A Trillion-Dollar, Federal Taxpayer-Funded Bailout For Government Union Bosses?
It is well-documented that public-sector union officials who are empowered with monopoly-bargaining and forced-dues privileges routinely wield them to jack up governments’ long-term spending commitments.
Moreover, as a consequence of Big Labor’s compulsory dues-financed lobbying successes, states that give more special privileges to public-sector union officials burden their citizens with more debt as as heavier taxation.
“Promises Made, Promises Broken,” an ongoing analysis of public pension plans prepared by the nonpartisan group State Budget Solutions (SBS) underscores the gravity of the problem. In an update published in November 2014, SBS Editor and General Counsel Joe Luppino-Esposito reported that, in the aggregate, state public pension plans are underfunded by $4.7 trillion.
That adds up to over $15,000 per American. But debt levels vary sharply from state to state.
The 26 states that lacked Right to Work protections as of last year had an average unfunded liability of $18,125 per capita. In contrast, the 24 states that had Right to Work laws as of 2014 had a large, but much more manageable average per capita pension liability that is 38% lower.
Expressed as a share of 2013 Gross Domestic Product by state, the average unfunded pension liability for forced-dues states was 32%, compared to an average of 23% for Right to Work states.
Obviously, Right to Work laws do not in themselves suffice to prevent politicians from making promises to government union officials that taxpayers can’t reasonably be expected to fulfill. But they do evidently help keep politicians’ irresponsibility from getting completely out of hand.
The reason why isn’t hard to see. In jurisdiction where forced union dues and fees are permitted and union monopoly bargaining in the public sector is authorized, union bosses negotiate with government employers over civil servants’ pay, benefits, and working conditions.
At the same time, government union chiefs funnel a large portion of the compulsory dues and fees they collect into efforts to influence the outcomes of state and local elections. And the outcomes of those elections determine who represents the public at the bargaining table. In city after city and state after state, government union bosses wield their forced-dues privileges to amass huge war chests, with which they support and oppose candidates for public office.
Enjoying what effectively amounts to the ability to “elect our own boss,” as New York City government union chieftain Victor Gotbaum (since retired) once put it, Big Labor has foisted extraordinary public pension liabilities on the taxpayers of state after state.
All of the seven states with the greatest per capita pension liability according to last fall’s SBS analysis (Alaska, Connecticut, Hawaii, Illinois, New Jersey, New Mexico and Ohio) lack Right to Work laws. But nine of the 10 states with the lowest per capita pension liability (Arizona, Florida, Georgia, Idaho, Indiana, Nebraska, North Carolina, South Dakota and Tennessee) already had Right to Work laws in 2014, and the sole exception (Wisconsin) adopted a Right to Work law prohibiting forced union dues and fees early this year.
As the state Senate majority leader in one of America’s most heavily indebted states, New Jersey Democrat Steve Sweeney could try to help his constituents reassert control over how public resources are allocated by fighting to roll back Big Labor’s forced-unionism privileges.
Instead, he is opting to try to get Congress to shift the burden to federal taxpayers.
Late last month, Sen. Sweeney (Gloucester) publicly declared his support for the creation of a “trillion dollar federal loan program” that would, in practice, force taxpayers in Right to Work states whose elected officials have managed their budgets more responsibly to bail out union-label politicians in Big Labor-dominated states like New Jersey. (See the news story linked below for more information.)
By enabling New Jersey elected officials to borrow tens of billions of dollars from federal taxpayers and pay just 1% interest on a 30-year loan, Sweeney’s scheme would soon reduce the cost of paying off the state’s unfunded liability by $3 billion a year, he boasts.
Of course, Sweeney has nothing to say about how the debt-ridden U.S. government is supposed to get all the money it will have to lend at a far-below market rate.
Even a spendthrift Congress is unlikely to be foolish enough to adopt Sweeney’s plan or anything resembling it, but he evidently hopes that by putting it on the table he can undercut renewed efforts to require unionized government employees to pay for a higher share of their pension benefits and roll back public-sector union bosses’ monopoly privileges.
As a dyed-in-the-wool advocate of compulsory unionism and a part-time ironworkers union official, a New Jersey version of Wisconsin’s Act 10, the 2011 statute under which the Right to Work of most public-sector employees in the Badger State was restored, is the last thing Sweeney wants. But fiscal realities may finally be pushing the Garden State in that direction despite his best efforts.