For Democrats, Senate Still a Possible Nightmare

By Stuart Rothenberg, Roll Call Contributing Writer Stuart Rothenberg, Roll Call Contributing Writer – Wed Sep 29, 11:01 pm ET

Delaware's Republican primary may well have lulled Democrats into a sense of complacency about their ability to hold the Senate after November's elections. They would be wise to wake up if they want to avoid a nasty surprise on election night.

Tea party activists did indeed do Democrats a huge favor in selecting Christine O'Donnell (R) to oppose New Castle County Executive Chris Coons (D) in the fall.

Yes, Coons is an unabashed liberal, and he almost certainly would have fallen to Rep. Michael N. Castle (R) in an election cycle when voters are dissatisfied with Democratic governance and focused on issues such as spending and big government. But most voters don't care about ideology, and O'Donnell's worldview and agenda simply do not fit Delaware.

Smart Republicans know they will win if the 2010 elections are about Democrats, not about the Republican candidate's background or ideology. Tea party activists apparently don't get that, even though it isn't a complicated idea.

O'Donnell's primary victory notwithstanding, Republicans are still headed for major Senate gains, and a 10-seat gain isn't impossible.

With a month to go until Nov. 2, Republicans have a clear advantage in five seats held by Democrats, with another five seats still in play.

Unless things change, Republicans will likely hold all 18 of their seats up this cycle. No GOP incumbent is in any trouble -- even Sens. Richard M. Burr (N.C.) and David Vitter (La.), who seemed at some risk early on, look headed for comfortable victories -- and Republican open seats appear to be at limited risk.

Of the open seats, Kelly Ayotte (R) looks like a solid bet over Rep. Paul W. Hodes (D) in New Hampshire, and Rob Portman (R) has opened up a lead over underfunded Lee Fisher (D) in Ohio.

In Florida, Independent Charlie Crist appears to be slipping, and that should all but guarantee the election of former state Speaker Marco Rubio (R).

That leaves Kentucky and Missouri, where weak Republicans are likely to take advantage of a good political environment to hang on to GOP seats.

While Democrats like to talk about Kentucky as "within the margin of error," most surveys show Rand Paul (R) ahead, probably by somewhere from 3 to 6 points -- meaning that the contest could be anywhere from even to Paul up by 8 or 9 points.

While the campaign of Jack Conway (D) claims momentum and portrays the contest as even, there is little reason to see Kentucky as a pure tossup. Paul clearly has a narrow but important edge, with few undecided voters in some surveys.

The same goes for Republican Rep. Roy Blunt in his Missouri Senate contest against Robin Carnahan (D). Blunt isn't an ideal candidate in this or any cycle, but Carnahan's Democratic label and liberal bent are more damaging to her. Blunt is ahead in the race by at least a few points, and barring a major goof by the Republican nominee, he should win.

GOP nominees have a solid advantage in three states: North Dakota, Arkansas and Indiana. They have an advantage in the polls -- and a momentum advantage -- in two other states: Pennsylvania and Wisconsin.

Polling in Illinois has been close for weeks, but with Republican Bill Brady running ahead in the gubernatorial race and Republican Congressional candidates overperforming in a number of parts of the state, Republican Rep. Mark Steven Kirk seems more likely than not to win the Senate race.

If all of those races fall into place as expected, they add up to a gain of six seats for Republicans, with six other contests still in play.

Two of the six, Colorado and Nevada, look like tossups. But in a year like this, the party with a strong wind at its back normally has a better-than-even chance of winning the jump balls. In Colorado, in particular, Ken Buck (R) appears to have a slight advantage over Sen. Michael Bennet (D). The Nevada race is so tight, and both Sen. Harry Reid (D) and Sharron Angle (R) are so unpopular, that any outcome is possible.

If Democrats lose both tossups, Republicans would have a net gain of eight seats, and they would need two of the remaining four contests -- West Virginia, Washington, California and Connecticut -- to net 10 seats

West Virginia voters like Gov. Joe Manchin III (D), but they don't like President Barack Obama, which is a headache for Manchin in a state that went solidly for Republican Sen. John McCain (Ariz.) in 2008. While Manchin can win the Senate seat if the election is about the governor, Democrats could easily lose the seat if the election is about Obama and Congressional Democrats.

Washington and California are difficult for Republicans for different reasons, while Connecticut is quickly emerging as perhaps a more viable target than the two West Coast states.

Sen. Barbara Boxer (D) isn't popular, but California is difficult for any Republican nominee. Boxer's recent television ads seem to be taking their toll on challenger Carly Fiorina, who is slipping in polls.

Sen. Patty Murray (D) is more popular than Boxer, but Washington's size and politics offer more opportunities for GOP Senate hopeful Dino Rossi.

In Connecticut, Linda McMahon (R) has run a strong race, but the state's uninspiring Democratic Senate nominee, Richard Blumenthal, for all his problems, enters the final month of the campaign with a small advantage over McMahon. As in California, the partisan bent in Connecticut is a problem for McMahon.

Republicans would need a strong wave to carry through Election Day to make a 10-seat net gain. While that's not yet likely, Senate Democrats can't take their East Coast/West Coast firewall for granted.

Stuart Rothenberg is editor of the Rothenberg Political Report (rothenbergpoliticalreport.com).


http://www.blogger.com/post-create.g?blogID=3078437581805316374

Family bank good for Giannoulias' taxes, bad for his campaign

U.S. Senate hopeful tells voters he was gone from the ailing institution by late 2005 — but he told the IRS something else

By John Chase, Tribune reporter


U.S. Senate candidate Alexi Giannoulias tells voters he was gone from his troubled family bank by late 2005, but that's not what he told the Internal Revenue Service.

Giannoulias was able to take a $2.7 million tax deduction last year because he reported working hundreds of hours at Broadway Bank in 2006.

Giannoulias says there's no contradiction, and in fact there is no suggestion the Democratic state treasurer took a tax break he didn't deserve. Rather, the issue highlights the fine line Giannoulias walks on the campaign trail in explaining exactly what he did at Broadway and when he did it.

The bank was at the top of his résumé when he was a 30-year-old first-time statewide candidate in 2006 with few professional highlights. But in his tight Senate race against Republican Mark Kirk, his tenure as a senior loan officer at Broadway is a bull's-eye for critics who hit him for the bank's loans to mob figures as well as troubled lending that contributed to Broadway's collapse earlier this year.

Saying he left in 2005 gives Giannoulias maximum distance from the bank's questionable lending practices, the April takeover by federal regulators and other controversies such as a loan by the bank to convicted influence peddler Antoin "Tony" Rezko in early 2006.

But by reporting that he worked at least 500 hours at Broadway in 2006, Giannoulias was able to get a break that helped him avoid paying federal income tax for 2009.

Giannoulias said he has been clear that he left the "day-to-day" operations of the bank in September 2005 to prepare his first run for public office, but was on paid leave until May 2006 when he left completely to campaign full time for treasurer.

That 2006 work consisted of roughly 30 hours a week closing out his responsibilities before quitting as a bank officer, and didn't involve making new loans, Giannoulias explained in a recent interview. It was more than enough to qualify him for the tax break, he said.

IRS regulations allow taxpayers to deduct business losses from certain types of corporations if they've logged significant hours there for five of the last 10 years. Giannoulias started at the bank in 2002, so working at least 500 hours in 2006 qualifies Giannoulias for the tax break.

Before leaving day-to-day operations in September 2005, "I was there, I think I worked seven days a week," Giannoulias said.

Asked what he was doing at the bank in early 2006, Giannoulias said, "I think the biggest difference is I wasn't taking on new customers. I was just finishing up what I needed to do, so I don't know how the hours worked out, but it wasn't a full-time job.

"I was campaigning," he said. "I'm a hard worker. … (The campaign office) was right next door. Most campaign events are at night anyway. … You go to events and you spend your weekends traveling downstate."

Giannoulias' Senate campaign Web site offers a less nuanced description of his departure from the bank his father started.

"It was because my father instilled in his sons the importance of helping others that I decided to leave the bank in 2005 to pursue public service," Giannoulias says in a statement on the campaign site. "At the time I left, according to every independent analysis, the bank was one of the best performing in Illinois."

In numerous quotes during the past months, the candidate or his representatives have stated he left the bank's "day-to-day operations" in 2005.

Giannoulias, who ran for state treasurer by touting his financial experience, has said that when he left Broadway, it was in sound fiscal shape. He also said he had very little to do with $20 million in controversial loans the bank approved between 2004 and September 2005 to a pair of men with criminal histories while he was a senior loan officer at Broadway.

Most recently, Kirk criticized Giannoulias for trying to claim he wasn't involved in the bank when Broadway approved a controversial loan for a project headed by Rezko, who was convicted in the federal corruption probe of former Gov. Rod Blagojevich's administration. Giannoulias' answer has been that he wasn't involved in the bank when the loan was approved in February 2006.

In the recent interview, Giannoulias acknowledged that while he was still at Broadway when that loan was approved, he was only involved in closing out his existing accounts and knew nothing about any new loans.

"For loans like the one you're talking about (Rezko) where I had nothing to do with or my name was never on it, I don't think there's any inconsistencies," he said.

http://www.chicagotribune.com/news/elections/ct-met-giannoulias-bank-taxes-20100928,0,6290447.story

Obliterating a generation of Democrats

By Dick Morris

Thanks to the leadership of President Obama, Speaker Pelosi and Majority Leader Reid, the Democratic Party is facing the biggest defeat in midterm elections in the past 110 years, perhaps surpassing the modern record of a 74-seat gain set in 1922. They will also lose control of the Senate.

Republicans are now leading in 54 Democratic House districts. In 19 more, the incumbent congressman is under 50 percent and his GOP challenger is within five points. That makes 73 seats where victory is within easy grasp for the Republican Party. The only reason the list is not longer is that there are 160 Democratic House districts that were considered so strongly blue that there is no recent polling available.
There is no Democratic message. President Obama is heralding education — an issue never mentioned on the campaign trail. Secretary of State Clinton is trying to restart the peace talks in the Middle East. Attorney General Holder is re-evaluating online national-security taps. And a hundred Democrats are scrambling about on their own trying to get reelected!

The Democratic campaigns they are waging are formulaic. They make no attempt to defend the administration, but run away from it where possible. They never mention the words stimulus, healthcare reform, card-check, GM takeover or cap-and-trade.

Instead, they are running almost exclusively negative ads. They base their campaigns on tax liens, failed marriages, DWIs and the like. Where there is a paucity of dirt, they resort to three prefab negatives: that their opponent favors a 23 percent national sales tax, that he wants to privatize Social Security and that he is shipping jobs overseas.

The Republican answers are simple. Republicans want a 23 percent value-added tax (VAT) only as part of eliminating the income tax. Some Republicans do back letting people under 55 divert one-third of their FICA taxes to approved investment alternatives, and most voters agree with them. But, on the campaign trail, simply saying — accurately — that “I oppose any change at all in Social Security for our seniors” takes care of it. And Republicans rebut the jobs overseas charge by citing how the incumbent backed cash-for-clunkers, where 40 percent of the cars bought were foreign; the TARP bailout, which paid billions to overseas banks; and the GM bailout, where two-thirds of the jobs were overseas.

It is a pathetic defense, easily pierced and defeated.

Now the field of battle will increasingly shift. The marginal Democrats — the freshmen and sophomores — are mostly gone. The seats of Southern conservative Democrats largely already lost. Now the combat shifts to the previously safe seats occupied by many in the House leadership, including, perhaps, the seats of Majority Leader Steny Hoyer (Md.) and Financial Services Committee Chairman Barney Frank (Mass.).

This new attack will force the Democrats to spend their resources defending their base and make it even easier to pick off marginal members. And while Republican resources shift to the previously solidly Democratic districts, eager donors anxious to develop relationships with the new Republican majority will fill their shoes.

In the Senate, Republicans lead in eight Democratic seats: North Dakota, Indiana, Arkansas, Colorado, Pennsylvania, Wisconsin, West Virginia and Illinois. In Nevada, the ninth, Harry Reid has been stuck at 44 percent of the vote since Aug. 1, when his Social Security/Medicare attack was rebutted. He is dead in the water. His negatives flood the airwaves but are not working, and the ads run by Karl Rove’s American Crossroads have him pinned down.

For the 10th seat, the GOP has five options: New York, where Joe DioGuardi is only one point behind Sen. Kirsten Gillibrand in the latest published poll; California, where Sen. Barbara Boxer is stubbornly below 50; Washington state, where the lead has seesawed back and forth between Dino Rossi and Sen. Patty Murray; Connecticut, where Linda McMahon has closed to 50-45; and Delaware, where Christine O’Donnell may yet come back and has closed the gap to nine points.

And where is Obama while all this is happening? Proposing new initiatives on education!

http://thehill.com/opinion/columnists/dick-morris/121487-obliterating-a-generation

Lies, Damned Lies – Obamacare 6 Months Later; It’s Time to Take Back the 20!

by Sarah Palin on Thursday, September 23, 2010 at 2:13pm

It’s now six months since President Obama took control of one-sixth of the private sector economy with his health care “reform,” and the first changes to our health care system come into effect today. Despite overwhelming public dislike of the bill, we were told that D.C. knows best, and there was nothing to worry about, and we’d be better off swallowing the pill called Obamacare; so, in defiance of the will of the people, the President and his party rammed through this mother of all unfunded mandates. Nancy Pelosi said Congress had to pass the bill so that Americans could “find out what is in it.” We found out that it’s even worse than we feared.



Remember when the president said, “If you like your doctor, you can keep your doctor”? Not true. In Texas alone a record number of doctors are leaving the Medicare system because of the cuts in reimbursements forced on them by Obamacare! The president of the Texas Medical Association, Dr. Susan Bailey, warns that “the Medicare system is beginning to implode.”



Remember the Obama administration’s promise that Obamacare would cut a typical family’s premium “by up to $2500 a year”? Not true. In fact, fueled by reports that insurers expect premiums to rise by as much as 25 percent as a result of Obamacare, Senate Democrats are contemplating the introduction of price controls.



Remember when the president said in his address to Congress that “no federal dollars will be used to fund abortions”? That turned out to be yet another one of those “You lie!” moments. We found out that Obamacare-mandated high risk insurance pools set up in states like Pennsylvania and New Mexico will fund abortions after all.



Remember the promise that Obamacare would “strengthen small businesses”? Not true either. The net result of Obamacare is that small businesses will face higher health care costs, new Medicare taxes, and higher regulation compliance costs, while the much-hyped health care tax credit for small businesses turns out to be almost impossible to obtain.



Remember the president’s promise that his bill would ensure “everyone [has] some basic security”? False again. Besides the great uncertainty that Obamacare hampers businesses with, companies now find it is actually cheaper to pay the $2000 per employee fine imposed by Obamacare than to keep insuring their workforce. This leaves millions of American workers at risk of losing their employer-provided health insurance.



And remember when the Obama administration said they would not be “rationing care” in the future? That ol’ “death panels” thing I wrote about last year? That was before Obamacare was passed. Once it passed, they admitted there was going to be rationing after all. There has to be. The reality of Obamacare is that it enshrines what the New York Times called “The Power of No” – the government’s power to say no to your request for treatment of the people you love. The fact that the president used a recess appointment to push through the nomination of Dr. Donald Berwick as head of the Centers for Medicare and Medicaid Services tells you all you need to know about this administration’s intentions. After all, Berwick is the man who said, “The decision is not whether we will ration care – the decision is whether we will ration with our eyes open.”



By the way, when the administration was talking about that independent board that has the statutory power to decide which categories of treatment are worthy of funding based on efficiency calculations (that, again, sounded to me like a panel of faceless bureaucrats making life and death decisions about your loved ones – which, again, is what I referred to as a “death panel”), it was another opportunity for Americans to hear the truth about Obamacare’s intentions.



So, yes, those rationing “death panels” are there, and so are the tax increases that the president also promised were “absolutely not” in his bill. (Aren’t you tiring of the untruths coming from this White House and the liberals in Congress?) When the state of Florida filed a challenge to Obamacare on the basis that the mandates in the bill are unconstitutional, the Obama Department of Justice filed a motion to dismiss the suit by citing the Anti-Injunction Act, which blocks courts from interfering with the federal government’s ability to collect taxes. Yes, taxes! Once the bill was passed it was no longer politically inconvenient for the Obama administration to admit that it makes no difference whether the payment is a tax or a penalty because it’s “assessed and collected in the same manner.” The National Taxpayer Advocate has already warned that “Congress must provide sufficient funding” to allow the IRS to collect this new tax. Pretty soon we’ll be paying taxes just to make it possible for the IRS to collect all the additional taxes under Obamacare! Seems as if this is another surprise that the public found out about after the bill was rammed through.



But perhaps the most ridiculous promise of all was the president’s assurance that Obamacare will lead to “bending the curve” on health care spending. Yes, rationing is a part of the new system, and yes, Obamacare does raise taxes. But because the new government managed system is so incredibly complicated and expensive to run, health care spending will actually rise instead of fall. Don’t believe me? Then take a look at the Congressional Budget Office’s admittance that the CBO’s original estimate of the total costs of the bill were off by around $115 billion. Its new estimate is now above $1 trillion, and even that may be way too low. A more realistic figure calculated by the Pacific Research Institute puts the number at $2.5 to $3 trillion over the next 10 years! This is probably what President Obama was referring to when he admitted recently that he had known all along that “at the margins” his proposals were going to drive up costs. Give us a break! Only in this administration would they refer to a $3 trillion spending increase as “marginal.” Next time he comes to us with another one of his harebrained proposals for a budget-busting federal power grab, let’s make sure we remember the president’s admission that he was lying all along when he told us his health care plan was going to cut costs. He is increasing costs. He admits it now. Period.



Higher costs and worse care – is it any wonder why people are overwhelmingly in favor of repealing and replacing Obamacare? Politicians who have vacillated on this issue need to be fired. Candidates who don’t support “repeal and replace” don’t deserve your support. No amount of money spent on Washington’s “government-wide apolitical public information campaign” (otherwise known as “propaganda”) will convince Americans that this awful legislation is anything other than a debt-driven big government train wreck. We need to repeal and replace it, and that can only happen if we elect a new Congress that will make scrapping Obamacare one of its top priorities. We can replace it with pro-private sector, patient-oriented reform that the GOP has proposed.



On March 23, when Obamacare was signed into law, I launched my “Take back the 20” campaign, focusing on 20 congressional districts that John McCain and I carried in 2008 which are or were represented by members of Congress who voted in favor of Obamacare. They need to be held accountable for those votes. They voted for Obamacare. Now we can vote against them. We need to replace them with representatives who will respect the will of the people.



That’s why today I’m launching a new Take Back the 20 website at www.takebackthe20.com!



TakeBackthe20.com provides information about the candidates in these 20 districts who are committed to repealing and replacing Obamacare. It has links to their personal websites and their donation pages. It allows you to read up on them, and then support them in their race to defeat those who gave us this terrible bill.



We have to send Washington a message that it’s not acceptable to disregard the will of the people. We have to tell them enough is enough. No more defying the Constitution. No more driving us off a financial cliff. We must repeal and replace Obamacare with patient-centered, results-driven, free market reform that provides solutions to people of all income levels without bankrupting our country.



It’s time to make a stand! Let’s take back the 20!



- Sarah Palin

http://www.facebook.com/notes/sarah-palin/lies-damned-lies-obamacare-6-months-later-its-time-to-take-back-the-20/433315368434

New Jersey Planned Parenthood Abortion Biz Closes After Christie Cuts Funds

by Steven Ertelt

Trenton, NJ (LifeNews.com) -- After the New Jersey state Senate defeated an attempt to override the decision of Gov. Chris Christie to cut off state taxpayer funding of Planned Parenthood abortion businesses, the first facility run by the national abortion giant is closing.

The Cherry Hill Courier Post newspaper says a Planned Parenthood facility located on Haddonfield Road and operated by Planned Parenthood of Southern New Jersey will close down.

PP-SNJ stands to lose as much as $160,000 in taxpayer funds because of Christie's decision and the upholding of his veto. With the closing of the Cherry Hill center, Planned Parenthood customers seeking abortions or other "services" must go to PP centers in Camden, Bellmawr, and Edgewater Park.

Parenthood of Southern New Jersey president Lynn Brown told the newspaper, "We are in think mode and creative mode and we are doing all that we can to try and salvage to see as many people as we need to see."

"We all know it's strictly ideological," Brown said of the funding cuts to the abortion business. "This is a very frustrating and perplexing time for us."

While the Cherry Hill center does not do abortions, it gives abortion referrals to Planned Parenthood offices in Hamilton Square, Princeton, and Trenton where abortions are done on women and unborn children.

Marie Tasy, the head of New Jersey Right to Life, told LifeNews.com she applauded the state Senate for not overriding Christie's veto of the Planned Parenthood funding bill.

"We applaud the Senators who voted No to override Governor Christie’s veto of S2139," she said. "This debate was never about health care, it is about advancing a political agenda and rewarding 'friends' and a radical special interest group with our tax dollars."

"We commend Governor Christie for his steadfast opposition to eliminate waste, fraud and abuse and for working to promote the best health care for all NJ citizens," Tasy added.

Christie won the praise of pro-life advocates in July by vetoing a bill that would restore the family planning funds his administration cut from the state budget because of deep economic troubles.

Although it doesn't fund abortions directly, the money goes to the Planned Parenthood abortion business. The funds go to 58 family planning clinics but Planned Parenthood, the nation's largest abortion chain, runs 29 of the facilities.

After Christie cut the funding, the state legislature approved a bill to restore it and they approved the bill he vetoed on a 30-10 vote on the Senate, more than enough to override.

However, Republicans who supported the bill would not buck their party's governor by supporting the override vote.

Although a majority of the Senate voted to restore the abortion businesses' funding, the Senate voted on a party-line 23-17 vote, well short of the two-thirds needed to override.

http://www.lifenews.com/state5472.html

Democrats Run From Pelosi

And the GOP prepares its 'Pledge to America.'

By KARL ROVE

Sometimes the impending loss of power can cause people to say strange things. Consider House Speaker Nancy Pelosi, who told reporters last week, "I don't really even have the time to pay attention" to the attacks on her. "This is what campaigns are about. I sort of, like, thrive on them."

Really? It's hard to imagine Mrs. Pelosi likes the ads run by at least seven Democratic House incumbents distancing themselves from her agenda, such as the stimulus, cap and trade, and ObamaCare. Or the comments in recent weeks by Reps. Chet Edwards (a trusted Texas lieutenant), Heath Shuler (North Carolina) and Zack Space (Ohio), all of whom declined to support her re-election, saying they don't even know who will run for speaker. Does she appreciate Alabama Rep. Bobby Bright, who said late last month, "Heck, she might even get sick and die"?
Mrs. Pelosi also faces an uprising by 37 House Democrats who back extending all the Bush tax cuts. Most of them signed a letter on Sept. 15 saying "given the continued fragility of our economy and slow pace of recovery . . . raising any taxes right now could negatively impact economic growth." With 179 Republicans in the House, just one more Democratic defection and there could be a majority for continuing the Bush tax cuts right now.

There is similar discontent among Senate Democrats. It appears impossible that Majority Leader Harry Reid can pass any tax bill. Senate Finance Chairman Max Baucus is rumored to be unveiling his proposal within days, but no one seems to know what will be in it. There have been no substantive discussions among the finance committee's members, a precondition for any sincere attempt to legislate.

Meanwhile, the president refuses to provide his own proposal. This is especially disappointing given that Mr. Obama's budget requires that the $3 trillion of Bush tax cuts he favors be offset by tax increases. So whose trillions of oxen does Mr. Obama want to gore with higher taxes just 40 days before the election? He won't say, proving he's not really serious about resolving his tax mess now.

Instead, he's content to ensnare Democrats in a losing game by asking them to extend the Bush tax cuts before they adjourn—only for those making less than $250,000. But with less than two weeks before Congress adjourns, Democrats can't pass a tax cut through either chamber.

So why are they even trying to take it up now? It will leave the president and Democratic lawmakers looking disorganized, incompetent and impotent. No wonder Sen. Dianne Feinstein (D., Calif.) questioned the sanity of Democratic leaders. "I don't know who takes a tax vote, in their right mind, just before an election," she told the Daily Caller on Tuesday.
Mrs. Feinstein knows of what she speaks. Depending on how the question is asked, polls show as many as two out of every three Americans want to continue the Bush tax cuts and oppose raising taxes on anyone right now because of the feeble economy.

Still, Democrats have achieved something significant. Just before a crucial election, they have cemented their party's reputation as tax-happy.

Given this ineptness, there will be a temptation for Republicans to ease up, say little of substance, and play out the clock. But in politics, it is never wise to count on the opposition to keep making mistakes. Democrats will get their act together sometime.

Republicans must reinvigorate the national conversation about jobs and economic growth, the stimulus, spending, deficits and ObamaCare, and then present constructive proposals of their own to meet the nation's challenges.

That's why today's release of the House GOP's "Pledge to America" is so important. It presents practical steps to create jobs, control spending, repeal ObamaCare, reform Washington and keep America secure. Much of it is embodied in legislation that can be voted on right now.
The only thing Congress must do before it leaves town is fund the government. The "Pledge" would freeze the tax code for two years and fund non-defense spending at 2008 levels—before the bailouts and stimulus. Mrs. Pelosi would lose if this were voted upon, even with her current huge majority. So it's unlikely she'll allow the GOP proposal to be considered. But she can't stop Republicans from making their point on spending and taxes.

What's brought Republicans so close to victory are their deep differences with Democrats. Now's the time to emphasize those policy disagreements in every way possible. Keeping the fight on the big issues will strengthen the powerful current that's set to sweep Democrats from office.

Mr. Rove, the former senior adviser and deputy chief of staff to President George W. Bush, is the author of "Courage and Consequence" (Threshold Editions, 2010).

http://online.wsj.com/article/SB10001424052748703860104575507831916397878.html?mod=WSJ_Opinion_LEADTop

The Trouble with Public Sector Unions

DANIEL DISALVO

When Chris Christie became New Jersey's governor in January, he wasted no time in identifying the chief perpetrators of his state's fiscal catastrophe. Facing a nearly $11 billion budget gap — as well as voters fed up with the sky-high taxes imposed on them to finance the state government's profligacy — Christie moved swiftly to take on the unions representing New Jersey's roughly 400,000 public employees.

On his first day in office, the governor signed an executive order preventing state-workers' unions from making political contributions — subjecting them to the same limits that had long applied to corporations. More recently, he has waged a protracted battle against state teachers' unions, which are seeking pay increases and free lifetime health care for their members. Recognizing the burden that such benefits would place on New Jersey's long-term finances, Christie has sought instead to impose a one-year wage freeze, to change pension rules to limit future benefits, and to require that teachers contribute a tiny fraction of their salaries to cover the costs of their health insurance — measures that, for private-sector workers, would be mostly uncontroversial.

The firestorm that these proposals have sparked demonstrates the political clout of state-workers' unions. Christie's executive order met with vicious condemnation from union leaders and the politicians aligned with them; his fight with the public-school teachers prompted the New Jersey Education Association to spend $6 million (drawn from members' dues) on anti-Christie attack ads over a two-month period. Clearly, the lesson for reform-minded politicians has been: Confront public-sector unions at your peril.

Yet confront them policymakers must. As Christie said about the duel with the NJEA, "If we don't win this fight, there's no other fight left." Melodramatic as this may sound, for many states, it is simply reality. The cost of public-sector pay and benefits (which in many cases far exceed what comparable workers earn in the private sector), combined with hundreds of billions of dollars in unfunded pension liabilities for retired government workers, are weighing down state and city budgets. And staggering as these burdens seem now, they are actually poised to grow exponentially in the years ahead. If policymakers fail to rein in this growth, a fiscal crack-up will be the inevitable result.

New Jersey has drawn national attention as a case study, but the same scenario is playing out in state capitals from coast to coast. New York, Michigan, California, Washington, and many other states also find themselves heavily indebted, with public-sector unions at the root of their problems. In exchange, taxpayers in these states are rewarded with larger and more expensive, yet less effective, government, and with elected officials who are afraid to cross the politically powerful unions. As the Wall Street Journal put it recently, public-sector unions "may be the single biggest problem...for the U.S. economy and small-d democratic governance." They may also be the biggest challenge facing state and local officials — a challenge that, unless economic conditions dramatically improve, will dominate the politics of the decade to come.

THE STATE OF THE UNION

Since the middle of the 20th century, organized labor in America has undergone two transformations with major implications for the nation's politics. The first is the dramatic decline in overall union membership. In 1955, organized labor represented one-third of the non-agricultural work force; today, it represents just 12.3%. The second transformation, however, is even more significant: the change in the composition of the unionized work force.

As private-sector unions have withered, public-sector unions have grown dramatically. The Bureau of Labor Statistics reports that, in 2009, for the first time ever, more public-sector employees (7.9 million) than private-sector employees (7.4 million) belonged to unions. Today, unionized workers are more likely to be teachers, librarians, trash collectors, policemen, or firefighters than they are to be carpenters, electricians, plumbers, auto workers, or coal miners.

This shift has produced a noticeable change in the demographic profile of union members; gone is the image of a union man as a beefy laborer in a hard hat and steel-toed boots. According to data from the University of Michigan's American National Election Study, in 1952, about 80% of union members were blue-collar workers, while 20% were white-collar workers; by the mid-1990s, those classified as white-collar workers gained majority status. Nor do men dominate unions any longer: In the 1950s, more than 80% of union members were men, but today there is near gender parity. Union members also have much more schooling than they once did. In 1960, more than 35% of union members had not finished high school and barely 2% had college degrees. Today, almost every union member has completed high school, and more than 25% have college degrees. The typical union member no longer lives in a major city center close to the factory; by the 1990s, union members were more likely to live in suburban than urban areas. Unions have also become multi-racial: Nearly a quarter of union members are now non-white. Unions today represent a vastly different slice of America than they did at the height of the country's manufacturing prowess.

The rise of government-worker unionism has also combined with the broader transformation of the American economy to produce a sharp divergence between public- and private-sector employment. In today's public sector, good pay, generous benefits, and job security make possible a stable middle-class existence for nearly everyone from janitors to jailors. In the private economy, meanwhile, cutthroat competition, increased income inequality, and layoffs squeeze the middle class. This discrepancy indicates how poorly the middle class has fared in recent decades in the private economy, which is home to 80% of American jobs. But it also highlights the increased benefits of government work, and shines a spotlight on the gains public-sector unions have secured for their members. Perhaps this success helps explain why, on average, 39% of state- and local-government employees belong to unions. (Differences in state and local laws of course mean that the percentage varies from state to state; New York tops the chart with roughly 70% of state employees in unions, while many Southern right-to-work states hover in the single digits.)

The emergence of powerful public-sector unions was by no means inevitable. Prior to the 1950s, as labor lawyer Ida Klaus remarked in 1965, "the subject of labor relations in public employment could not have meant less to more people, both in and out of government." To the extent that people thought about it, most politicians, labor leaders, economists, and judges opposed collective bargaining in the public sector. Even President Franklin Roosevelt, a friend of private-sector unionism, drew a line when it came to government workers: "Meticulous attention," the president insisted in 1937, "should be paid to the special relations and obligations of public servants to the public itself and to the Government....The process of collective bargaining, as usually understood, cannot be transplanted into the public service." The reason? F.D.R. believed that "[a] strike of public employees manifests nothing less than an intent on their part to obstruct the operations of government until their demands are satisfied. Such action looking toward the paralysis of government by those who have sworn to support it is unthinkable and intolerable." Roosevelt was hardly alone in holding these views, even among the champions of organized labor. Indeed, the first president of the AFL-CIO, George Meany, believed it was "impossible to bargain collectively with the government."

Courts across the nation also generally held that collective bargaining by government workers should be forbidden on the legal grounds of sovereign immunity and unconstitutional delegation of government powers. In 1943, a New York Supreme Court judge held:

To tolerate or recognize any combination of civil service employees of the government as a labor organization or union is not only incompatible with the spirit of democracy, but inconsistent with every principle upon which our government is founded. Nothing is more dangerous to public welfare than to admit that hired servants of the State can dictate to the government the hours, the wages and conditions under which they will carry on essential services vital to the welfare, safety, and security of the citizen. To admit as true that government employees have power to halt or check the functions of government unless their demands are satisfied, is to transfer to them all legislative, executive and judicial power. Nothing would be more ridiculous.

The very nature of many public services — such as policing the streets and putting out fires — gives government a monopoly or near monopoly; striking public employees could therefore hold the public hostage. As long-time New York Times labor reporter A. H. Raskin wrote in 1968: "The community cannot tolerate the notion that it is defenseless at the hands of organized workers to whom it has entrusted responsibility for essential services."

Another common objection to collective bargaining with public-employee unions was that it would mean taking some of the decision-making authority over government functions away from the people's elected representatives and transferring it to union officials, with whom the public had vested no such authority. In this view, democracy would be compromised when elected officials began sharing with union leaders the power to determine government employees' wages, benefits, and working conditions. Furthermore, collectively bargained work rules could alter what public servants did day to day in ways not condoned by either elected officials or the voting public.

Given the forces and arguments aligned against public-sector unions, what led to their enormous growth? Three conditions prepared the ground for the legal reforms that facilitated collective bargaining in the public sector (and the subsequent swelling of the ranks of unionized government employees).

The first was the weakening of party machines at the state and (especially) local levels. In many of America's large cities, the responsibility for filling government jobs fell to the party machines; turnover in government employment was therefore high, connected as it was to election results. In New York during the 1930s and '40s, for instance, the average tenure of a cop or garbage collector was five years. Another effect of the machines' influence over government hiring was political: People in patronage jobs inevitably devoted a portion of their nominal working hours to party affairs. Because government employment under the machine system was both relatively brief and partisan in nature, a culture of professionalism was never really able to take hold.

Reformers' chief weapon in the war against the machines was the enactment of civil-service laws. Such laws sought to deprive ward bosses of control over patronage, which was their lifeblood. Civic groups, the press, and public-employees' associations believed that greater professionalization of the government work force would draw in talent, increase efficiency, and reduce corruption. In the 1950s, according to historian Leo Kramer, the leadership of the American Federation of State, County, and Municipal Employees (AFSCME) "saw itself as part of a great movement to reform government," one of whose principal aims was "the extension of the merit system to all nonpolicy determining positions in all government jurisdictions."

By the end of the 1950s, reformers had put the old machines on the defensive. And professionalization had had its intended effect: In their 1963 book City Politics, Edward Banfield and James Q. Wilson found that, by 1961, 52% of cities with populations over 500,000 had placed nearly all government employees under civil-service protections.

One important consequence of civil-service reform was that, with the end of election-based turnover — and with protections against undue political interference in hiring and firing — public employees gained nearly lifetime job security. This gave workers a long-term interest in their jobs and increased their capacity to express themselves collectively, thereby helping to make the unionization of public employees possible.

The second precondition for public-sector unionization was economic and demographic change. In the post-war period, the number of government jobs grew rapidly: Between 1950 and 1976, state- and local-government employment increased from 9.1% to 15.3% of the non-agricultural work force (an increase from roughly 4 million workers to about 12 million). A large part of this spike was the result of increased demand for government services caused by the Baby Boom. Huge numbers of young people meant a greater need for workers in schools in particular; the number of Americans working as teachers, principals, and administrators thus increased dramatically. It is hardly surprising, then, that some of the first public employees to unionize (and some of the most militant) were teachers. In the 1970s in New York state alone, there were, on average, 20 teacher strikes a year.

Finally, the third precondition was the solidification of the alliance between organized labor and the Democratic Party. Franklin Roosevelt's signing of the Wagner Act (which protected the rights of private-sector workers to organize and bargain collectively) in 1935 fully bonded labor to the Democrats; their partnership was reinforced during the fight over the Taft-Hartley Act of 1947, which was a Republican initiative to rein in union power. By mid-century, Democrats began to rely on labor unions for both funding and on-the-ground campaign organizing. In the 1950s and '60s, according to political scientist J. David Greenstone, "labor functioned as the most important nation-wide electoral organization for the Democratic Party." As a political tag team, both Democrats and labor had an incentive to broaden the base of the labor movement — and they came to see public-sector workers as the most promising new hunting ground, especially as private-sector union membership began to decline.

Democrats began to mobilize this new constituency in the late 1950s. In 1958, New York City mayor Robert Wagner, Jr., issued Executive Order 49, known as "the little Wagner Act." It gave city employees bargaining rights, and provided their unions with exclusive representation (meaning that the unions alone were legally authorized to speak for city workers, regardless of whether those workers belonged to the unions or supported them). And in 1962, President John Kennedy issued Executive Order 10988, reaffirming the right of federal workers to organize and codifying their right to bargain collectively.

From the mid-1960s through the early '70s, states and cities followed with a plethora of laws providing public-employee unions with collective-bargaining rights. In many cases, the consequences were almost immediate. In New York state, one year after the passage of the so-called Taylor Law in 1967, 360,000 state- and local-government employees became unionized; the New York Times described the law as having an "almost revolutionary effect." Other states and cities experienced similar expansions in the number of public-sector union members. For example, in 1968, California passed the Meyers-Milias-Brown Act — a law granting local-government workers bargaining rights — and then extended those rights to teachers a few years later; in the 1970s and '80s, both membership in public-sector unions and the number of strikes in California skyrocketed. Nationwide, by 1970, the AFSCME had negotiated more than 1,000 collective-bargaining agreements, nearly twice the number in place in 1964. And by 1972, nearly half of the states had public-employee collective-bargaining laws in place at either the state or local level.

Collective-bargaining laws gave government workers powerful incentives to join unions. Between 1960 and 1980, the portion of full-time unionized public employees jumped from 10% to 36% of the public-sector work force. The AFSCME grew from 99,000 members in 1955 to just under 1 million members in 1980. Over the same period, the American Federation of Teachers grew from 40,000 to more than half a million members. Today, its membership stands at more than 1.5 million — which makes the AFT larger than the largest exclusively private-sector union, the United Food and Commercial Workers (1.3 million members). But even the AFT is dwarfed by the largest labor union in the United States: the National Education Association, which claims 3.2 million members.

Organized labor in America thus increasingly consists of government employees, and government employees increasingly belong to unions. This shift has clearly reshaped the country's labor movement. Far more important to most Americans, though, is the way it has transformed the relationships between public employees, the governments they work for, and the public they serve — often with less than salutary results.

THE PUBLIC-SECTOR DIFFERENCE

When it comes to advancing their interests, public-sector unions have significant advantages over traditional unions. For one thing, using the political process, they can exert far greater influence over their members' employers — that is, government — than private-sector unions can. Through their extensive political activity, these government-workers' unions help elect the very politicians who will act as "management" in their contract negotiations — in effect handpicking those who will sit across the bargaining table from them, in a way that workers in a private corporation (like, say, American Airlines or the Washington Post Company) cannot. Such power led Victor Gotbaum, the leader of District Council 37 of the AFSCME in New York City, to brag in 1975: "We have the ability, in a sense, to elect our own boss."

Since public-sector unions began to develop in earnest, their importance in political campaigns has grown by leaps and bounds. Starting from almost nothing in the 1960s, government-workers' unions now far exceed private-sector unions in political contributions. According to the Center for Responsive Politics, from 1989 to 2004, the AFSCME was the biggest spender in America, giving nearly $40 million to candidates in federal elections (98.5% of it to Democrats). It is important to stress that this was spending on federal elections; the union represents mostly state and local workers. But given the magnitude of federal contributions to state budgets, the AFSCME is heavily involved in electioneering to shape Washington's spending in ways that protect public workers and the supply of government services. And so over that 15-year period, the AFSCME was willing and able to outspend any other organization in the country.

The political influence of public-sector unions is probably greatest, however, in low-turnout elections to school boards and state and local offices, and in votes to decide ballot initiatives and referenda. For example, two of the top five biggest spenders in Wisconsin's 2003 and 2004 state elections were the Wisconsin Education Association Council and the AFSCME-affiliated Wisconsin PEOPLE Conference. Only the state Republican Party and two other political action committees — those belonging to the National Association of Realtors and SBC / Ameritech — spent more. The same is true in state after state, as unions work to exert control over the very governments that employs their members.

This political dimension of public-sector unionism also changes the substantive priorities and demands of the unions themselves. Although private-sector unions in the United States have engaged in leftist "social activism," they have mostly concentrated their efforts on securing the best wages, benefits, pensions, and working conditions for their members: "pure and simple unionism," as longtime American Federation of Labor president Samuel Gompers used to call it. Rarely do they demand more hiring, since — given the constant private-sector imperative to keep operating costs minimal — increasing the number of a company's employees can limit wage and benefit increases for the workers already on the company's payroll.

By contrast, as economist Richard Freeman has written, "public sector unions can be viewed as using their political power to raise demand for public services, as well as using their bargaining power to fight for higher wages." The millions spent by public-employee unions on ballot measures in states like California and Oregon, for instance, almost always support the options that would lead to higher taxes and more government spending. The California Teachers Association, for example, spent $57 million in 2005 to defeat referenda that would have reduced union power and checked government growth. And the political influence of such massive spending is of course only amplified by the get-out-the-vote efforts of the unions and their members. This power of government-workers' unions to increase (and then sustain) levels of employment through the political process helps explain why, for instance, the city of Buffalo, New York, had the same number of public workers in 2006 as it did in 1950 — despite having lost half of its population (and thus a significant amount of the demand for public services).

For a case study in how public-sector unions manipulate both supply and demand, consider the example of the California Correctional Peace Officers Association. Throughout the 1980s and '90s, the CCPOA lobbied the state government to increase California's prison facilities — since more prisons would obviously mean more jobs for corrections officers. And between 1980 and 2000, the Golden State constructed 22 new prisons for adults (before 1980, California had only 12 such facilities). The CCPOA also pushed for the 1994 "three strikes" sentencing law, which imposed stiff penalties on repeat offenders. The prison population exploded — and, as intended, the new prisoners required more guards. The CCPOA has been no less successful in increasing members' compensation: In 2006, the average union member made $70,000 a year, and more than $100,000 with overtime. Corrections officers can also retire with 90% of their salaries as early as age 50. Today, an amazing 11% of the state budget — more than what is spent to educate California's nearly 6.3 million public-school students — goes to the penal system. Governor Arnold Schwarzenegger now proposes privatizing portions of the prison system to escape the unions' grip — though his proposal has so far met with predictable (union supported) political opposition.

A further important advantage that public-sector unions have over their private-sector counterparts is their relative freedom from market forces. In the private sector, the wage demands of union workers cannot exceed a certain threshold: If they do, they can render their employers uncompetitive, threatening workers' long-term job security. In the public sector, though, government is the monopoly provider of many services, eliminating any market pressures that might keep unions' demands in check. Moreover, unlike in the private sector, contract negotiations in the public sector are usually not highly adversarial; most government-agency mangers have little personal stake in such negotiations. Unlike executives accountable to shareholders and corporate boards, government managers generally get paid the same — and have the same likelihood of keeping their jobs — regardless of whether their operations are run efficiently. They therefore rarely play hardball with unions like business owners and managers do; there is little history of "union busting" in government.

Additionally, the rise and fall of businesses in the private sector means that unions must constantly engage in organizing efforts, reaching out to employees of newly created companies. In government agencies, on the other hand, once a union organizes workers, they usually remain organized — because the government doesn't go out of business. Public-employee unions can thus maintain membership levels with much less effort than can private-sector unions.

Finally, public-sector unions enjoy a privileged position in relation not only to their private-sector counterparts but also to other interest groups. Public-sector unions have automatic access to politicians through the collective-bargaining process, while other interest groups must fight for such entrée. Government unions can also more easily mobilize their members for electoral participation than other interest groups can — since they are able to apply pressure at the workplace and, in many cases, can even arrange for time off and other benefits to make members' political activism easier. Furthermore, most interest groups must devote a great deal of time and effort to fundraising; public-sector unions, on the other hand, enjoy a steady, reliable revenue stream, as union dues are deducted directly from members' paychecks (often by government, which drastically reduces the unions' administrative costs).

Taken together, the intrinsic advantages that public-sector unions enjoy over private-sector advocacy groups (including private-sector unions) have given organized government laborers enormous power over government at the local, state, and federal levels; to shape public finances and fiscal policy; and to influence the very spirit of our democracy. The results, unfortunately, have not always been pretty.

A UNIONIZED GOVERNMENT

The effects of public-sector unionism can be grouped under three broad headings. The first centers on compensation, which includes wages, pensions, health care, and other benefits easily valued in monetary terms — the core issues at stake in collective-bargaining negotiations. The second involves the amount of government employment, or the size of government, as reflected in the number of workers and in public budgets. The third involves the productivity and efficiency of government services. Insofar as unions negotiate detailed work rules, they share the power to shape the day-to-day responsibilities of public servants — which influences what government does, and how well it does it.

These are complex matters that are hard for social scientists to measure, and on which scholars disagree. Nevertheless, the evidence supports a few broad conclusions.

Most economists agree that public-sector unions' political power leads to more government spending. And recently, Chris Edwards of the Cato Institute documented how government unionism has abetted growth in public-sector compensation. Generally speaking, the public sector pays more than the private sector for jobs at the low end of the labor market, while the private sector pays more for jobs at the high end. For janitors and secretaries, for instance, the public sector offers an appreciably better deal than the private economy: According to the Bureau of Labor Statistics, the average annual salary for the roughly 330,000 office clerks who work in government was almost $27,000 in 2005, while the 2.7 million in the private sector received an average pay of just under $23,000. Nationwide, among the 108,000 janitors who work in government, the average salary was $23,700; the average salary of the 2 million janitors working in the private sector, meanwhile, was $19,800.

For workers with advanced degrees, however, the public-sector pay scale is likely to be slightly below the private-sector benchmark. Private-sector economists, for instance, earn an average of $99,000 a year, compared to the $69,000 earned by their government colleagues. And accountants in the corporate world earn average annual salaries of $52,000, compared to $48,000 for their public-sector counterparts.

Not as easily captured is the comparable worth of those government workers who lack counterparts in the private sector, such as policemen, firefighters, and corrections officers. But that very monopoly status has given the union representatives of these workers enormous leverage, which they have converted into major gains. For example, in New York state, county police officers were paid an average salary of $121,000 a year in 2006. In that same year, according to the Boston Globe, 225 of the 2,338 Massachusetts State Police officers made more than the $140,535 annual salary earned by the state's governor. Four state troopers received more than $200,000, and 123 others were paid more than $150,000. While people whose jobs entail greater risk of life and limb certainly deserve higher pay, union power has clearly added a substantial premium.

When all jobs are considered, state and local public-sector workers today earn, on average, $14 more per hour in total compensation (wages and benefits) than their private-sector counterparts. The New York Times has reported that public-sector wages and benefits over the past decade have grown twice as fast as those in the private sector. These aggregate pay differentials stem partly from the fact that government work tends to be more white-collar, and that public employees tend to be better educated and more experienced, and to live in urban areas. Another factor is the hollowing out of the middle of the income distribution in the private sector. But union influence still plays a major role.

When unions have not been able to secure increases in wages and salaries, they have turned their attention to benefits. USA Today journalist Dennis Cauchon notes that, since 2002, for every $1-an-hour pay increase, public employees have gotten $1.17 in new benefits; private-sector workers, meanwhile, have received just 58 cents in added benefits. Of special interest to the unions has been health care: Across the nation, 86% of state- and local-government workers have access to employer-provided health insurance, while only 45% of private-sector workers do. In many cases, these plans involve meager contributions from employees, or none at all — in New Jersey, for instance, 88% of public-school teachers pay nothing toward their insurance premiums.

The unions' other cherished benefit is public-employee pensions. In California, for example, state workers often retire at 55 years of age with pensions that exceed what they were paid during most of their working years. In New York City, firefighters and police officers may retire after 20 years of service at half pay — which means that, at a time when life expectancy is nearly 80 years, New York City is paying benefits to 10,000 retired cops who are less than 50 years old. Those benefits quickly add up: In 2006, the annual pension benefit for a new retiree averaged just under $73,000 (and the full amount is exempt from state and local taxes).

How, one might ask, were policymakers ever convinced to agree to such generous terms? As it turns out, many lawmakers found that increasing pensions was very good politics. They placated unions with future pension commitments, and then turned around, borrowed the money appropriated for the pensions, and spent it paying for public services in the here and now. Politicians liked this scheme because they could satisfy the unions, provide generous public services without raising taxes to pay for them, and even sometimes get around balanced-budget requirements.

Unfortunately, the hit pension funds took recently in the stock market has exposed the massive underfunding that results from states' and municipalities' not paying for the public services they consume. In Illinois, for example, public-sector unions have helped create a situation in which the state's pension funds report a liability of more than $100 billion, at least 50% of it unfunded. Yet many analysts believe the figure is much higher; without a steep economic recovery, the Prairie State is looking at insolvency. Indeed, Northwestern University finance professor Joshua Rauh puts the date of collapse at 2018; he also predicts that six other states — Connecticut, Indiana, New Jersey, Hawaii, Louisiana, and Oklahoma — will see their pension funds dry up before the end of fiscal year 2020. What's more, according to the Pew Center on the States, 18 states face long-term pension liabilities in excess of $10 billion. In the case of California, like that of Illinois, the unfunded pension liability exceeds $50 billion. In fact, Pew estimates that, when retiree health-care costs are added to pension obligations, the unfunded liabilities of the states total an astounding $1 trillion.

The skyrocketing costs of public employees' pensions now present a huge challenge to state and local governments. If allowed to persist, such massive obligations will inevitably force a fundamental re-ordering of government priorities. After all, if government must spend more on pensions, it cannot spend more on schools, roads, and relief for the poor — in other words, the basic functions people expect their governments to perform. But because many states' pension commitments are constitutionally guaranteed, there is no easy way out of this financial sink hole. Recent court decisions indicate that pension obligations will have to be fulfilled even if governments declare bankruptcy — because while federal law allows bankruptcy judges to change pension and health-care packages in the private sector, it forbids such changes in public employees' agreements.

Yet as skilled as the unions may be in drawing on taxpayer dollars, many observers argue that their greater influence is felt in the quality of the government services taxpayers receive in return. In his book The Warping of Government Work, Harvard public-policy scholar John Donahue explains how public-employee unions have reduced government efficiency and responsiveness. With poor prospects in the ultra-competitive private sector, government work is increasingly desirable for those with limited skills; at the opposite end of the spectrum, the wage compression imposed by unions and civil-service rules makes government employment less attractive to those whose abilities are in high demand. Consequently, there is a "brain drain" at the top end of the government work force, as many of the country's most talented people opt for jobs in the private sector where they can be richly rewarded for their skills (and avoid the intricate work rules, and glacial advancement through big bureaucracies, that are part and parcel of government work).

Thus, as New York University professor Paul Light argues, government employment "caters more to the security-craver than the risk-taker." And because government employs more of the former and fewer of the latter, it is less flexible, less responsive, and less innovative. It is also more expensive: Northeastern University economist Barry Bluestone has shown that, between 2000 and 2008, the price of state and local public services has increased by 41% nationally, compared with 27% for private services.

Finally, insofar as government collective-bargaining agreements touch on a wide range of economic decisions, public-sector unions have extraordinary influence over government policies. In the classic model of democratic accountability, citizens vote in competitive elections for candidates offering distinct policy agendas; once in office, the winners implement their programs through public agencies. But when public-employee unions bargain collectively with the government, elected officials partially cede control of public agencies to unelected labor leaders. Many policy choices are then settled in the course of negotiations between office holders and unions, rather than originating with the people's duly elected representatives. Over the long term, these negotiated work rules can drive public policy in directions that neither elected officials nor voters desire. And once enacted, these policies can prove very hard to reverse, even through elections: A new mayor or governor — no matter how hard-charging a reformer — will often find his hands tied by the iron-clad agreements unions managed to extract from his predecessors.

Stanford University political scientist Terry Moe has made exactly this argument with respect to the education sector. "Teachers unions have more influence on the public schools than any other group in American society," Moe argues. "Their massive memberships and awesome resources give them unrivaled power in the politics of education, allowing them to affect which policies are imposed on the schools by government — and to block reforms they don't like." One need only look at the debates over charter-school caps or merit-pay proposals to see Moe's point.

Public-sector unions thus distort the labor market, weaken public finances, and diminish the responsiveness of government and the quality of public services. Many of the concerns that initially led policymakers to oppose collective bargaining by government employees have, over the years, been vindicated.

As a result, it is difficult for defenders of public-sector unions today to make a convincing case that such unions benefit the public at large. Their argument has basically been reduced to three assertions. One is that most public employees live modest lives, and so criticizing efforts to improve their lot distracts attention from wealthy CEOs and Wall Street bankers who are the real culprits behind today's economic woes. Another is that the unions defend the dignity of public service, thereby preserving a middle class that would otherwise be plunged — through conservatives' efforts to privatize such work — into the vicious race to the bottom that now plagues the private sector. Finally, government-workers' unions help advance leftist politics by keeping the labor movement hobbling along.

To be sure, there is some merit to each of these arguments, though none is especially convincing. But even if these claims were completely true and obvious, they would not offer sufficient reason to put up with the other, manifestly negative consequences of public-sector unionism.

GOVERNING IN THE REAL WORLD

"At some point," New Jersey governor Chris Christie said in a February speech to his state's mayors, "there has to be parity between what is happening in the real world and what is happening in the public-sector world."

Achieving such parity will not be easy, as some early attempts to curtail the power of public-sector unions have shown. Some state and local officials (like California governor Arnold Schwarzenegger) have sought to appeal directly to the people through referenda, only to be thwarted by the unions' electoral clout. Others have pursued stop-gap measures like wage freezes and furloughs of public employees, which inevitably draw some public backlash. There have even been calls for some cities to follow the example of Vallejo, California, and declare bankruptcy so that they can renegotiate employment contracts with the unions.

A few places are attempting more serious long-term solutions. As the Wall Street Journal reported in June, public-employee unions in Vermont, Iowa, Minnesota, and Wyoming have recently agreed to modest reductions in pension benefits — though none of the cuts is large enough to bring the finances of that state's pension funds fully into balance. In the Garden State, Governor Christie succeeded in getting the state legislature to approve a 2% annual growth cap on property taxes in order to limit local spending — thereby indirectly curtailing the power of teachers' unions to demand more public dollars. Yet even well-designed tax caps can unleash unpleasant consequences, including more crowded classrooms, layoffs of state workers, and increases in pension debt. Few politicians will want to suffer those consequences, and the unions will fiercely oppose all policies that even hint at reform.

All of these efforts are, of course, attempts to deal only with the symptoms of the looming state fiscal crisis — not with its underlying causes. To address those causes, policymakers may even need to re-open the question of whether government workers should enjoy the privilege of collective bargaining.

After all, even without collective bargaining, government workers would still benefit from far-reaching protections under existing civil-service statutes — more protections than most private-sector workers enjoy. And they would retain their full rights as citizens to petition the government for changes in policy. Public-sector workers' ability to unionize is hardly sacrosanct; it is by no means a fundamental civil or constitutional right. It has been permitted by most states and localities for only about half a century, and, so far, it is not clear that this experiment has served the public interest.

It is true that ending government workers' ability to organize is politically inconceivable today in the states where it exists. But if states' and cities' fiscal ills grow painful enough, the unthinkable could someday become political necessity. For all Americans — including public-sector employees — it would of course be better if the situation did not reach that point of catastrophe. We can all hope that a robust economic revival will take the pressure off of states and cities and give policymakers more room to maneuver. If such a rapid recovery is not forthcoming, though, the most appealing solution will be for everyone to re-enter the real world — if only public officials and public-sector unions can be sensible enough to try.


Daniel DiSalvo is an assistant professor of political science at the City College of New York

http://nationalaffairs.com/publications/detail/the-trouble-with-public-sector-unions

Quinn cuts "no-layoff" deal with union that endorsed him

Posted by Greg H. at 9/20/2010 11:02 AM CDT on Chicago Business

Just days after being endorsed by the state's largest employee union, the Quinn administration has reached a deal not to lay off any of the union's members or close any facilities in which they work until at least mid-2012.

Under a tentative pact that the state says it expects to sign later this week, some 50,000 state workers who are members of the American Federation of State, County and Municipal Employees would have their jobs protected until June 30, 2012 — a third of the way into the term of the next governor.

The GOP candidate for governor, Bill Brady, has vowed to slash state spending.

Before the no-layoffs clause takes effect, AFSCME will have to identify and accept at least $50 million in spending cuts. Those trims could come in the form of unpaid furlough days, less overtime and — potentially — partial deferral of 8.25% in salary hikes union members are scheduled to receive in the year beginning Jan. 1, 2% of it deferred from this year.
Both AFSCME and the state Budget Director David Vaught's spokeswoman said that makes the deal a good one for taxpayers.

But the annualized value of those 8.25% in salary hikes is at least $190 million according to the union —more than that, according to other sources. And outside fiscal watchdogs to whom I described the deal were harshly critical.

"To tie the next governor's hands now is untimely," said J. Thomas Johnson, head of the Taxpayers' Federation of Illinois. "There needs to be significant savings across state government. This (deal) doesn't seem to be enough."

"This seems like a very uneven bargain," said Laurence Msall, president of the Civic Federation. "While we haven't seen the details, we are very concerned."

Last year, the state reached a somewhat similar deal in which Gov. Pat Quinn backed away from threats to layoff AFSCME members in exchange for furlough days and other savings. He signed a pact agreeing to no layoffs until at least June 30, 2011.

But the pending deal may not reap the state as much in savings and, notably, extends much further into the term of the next governor, who the latest polls say will be Mr. Brady.

The deal was struck last Monday, Sept. 13 —two days after AFSCME announced it was endorsing Mr. Quinn, saying he "has made the case for adequate revenue to save jobs."

Henry Bayer, executive director of AFSCME's Illinois council, said that timing was "strictly coincidental." The union's endorsement session was scheduled long ago, he said, and the state and the union have been talking about ways to save money for "many months."

He also noted that the deal sets a goal of $100 million in savings, though only $50 million will be needed for the no-layoff clause to kick in.

"We feel that $100 million in savings is a good thing for us," Mr. Vaught's spokeswoman said.

The spokeswoman noted that another part of the deal — this part already signed — will yield $70 million in savings for employee health care.

But, in exchange for that, the state agreed not to seek to reopen the union's contract on health-insurance matters.

AFSCME's Mr. Bayer also argued that, whatever his harsh words, gubernatorial candidate Mr. Brady will not be able to layoff many state workers with, for instance, federal Medicaid rules blocking much action.

Mr. Brady's campaign declined to comment for this post.

Earlier this election year, Mr. Quinn caught heat for vetoing a bill to restructure McCormick Place. He insisted there was no connection between the fact that one of the convention center's top unions, the Teamsters, was a major campaign donor of his.

AFSCME had been quarrelling with Mr. Quinn over cuts in pensions for newly hired state workers, but its Sept. 13 press release endorsing him was unequivocal in its support.

"Quinn inherited a state ravaged by years of fiscal mismanagement and ethical compromise, and he's been working hard to get it back on track," it said. Mr. Brady "would take our state in the wrong direction."

The union casts a huge presence in state elections, regularly funnelling hundreds of workers and hundreds of thousands of dollars in campaign cash behind favored candidates.

* * * 3:10 update: Mr. Brady is out with a statement and, with a reference to "pay to play," it's pretty hard hitting:

"Unemployment is at double-digit levels and the state cannot pay its bills," the statement says. "The Quinn Administration should not agree to anything that limits Illinois' flexibility to manage this catastrophe."

The statement goes on to call on the governor to "avoid 11th hour election-year agreements that lock in more pay hikes and job security guarantees...in an arrangements that reminds voters of the pay-to-play politics that I seek to end."

Ouch!

http://www.chicagobusiness.com/section/blogs?blogID=greg-hinz&plckController=Blog&plckScript=blogScript&plckElementId=blogDest&plckBlogPage=BlogViewPost&plckPostId=Blog:1daca073-2eab-468e-9f19-ec177090a35cPost:37b3d0f4-3eed-4dd7-b431-a3a607c06784&sid=sitelife.chicagobusiness.com

A Failing Presidency and a Broken Party

Peter Wehner - 09.21.2010 - 2:15 PM

This heartfelt comment and question, the first one President Obama received at a CNBC town hall gathering yesterday, may well become emblematic of the first half (at least) of the Obama presidency.

Ms. Velma Hart — middle class, a wife and the mother of two, a veteran, and an African-American Obama supporter — said this:

Quite frankly, I’m exhausted – I’m exhausted of defending you, defending your administration, defending the mantle of change that I voted for, and deeply disappointed with where we are right now. I have been told that I voted for a man who said was going to change things in a meaningful way for the middle class. I’m one of those people and I’m waiting, sir. I’m waiting. I don’t feel it yet. And I thought while it wouldn’t be in great measure, I’d feel it in some small measure. I have two children in private school and the financial recession has taken an enormous toll on my family. My husband and I have joked for years that we thought we were well beyond the hot dogs and beans era of our lives, but, quite frankly, it’s starting to knock on our door and ring true that that might be where we’re headed again, and, quite frankly, Mr. President, I need you to answer this honestly. Is this my new reality?

This was a very bad moment for the Obama presidency because it was such an honest and representative one.

Velma Hart is obviously no Tea Party activist. The town hall audience was undoubtedly vetted by the White House in advance of the event. So for Ms. Hart to frame the question she did, in the manner she did, was fairly extraordinary. And she was not the only person who asked searching questions of Mr. Obama. A recent law school graduate, Ted Brassfield, told Mr. Obama that he had hoped to pursue a career in public service, like Obama himself, but said he could barely pay the interest on his student loans, let alone think of getting married or starting a family. “I was really inspired by you and your campaign and the message you brought,” Brassfield said, “and that inspiration is dying away. And I really want to know, is the American dream dead for me?”

Having worked in the White House, I can assure you this is not what Obama and his team of advisers wanted to hear — certainly not from a hand-picked audience at an economic town hall forum that is being broadcast on television six weeks before a crucial midterm election.

A long time ago, in a galaxy far, far away, a contributor to CONTENTIONS wrote this cautionary note regarding the new president-elect:

Sooner than he might imagine, and certainly sooner than he might wish, the responsibility for how America is performing will fall to him and his Democratic colleagues in the House and the Senate. A year from now, it won’t be enough to blame the problems on others. He and other Democrats ran and won on the promise that they would turn things around, and do so quickly. Those promises can’t be reeled back. Obama in particular has set a very high bar. Indeed, the expectations for “change”–in policies, in performance, even in the way we conduct our politics–is as high as I can recall … For understandable reasons, many people are being swept up in this remarkable American moment. But reality will intrude soon enough, and Barack Obama will face the same standards that every other President has faced. Incantations of “hope” and “change” can work in a campaign. They are virtually useless when it comes to governing. Barack Obama is about to enter the crucible. We’ll see how he performs.

President Obama has, so far at least, performed rather dismally. He set super-human expectations for himself — including his pledge to slow the rise of the oceans and begin to heal the planet, his commitment to resist the temptation to “fall back on the same partisanship and pettiness and immaturity that has poisoned our politics for so long,” and to “transform” America at what he called a “defining moment.”

In some respects, of course, President Obama has transformed America — but in ways many American find alarming. What we are seeing all across our land is an extraordinary, organic movement rising up against Obamaism. If you go to the heart of this effort, beyond even the policy differences themselves, what you will find is an effort to restore America. It is a direct, energetic, and sometimes rambunctious response to the president’s transformational project, to his effort to remake America in his own liberal image and conforming to his own liberal views and values.

As we saw yesterday, at the economic town hall meeting, the hope and promise of Obama has collided with, and is being shattered by, reality.

Barack Obama is, right now, the architect of a failing presidency and, soon, a broken party.

The Carter-Obama Comparisons Grow

Walter Mondale himself sees a parallel

By JOHN FUND
Comparisons between the Obama White House and the failed presidency of Jimmy Carter are increasingly being made—and by Democrats.

Walter Mondale, Mr. Carter's vice president, told The New Yorker this week that anxious and angry voters in the late 1970s "just turned against us—same as with Obama." As the polls turned against his administration, Mr. Mondale recalled that Mr. Carter "began to lose confidence in his ability to move the public." Democrats on Capitol Hill are now saying this is happening to Mr. Obama.

Mr. Mondale says it's time for the president "to get rid of those teleprompters and connect" with voters. Another of Mr. Obama's clear errors has been to turn over the drafting of key legislation to the Democratic Congress: "That doesn't work even when you own Congress," he said. "You have to ride 'em."
Mr. Carter himself is heightening comparisons with his own presidency by publishing his White House diaries this week. "I overburdened Congress with an array of controversial and politically costly requests," he said on Monday. The parallels to Mr. Obama's experience are clear.

Comparisons between the two men were made frequently during the 2008 campaign, but in a favorable way. Princeton University historian Sean Wilentz, for instance, told Fox News in August 2008 that Mr. Obama's "rhetoric is more like Jimmy Carter's than any other Democratic president in recent memory." Syndicated columnist Jonah Goldberg noted more recently that Mr. Obama, like Mr. Carter in his 1976 campaign, "promised a transformational presidency, a new accommodation with religion, a new centrism, a changed tone."

But within a few months, liberals were already finding fault with his rhetoric. "He's the great earnest bore at the dinner party," wrote Michael Wolff, a contributor to Vanity Fair. "He's cold; he's prickly; he's uncomfortable; he's not funny; and he's getting awfully tedious. He thinks it's all about him." That sounds like a critique of Mr. Carter.

Foreign policy experts are also picking up on similarities. Walter Russell Mead, then a fellow at the Council on Foreign Relations, told the Economist magazine earlier this year that Mr. Obama is "avoiding the worst mistakes that plagued Carter." But he warns that presidents like Mr. Obama who emphasize "human rights" can fall prey to the temptation of picking on weak countries while ignoring more dire human rights issues in powerful countries (Russia, China, Iran). Over time that can "hollow out an administration's credibility and make a president look weak." Mr. Mead warned that Mr. Obama's foreign policy "to some degree makes him dependent on people who wish neither him nor America well. This doesn't have to end badly and I hope that it doesn't—but it's not an ideal position after one's first year in power."

Liberals increasingly can't avoid making connections between Mr. Carter's political troubles and those of Mr. Obama. In July, MSNBC's Chris Matthews asked his guests if Democrats up for re-election will "run away from President O'Carter." After much laughter, John Heileman of New York Magazine quipped "Calling Dr. Freud." To which Mr. Matthews, a former Carter speechwriter, sighed "I know."

Pat Caddell, who was Mr. Carter's pollster while he was in the White House, thinks some comparisons between the two men are overblown. But he notes that any White House that is sinking in the polls takes on a "bunker mentality" that leads the president to become isolated and consult with fewer and fewer people from the outside. Mr. Caddell told me that his Democratic friends think that's happening to Mr. Obama—and that the president's ability to pull himself out of a political tailspin is hampered by his resistance to seek out fresh thinking.

The Obama White House is clearly cognizant of the comparisons being made between the two presidents. This month, environmental activist Bill McKibben met with White House aides to convince them to reinstall a set of solar panels that Mr. Carter had placed on the White House roof. They were taken down in 1986 following roof repairs. Mr. McKibben said it was time to bring them back to demonstrate Mr. Obama's support for alternative energy.

But Mr. McKibben told reporters that the White House "refused to take the Carter-era panel that we brought with us" and only said that they would continue to ponder "what is appropriate" for the White House's energy needs. Britain's Guardian newspaper reported that the Obama aides were "twitchy perhaps about inviting any comparison (to Mr. Carter) in the run-up to the very difficult mid-term elections." Democrats need no reminding that Mr. Carter wound up costing them dearly in 1978 and 1980 as Republicans made major gains in Congress.

Mr. Fund is a columnist for WSJ.com.

http://online.wsj.com/article/SB10001424052748704129204575505822147816104.html

Quinn defends bringing budget chief to union endorsement interview

Deal reached with AFSCME two days after group's backing

By Monique Garcia, Tribune Reporter

8:24 PM CDT, September 21, 2010

Gov. Pat Quinn on Tuesday defended bringing his state budget director to a political meeting in which he sought the endorsement of the state's largest employee union, saying the top aide needed to be in the room in case any technical questions came up.

Budget director David Vaught's appearance with Quinn before leaders of the American Federation of State, County and Municipal Employees came as Vaught was in the midst of negotiating budget cuts that included discussions about whether union workers could lose their jobs.

Quinn's mixing of politics and state business drew raised eyebrows from a reform group and scorching criticism from Republican governor challenger Bill Brady.

Brady, a state senator from Bloomington, said the situation is particularly troubling because the union endorsed Quinn just two days before his administration struck a tentative agreement that would prevent union layoffs until mid-2012 — a deal Vaught helped negotiate.

"This smacks so much of pay-to-play, and it's scandalous," said Brady, who called on Quinn not to go through with the deal. "Let's let this election play out and the next governor manage the state's resources with the flexibility he needs without some contract that was put together in the timing of an endorsement."

Quinn dismissed Brady's allegations as "a lot of baloney" and said the deal he cut is about saving money by having the union cut health care costs and deferring scheduled pay raises in exchange for freezing layoffs and facility closings until June 2012.

The governor added that Vaught was on "personal time" and did not speak when he appeared before union leaders on Aug. 31, when both Quinn and Brady were interviewed as part of the union's endorsement process.

"He's the budget director. I have him come with me to many meetings for technical advice on budget questions that come up," Quinn said. "He didn't answer any questions. He didn't speak at all. … He was there to give me budget figures that I might need. That's all he did."

But Cynthia Canary, director of the Illinois Campaign for Political Reform, said Vaught's appearance "definitely blurs the line" between government and political work.

"In any governor's administration, one assumes that his Cabinet-level positions are people who are also strong personal political supporters," Canary said. "So it's not unusual to see these people also play a political role."

The controversy is the latest in which Quinn's campaign has seeped into his administration. His chief of staff resigned in August after a state inspector general found that he improperly sent three campaign e-mails while on state time.

Earlier this year, questions arose after Quinn rewrote legislation to help the Teamsters at the McCormick Place convention center after receiving a $75,000 political donation from the union.

Last year, Quinn blamed a "naive" aide for trying to sell interest groups "face time" with him in exchange for hosting $15,000 fundraising events during the spring legislative session.

Brady and Quinn made their comments after a closed-door forum before a Chicago business group.

mcgarcia@tribune.com

http://www.chicagotribune.com/news/elections/ct-met-quinn-union-endorsement-20100921,0,2106504,print.story

Koch Industries Lawyer to White House: How Did You Get Our Tax Information?

BY John McCormack
September 20, 2010 1:31 PM

Lately, the White House and its allies have been drawing attention to the political activities of libertarian billionaires Charles and David Koch. In an August 9 speech, President Obama singled out Americans for Prosperity, a free-market political group founded by David Koch in 2004. In the wake of the Citizens United Supreme Court decision, Obama said:

Right now all around this country there are groups with harmless-sounding names like Americans for Prosperity, who are running millions of dollars of ads against Democratic candidates all across the country. And they don't have to say who exactly the Americans for Prosperity are. You don't know if it’s a foreign-controlled corporation. You don't know if it’s a big oil company, or a big bank. You don't know if it’s a insurance company that wants to see some of the provisions in health reform repealed because it’s good for their bottom line, even if it’s not good for the American people.

"Using a great deal" of research by the left-wing Center for American Progress, the New Yorker's Jane Mayer reported in the magazine's August 30 issue that the Kochs are "waging a war against Obama." Reason's Nick Gillespie argued that Mayer's report was nothing more than "sly innuendo and revelations as lame as they are breathless," but that hasn't stopped top Democrats from blasting the Kochs for funding the Democrats' political opposition.

Democratic Congressional Campaign Committee chairman Chris Van Hollen said in a September 10 TV appearance that "Americans for Prosperity which are the Koch Industries ... did well under the Bush administration economic policies," which is why AFP is opposing the Democrats. In a September 16 speech, President Obama again singled out Americans for Prosperity. Even Jimmy Carter took a whack at the Kochs last week.

While the attention is unwanted for the Kochs, if somewhat expected, a lawyer for Koch Industries now tells THE WEEKLY STANDARD that the administration may have crossed a line by revealing tax information about Koch Industries. According to Mark Holden, senior vice president and general counsel of Koch Industries, a senior Obama administration official told reporters at an August 27 on-the-record background briefing on corporate taxes:

So in this country we have partnerships, we have S corps, we have LLCs, we have a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know Koch Industries is a multibillion dollar businesses. So that creates a narrower base because we've literally got something like 50 percent of the business income in the U.S. is going to businesses that don't pay any corporate income tax. They point out [in the report] you could review the boundary between corporate and non-corporate taxation as a way to broaden the base.

Holden tells THE WEEKLY STANDARD that this quotation from a senior administration official "came to our attention from different avenues. We are very concerned about why this would be said about us, particularly in this setting. We are concerned where this information would have been obtained from. We also are concerned in light of recent events that we have been singled out by the government and others as a campaign against us because of our political views."

THE WEEKLY STANDARD asked White House press office officials in an email on Friday to verify the quotation's accuracy, but 72 hours later they have not replied. A White House press aide reached this morning on the phone said she would look into whether a transcript of the call exists. The aide has not yet responded.

But an independent source who participated in the briefing confirms to THE WEEKLY STANDARD that the quotation matches the source's careful notes from the briefing.
Holden claims that the revelation of tax information could have been improper, depending on how the information was obtained by the White House:

"I’m not accusing any one of any illegal conduct. But it’s my understanding that under federal law, tax information, is confidential and it’s not to be disclosed or obtained by individuals except under limited circumstances. ... I don’t know what [the senior administration official] was referring to. I'm not sure what he's saying. I'm not sure what information he has. But if he got this information--confidential tax information--under the internal revenue code ... if he obtained it in a way that was inappropriate, that would be unlawful. But I don't know that that's the case."

Holden says that to his knowledge the tax status of Koch Industries has not been previously reported in the press.

So, questions remain: Why won't White House officials say if the quotation about Koch Industries is accurate--or even if a transcript of the briefing exists?

And, if the quotation is accurate, why won't they say how the White House obtained tax information on Koch Industries?

http://weeklystandard.com/blogs/koch-industries-lawyer-white-house-how-did-you-get-our-tax-information-1