. Large corporations and wealthy individuals are the natural allies of public sector unions, especially at the state and local level, where these unions will rubber-stamp any legislation these elite special interests ask for, in return for support for their wage and benefit demands. Public unions both impel and enable corporatism and financialization. They are inherently authoritarian. They are inherently inclined to support bigger government, no matter what the cost or benefit may be, because that increases their membership and their power. They are a threat to our democratic institutions, our economic health, and our freedom.

And they are monstrous hypocrites.

 *   *   *

Ed Ring is the president of the California Policy Center.

Good Fortune Shines on Teachers Unions

California’s teachers unions have been described as the most powerful force affecting state government. Recently, however, threats to the California Teachers Association and the California Federation of Teachers have arisen on a number of fronts, yet over the last couple of weeks those threats seemed to be minimized by political pressure, apparent sympathetic judges, and even an act of God.

First came the death of United States Supreme Court Justice Antonin Scalia. Before Scalia’s demise, he sat at the hearing of the Friedrichs v. California Teachers Association case, which challenged the union’s right to collect agency fees from all teachers to represent them in collective bargaining. Friedrichs and her teacher colleagues argued that all activities of CTA are political and therefore offering dues to the organization was backing a political agenda with which some teachers did not agree.

Most observers who watched the oral arguments believed that the Supreme Court would rule 5 to 4 in favor of Friedrichs, with Scalia a member of the majority. In other states in which public union members were given the freedom to withhold dues to their union there was a considerable drop-off in fees paid thus weakening the political influence of the unions. Many expected a similar result in California if the court supported the Friedrichs side.

However, with Scalia’s passing it is anticipated that the remaining justices will split on the Friedrichs case resulting in a 4 to 4 tie. If that occurs, the Appellate Court ruling that favored the teachers union will stand.

In another case, a challenge to teacher tenure rules was argued before a Los Angles state appellate court. In the Superior Court, Vergara v. California was decided in favor of nine public school students who argued that the current tenure laws and seniority rules harm school children particularly in poor communities. Lawyers for the students argued that bad teachers are difficult to fire and are often shifted to teaching positions in those poor communities. The teachers unions vociferously argued that eliminating the teacher tenure laws will weaken the profession.

Reports from the hearing last week before the appellate court indicated that two of the three judges expressed skepticism with the decision of Superior Court Judge Rolf Treu. If the questioning were a reflection of the court’s thinking, the Vergara decision likely would be overturned.

It wasn’t just the courtroom where good fortune seemed to follow the teachers unions.

Last week, proponents for the anti-poverty property tax increase measure decided to pull the measure from petition circulation despite having over a million dollars to help qualify the initiative and a stack of petition signatures in hand. Had this property tax measure remained on the ballot, it could weigh down the campaign to pass the Proposition 30 income tax extension backed by the teachers unions.

The unions wanted the property tax gone for a couple of reasons.

One too many taxes on the ballot might convince voters that all taxes deserve a no vote. Property taxes are a local tax with a share of the property tax going to schools. Creating a state controlled property tax designated for purposes that exclude the traditional school funding was anathema to the unions. The teachers unions and their allies inside and outside the government put immense pressure on the initiative proponents to pull their measure.

Whether due to political pressure, sympathetic judges, or an act of God, good fortune shined on the teachers unions as they moved to preserve their powerful position in state politics.

 *   *   *

Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee. This article originally appeared in Fox & Hounds and appears here with permission.

The Mechanics of Pension Reform – State Actions

Part 1 of 2…

Since the passage of SB 400, adopted by the California Legislature in 1999 (93 for, 7 against), pension deficits have steadily grown in California. According to the Stanford Institute for Economic Policy Research, as of the end of 2015, credible estimates of the total unfunded pension obligations owed by California’s state and other government agencies now approach $1.0 trillion.

Reform groups support pension reform and voters generally back pension reform initiatives by a 75% vote; but usually, state and agency lawyers pollute the process to defeat the reforms. In Pacific Grove and San Jose, clearly legal pension reform initiatives were defeated. In Marin and Sonoma county, Grand Juries determined pension increases of about a billion each were illegally adopted, but the sheriffs, district attorneys and boards of supervisors simply purchased “as requested” legal opinions that ignored the reports and said everything looked “OK” to them.

At the state and agency level, there will not be curative pension reform without the election of a pension reform majority of each legislative body. This analysis will outline an agenda, first at the state level and later, separately, at the agency level, specifically describing reforms required prospectively at the state level and setting forth remedial steps available to local agencies. Obviously, legislative body majorities must be elected to adopt the curative action.

The Need for Pension Reform at The State Level:

The current Ca. Government pension system is a classical “Blue Sky System,” a term defined by U.S. Justice McKenna in Hall v. Geiger-Jones Co.:

“The name that is given to the law indicates the evil at which it is aimed…’speculative schemes which have no more basis than so many feet of blue sky’…. ‘the sale in fly by night schemes’”

Unfortunately, the state can and has enacted a pension system for government workers, including the legislature, that is NOT subject to its own Blue Sky Laws and could not comply with its own enactments controlling the private sector:

1. All applicable evidence proves that the financial assumptions for government pensions are and have been impossible to achieve since SB 400 to-date. If marketed by a private investment company, the state would shut it down. The state attorney general should take vigorous action against pension administrators, but is openly supportive of the blue sky nature of the system;

2. The system is managed by administrators who openly support a goal of growing pensions for union workers. They are controlled by Boards that were elected by the Unions. Their definition of reform is greater contribution rates;

20151221-UW-Moore-CalPERS1
The infamous Hotel CalPERS  –  you can check in, but you can’t check out.

3. Retirement Boards routinely violate section 17 (b) of Article XVI of the State constitution which says: “The members of the retirement board of a public pension or retirement system shall discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, MINIMIZING EMPLOYER CONTRIBUTIONS thereto (my emphasis)…” If retirement boards had obeyed this dictate, there could be no pension crises. It is the duty of the state to assure retirement board compliance in minimizing employer contributions;

4. Government unions in the state of California have become too powerful. FDR was emphatically opposed to collective bargaining in government affairs: “collective bargaining with public-employee unions takes much of the decision making authority over government functions away from the people’s representatives and transfers it to union officials, with whom the public has no authority.” At present, public-employee unions dominate the state legislature, the executive branch (including pension boards), the attorney-general, every local legislative body, sheriff or other elective position. Why? Because the average citizen has no idea about the decline in and cost of government services since the enactment of Meyers-Milias-Brown, California’s collective bargaining scheme. One thing is for certain, the cost of union controlled government services proves that “new development” is a financial loser, requiring a larger police, fire and administrative services regime, leading to larger uncontrollable deficits.

5. As an example of what FDR feared consider the fact that the Unions run the California employee retirement systems. You and I don’t get to vote for the various retirement boards. Imagine if social security and medi-care were managed by a board composed of seniors: certainly they would expect retirement benefits comparable to those of government union members; $50K, $60K even up to $300K per year.

6. Why are voters so uninformed? With the notable exception of the Contra Costa Times, newspapers have foregone any pretense of journalism. Why aren’t they all like the Times? Because it takes research. In Monterey county, where I live, every news source simply repeats the skewed tales of pro-union city managers, administrators and bent government lawyers. If a citizen provides them with documentary evidence of illegal government activity, the press then gives the last word, truthful or not, to the government agent.

The Mechanics of Pension Reform at the State Level:

It is difficult to be optimistic about pension reform at the state level. Neither the Republicans, nor the Democrats have a pension reform platform that meets the requirement of Article XVI, section 17 (b) that retirement boards minimize pension contributions. The state legislature will not enact laws requiring a balanced pension system. The attorney general will not act to prosecute institutional untruthfulness per Penal code sec. 85. The press, whether intentional or not, is a handmaiden for union dominated government that has decimated government service. Since government unionism, California has declined from first to near bottom in education, infrastructure, and most importantly, quality of life for the middle class. Any responsible parent should encourage their children and grandchildren to move to a fairer government where a middle class citizen can afford a home, decent schools and safety. For those of us able to stay, it is time for a new approach. I don’t claim to be the perfect person to set forth first principles of reform. I am doing so only because no one else has, or seems likely to do so.

REFORMS

Because the unions are so strong at the state level, it is imperative that reform groups demand that candidates specify the pension reforms they would initiate and support.

In the case of a candidate for the legislature, or state office, would he or she support state sponsored initiatives, referendums, or laws that:

1. Replaced retirement boards with politically neutral private institutions to manage government pension plans;

2. Limited government pension plans to outlaw annual deficits. Any apparent deficit would require a reduction in benefits to eliminate the deficits;

3. Limited the annual pension contribution by any government entity to a fixed percentage, say 10% of salary;

4. Limited annual salary increases for pension purposes to 0% of salary until current deficits are eliminated;

5. Neutralized the power of unions by doing away with statewide unions for government workers. Local unions would be allowed and may propose working conditions (pay, medical, vacations, etc.); but without collective bargaining. After listening to the unions proposals and after public comment, the legislative body would enact working condition statutes;

6. Prop 218 would be amended to stop the current abuse of creating a new tax to provide that which was paid by current revenues, but have been depleted by pension and other retirement costs.

7. Legislative bodies would be prohibited from granting staff, employees and legislative bodies, vested contract rights related to pensions, insurance of all kind and any other work-related benefit;

8. Validation actions for the issuance of bonds, including pension bonds, pursuant to the authority of Government code 53511 shall restrict the scope of validation judgments to protect the bond holders from the relief for matters specifically stated in the summons published in the action. A judgment purporting to grant relief in excess of matters specified in the summons shall not be entitled to collateral estoppel, or res judicata or enforcement;

9. In all matters between staff, employees and the city council, agency lawyers shall only advise the legislative body, and shall do so consistent with the applicable law. In such circumstance, agency lawyers shall have a duty only to the agency through its legislative body. Currently, agency lawyers advocate for staff and unions, ignoring its duty of loyalty to the agency;

10. Government code, section 7507 shall add a provision that states that compliance with the statute has always been mandatory and shall continue to be mandatory;

11. Government code 7507 shall add a provision requiring the chief financial officer of any agency to certify that the annual costs for any contemplated pension increase will not violate the debt limitation set forth in Article XVI of the state constitution. Note: In the Orange county pension bond, debt limit case, the court found that the potential to cause deficits did not violate the debt limit, but the issue concerning the annual costs as a violation was not presented;

12. No agency shall link salary increases to that of other agencies and all such legislative provisions now in effect are void;

13. The chief financial officer of any agency shall be hired and replaced by the agency’s legislative body. In addition to its current duties, it shall advise the legislative body of the soundness of any proposal related to employee and staff compensation. Said position shall be autonomous of the agency manager or administrator. Presently, agency financial officers often risk their jobs if they do not recommend game the system” schemes;

14. The current practice of annual cash budgets shall be supplemented with an accrual method budget. The accrual method budget shall expense all items that are necessary for the agency to provide a good level of service, but have been omitted from the cash budget because of a lack of revenues. For example, a county like Sonoma may have $200M in deferred road maintenance; in the accrual method, that sum will be shown as an expense. The agency legislative body shall determine the correct level of service for every agency department, and to the extent there are insufficient revenues to provide that level of service, the insufficient revenues shall be shown as an accrued expense. The purpose of the accrual budget is to show the actual financial condition of the agency, but also to help an agency qualify for a chapter 9 in bankruptcy;

15. The current practice of obtaining a post-employment disability so that up to 50% of pension payments are tax free shall be the subject of an investigation by the state legislature with the goal of eliminating abuses of said practice. Evidence indicates that a high percentage of safety employees who were able to perform normal services up to their date of retirement then magically become disabled for tax benefit purposes;

16. The current practice of borrowing proposition 218 funds and other restricted funds shall be prohibited. Such practice is and shall constitute evidence of a debt violation;

17. Ventura county attempted to terminate its CERL program and make new hires subject to a defined contribution or employee funded plan. PERL and CERL agencies may make limited terminations of its pension plans (LT). In that case it may create a defined contribution plan for new hires and said hires shall not be in the defined benefit plan; but the agency may remain in the defined benefit plan for pre-LT employees. The purpose is to allow the agency to continue to work its way out of its deficit making annual contributions at the current income rate, not the termination rate. The termination rate is so punitive, it prevents agencies from terminating. This provision shall not create pension or other benefit vested rights;

18. Agency staff (attorneys, administrators, managers and finance officers) shall not be granted indemnity for their acts of gross negligence and criminal conduct. Currently such grants are commonplace.

SUMMARY

Most reasonable citizens appreciate the place of unions in the private sector. Arms-length bargaining between management and union leaders has passed the test of time, albeit not without turmoil. On the other hand, there has been and cannot be arms-length bargaining in government: both agencies staff and the unions have acted in concert to grant themselves incredible salaries and benefits. Agency attorneys have given up all pretense of any duty to the agency or taxpayers. Mathematically, the system cannot continue. For reform to succeed, it is necessary to demand that candidates for local legislative and state office, take a position on substantial reforms. Without substantial curative reforms, the quality of life in California will continue to decline.

In Part Two, I will discuss the mechanics of reform at the agency level, particularly at the city and county level. Unlike reform at the state level, local agencies have tools to initiate reforms that will preserve the quality of life in the jurisdiction. It will still require the election of true reformers, but your city or county can be saved from the mockery of the parasitic governance that now prevails. Voters are anxious and will vote for the reforms, and for candidates, that will cure the current “blue sky” pension system. But candidates must run on these concrete reforms; otherwise. As they say: “pension reform is 25 years away, and always will be.”

*   *   *

About the Author:  John M. Moore is a resident of Pacific Grove, Ca. He is a licensed member of the California State Bar (#34749) and a member of the “Public Law” section of the State Bar. He is retired and no longer practices law, but has Lexis/Nexis for research. John graduated from San Jose State College with majors in Political Science and Economics (summa cum laude). He then received a JD from The Stanford School of Law and practiced business and trial law for 40 years before retiring. In 1987, he was the founding partner of a Sacramento law firm that he formed in 1987 to take advantage of the increased bankruptcies brought about by the Tax Act of 1986. Although he did not file and manage bankruptcy cases, he represented clients in numerous litigation matters before the bankruptcy court, including several cases before judge Klein, the current judge of the Stockton bankruptcy case. He is an admirer of Judge Klein, for his ability and accuracy on the law. As managing partner, he understood the goals of bankruptcy filings and its benefits and limitations.

Note to readers:  During 2012 author John Moore published the “final” chapter of “The Fall of Pacific Grove” in an four part series published between October 20th and November 9th:

The Fall of Pacific Grove – A Primer on Vested Rights
 – The Final Chapter, Part 1, October 20, 2015

The Fall of Pacific Grove – The City’s Tepid Defense of the Vested Rights Lawsuit
– The Final Chapter, Part 2, October 27, 2015

The Fall of Pacific Grove – The Judge’s Ruling
– The Final Chapter, Part 3, November 2, 2015

The Fall of Pacific Grove – The Immediate Future
– The Final Chapter, Part 4, November 9, 2015

During 2014 author John Moore published the first chapter of “The Fall of Pacific Grove” in an eight part series published between January 7th and February 24th. For a more complete understanding of the history, read the entire earlier series:

The Fall of Pacific Grove – How it Began, and How City Officials Fought Reform
 – Part 1, January 7, 2014

The Fall of Pacific Grove – How City Thwarted Reform, and CalPERS Squandered Surpluses
 – Part 2, January 14, 2014

The Fall of Pacific Grove – CalPERS Begins Calling Deficits “Side Funds,” Raises Annual Contributions
 – Part 3, January 21, 2014

The Fall of Pacific Grove – Outsourcing of Safety Services Causes Increased Pension Deficits
 – Part 4, January 28, 2014

The Fall of Pacific Grove – Anti-Pension Reform Mayor Claims to Favor Reed Pension Reform
 – Part 5, February 3, 2014

The Fall of Pacific Grove – Privately Owned Real Property are the Only Assets to Pay for Pensions
 – Part 6, February 11, 2014

The Fall of Pacific Grove – The Cover-Up by the City After the Hidden Actuarial Report Surfaced in 2009
 – Part 7, February 18, 2014

The Fall of Pacific Grove – Conclusion: The “California Rule” Cannot Stand

The Alliance Between Wall Street and Public Unions

“It’s [private equity investments] generating real returns for our members, which is exactly what it’s supposed to do,” said Joe DeAnda, a CalPERS spokesman. “It’s real value that we don’t feel there’s another way to achieve.”
–  “Are private equity investments worth the risk?,” Los Angeles Times, November 14, 2015

The alliance between government unions and America’s overbuilt financial sector is one of the most unreported stories of our time. It is a story saturated in greed, drowning in delusion, smothered and marginalized by an avalanche of taxpayer funded propaganda. If this story were known and appreciated by the people most victimized by its effects, it would fundamentally shift the political landscape of the nation. The most obvious example of this alliance are the government worker pension systems, Wall Street’s biggest players, controlled by union operatives.

The problem with public sector defined benefit pensions can be boiled down to two cold facts: They are too generous, and they rely on rate-of-return assumptions that are too optimistic. The first is the result of greed, the second of delusion. To indulge these vices requires corruption, and it is a rot that joins public sector unions with the most questionable elements of that Wall Street machine they so readily demonize.

In an attempt to earn in excess of 7.0% per year, government pension systems have increasingly turned to hedge funds, whose charter, essentially, is to earn over-market returns. To do this, they do all the things that public sector unions are supposedly opposed to – opaque private equity deals, currency speculation, high-frequency trading – all those manipulative tools used by the super-wealthy, super empowered Wall Street players to siphon billions out of the economy. Except now they’re using tax dollars, channeled to them via government pension systems. And if it goes south? Taxpayers pay for the bailout.

Which brings us to sheer abuse of power. Hypocrisy aside – and how much more hypocritical can it be for union leaders to rhetorically demonize “profits,” yet ignore the fact that only profits can permit pension funds to appreciate at rates of 7.0% per year or more – it is raw power, sheer financial and legal might, that enables pension systems, with unions cheering them on every step of the way, to sue city after faltering city to ensure their “contracts” are inviolable, that relentlessly escalating pension contributions keep pouring in, even if it means raising taxes via court order, then selling the parks, selling the libraries, closing government offices and “furloughing” public servants, and giving raw deals to their new hires.

The alliance between Wall Street and public sector unions isn’t restricted to the over $4.0 trillion in government pension assets that they’ve wagered in a volatile investment market with taxpayers on the hook to guarantee perpetual winnings. The alliance extends to bond underwriters, who join with government unions to sell overpriced, often unnecessary projects to taxpayers, collecting billions in fees. It even extends to auctions of government permits to emit CO2, which when fully implemented will guarantee Wall Street firms a cut on virtually every energy transaction in America, while quietly pouring a huge portion of the proceeds into funding public sector jobs – redefined to meet “mitigation” criteria: code inspectors enforcing energy retrofits, entire cities who zone ultra-high density which presumably lowers transportation related emissions, bus drivers and other mass transit workers, police and fire agencies who confront higher crime rates and more wildfires during hot weather. And, of course, the bullet train.

Whether it’s financially unsustainable government pension systems, who are the biggest players on Wall Street, or financing overpriced public construction projects of dubious value, or imposing billions in hidden taxes on energy users to supposedly save the planet, public sector unions receive formidable political, legal and financial support from their partners in the financial sector, corrupt, crony capitalists who indeed give capitalism a bad name.

*   *   *

Ed Ring is the executive director of the California Public Policy Center.

Banish Rogue Cops and Bad Teachers

There’s no good reason why it took 13 months for prosecutors in Chicago to indict police officer Jason Van Dyke for murdering 17-year-old Laquan McDonald. Not at all. There’s also no reason why the Second City’s police department withheld and even deleted video evidence that the 14-year veteran fired 16 bullets within 15 seconds into the body of the unarmed youth as he was walking away. No good reason at all. There’s no justifiable reason why Chicago Mayor Rahm Emanuel allowed his police bureaucrats to do everything possible to cover-up what Van Dyke did to McDonald — including paying out a $5 million settlement to McDonald’s family in order to keep matters hush hush. None at all. There’s clearly no reason why Van Dyke even pulled out his gun in the first place — especially when his fellow officers didn’t view McDonald as a threat to their own safety. Not one good reason whatsoever.

20151130-UW-Biddle

Government unions make it almost impossible to fire rogue cops, with deadly consequences.

Calling Van Dyke’s murder of McDonald immoral and indefensible is a grand understatement that fails to fully consider the damage he has done. The officer took the life of a fellow child of God and member of the Family of Man for no good reason. Because of Van Dyke, Laquan now joins Tamir Rice, Eric Garner, Michael Brown, and other innocent black men and women who have been slain at the hands of venal and morally debased men in uniform. The murder is also another reminder that state-sanctioned murder of black men is at the heart of the racial bigotry that is America’s Original Sin. As demonstrated by the efforts of Jamie Kalvern of the Invisible Institute and University of Chicago Law Professor Craig Futterman to reveal and publicize the existence of the tapes, this case is a lesson on why no government can be trusted to do right by any human being, much less the descendants of enslaved Africans brought to this continent so long ago.

The only good thing that can be said is that with Van Dyke’s indictment, there’s at least a chance of justice being done on behalf of McDonald and his family. This is because few rogue cops are ever indicted, much less convicted, of their criminal misdeeds. Once again, Van Dyke’s indictment is another reminder of how incompetent police bureaucracies, state laws, and the cultism among those wearing the badge often act to protects corrupt and murderous police officers. Particularly for the school reform movement, the problems of removing rogue cops mirror the struggles to rid classrooms and schools of laggard and criminally abusive teachers. Which is why we must join together with criminal justice reformers to keep rogue cops and laggard teachers from damaging our children.

The especially sad thing about McDonald’s murder is that it didn’t have to happen in the first place. Even before he slayed the young man, Van Dyke had a well-deserved reputation as a thug in a uniform. During the course of his career, 18 complaints were filed against him for using excessive force, engaging in illegal searches, and uttering racial slurs during arrests. The Second City had to pay out $500,000 to one of Van Dyke’s victims in order to address his misdeeds. With such a lengthy record on his personnel file, Van Dyke should have lost his badge and gun. Yet Van Dyke was never disciplined.

One likely reason: The Second City’s arduous and cumbersome process for disciplining and firing rogue cops. Because several different units of the police department — including the internal affairs unit, the Independent Police Review Authority, and the Police Board (which decides whether to mete out discipline in the most-serious cases) — are in charge of investigating and addressing misconduct, the misbehavior of rogue cops can fall through the cracks. It can take as long as 328 days to investigate an incident of misconduct, according to areport produced last year for Chicago by a team led by Ron Safer, a partner for law firm Schiff Hardin. In one case, it took the IPRA five years to determine that an officer, Bruce Askew, should be fired and charged with excessive force after he cracked the skull of Greg Larkins during an arrest. [The city’s police board dismissed that complaint because it was filed after the statute of limitations ran out.] Little wonder why IPRA recommended the firing of just two out of 400 officers brought before it in the last eight years.

Adding to the bureaucratic morass: The fact that Chicago’s police superintendent is barred from being the ultimate decision maker in the disciplinary process. While the superintendent can recommend a firing after being given the right to do so by the IPRA, it is still up to the Police Board to make the final decision. Because of the labyrinthine process and lack of clear oversight, commanders who directly oversee rogue cops take no responsibility for holding them accountable.

Then there are the state laws and court rulings that allow for police officers to use excessive force with impunity. Beginning in 1985 with the U.S. Supreme Court’s ruling in Garner v. Tennessee, state laws give officers wide leeway in how they use deadly force in stopping criminal activity. Officers can shoot to kill if they “objectively reasonable” probably cause to “believe that the suspect poses a significant threat of death or serious physical injury to the officer or others”. The problem is that it is almost impossible to determine what is objective or reasonable, and thus, objective becomes subjective and unreliable. More often than not, if a police officer says he fears for his life, then he is let off the hook. Since state laws rarely require the objective standard to be based on physical evidence, even a videotape isn’t enough to lead to an indictment, much less a conviction.

Illinois took a step in the right direction on this front this past August when state legislators and Gov. Bruce Rauner passed a police reform law that bans officers from using choke holds as well as restricts use of deadly force. But having law in place doesn’t mean that rogue cops will be held accountable for their criminality — especially since prosecutors (who depend on support from cops and police unions) and mayors (who are charged by the public with addressing quality of life issues) have little incentive to root out corruption. This is clear from the fact that Van Dyke is the first Chicago cop to be indicted for murder in 36 years — even as the city has spent millions (including $250 million between 2010 and 2014 alone) settling cases involving officer-involved killings and other forms of police brutality.

Meanwhile there is the reality that police officers often view themselves as bands of brothers who will protect each other even at cost to the integrity of their profession. This was pointed out forcefully by famed police detective Frank Serpico — who carries a bullet in his head as a result of his decision to shed light on the Big Apple’s drug war-driven police corruption in the 1970s — in a piece on Ferguson he wrote last year. Not only will officers do nothing to help weed out the worst (and even merely bad) within their ranks, they will shun (and even endanger) those few brave officers who dare to break the Blue Wall of Silence.

But the culture extends beyond the precinct walls. Police unions such as the Chicago branch of the Fraternal Order of Police as well as affiliates of the International Union of Police Associations work overtime to keep even the worst officers on the job. This includes termination processes that can often last years. In Chicago, for example, rogue officers can lodge several appeals of any finding, challenge the length of a suspension, and even file a grievance against a supervisor for daring to mete out punishment. Before the Second City finally convinced FOP and other police unions to slightly amend the process, it could take at least 1,009 days (or more than three years) for a finding of misconduct to be fully resolved. The pressure police unions also exert on prosecutors dependent on their endorsements all but ensure that few rogue cops will ever face justice. For the police unions, who depend on compulsory dues from cops regardless of their desire for membership, a dollar from a rogue cop is as good as one from a law-abiding one.

For school reformers, all of this sounds all too familiar. It should be. Because the way American criminal justice systems protect and enable rogue cops is similar to how public education keeps laggard and criminally-abusive teachers in classrooms.

Just like police departments, traditional districts do an abysmal job of evaluating and dismissing low-quality and criminally-minded teachers. Los Angeles Unified School District, for example, evaluated just 40 percent of veteran teachers and 70 percent of new hires during the 2009-2010 school year, according to the National Council on Teacher Quality in a report released four years ago. As with laws governing deadly force, state laws granting near-lifetime employment in the form of tenure all but ensure that teachers remain on the job regardless of performance, while teacher dismissal laws work to keep even the most-abusive teachers in schools. The presence of incompetent school leaders, who have little incentive to remove low-quality teachers (and are sometimes engaged in abusive behavior themselves), often means that they help perpetuate cultures of abuse, educational and otherwise.

The cultism that pervades police departments is also a poison in traditional districts. Like the Blue Wall of Silence, the Thin Chalk Line not only keeps good and great teachers from calling out the incompetents in their midst, it (along with near-lifetime employment) also lead otherwise-honorable teachers to protect the criminally-abusive among them. This was clear in Rochester, N.Y., where teachers at School 19 failed to cooperate in the investigation of Matthew LoMaglio for second-degree sexual misconduct against an eight-year-old boy, then wrote letters to a judge pleading for leniency on his behalf. As in the case of police unions, affiliates of the National Education Association and the American Federation of Teachers extend this cultism, both by making it almost impossible to remove  removing laggard and criminally abusive teachers, as well as through their roles as the biggest players in school board races and state legislative politics. And like police unions, NEA and AFT affiliates benefit from keeping as many bodies, be they high-quality, incompetent, or criminally abusive, on payrolls.

The good news for school reformers is that they have made some headway on addressing teacher quality issues. From successfully implementation of evaluations using objective test score growth data, to efforts such as the lawsuits inspired by the Vergara v. California (in which a state court judge tossed out the Golden State’s tenure and dismissal laws), to efforts by districts to aggressively evaluate newly-hired teachers before they attain tenure, reformers have made small positive steps in providing all children with the high-quality teachers they deserve.

So reformers should team up with criminal justice reform advocates are share lessons on how to address their parallel issues. The most-important reason of all: Because what happens to our outside of schoolhouse doors also affects them within them. As Dropout Nation has documented over the past few years, American public education has been responsible for thecriminalization of youth (especially the lives of black children) that have led to incidents such as Van Dyke’s murder of McDonald. That the nation’s education crisis has also fueled the crises that happen daily on our streets makes reforming criminal justice systems an important consideration in our efforts. No reformer can claim that criminal justice reform and the Black Lives Matter movement that has made it a critical public policy issue over the last year isn’t a matter about which we must be concerned.

Jason Van Dyke may still avoid the human justice he deserves. More importantly, we cannot bring Laquan McDonald back to life. But we can save the lives of more young black men and women like him from the villainous and immoral behavior of rogue cops and bad teachers. We must do this now.

About the Author:  RiShawn Biddle is Editor and Publisher of Dropout Nation — the leading commentary Web site on education reform — a columnist for Rare and The American Spectator, award-winning editorialist, speechwriter, communications consultant and education policy advisor. More importantly, he is a tireless advocate for improving the quality of K-12 education for every child. The co-author of A Byte at the Apple: Rethinking Education Data for the Post-NCLB Era, Biddle combines journalism, research and advocacy to bring insight on the nation’s education crisis and rally families and others to reform American public education. This article originally appeared in Dropout Nation and is republished here with permission from the author.

Al Sharpton and the Government Unions

Summary:   From the “Subway Vigilante” and Tawana Brawley cases to the Pigs in a Blanket movement, the Rev. Al Sharpton has been a controversial public figure for more than three decades, first in New York and then nationwide. Today, he is one of the most influential people in the country, closely tied to the mayor of the nation’s largest city and to the President of the United States. And much of his influence and his financing can be traced to his ties to labor unions.

Al Sharpton has spent decades bringing attention to real and (in most cases) imaginary abuses committed by law enforcement officials and their allies. He has brought together mobs to demand the imprisonment of innocent people on such charges as rape and murder. He and his followers have filled the air with threats of “no justice, no peace,” and they have defined “justice” without regard to the truth. He is considered the father of the Pigs in a Blanket movement that in recent months has inspired shootings of police officers from New York to Missouri to Texas to Kentucky.

20151116-UW-Al-Sharpton

He depends on the largesse of Big Business. He has his own TV show on the MSNBC “news” channel, and is a top advisor to, and unofficial agent of, President Barack Obama.

Politico in 2014 called him the President’s “go-to” person on race. By May 2015, he had visited the President and/or his senior appointees at the White House more than 100 times. Since taking office, the President twice has been the featured speaker at the annual convention of Sharpton’s nonprofit organization, National Action Network.

And, for much of his funding and organizational support, Sharpton depends on labor unions. Without realizing it, millions of Americans who pay union dues—voluntarily or involuntarily—help make the Al Sharpton phenomenon a reality.

On the Left

On issues big and small, Sharpton has taken a Far Left position. In 2001, he was arrested while protesting U.S. Navy practice bombings on the Puerto Rican island of Vieques, along with other public figures such as Robert Kennedy Jr., the actor Edward James Olmos, and Dennis Rivera, then head of the nation’s largest union local, Local 1199 (SEIU Healthcare Workers East).

In 2003, he likened the Democratic Leadership Council—the party faction once headed by Bill Clinton—to segregationists. “They don’t call themselves the Dixiecrats now, they call themselves the DLC,” he said.

In subsequent years, he seemed to be everywhere, running for president in 2003-2004, then establishing his organization, National Action Network, as a touchstone in national Democratic politics.

Sharpton declared the Second Amendment outdated, noting that “People do not have the right to unregulated rights in this country.” When radio commentator Rush Limbaugh tried to buy part of the St. Louis Rams football team, Sharpton attempted to block the deal, an effort that was successful. When leaders in Indiana sought to protect the right of caterers and photographers to refuse to participate in weddings for religious reasons—a right supported 82%-10% in one recent national poll—Sharpton likened this religious-freedom effort to “slavery,” “Jim Crow,” and denying “women’s right to vote.”

In May of this year, when floods killed 13 people in Texas and six in Oklahoma, he tweeted: “Do you think the Texas Flooding is related to climate control or God’s rebuke?” He recently called “climate change” a “civil rights issue” and said “it is an issue of justice, and it is an issue of human rights. African Americans are at a higher risk of being close, or predisposed to areas of carbon, as well as other poisonous pollution in the air. And we have a disproportionate interest because we suffer disproportionately.” (Carbon dioxide, the gas that is the primary target of current “climate change” policies, is present in the atmosphere worldwide and is harmless to humans.)

Regarding the Iran nuclear weapons deal, Sharpton called on “ministers in black churches nationwide” to back the deal from their pulpits. “We have a disproportionate interest,” he said, “being that if there is a war, our community is always disproportionately part of the armed services, and that a lot of the debate is by people who will not have family members who will be at risk.” (According to military historian Victor Davis Hanson, there is no evidence that African Americans are more at risk than other groups with regard to the dangers of military service.)

Often, Sharpton’s focus is on issues that are at the top of the unions’ agenda. In 2011, he joined with Lee Saunders, then secretary-treasurer of the American Federation of State, County and Municipal Employees union (AFSCME), to protest a Georgia law meant to crack down on people who enter the U.S. illegally or remain in the country after their visas have expired. Sharpton said he was working to protect citizens who might be profiled. “They’ll start with Latinos, say they look like illegal Mexicans. Then it’ll be blacks, saying they look like illegal Caribbean.”

Also attending the rally were members of Jobs with Justice (a front for the Service Employees International Union), the Atlanta/North Georgia Labor Council, and Teamsters Local 728. AFSCME’s Saunders, by the way, is now the union’s president. He is also a board member of National Action Network.

Also in 2011, Sharpton took a stand against governors who were trying to put a lid on the power of public employees’ unions. Gov. John Kasich (R-Ohio) attempted to curb abuses by public-sector unions. Kasich’s reforms, in the form of Senate Bill 5, passed the state legislature and were signed into law, but eventually overturned in a statewide referendum. Sharpton was a leader of the effort to block the Kasich reforms. He came to Cleveland, where he spoke at the Greater Abyssinia Baptist Church against Senate Bill 5. Sharpton was joined by AFSCME’s Lee Saunders.

As reported in the newspaper Call & Post:

Sharpton used strong words to push against Republican Ohio Governor John Kasich and members of the Ohio legislature who are trying to limit collective bargaining. “They’ve brought in a right wing that is now trying to change everything that protects us and the progress we have made,” said Sharpton at the breakfast gathering. . . . “Where we thought we were talking about deficits, they were talking about union busting and robbing people of the civil rights of collective bargaining.”

Monday afternoon Rev. Sharpton spoke at Cleveland City Hall along with Congressman Dennis Kucinich, Cleveland City Council members, and Saunders. Sharpton held a news conference on the front steps of Cleveland City Hall. There, he told reporters that those against Senate Bill 5 were waging a war on the proposal. “As we combine the civil rights and labor communities along with congressional leaders like Dennis Kucinich, we are sure we can fight this,” said Sharpton, as other local leaders flanked him and applauded his words.

Sharpton ended his evening at Local 310 Hall where he had a standing-room-only crowd. “Workers should not be robbed of the civil right to organize,” says Sharpton. He says he will do whatever it takes to protect workers including challenging it in court. Reverend Al Sharpton is standing united with Northeast Ohioans worried about their fate if Senate Bill 5 (SB5) becomes law. “I come to Ohio to tell you, Governor, that our strength doesn’t come from what you see, our strength comes from what you can’t see,” said Rev. Sharpton.

The Toledo Blade described another segment of Sharpton’s anti-Senate Bill 5 tour, which was part of a national pro-union campaign:

The fight over public union power isn’t just a labor struggle, the Rev. Al Sharpton and national union leaders said yesterday at Toledo’s Roy C. Start High School. It’s a civil rights battle, they said.

The event, along with a breakfast meeting at Pinewood Tabernacle Church, were stops on a tour by Mr. Sharpton and top labor leaders of labor battleground sites across the country. The events were billed as part of a “fight against the coordinated attack on public services.”

Mr. Sharpton was in Cleveland Monday, calling for a “war” against the Republican-backed legislation now before the Ohio House that would strip Ohio’s public union members of the right to collective bargaining—a bill supported by Gov. John Kasich. Mr. Sharpton said yesterday that threats to labor rights are a civil rights issue and that the legislation would hurt not just teachers but also their students’ futures and the community at large. He and union leaders praised Start’s high graduation rate and said the proposed legislation could roll back the school’s success. “This is what we are fighting to maintain,” Mr. Sharpton said of Start [High School]. “If we make it difficult for teachers to work, if we denigrate them, we turn schools like this around.”

Keep in mind that Sharpton was talking about “collective bargaining rights” for government employee unions—rights that were historically opposed by such pro-union figures as President Franklin D. Roosevelt and the first president of the AFL-CIO, George Meany, who believed it was “impossible to bargain collectively with the government.”

When Gov. Chris Christie (R-N.J.), in an effort to balance the state budget, proposed reforms related to teacher tenure and government employees’ pension and health benefits, Sharpton rallied opposition. “We have committed to going all over this country to deal with the reality that we cannot balance the deficits and the budgets that we didn’t cause on the backs of working-class people,” he said at a rally. He was joined at the event by AFSCME’s Lee Saunders and Randi Weingarten, head of the American Federation of Teachers.

In a 2011 Huffington Post column, Sharpton went after Gov. Scott Walker (R-Wisc.):

Madison, Wisconsin—arguably the center of labor movements and unions—is under attack.  In one of the largest and troubling setbacks to workers’ rights, Republican Gov. Scott Walker has proposed regressive legislation that not only dismantles the ability of civil employees to oppose unjust practices, but it essentially demonizes each individual’s self-worth.  As thousands continue to gather in Wisconsin to protest laws that would require them to pay more for their pensions and health insurance, similar action is taking place in New Mexico and around the country as unions face continued assault. The nation, in effect, is at a pivotal moment not seen since the days of the great civil rights movement….

Last week, I was in New Mexico with Lee Saunders, International Secretary-Treasurer for the American Federation of State, County and Municipal Employees (AFSCME), as we addressed a similar attack on workers in that state. . . . [W]e must ensure that other states and municipalities do not begin to undermine the people who clean our streets, collect our garbage, teach our children, deliver our mail and tremendously help us all on a daily basis.

One night in 2012, Sharpton used his TV show, PoliticsNation, as a forum to attack the Right to Work legislation then up for consideration in Michigan. He called it “an extreme attack on core democratic policies.” He claimed that “billionaire conservatives” were behind the effort and that “their goal is the same it was then: cripple unions to pad their corporate profits and take down a key source of support for the Democratic Party.”  The following night, Sharpton huffed:  “Threats, intimidation, undemocratic moves. Right now, Michigan is the center of the right-wing attack on workers’ rights, and we must fight it.”

When National Action Network held a major event in Los Angeles, a NAN press release made clear the continuing ties between Sharpton’s group and the union movement:

Dr. [Martin Luther] King visited Los Angeles in the aftermath of the Watts Riots to decry the violence; today, Rev. Al Sharpton and the Los Angeles Chapter of National Action Network are working in the same tradition to carry on Dr. King’s vision of equality. Proceeds from the event will go towards funding NAN’s 2015 Technology Tour, which will create tech academies in five cities across the U.S., including New York, Atlanta, Detroit, Los Angeles and Oakland. Sponsors include: AFSCME Local 393/AFL-CIO; Charter Communications, Inc.; The Los Angeles County Federation of Labor, AFL-CIO; SEIU Local 2015; UDW: The Homecare Providers Union, United Domestic Workers of America.

Today, Sharpton plays a prominent role in efforts by unions to raise the federal minimum wage to $15 an hour—which would have the effect of making millions of entry-level workers potentially unemployable.

Corporate sponsors

Sharpton’s National Action Network was founded in 1991 and now takes in at least $5 million a year.

Nevertheless, NAN and other Sharpton-controlled organizations are in poor financial shape. Federal and New York State tax liens against Sharpton and his nonprofit and for-profit organizations now total around $4.5 million.

National Action Network’s 2013 filing with the IRS showed a negative asset balance of $1.33 million. That’s one of several reasons why the nonprofit watchdog group Charity Navigator recently placed NAN on its watch list. Even personal loans from Sharpton, totaling almost $329,000, haven’t put his group in the black.

Still, lots of money is coming in, especially from Big Business. Individual donations are part of the revenue stream, but more significant are institutional donations. A NAN-sponsored policy conference on Capitol Hill in July was bankrolled by PepsiCo; participants got a free company logo notebook and nylon tote bag in the bargain. And the sponsor (i.e., donor) lists for NAN conferences over the years are corporation-heavy, including such names as Home Depot, Ford, Chrysler, Facebook, McDonald’s, Walmart, Johnson & Johnson, Macy’s, the News Corporation, Coca-Cola, Toyota, UPS, JPMorganChase, Anheuser-Busch, FedEx, Denny’s, Comcast, Colgate-Palmolive, American Honda, AT&T, and Verizon.  [For more on the support of corporations and foundations for Sharpton’s organization, see Labor Watch’s sister publication, Foundation Watch, May 2010.]

These companies believe such generosity buys them immunity from boycotts, lawsuits, and adverse publicity. Of course, such payoffs often whet the shakedown artist’s appetite for more. (An appeaser, Churchill said, is one who “feeds a crocodile hoping it will eat him last.”) If anything can be said on behalf of such corporate timidity, at least it is rooted in self-interest more than ideological solidarity.

Sharpton’s shakedown operation was spotlighted last January in an article by Isabel Vincent and Melissa Klein of the New York Post:

Want to influence a casino bid? Polish your corporate image? Not be labeled a racist? Then you need to pay Al Sharpton.

For more than a decade, corporations have shelled out thousands of dollars in donations and consulting fees to Sharpton’s National Action Network. What they get in return is the reverend’s supposed sway in the black community or, more often, his silence. . . .

Sony Pictures co-chair Amy Pascal met with the activist preacher after leaked emails showed her making racially charged comments about President Obama. . . . Pascal and her team were said to be “shaking in their boots” and “afraid of the Rev,” The Post reported. No payments to NAN have been announced, but Sharpton and Pascal agreed to form a “working group” to focus on racial bias in Hollywood. . . . Sharpton notably did not publicly assert his support for Pascal after the meeting—what observers say seems like a typical Sharpton “shakedown” in the making. Pay him in cash or power, critics say, and you buy his support or silence. . . .

Sharpton, who now boasts a close relationship with Obama and [New York City] Mayor Bill de Blasio, is in a stronger negotiating position than ever. “Once Sharpton’s on board, he plays the race card all the way through,” said a source who has worked with the Harlem preacher. “He just keeps asking for more and more money.”

A few of the examples cited in the Post article:

[National Action Network] had repeatedly and without success asked GM for donations for six years beginning in August 2000, a GM spokesman told The Post. Then, in 2006, Sharpton threatened a boycott of GM over the planned closing of an African-American-owned dealership in The Bronx. He picketed outside GM’s Fifth Avenue headquarters. GM wrote checks to NAN for $5,000 in 2007 and another $5,000 in 2008.

Sharpton targeted American Honda in 2003 for not hiring enough African-Americans in management positions. “We support those that support us,” Sharpton wrote to the company. “We cannot be silent while African-Americans spend hard-earned dollars with a company that does not hire, promote or do business with us in a statistically significant manner.” Two months later, car company leaders met with Sharpton, and Honda began to sponsor NAN’s events. The protests stopped.

Sharpton landed a gig as a $25,000-a-year adviser to Pepsi after he threatened a consumer boycott of the soda company in 1998, saying its ads did not portray African-Americans. He held the position until 2007.

Union backing

Another category of institutional donor to Sharpton is the unions.  Whether or not rank-and-file members are aware of it, their dues payments have helped make possible his many campaigns. And the flow of cash from a wide range of labor organizations into National Action Network’s coffers continues.

Jason Hart of Watchdog.org wrote in April:

Would you believe taxpayer money taken from government workers’ paychecks was sent to MSNBC host Al Sharpton? It was.

AFSCME donated $126,500 to Sharpton’s National Action Network, one of many examples of AFSCME spending member dues on polarizing “progressive” causes. In the government union’s 2014 report to the U.S. Department of Labor, AFSCME disclosed $64,585,115 in “Political Activities and Lobbying” spending.

The union also reported more than $1 million in donations to political nonprofits—including Sharpton’s—as “Contributions, Gifts and Grants.”

Last May, Jillian Kay Melchior reported in National Review Online:

Since PoliticsNation [Sharpton’s TV show] debuted on MSNBC on August 29, 2011, Al Sharpton’s nonprofit National Action Network has collected more than $2.38 million in contributions from unions, according to Department of Labor records. Meanwhile, Sharpton has often used his show to promote pro-labor viewpoints, also inviting union leadership on as guests.

“The civil-rights movement, the labor movement, the human-rights movement is all one thing,” Sharpton said in May 2014, echoing the Amalgamated Transit Union’s cries against cuts in transportation spending. Just two months prior, the Amalgamated Transit Union had given National Action Network a $15,000 contribution. . . .

In 2010, before Sharpton’s show debuted, National Action Network had offered “the opportunity to appear bi-monthly on Reverend Sharpton’s nationally syndicated radio show” in exchange for a donation of $100,000 or more, according to records from the nonprofit reviewed by National Review. A source close to Sharpton notes that “MSNBC’s rules are more stringent than syndicated radio shows” but also adds: “I think Sharpton’s providing a vehicle for pro-labor organizations gives him access to dollars, that’s for sure.”

Lee Saunders sits on the board of National Action Network, and he’s also president of the American Federation of State, County and Municipal Workers, which has given Sharpton’s nonprofit $541,500 in donations since PoliticsNation launched, according to Department of Labor records. Saunders has appeared twice on PoliticsNation in the last 16 months. . . .

Randi Weingarten, president of the American Federation of Teachers, has also appeared twice in the past 16 months. AFT’s headquarters and New York Local 2 have given Sharpton’s nonprofit $445,000 since August 29, 2011, records show.

Service Employees International Union’s [Local 1199] president, George Gresham, has also made appearances on Sharpton’s show. [SEIU headquarters] has given National Action Network $436,133 over the past four years, the Department of Labor reports. . . .

Sharpton’s MSNBC program, PoliticsNation, recently lost its Monday-through-Friday slot and will now be relegated to Sunday mornings.

A 2014 investigation by Jason Hart for Media Trackers revealed that NAN received more than $3.6 million from unions during 2005-13, including about $1.16 million that had been donated in Fiscal Year 2013.

Al Sharpton’s National Action Network
The 20 largest union disbursements in 201320151116-UW-Sharpton-funding
Notes:  All donations are from a union’s headquarters, unless otherwise indicated.  Certain unions are repeat donors. Source:  Jason Hart, “MSNBC Host Al Sharpton Rakes in Union Cash,” mediatrackers.org, April 11, 2014.

Al Sharpton virtually embodies demagoguery in American public life.  For three decades, the New York City-based minister, politician, and talk show host has occupied the national stage, applying character assassination and political brinksmanship to achieving his ideal of social and racial “justice.”  Through his nonprofit group, National Action Network (NAN), he has attracted extensive financial and moral support, much of it from unions.

Do the grassroots members of these union care, or even know, where their money is going?

Carl F. Horowitz heads the Organized Labor Accountability Project for the National Legal and Policy Center in Falls Church, Virginia. He is the author of the new book “Sharpton:  A Demagogue’s Rise.” This article orginally appeared in the October 2015 issue of Labor Watch and is republished here with permission.

Moral Values That Underlie Opposition to Government Unions

Often missing from entirely legitimate criticism of government unions is an accompanying explanation of the moral values that underlie the criticism. Last month we published a post entitled “Deceptive and Misleading Claims – How Government Unions Fool the Public,” which listed ten myths that government unions use repeatedly in their propaganda campaigns. Missing in that post, and added here, are the moral values that underlie the need to expose each of these myths.

TEN GOVERNMENT UNION MYTHS AND THE MORAL ARGUMENTS AGAINST THEM

Myth #1:  Government unions are protecting the middle class.

Reality:  Government unions are protecting government workers at the expense of the private sector middle class. The agenda of government unions is more wages and benefits for government workers, and more hiring of government workers. To adhere to this agenda, failure of government programs still constitutes success for these unions. More laws, more regulations, and more government programs equates to more unionized government workers, regardless of the cost, benefit, or need for these programs. The primary agenda of unionized government has nothing to do with the welfare of the private sector middle class, whose taxes pay for it.

Moral value:
The dignity and security of ALL workers is important, not just government workers.

Myth #2:  Government unions are a necessary political counterweight to “Wall Street,” big business, and billionaires.

Reality:  When government is expanded to serve the interests of government unions, the elite and privileged special interests are relatively unaffected, and often benefit. Large corporations can afford to comply with excessive regulations that drive their emerging competitors out of business. When governments borrow to finance deficits created by an over-built unionized government, bond underwriters profit from the fees. Government pension funds are among the biggest players on Wall Street, aggressively investing hundreds of billions each year to secure their 7.0% (or more) per year returns. Billionaires can afford to pay taxes and fees – it’s the middle class taxpayer who can be overwhelmed by them. When powerful special interests want favorable legislation passed in California, they go to the government unions and make a deal. Government unions are the brokers and enablers of special interest cronyism. They are allies, not counterweights.

Moral value:
As government contractors and as representatives of public servants, financial special interests and their government union partners should care about ALL citizens, not just themselves.

Myth #3:  Government unions represent and protect the American worker and the labor movement.

Reality:  For better or worse, government unions represent and protect government workers. Government unions and private sector unions have very little in common. Unlike private unions, government unions elect their own bosses, and their agencies are funded by compulsory taxes, not through profits earned by creating products and services that are voluntarily purchased in a competitive market. Moreover, government union members operate the machinery of government, giving them the ability to harass their political opponents under cover of authority. Private sector unions – properly regulated – have a legitimate role to play in American society. Government unions, on the other hand, exist to serve the interests of government workers, not the ordinary American citizen.

Moral value:
Democratic government represents and serves ALL Americans, not just government workers.

Myth #4:  Public employees are underpaid.

Reality: In past decades, prior to the unionization of government, a public worker exchanged lower base pay for better retirement benefits and more job security. But today, not only have retirement benefits been greatly increased from what was normal back in the 1980’s and 1990’s, but in most cases the base pay of government workers exceeds the base pay for private sector workers performing jobs requiring similar skills. A 2015 study by State Budget Solutions estimated the total compensation of California’s government workers to exceed private sector workers by 31%. But these studies typically omit lower paid independent contractors who now constitute one in three workers. A California Policy Center study that examined 2012 data showed the average pay and benefits for California’s city workers was $124,058, county workers $102,312, and state workers $100,668. And this study did not take into account the value of additional paid vacation benefits, extra paid holidays, and generous “comp time” policies, which add significantly to the total value of annual compensation. Just how much public employee pay exceeds private sector pay for equivalent jobs is the topic of ongoing debate. But they’re not underpaid by any reasonable measure.

Moral value:
Taxpayer funded government benefits – whether they are generous or minimal – should extend to ALL workers according to the same set of formulas and incentives.

Moral value:
Public service should not automatically bestow better pay, more job security, and superior benefits compared to private sector workers.

Myth #5:  The average public sector pension is only $25,000 per year (or some similarly low number).

Reality:  The problem with this profoundly misleading statistic is that this low average is the result of including participants who only worked a few years in state/local government, barely vesting a pension. Should someone who worked less than a decade (or two) in a job expect a pension based on a full career of service? When normalizing for 30 year careers and taking into account the uptick in retirement benefit formulas that rolled through California starting in 1999, the average state/local retiree in California collects a pension and retirement health benefit package worth over $70,000 per year. For a private sector taxpayer to collect this much in retirement, they would have to save at least $1.5 million.

Moral value:
We support modest, financially sustainable retirement security benefits for ALL American workers, not just government workers.

Myth #6:  California’s state/local pension systems are being reformed and will be just fine financially.

Reality: Virtually every official post-reform projection among California’s 80+ public sector pension systems are predicting eventual financial health based on a huge, extremely risky assumption – that the average annual returns of these funds over the next few decades will exceed 7.0% per year. Common sense should tell any unbiased observer that ongoing 7.0% average annual returns are not a safe bet. If they are, why are Treasury Bills only yielding 3.0%? What are mortgage bankers only able to get 3.5% on 30 year fixed mortgages? Why are bank CD’s only offering 2.0%? The spread between equity returns and truly risk-free returns has never been this large for this long. Pension funds are basing future performance projections on past results. The problem is that over the past 30 years, interest rates have been steadily lowered to allow people to borrow more. This borrowing stimulated the economy, creating corporate profits and driving up the price of corporate equities. But interest rates cannot be lowered any further. We are at the end of a long-term credit cycle, and pension funds are just beginning to deal with the consequences.

Moral value:
Government worker retirement funds should be managed cautiously and responsibly, not gambled on Wall Street with taxpayers liable if returns don’t meet unrealistic expectations.

Myth #7:  The teachers unions care about student achievement more than anything else.

Reality: The evidence simply doesn’t support this assertion. Consider the reaction of the California Teachers Association to the recent Vergara decision, in which a Los Angeles superior court judge agreed with student plaintiffs who challenged three union work rules. The CTA criticized the ruling and announced their support for an appeal. What does the Vergara lawsuit aim to accomplish? It would take away the ability for teachers to earn tenure in less than two years. It would end the practice of favoring seniority over merit when deciding what teachers to layoff. And it would make it easier to fire incompetent teachers. These are commonsense, bipartisan reforms that the teachers unions oppose.

Moral value:
Good educations for our children matter more than job security for bad teachers.

Myth #8:  Billionaires are trying to hijack California’s public education system.

Reality:  Wealthy individuals come from a diverse background of political orientations. All of them share a desire to rescue California’s next generation of citizens from a union monopoly on education. And unlike the unionized traditional public school, public charter schools and private schools survive based on the choice of parents who want a better education for their children. And if they don’t do a great job, the parents can withdraw their children from the failing charter or private school. Introducing competition to California’s unionized K-12 education system is a healthy, hopeful trend that gathers support from concerned citizens of all incomes, ethnic groups, and political ideologies.

Moral value:
What matters is the character and intentions of philanthropists and investors, not whether their ideology is right-wing or left-wing.

Myth #9:  Proponents of public sector union reform are “anti-government workers.”

Reality: This sort of claim is a distraction from the reality – which is that public sector unions have corrupted the democratic process and have been attempting to inculcate public employees with the “us vs. them” mentality that is the currency of unions. Sadly, the opposite is the truth – government unions alienate the public from their government, and, worse, alienate government employees from the public. They have created two classes of workers, government employees who have superior pay, benefits, job security and retirement security, and everyone else in the private sector. They know perfectly well that this level of worker comfort is economically impossible to extend to everyone. Government unions have undermined the sense of common rules and shared fate between public and private individuals that is a foundation of democracy. Those who oppose government unions recognize this threat. It has nothing to do with their support and respect for the men and women who perform the many difficult and risky jobs that are the role of government.

Moral value:
All American citizens should live according to the SAME government laws, rules, incentives.

Myth #10:  Opponents of government unions are “right wing extremists.”

Reality: The problems caused by government unions should concern everyone, and they do. Conscientious left-wing activists who favor an expanded role for government expect positive results, not failed programs that were created merely to increase union membership. They realize that unionized government is expensive and inefficient, leaving less money or authority to maintain or expand government services. Public libraries and parks with reduced hours and curtailed maintenance. Pitted, congested roads. After school recreation programs without reliable funding. Public schools where students aren’t learning and apathetic teachers are protected from accountability. Government has to be cost-effective, no matter how big or how small. Opponents of government unions can disagree on the optimal size of government, yet passionately agree on the problems caused by a unionized government.

Moral value:
Good government is something EVERYONE believes in, whether they are right-wing or left-wing.

This list of ten myths promulgated by spokespersons for government unions only begins to chronicle their many deceptions. But each of these myths offer strategic value to these unions – giving them the ability to put reformers on the defensive, change the topic of discussion, redefine the terms of the debate. Each of them has powerful emotional resonance, and each of them – along with many others – is continuously reinforced by a network of professional communicators backed by literally billions in dues revenue. But they are myths, not facts, and equally if not more important, they rely on premises of questionable moral worth.

Although intellectual integrity and emotional resonance are important and necessary elements of any effective argument critical of government unions, it is the moral worth of those arguments that matters above all. When you consider these myths – which is a charitable way to describe these distortions, deceptions, and misleading claims – in the context of the moral arguments that impel critics to refute them, what emerges is a new and decisive approach to countering union propaganda. Because government unions are destroying our democracy, our freedom and our prosperity, merely to enrich themselves. The moral high ground belongs to their critics, not to the government unions.

*   *   *

Ed Ring is the executive director of the California Policy Center.

Government Unions Move to Extend "Temporary" Income Tax Increases

A coalition of government employee unions has filed an initiative that would extend the temporary income tax hikes that were contained in Proposition 30 and approved by voters in 2012.

If this seems like, in the immortal words of Yogi Berra, “déjà vu all over again,” it’s not your imagination. This is just the tax raisers running their favorite play from “The Book of Dirty Tricks on Taxpayers.” First they persuade taxpayers to accept a tax by marketing it as temporary. Once taxpayers have become inured to paying it, the tax raisers move in to extend it or make it permanent.

Big spending politicians and their allied government employee unions count on taxpayers having short memories to make this scam work. For example, look at the 1.25% sales tax increase political elites pushed in 1991 to deal with a budget gap. A half-cent was supposed to be temporary but when it came time to expire the Legislature placed it on the ballot promoting it as necessary for “public safety.” Voters — by then used to paying the higher tax — swallowed the hook and we continue to pay the entire 1.25% increase initiated almost twenty-five years ago.

There is a saying in football that if a play works once, keep running it until the opposition shows they can stop it. In 2009, the Legislature achieved the two-thirds vote to impose two year increases in state sales and income taxes. Immediately they placed on the ballot, in a special election, an extension of these taxes for two additional years. Voters, still shocked by being hit with stiff tax increases, were having none of it and rejected the extension by almost two to one.

Realizing they had not waited long enough to allow taxpayers to become accustomed to higher taxes, government employee unions, working with Gov. Brown returned to the ballot in 2012 with another “temporary” increase in sales and income taxes in the form of Proposition 30. As the primary spokesman for the tax, the governor traveled the state repeating the mantra, “It’s for the schools, its temporary.” Voters were persuaded to approve another “temporary” tax increase. Now those who benefit the most from higher revenues – California has the highest-paid state and local public employees in all 50 states according to the Department of Labor – are back seeking to extend taxes, that were scheduled to expire in 2019, for another dozen years.

If the Proposition 30 extension, now being called the School Funding and Budget Stability Act, appears on the ballot, it has a good chance to pass. This is because the burden will fall on a minority, upper income taxpayers, and many voters will overlook that high taxes will cause some of our most successful residents to leave for more tax-friendly states, meaning that they will no longer pay any taxes to California.

The most important thing for voters to remember, however, is that if they agree to any temporary tax, it may as well be considered as permanent. As for the Proposition 30 temporary tax, it likely will join the ranks of other “temporary” taxes that seem never to disappear. Among those is the federal telephone tax established to pay for the Spanish American War, which remained in place for 108 years after the war ended.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

How Government Unions Are Destroying America

Not one presidential candidate, apart from Gov. Walker’s last-ditch rhetoric prior to dropping out, has discussed the problems with unionized government as a major issue. That’s too bad, because these problems are bigger than even most critics acknowledge.

When people discuss the need to reform, if not eliminate, public sector unions, the only reason typically cited is that their demands are bankrupting our cities and states. And reformers also usually fail to communicate the fundamental differences between government unions and private sector unions, or emphasize the bipartisan urgency of public sector union reform. Government unions don’t merely drive our cities and counties into service insolvency if not bankruptcy, they are distorting policy decisions of fundamental importance to the future of America.

With a focus on California, and in no particular order, here is an attempt to summarize how this is occurring:

(1) The Economy

California has the highest taxes and fees in the U.S., and is consistently ranked as the worst state in America to do business. California also has the highest paid public employees in the United States, and with state and local debt and unfunded retirement obligations now hovering around $1.0 trillion – nearly half of the state’s entire GDP – virtually all new state and local taxes and fees are to pay for services that have already been performed. The uncontrollable political power of state and local government unions, combined with their insatiable appetite for more pay, more benefits, and more members, has – across all areas of policy – shifted political priorities from the public interest to the interests of public employees. The primary reason for excessive taxes and fees, as well as fewer services and less infrastructure investment, is because California’s unionized state and local government workers receive pay and benefits that are twice what the average private citizen earns.

(2) Cronyism and Financial Special Interests

When government unions control the government, big business either gets out of the way or gets on board. The idea that government unions protect the public interest against big corporate interests is absurd. Government union backed policies create deficits that bond issuers earn billions underwriting. Excessive pension benefits create additional hundreds of billions in pension fund assets invested on Wall Street. Excessive regulations are enforced by additional unionized government employees, to which only the biggest corporations can afford to comply. Government unions enable and enrich the largest corporate and financial interests at the expense of small independent businesses and emerging competitors.

(3) Environment

When it comes to cronyism, the “clean-tech” sector has risen to the top of the list. Government unions are partnering with “green” venture capitalists to carve up the proceeds of California’s carbon emission auction proceeds, a tax by any other name that will eventually extract tens of billions each year from California’s consumers to fund investments that wouldn’t make it in a normal market. From high speed rail to side loading washers that tear up fabric, strain backs, and require expensive maintenance, “green” projects and products are being forced on Californians in order to enrich investors and corporations. But it doesn’t end there. A bad fire season isn’t because of normal drought recurrence, no, the cause is “man made climate-change,” so fire crews have a claim on CO2 emissions auction proceeds. A heat wave isn’t a heat wave, it’s global warming – and since crime is statistically known to increase during hot weather, police agencies also have a claim on CO2 emissions auction proceeds. Code inspectors and planners? Climate change mitigation via enforcing “additional” energy efficiency mandates and higher housing density. Transit workers whose conveyances replace cars? Ditto. Teachers who insert climate change indoctrination into curricula? Ditto.

An entire article, or book for that matter, could be written on the synergistic symbiosis between environmental extremists, big business/finance, and government unions. What about the artificial scarcity environmentalism creates by restricting development of land, energy, water, and other natural resources? When this happens, the wealthiest corporations and developers make higher profits while their smaller competitors go out of business. Utilities, whose margins are fixed, raise revenues which increases their absolute profits. Union controlled government pension funds, whose entire solvency depends on asset bubbles, ride investments in these artificially scarce commodities to new heights. Property tax revenues rise because home prices are artificially inflated.

(4) Infrastructure

California’s deferred maintenance on existing infrastructure – roads, bridges, rail, port facilities, utility grid, dams and aqueducts – has been assessed in the hundreds of billions. New infrastructure to solve, for example, water scarcity, would include toilet-to-tap sewage reuse, desalination, enhanced runoff capture, and – dare we say it – a few new dams. But none of these projects get off the ground, not only because environmentalists oppose them based on mostly misguided principles, but because artificial scarcity enriches established special interests, and because all the public funds that can possibly be found are instead perpetually needed to pay unionized government workers. More pay. More benefits. More government workers. Infrastructure? It’s environmentally harmful.

(5) Immigration

No matter where one stands on this sensitive and complex issue, they must recognize that government unions win when immigrants fail to prosper or assimilate. While American culture retains a vitality that is almost irresistible to newcomers and may overcome all attempts to undermine and fragment it, if government unions had their way, that’s exactly what would happen. Because the more difficulties new immigrants encounter, the more government workers are required. If immigrants fail to find jobs, if they become alienated and traumatized, if they turn to crime or even terrorism, then we need more welfare and social workers, we need more multilingual teachers and bureaucrats, we need more police, and we need more prisons. The unpleasant truth is this: If we import millions of destitute immigrants into America – people with marginal skills from cultures that are hostile to American values – it is a meal ticket worth billions of dollars for government unions, and for every crony business who services the programs they administer.

(6) Authoritarianism

By over-regulating all activity that so much as scratches the earth, whether it’s to develop land, water, energy, minerals; to farm, transport, build, manufacture; to enforce these rules, more government powers are required. Similarly, by upending the cultural fabric that’s nurtured a social contract in America so strong that volumes of law never had to be written, but were instead the stuff of mutually understood courtesies and customs, we invite strife. To manage this, more rules and referees are necessary, enforced by more government. As society loses its cohesion, and as ordinary honest citizens rebel against excessive taxes and regulations, government unions benefit from training their members to mistrust the fractious and rebellious public. After all, unionized government workers are now a special class. As society fragments, they become more cohesive. As the middle class dissolves, they retain their economic privileges. Perhaps more than any other factor, government unions impel the growth of a police state.

(7) Education

To consider education is to save the most important for last. Because everything that is wrong with where our culture is headed can either be magnified or mitigated by how we educate our young students, regardless of their income or gender or culture or faith. As it is, in California’s public schools, students are taught that open space is sacred, that energy development will destroy the planet, that capitalism is innately flawed if not irredeemable, and that the legacy of Western European culture is a primary cause for most problems in the world. Instead of teaching children to develop functional skills in reading and math, they are being indoctrinated to believe that any failure or disappointment they ever encounter is the result of discrimination. Given the demographics of California’s youth, the union fostered educational environment currently imposed on them is nothing short of a catastrophe.

The reader may not agree with all seven of these assessments, but regardless of the scope of anyone’s reform advocacy, they must confront government unions. Because reform in all of these areas is stopped by government unions. Do you want to unleash California’s economic potential? Do you want to reduce the power of the financial special interests and crony capitalists? Do you want to restore balance to environmental policies, and build revenue producing infrastructure that eliminates scarcity and lowers the cost of living for ordinary people? Do you want to stop importing welfare recipients and instead admit highly skilled and highly educated workers who will enliven our economy and our culture with spectacular success? Do you want to avoid living in a police state? Do you want California’s children to be taught lessons that build their character and give them useful skills?

Reformers must recognize that government unions have a natural interest in preventing any of these reforms from ever happening. Addressing any of these issues without also taking on the government unions is futile. Conscientious members of government unions can play a vital role in reforms, by the way, if they are willing to make their personal interests secondary to their duties as a public servant. If California can be rescued from the grip of government unions, eventually everyone will benefit. And as goes California, so goes the nation.

*   *   *

Ed Ring is the executive director of the California Policy Center.

Government Union's New Taxes on Working Californians Stopped in Legislature – For Now

It’s been a long year in the Capitol for those of us who advocate against higher taxes, crushing regulations and wasteful government spending. The good news is that California taxpayers have prevailed in virtually all the major tax fights this year. The bad news is that, because the legislature convenes for two-year sessions, this is only halftime. On January 4, 2016 – less than 4 months from now – the same cast of characters will reconvene and we will have to fight many of the same battles yet again. Still, it is helpful to assess how homeowners and working Californians fared in the legislative process this year.

For Howard Jarvis Taxpayers Association, there is no higher priority than defending Proposition 13 against attacks. As a constitutional amendment, Prop 13 cannot be amended by the Legislature directly. But that doesn’t mean the politicians can’t inflict harm. Indeed, with a two-thirds vote of each house, the California Legislature can place proposed constitutional amendments on the ballot. And if an anti-Prop 13 measure is sufficiently enticing or deceptive, voters might unwittingly take away some of their own rights as taxpayers.

This past year, there were three such proposals. Two were efforts to lower the two-thirds vote requirement at the local level as a condition for higher taxes. This is an important part of Prop 13 because the higher vote threshold was put in place to prevent local governments from taking away the benefits of Prop 13’s reduced property tax burden by simply imposing new or higher levels of other local taxes. The third attack on Prop 13 was an effort to take away the provision that limits annual increases in the taxable value of property to two percent. Although not affecting all property owners, this dangerous bill was simply “Step 1” for the complete repeal of Prop 13.

As noted above, the good news is that all three proposals were vigorously opposed by HJTA and each was stopped. But the bad news is that these proposals to repeal or weaken Prop 13 will be back come January.

Over and above our Prop 13 victories, taxpayers also stopped a myriad of other taxes including one proposal that would have slammed every California family that relies on their car for work, errands or pleasure. That proposal would have imposed big increases in the gas tax, the cost of getting a license and the annual vehicle registration fee. Stopping that awful tax hike was a very high priority for the more than 200,000 members of HJTA.

An equally dreadful proposal to extend the sales tax to services – a bill which would slam taxpayers with over $100 billion in higher consumer costs every year – was also derailed, at least for now.

Wars are not fought alone and taxpayers should be very grateful to those legislators who stood on the right side. Because taxes imposed by the Legislature require a two-thirds vote, our allies had the votes to stop the attacks even though a large majority in both the Assembly and Senate never met a tax they didn’t like.

A huge vote of thanks is due to the Republicans and their leaders who stood united against the assault. But we should also note that several moderate Democrats withstood the withering criticism of their colleagues and the left-leaning media to actually represent the interests of their taxpaying constituents. That sort of courage is a rare thing in politics.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Deceptive and Misleading Claims – How Government Unions Fool the Public

California’s public sector unions collect and spend well over $1.0 billion per year. When you have that much money, you can hire thousands of skilled professionals to wage campaigns, litigate, lobby, negotiate, and communicate. You can hire the best public relations firms money can buy. You can commission research studies that spin facts to support your agenda. You can silence voices of dissent, voices of reason, voices of reform, with an avalanche of misinformation. And it works.

Here, then, for what it’s worth, is a list of some of the biggest deceptions and misleading claims made by California’s government unions.

1 – Government unions are protecting the middle class.

FALSE. Government unions are protecting government workers at the expense of the private sector middle class. The agenda of government unions is more wages and benefits for government workers, and more hiring of government workers. To adhere to this agenda, failure of government programs still constitutes success for these unions. More laws, more regulations, and more government programs equates to more unionized government workers, regardless of the cost, benefit, or need for these programs. The primary agenda of unionized government has nothing to do with the welfare of the private sector middle class, whose taxes pay for it.

2 – Government unions are a necessary political counterweight to “Wall Street,” big business, and billionaires.

FALSE. When government is expanded to serve the interests of government unions, the elite and privileged special interests are relatively unaffected, and often benefit. Large corporations can afford to comply with excessive regulations that drive their emerging competitors out of business. When governments borrow to finance deficits created by an over-built unionized government, bond underwriters profit from the fees. Government pension funds are among the biggest players on Wall Street, aggressively investing hundreds of billions each year to secure their 7.0% (or more) per year returns. Billionaires can afford to pay taxes and fees – it’s the middle class taxpayer who can be overwhelmed by them. When powerful special interests want favorable legislation passed in California, they go to the government unions and make a deal. Government unions are the brokers and enablers of special interest cronyism. They are allies, not counterweights.

3 – Government unions represent and protect the American worker and the labor movement.

FALSE. For better or worse, government unions represent and protect government workers. Government unions and private sector unions have very little in common. Unlike private unions, government unions elect their own bosses, and their agencies are funded by compulsory taxes, not through profits earned by creating products and services that are voluntarily purchased in a competitive market. Moreover, government union members operate the machinery of government, giving them the ability to harass their political opponents under cover of authority. Private sector unions – properly regulated – have a legitimate role to play in American society. Government unions, on the other hand, exist to serve the interests of government workers, not the ordinary American citizen.

4 – Public employees are underpaid.

FALSE. In past decades, prior to the unionization of government, a public worker exchanged lower base pay for better retirement benefits and more job security. But today, not only have retirement benefits been greatly increased from what was normal back in the 1980’s and 1990’s, but in most cases the base pay of government workers exceeds the base pay for private sector workers performing jobs requiring similar skills. A 2015 study by State Budget Solutions estimated the total compensation of California’s government workers to exceed private sector workers by 31%. But these studies typically omit lower paid independent contractors who now constitute one in three workers. A California Policy Center study that examined 2012 data showed the average pay and benefits for California’s city workers was $124,058, county workers $102,312, and state workers $100,668. And this study did not take into account the value of additional paid vacation benefits, extra paid holidays, and generous “comp time” policies, which add significantly to the total value of annual compensation. Just how much public employee pay exceeds private sector pay for equivalent jobs is the topic of ongoing debate. But they’re not underpaid by any reasonable measure.

5 – The average public sector pension is only $25,000 per year (or some similarly low number).

FALSE. The problem with this profoundly misleading statistic is that this low average is the result of including participants who only worked a few years in state/local government, barely vesting a pension. Should someone who worked less than a decade (or two) in a job expect a pension based on a full career of service? When normalizing for 30 year careers and taking into account the uptick in retirement benefit formulas that rolled through California starting in 1999, the average state/local retiree in California collects a pension and retirement health benefit package worth over $70,000 per year. For a private sector taxpayer to collect this much in retirement, they would have to save at least $1.5 million. If public pensions weren’t so generous, these pension systems would not face severe financial challenges. Which brings us to the next myth….

6 – California’s state/local pension systems are being reformed and will be just fine financially.

FALSE. Virtually every official post-reform projection among California’s 80+ public sector pension systems are predicting eventual financial health based on a huge, extremely risky assumption – that the average annual returns of these funds over the next few decades will exceed 7.0% per year. Common sense should tell any unbiased observer that ongoing 7.0% average annual returns are not a safe bet. If they are, why are Treasury Bills only yielding 3.0%? What are mortgage bankers only able to get 3.5% on 30 year fixed mortgages? Why are bank CD’s only offering 2.0%? The spread between equity returns and truly risk-free returns has never been this large for this long. Pension funds are basing future performance projections on past results. The problem is that over the past 30 years, interest rates have been steadily lowered to allow people to borrow more. This borrowing stimulated the economy, creating corporate profits and driving up the price of corporate equities. But interest rates cannot be lowered any further. We are at the end of a long-term credit cycle, and pension funds are just beginning to deal with the consequences.

7 – The teachers unions care about student achievement more than anything else.

FALSE. The evidence simply doesn’t support this assertion. Consider the reaction of the California Teachers Association to the recent Vergara decision, in which a Los Angeles superior court judge agreed with student plaintiffs who challenged three union work rules. The CTA criticized the ruling and announced their support for an appeal. What does the Vergara lawsuit aim to accomplish? It would take away the ability for teachers to earn tenure in less than two years. It would end the practice of favoring seniority over merit when deciding what teachers to layoff. And it would make it easier to fire incompetent teachers. These are commonsense, bipartisan reforms that the teachers unions oppose.

8 – Billionaires are trying to hijack California’s public education system.

FALSE. To the extent wealthy individuals have decided to involve themselves in education reform and private education initiatives, they come from a diverse background of political orientations. But all of them share a desire to rescue California’s next generation of citizens from a union monopoly on education. And unlike the unionized traditional public school, public charter schools and private schools survive based on the choice of parents who want a better education for their children. And if they don’t do a great job, the parents can withdraw their children from the failing charter or private school. Introducing competition to California’s unionized K-12 education system is a healthy, hopeful trend that gathers support from concerned citizens of all incomes, ethnic groups, and political ideologies.

9 – Proponents of public sector union reform are “anti-government workers.”

FALSE. This sort of claim is a distraction from the reality – which is that public sector unions have corrupted the democratic process and have been attempting to inculcate public employees with the “us vs. them” mentality that is the currency of unions. Sadly, the opposite is the truth – government unions alienate the public from their government, and, worse, alienate government employees from the public. They have created two classes of workers, government employees who have superior pay, benefits, job security and retirement security, and everyone else in the private sector. They know perfectly well that this level of worker comfort is economically impossible to extend to everyone. Government unions have undermined the sense of common rules and shared fate between public and private individuals that is a foundation of democracy. Those who oppose government unions recognize this threat. It has nothing to do with their support and respect for the men and women who perform the many difficult and risky jobs that are the role of government.

10 – Opponents of government unions are “right wing extremists.”

FALSE. The problems caused by government unions should concern everyone, and they do. Conscientious left-wing activists who favor an expanded role for government expect positive results, not failed programs that were created merely to increase union membership. They realize that unionized government is expensive and inefficient, leaving less money or authority to maintain or expand government services. Public libraries and parks with reduced hours and curtailed maintenance. Pitted, congested roads. After school recreation programs without reliable funding. Public schools where students aren’t learning and apathetic teachers are protected from accountability. Government has to be cost-effective, no matter how big or how small. Opponents of government unions can disagree on the optimal size of government, yet passionately agree on the problems caused by a unionized government.

This list of ten myths promulgated by spokespersons for government unions only begins to chronicle their many deceptions. But each of these myths offer strategic value to these unions – giving them the ability to put reformers on the defensive, change the topic of discussion, redefine the terms of the debate. Each of them has powerful emotional resonance, and each of them – along with many others – is continuously reinforced by a network of professional communicators backed by literally billions in dues revenue.

Compensation reform, pension reform, other fiscal reforms, reforming work rules, education reform – all these urgent reforms must first go through one powerful special interest that stops them in their tracks: Government unions. Reformers must confront not only the myths these unions promote, challenging and debunking them, but they must also redefine the role of government unions, if not question their very existence.

*   *   *

Ed Ring is the executive director of the California Policy Center.

Government Union Assault on Taxpayers Continues in California

Editor’s Note:  This article discusses multiple proposals to raise taxes that are making the rounds in California’s government union controlled state legislature. Two in particular are mentioned, Senate Constitutional Amendment 5 that takes Prop 13 protections away from business owners, and Assembly Constitutional Amendment 4 that lowers the two-thirds vote requirement for local tax increases. On top of that they are considering transportation taxes, tobacco taxes, managed care taxes, new real estate transaction fees, and new “cap and trade” fees, to name a few. And this is happening at the same time as the government union spokespersons and their political puppets are crowing about a “six billion budget surplus.” Make no mistake about it. ALL of these proposed new taxes are to pay for excessive pay and obscenely inflated pension benefits for unionized government employees. Government workers should face precisely the same economic challenges as private sector workers. Only then will policies be crafted for the betterment of all Californians. As it is, California’s unionized state and local government workers are a privileged class, running the state’s economy and beleaguered taxpayers into the ground.

Although comparisons to actual wartime fighting should be used sparingly, California taxpayers can’t help but feel a bit like the 20th Maine Regiment at the battle of Gettysburg during the American Civil War. The actions of the 20th Maine, depicted in the Pulitzer Prize winning book “Killer Angels” by Michael Shaara, are well known to Civil War buffs.

Led by Joshua Chamberlain, who later became Governor of Maine, the 20th Regiment became famous for its defense of Little Round Top, a small hill on the flank of the Union forces. On July 2, 1863, the 20th Maine was positioned at the far left of the Union line with elements of the 44th New York, 16th Michigan, and 83rd Pennsylvania. As the Confederacy began its attack, Chamberlain was alerted that the enemy seemed to be pushing toward the regiment’s left. Chamberlain ordered a right-angle formation, extending his line farther to the east.

After an hour and a half under heavy attack and running low on ammunition, Chamberlain saw the rebels forming for another push and ordered a charge down the hill with fixed bayonets, which caught the enemy by surprise. During the charge, a second Confederate line tried to make a stand near a stone wall. The isolated group of Union soldiers, now in a position from which to provide the rest of the regiment with support, fired into the Confederate’s rear, giving the impression that the 20th Maine had been joined by another regiment. This, coupled with the surprise of Chamberlain’s bold attack, caused panic among the Southerners’ ranks.

The Confederates scattered, ending the attack on the hill. If the 20th Maine had retreated instead, the entire line would have been flanked and the Union likely would have lost Gettysburg. Most Civil War historians agree that holding the hill helped the Union win Gettysburg and turn the tide of the war.

What is notable about the 20th Maine was the number of direct assaults launched directly against its ranks. Time and time again, enemy forces assailed the small force made up of mostly farmers, woodsmen and fishermen. Chamberlain himself was no professional soldier, but rather the Professor of Modern Languages at Bowdoin College.

Like the constant attacks on the 20th Maine, which depleted both the energy and ammunition of its members, political forces in California are lined up against taxpayers ready to make a final push as the current legislative session enters its final few weeks. The question is whether taxpayers and their allies in the Legislature – mostly Republicans – can repel all the tax hikes being proposed.

The proposals are many, varied and all dangerous. Senate Constitutional Amendment 5 seeks to rip Prop 13 protections away from business owners, including tens of thousands of mom and pop stores. Assembly Constitutional Amendment 4 seeks to lower the two-thirds vote for local taxes which, if passed, will subject local citizens to massive new tax hikes. In a special session, which is not subject to the same time deadlines as the regular legislative session, there will be a huge push for new transportation taxes, slamming middle class working Californians who rely on their cars for both work and their family life.

Fortunately, there is plenty of ammunition taxpayers can use to counter the assault, starting with the argument that California is already a high tax state with a hostile regulatory environment that has driven many of its citizens and businesses to more friendly jurisdictions. Also, taxpayers will surely assert that, with a $6 billion surplus, the last thing we should be talking about is tax hikes. Finally, government waste in California continues to eat up tens of billions of dollars annually. All these contentions must be brought to the fore if taxpayers are to be victorious in stopping those who want even more money out of our pockets.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

A Challenge to Moorlach and Glazer – Build A Radical Center

On March 22, 2015, John Moorlach was officially sworn in as state senator for California’s 37th District. On May 28, 2015, Steve Glazer took the oath of office as state senator for the 7th District. Moorlach is a Republican serving mostly conservative constituents in Orange County. Steve Glazer is a Democrat serving mostly liberal constituents in Contra Costa County.

Different parties. Different constituents. You wouldn’t think these two men had much in common. But you’d be wrong.

John Moorlach and Steve Glazer have both distinguished themselves as politicians and candidates by doing something that transcends their political party identity or conventional ideologies. They challenged the agenda of government unions. As a consequence, both of them faced opponents who were members of their own party who accepted money and endorsements from government unions.

It wasn’t easy to challenge government unions. Using taxpayers money that is automatically deducted from government employee paychecks, government unions in California collect and spend over $1.0 billion per year. These unions spent heavily to attack Moorlach and Glazer, accusing – among other things – Moorlach of being soft on child molesters, and accusing – among other things – Glazer of being a puppet of “big tobacco.”

This time, however, the lavishly funded torrent of union slime didn’t stick. Voters are waking up to the fact that the agenda of government unions is inherently in conflict with the public interest. Can Moorlach and Glazer transform this rising awareness into momentum for reform in California’s state legislature?

Despite sharing in common the courage to confront California’s most powerful and most unchecked special interest, Moorlach and Glazer belong to opposing parties whose mutual enmity is only matched by their fear of these unions. With rare exceptions, California’s Democratic politicians are owned by government unions. Fewer of California’s Republican politicians are under their absolute control, but fewer still wish to stick their necks out and be especially targeted by them.

The good news is that bipartisan, centrist reform is something whose time has come. Democrats and Republicans alike have realized that California’s system of public education cannot improve until they stand up to the teachers unions. Similarly, with the financial demands of California’s government pension systems just one more market downturn away from completely crippling local governments, bipartisan support for dramatic pension reform is inevitable.

There are other issues where voters and politicians alike realize current policy solutions are inadequate at best, but consensus solutions require intense dialog and good faith negotiations. An obvious example of this is water policy, where the current political consensus is to decrease demand through misanthropic, punitive rationing, when multiple solutions make better financial and humanitarian sense. Supply oriented solutions include upgrading sewage treatment plants to reuse wastewater, building desalination plants, building more dams, increasing cloud seeding efforts, and allowing some farmers to sell their allocations to urban areas.

Imagine a centrist coalition of politicians, led by reformers such as Moorlach and Glazer, implementing policies that are decisive departures from the tepid incrementalism and creeping authoritarianism that has defined California’s politics ever since the government unions took control. How radical would that be?

Ultimately, forming a radical center in California requires more than the gathering urgency for reforms in the areas of education, government compensation and pensions, and, hopefully, infrastructure investment. Beyond recognizing the inevitable crises that will result from inaction, and beyond finding the courage to stand up to government unions, Moorlach and Glazer, and those who join them, will have to manifest and pass on to their colleagues an empathy for the beliefs and ideologies of their opponents.

Ideological polarities – environmentalism vs. pro-development, social liberal vs. social conservative, libertarian vs. progressive – generate animosity that emotionalizes and trivializes debate on unrelated topics where action might otherwise be possible. The only solution is empathy. The extremes of libertarian philosophy are as absurd as those of the progressives. The extremes of social liberalism can be as oppressive as an authoritarian theocracy. Economic development without reasonable environmentalist checks is as undesirable as the stagnant plutocracy that is the unwitting consequence of extreme environmentalism. And while government unions should be outlawed, well regulated private sector unions play a vital role in an era of automation, globalization, and financial corruption.

Despite being inundated with a torrent of slime by their opponents, John Moorlach and Steve Glazer took the high road in their campaigns. They are worthy candidates to nurture the guttering remnants of empathy that flicker yet in Sacramento, and turn them into a roaring, radical centrist fire.

*   *   *

Ed Ring is the executive director of the California Policy Center.

Pension Reformers are not "The Enemy" of Public Safety

“You will find that powerful financial and investment institutions are the ones promoting the attacks on your pensions. Firms like Berkshire-Hathaway and the Koch brothers are backing political candidates and causes all over the country in the hopes of making this issue relevant and in the mainstream media. Why? Because if they can crack your pension and turn it into a 401(k), they will make billions. Your pension is the golden egg that they are dying to get their hands upon. By the way, it was those same financial geniuses that brought about the Great Recession in the first place. After nearly collapsing the entire financial system of western civilization, they successfully managed to deflect the blame off of themselves and onto government employee pay/benefits.”
– Jim Foster, Vice President, Long Beach Police Officers Association, posted on PubSec Alliance website

These comments form the conclusion to a piece published by Foster entitled “What does “unfunded liability” mean?,” published on PubSecAlliance.com, an online “community of law enforcement associations and unions.” If you review the “supporters” page, you can see that the website’s “founding members,” “affiliated organizations,” and “other groups whose membership is pending” are all law enforcement unions.

In Foster’s discussion of what constitutes an unfunded pension liability, he compares the liability to a mortgage, correctly pointing out that like a mortgage, an unfunded pension liability can be paid down over many years. But Foster fails to take into account the fact that a mortgage can be negotiated at a fixed rate of interest, whereas a pension liability will grow whenever the rates earned by the pension system’s investments fall short of expectations. When the average taxpayer signs a 30 year fixed mortgage, they don’t expect to suddenly find out their payments have doubled, or tripled, or gone up by an order of magnitude. But that’s exactly what’s happened with pensions.

Apart from ignoring this crucial difference between mortgages and unfunded pension liabilities, Foster’s piece makes no mention of the other reason unfunded pension liabilities have grown to alarming levels, the retroactive enhancements to the pension benefit formula – enhancements gifted to public employees and imposed on taxpayers starting in 1999. These enhancements were made at precisely the same time as the market was delivering unsustainable gains engineered by, as Foster puts it, the “same financial geniuses that brought about the Great Recession in the first place,” and “nearly collapsing the entire financial system of western civilization.”

This is a huge failure of logic. Foster is suggesting that the Wall Street crowd is to blame for the unfunded liabilities of pensions, but ignoring the fact that these unfunded liabilities are caused by (1) accepting the impossible promises made by Wall Street investment firms during the stock market bubbles and using that to justify financially unsustainable (and retroactive) benefit formula enhancements, and (2) basing the entire funding analysis for pension systems on rates of return that can only be achieved by relying on stock market bubbles – i.e., doomed to crash.

You can’t blame “Wall Street” for the financial challenges facing pension funds, yet demand benefits based on financial assumptions that only those you taint as Wall Street charlatans are willing to promote.

Foster ignores the fact that the stock market bubbles (2000, 2008, and 2014) were inflated then reflated by lowering interest rates and accumulating debt to stimulate the economy. But interest rates cannot go any lower. When the market corrects, and pension funds start demanding even larger annual payments to fund pensions and OPEB that now average over $100,000 per year for California’s full-career public safety retirees, Foster and his ilk are going to have a lot of explaining to do.

There is a deeper, more ominous context to Foster’s remarks, however, which is the power that government unions, especially public safety unions, wield over politicians and over public perception. The navigation bar of the website that published his essay, PubSecAlliance, is but a mild reminder of the power police organizations now have over the political process. Items such as “Intel Report,” “Pay Wars,” “Tactics,” “Tales of Triumph,” and “The Enemy” are examples of resources on this website.

When reviewing PubSecAlliance’s reports on “enemies,” notwithstanding the frightening reality of police organizations keeping lists of political enemies, were any of the people and organizations listed selected despite the fact that they were staunch supporters of law enforcement? Because pension reformers and government union reformers are not “enemies” of law enforcement, or government employees, or government programs in general. There is no connection.

Here are a few points for Jim Foster to consider, along with his leadership colleagues at the Long Beach Police Officers Association, and police union members everywhere.

TEN POINTS FOR MEMBERS OF PUBLIC SAFETY UNIONS TO CONSIDER

(1)  Not all pension reformers want to abolish the defined benefit. Restoring the more sustainable pension benefit formulas in use prior to 1999, and adopting conservative rate-of-return assumptions would make the defined benefit financially sustainable and fair to taxpayers.

(2)  Over the long term, the real, inflation-adjusted return on investments cannot be realistically expected to exceed the rate of national and global economic growth. You are being sold a 7.0% (or more) annual rate of return because it is an excuse to keep your normal contribution artificially low, and mislead politicians into thinking pension systems are financially sound.

(3)  As noted, you can’t blame “Wall Street” for the financial challenges facing pension funds, yet demand benefits based on financial assumptions that only those you taint as Wall Street charlatans are willing to promote.

(4)  If public safety employers didn’t have to pay 50% or more of payroll into the pension funds – normal and unfunded contributions combined – there would be money to hire more public safety employees, improving their own safety and better protecting the public.

(5)  Public safety personnel are eyewitnesses every day to the destructive effects of failed social welfare programs that destroy families, ineffective public schools with unaccountable unionized teachers, and a flawed immigration policy that prioritizes the admission of millions of unskilled immigrants over those with valuable skills. They ought to stick their necks out on these political issues, instead of invariably fighting exclusively to increase their pay and benefits.

(6)  The solution to the financial challenges facing all workers, public and private, is to lower the cost of living through competitive development of land, energy, water and transportation assets. Just two examples: rolling back CEQA hindrances to build a desalination plant in Huntington Beach, or construct indirect potable water reuse assets in San Jose. Where are the police and firefighters on these critical issues? Creating inexpensive abundance through competition and development helps all workers, instead of just the anointed unionized government elite.

(7)  If pension funds were calibrated to accept 5.0% annual returns, instead of 7.0% or more, they could be invested in revenue producing infrastructure such as dams, desalination plants, sewage distillation and reuse, bridges, and port expansion, to name a few – all of which have the potential yield 5.0% per year to investors, but usually not 7.0%.

(8)  Government unions are partners with Wall Street and other crony capitalist interests. The idea that they are opposed to each other is one of the biggest frauds in American history. Government unions control local politicians, who award contracts, regulate and inspect businesses, float bond issues, and preserve financially unsustainable pension benefits. This is a gold mine to financial special interests, and to large corporate interests who know that the small businesses lack the resources to comply with excessive regulations or afford lobbyists.

(9)  Government unions elect their bosses, they wield the coercive power of the state, they favor expanded government and expanded compensation for government employees which is an intrinsic conflict of interest, and they protect incompetent (or worse) government employees. They should be abolished. Voluntary associations without collective bargaining rights would still have plenty of political influence.

(10)  Expectations of security have risen, the value of life has risen, the complexity of law enforcement challenges has risen, and the premium law enforcement officers should receive as a result has also risen. But unaffordable pensions, along with the consequent excessive payments of overtime, have priced public safety compensation well beyond what qualified people are willing to accept. Saying this does not make us your “The Enemy.”

*   *   *

Ed Ring is the executive director of the California Policy Center.

RELATED ARTICLES AND POSTS

Pension Reform is BAD for Wall Street, and GOOD for California, April 14, 2015

Desalination Plants vs. Bullet Trains and Pensions, April 7, 2015

The Glass Jaw of Pension Funds is Asset Bubbles, February 24, 2015

Police Unions in America, December 9, 2014

How Police Unions and Arbitrators Keep Abusive Cops on the StreetAtlantic Monthly, December 2014

More Taxes and Tuition Buy Time for the Pension Bubble, November 25, 2014

The Amazing, Obscure, Complicated and Gigantic Pension Loophole, November 18, 2014

Estimating America’s Total Unfunded State and Local Government Pension Liability, September 9, 2014

Two Tales of a City – How Detroit Transcended Ideology to Reform Pensions, July 22, 2014

Government Employee Unions – The Root Cause of California’s Challenges, June 3, 2014

California’s Green Bantustans, May 21, 2014

Conservative Politicians and Public Safety Unions, May 13, 2014

The Unholy Trinity of Public Sector Unions, Environmentalists, and Wall Street, May 6, 2014

Public Pension Solvency Requires Asset Bubbles, April 29, 2014

Add ALL Public Workers to Social Security, March 25, 2014

How Much Does Professionalism Cost?, March 11, 2014  (The Kelly Thomas Story)

Pension Funds and the “Asset” Economy, February 18, 2014

Middle Class Private Sector Workers Are NOT “Ripping Off the Next Generation”, December 17, 2013

Unions and Bankers Work Together to Protect Unsustainable Defined Benefits, November 26, 2013

A Member of the Unionized Government Elite Attacks the CPC, November 19, 2013

How Public Sector Unions Skew America’s Public Safety and National Security Agenda, June 18, 2013

California Democrat Goes Rogue, Incurs Government Union Wrath

It didn’t take long for “the brotherhood” of status quo politics to pile on. Within hours of former Assembly member Joan Buchanan having lost her election bid for Northern California’s 7th Senate District seat in last week’s special election to fill the vacancy, she endorsed labor-embraced and fellow Democratic Assemblywoman Susan Bonilla, D-Concord. Together, they joined the panoply of monied special interests led by public sector unions that are largely funding the Democratic Party, to defeat a third Democrat – independent Steve Glazer.

Glazer describes himself as “fiscally conservative, socially progressive.” He is the mayor of Orinda and former political aide to Gov. Jerry Brown. Glazer brandishes “blue” credentials in California, having worked for decades to support Democratic candidates and causes.

But a funny thing happened on the way to governing California: Glazer ran afoul of the Democratic Party establishment when he started challenging the power of public sector unions on municipal and state government. Glazer supported banning strikes by public transit workers, embraced pension reforms and campaigned to elect more business friendly Democrats.

Millions of dollars were spent to try to bury Glazer on Election Day, prompting questions on whether there is a zero tolerance policy in the Democratic party against independent-minded Democrats.

Yet, on Election Night, Glazer not only survived, but emerged as the top vote-getter. A May runoff is scheduled.

Glazer stands out because it is rare for Democrats to “go rogue” and support labor-opposed changes to teacher tenure or curbing government pensions. Despite the “big tent” image, discourse and dissent is disallowed, despite growing public support for these reforms. Party-supported candidates are reminded that the hand that feeds them comes with a demand of loyalty.

If not, as was done to Glazer, they become labeled with the equivalent of a political red-letter A: abandonment of the Democratic Party for not remaining subservient to the interests of those who fund them. Forget 50 shades – can Democrats even be allowed to display more than one shade of blue? Yet, the dirty laundry of adherence to blind allegiance has erupted into public view in recent election cycles.

Indeed, in 2008, then-candidate Barack Obama lost favor with the National Education Association for his support of holding teachers and schools accountable and linking student outcome data to teacher evaluations. Since then, he and his Education secretary have largely earned the wrath of national teachers unions.

In the most-recent Los Angeles mayoral election, Eric Garcetti defeated a fellow Democrat largely by portraying his opponent as blindly subservient to the city unions that had endorsed her. Today, Democratic Chicago Mayor Rahm Emanuel faces a re-election runoff due to his willingness to battle Chicago’s powerful teachers unions.

Meanwhile, in Orange County’s special election to fill another vacant state Senate seat, two Republicans battled each other. Former county Supervisor John Moorlach – the candidate who refused to accept campaign contributions from labor unions – claimed outright victory in that Republican stronghold district. His opponent, Assemblyman Don Wagner, R-Tustin, was financed by labor unions who perceived him to be more allegiant to the state’s public sector unions.

The outcomes of both elections – one in a Democratic and one in a Republican stronghold district – send strong signals that voters desire to reclaim their party, and not allow candidates to be constricted to only one shade of red or blue. The challenge now is to seek independence in California’s remaining 38 Senate districts, 80 Assembly districts and every statewide and constitutional office.

About the Author:  Gloria Romero, a Los Angeles resident, served in the California Legislature from 1998 to 2008, the last seven years as Senate majority leader. Romero is the director of education reform for the California Policy Center. This article originally appeared in the Orange County Register and is republished here with permission from the author.

Pension Funds and the Ultimate Hedge, Taxpayers

“We’re trying to make these guys’ money toxic because, as we’ve seen, their money is toxic,” Jonathan Westin, the director of New York Communities for Change, told Business Insider on Thursday. “I think it’s connecting the dots that many people don’t always connect.”
–  “Activists think they found a way to convince Democrats to stay away from ‘toxic’ hedge fund money,” March 13, 2015

There’s nothing new about this talking point, courtesy of the labor funded ACORN successor “New York Communities for Change.” If you don’t like an idea, don’t attack by arguing its merits. Just attack the “dark money,” or the “toxic money,” that funded whomever had the inspiration and did the work to develop the idea.

The long list of causes whose advocates may or may not have accepted “toxic money” just got longer, since the New York Communities for Change – and their inevitable spawn in other states – are now accusing Charter Schools of being financed by “hedge fund billionaires.”

Here in California, charter school advocacy, and, more significantly, charter schools themselves, are indeed supported by many wealthy individuals, but the vast majority of them are self-made entrepreneurs who earned their riches by actually creating something of value to society, from high-tech innovations to office parks and housing developments. Others earned their money in the entertainment business, or through providing legitimate financial services including managing investments on behalf of clients. The idea that “hedge fund billionaires” are the primary force behind the charter school movement is a convenient myth.

With that out of the way, let’s “connect the dots that many people don’t always connect.”

When union activists accuse the financial industry of being overbuilt and riddled with corruption, they’re right. But they are unable to distinguish between honest advisers who manage investments for their clients with integrity and prudence, and rapacious predators whose unchecked greed and insatiable appetite for risk literally threatens to crash the global economy. And the most salient method to distinguish between good and bad investment managers? The good ones are personally accountable for their losses, and the bad ones depend on government bailouts.

There’s no defense for investment managers who use supposedly risk free, low yield consumer deposits as collateral to make high risk investments, and then collect taxpayer bailouts to restore solvency to their client accounts when their schemes fail. Financial bailouts are bad. Financial firms that take risks because they know they will get bailed out are bad. We agree. So why are the pension funds for government workers not included? Why aren’t they at the top of the list? Why aren’t the unions who pay for reinvented former ACORN activists to identify “toxic money” not including pension funds among their targets?

Why aren’t those dots being connected?

Back in 1999, California’s pension funds lobbied California’s politicians to increase pension benefits. California’s all-powerful government unions were quick to hop on that bandwagon. Pension benefits weren’t just enhanced, they were enhanced retroactively. And since the market was roaring, nobody thought it would cost a penny more to fund all of this.

Fast forward to 2015, after years of market volatility, pension funds in California, collectively, are only about 75% funded. With the debt fueled bull market of the past few years beginning to sputter, pension funds are midway through imposing a roughly 100% increase in required contributions by cities and counties. That is, by taxpayers.

Pension funds, which control over $4.0 trillion in assets on behalf of state and local government employees in the United States, are the biggest players in American finance. They invest in anything that will get them a rate of return, after inflation, that averages 4.5% per year – that’s currently 7.5% before taking inflation into account. They invest in hedge funds, they invest in private equity, along with real estate and public equities. And when they don’t hit their numbers, taxpayers bail them out.

Why aren’t those dots being connected? Pension funds rely on taxpayers to hedge their bets. They can make whatever promises they want, take whatever risks they wish, indulge in optimistic projections and lobby for excessive benefit formulas, because taxpayers will bail them out. How deep is the hole? We’re talking trillions, not billions.

Connect the dots. Government pension funds and “hedge fund billionaires” are cut of the same toxic cloth. Perhaps taking money from taxpayers to fund government unions and their activist “volunteers,” and taking money from taxpayers to bail out government pensions are the bigger “toxic” threats to our democracy and our economy.

*   *   *

Ed Ring is the executive director of the California Policy Center.

Why Professional Government Doesn’t Stand a Chance

In 1981, President Ronald Reagan famously fired 11,000 air traffic controllers who went on strike. Looking back on it, one has to credit those controllers for having the courage to go on strike in the face of pay and working conditions they regarded as unacceptable.

In contrast, the police in New York City, who are unhappy that Mayor Bill de Blasio has not paid them the deference they demand, are on strike while at work! That is, they are reporting for duty, so as to get paid, but by making few arrests are refusing to engage in their duties. The police characterize their exercise in insubordination as an act of protest against the mayor. In fact, of course, it is an act of defiance against the people of New York City, who tax themselves to pay their police force for its services.

What is striking (no pun intended) about the New York City situation is the nature of the battle, with the mayor and the police commissioner on one side and the police on the other. Surely this can’t be right. The police, after all, are at work, where supervisors and managers ought to be found. Why is it that we have only the mayor and the commissioner on the side of a day’s work for a day’s pay? Is there no management in the police department with the responsibility and the authority to obtain work?

The answer is, of course, that there is management, but it is dispiritingly weak. It may even be participating in the debacle. It is, after all, a public-sector mantra that management must be weak. (In theory, weak management allows elected officials to be strong, but in practice no such result is obtained.)

Consider the Port Authority of New York and New Jersey. The legislatures of the two states, hardly known as champions of professionalism in government, recently astounded one and all by passing comprehensive reform legislation that would have installed professional management in lieu of political patronage at the bi-state agency. This unexpected and unwelcome intrusion into their political prerogatives served to unite Govs. Andrew Cuomo and Chris Christie, with the announcement that they would veto the legislation amounting to a defense of patronage and a stance against professionalization. The Cuomo-Christie alliance is altogether reminiscent of the political resistance in the 19th century, across party lines, to civil-service government when those reforms cut into political patronage.

Or consider the U.S. Postal Service, which has professional management in name but not in fact. Between Congress on the one hand and labor on the other, Postmaster General Patrick R. Donahue is all but powerless to manage the institution he supposedly heads. The Postal Service’s professional managers know exactly what to do to render the agency economically viable. But those measures are not politically viable. So the Postal Service’s top management must wait and hope that, one day, that which is required might be politically permissible.

We often pay lip service to professional and managerial values in the public sector, but we rarely permit those values to be applied. At one end of the spectrum, the politicians in charge do not regard managerial values as consistent with their political interests. At the other end, the labor unions that represent millions of government employees regard professional management as their mortal enemy.

So it is that we portray government’s management deficit as a political problem. But in truth it is a structural, institutional problem. Neither the politicians in charge of government nor the employees who would be subject to it have any interest in promoting professional management. As long as this remains the case, and it looks like it may remain the case in perpetuity, institutions of government will continue to operate without professional management. The public pays a huge price for this, but as yet neither politicians nor labor have been called upon to pay any price at all.

*   *   *

About the Author:  Richard Clay Wilson Jr. served in local government for 38 years, including 29 years as city manager of Santa Cruz, Calif. He is the author of “Rethinking Public Administration: the Case for Management.” This article originally appeared in Governing and is republished here with permission.