Obama’s Love of Labor Makes for One Unholy Union

February 17, 2010 03:20

Commentary by Kevin Hassett via Bloomberg.com

President Barack Obama’s union with labor unions has become a marriage made in hell. If he wants to save his presidency, and his party, he should seek a divorce.

When Obama met with House Republicans last month, he chastised them for mischaracterizing his health-care agenda. “You’d think that this thing was some Bolshevik plot,” he said. It’s not, of course, but Republicans can be forgiven for observing the truth that this president has been more in the tank for the labor movement than any U.S. president since World War II.

It certainly has made great financial sense for the president to align himself with the unions. After all, organized labor spent more than $100 million in the last election supporting Democrats. And for unions, the investment looks like a good one. Since taking office, Obama has doggedly pursued their agenda.

First, he included special restrictions on much of the economic-stimulus funds, requiring that large portions of the $787 billion be used only on projects involving unionized workers. The stimulus also included “Buy American” clauses that infuriated our trading partners. Though Obama was said to oppose adding trade restrictions to the bill, that didn’t stop him from signing it.

Obama cut deals with the United Auto Workers ensuring that they be the primary beneficiaries in the bankruptcies of Chrysler and General Motors. More recently, Congress exempted unionized workers from the 40 percent tax on high-end insurance packages in the Senate health-care bill, a step that would have saved labor an estimated $59 billion. Unfortunately for Democrats and labor alike, this type of backroom dealing destroyed public support for the health-care bill.

Persistent Nomination

Perhaps the most obscene sign of Obama’s heavy indebtedness to the unions is his persistence in the case of union lawyer Craig Becker.

Last year, Becker was nominated to serve on the National Labor Relations Board, the federal agency that administers U.S. labor law. Becker’s nomination set off red flags, given his radical pro-labor views in support of that board rewriting union-election rules without the consent of Congress.

The U.S. Chamber of Commerce took the unusual step of opposing Becker’s nomination, something it had done only three times in 30 years. “Many of the positions taken in his writings are well outside the mainstream and would disrupt years of established precedent and the delicate balance in current labor law,” the chamber and several other industry groups wrote last October.

Easier to Unionize

To many, Becker’s appointment looked like an attempt to use government fiat to impose rules that could never pass Congress and that would make it much easier for unions to organize workplaces. Even moderate Democrats opposed Becker, and his nomination was returned to the president last year.

But late last month, even after Obama began paying lip service to bipartisanship in response to the shocking Republican Senate victory in Massachusetts, Obama chose to resubmit this controversial candidate. The Senate again blocked Becker, but Obama may well use a recess appointment to seat him.

There are two big problems with such a high-stakes alliance with America’s unions.

First, unions are unpopular with ordinary Americans. A Gallup poll last September found that 48 percent of Americans approve of unions, an all-time low since Gallup began asking the question in 1936.

Tawdry History

Unions are unpopular for good reason. They have a tawdry history of connection to organized crime and a continued reputation for thuggery. According to the Federal Bureau of Investigation’s Web page on organized crime: “Labor racketeering has become one of La Cosa Nostra’s fundamental sources of profit, national power and influence,” and, “For decades, the Teamsters has been substantially controlled by La Cosa Nostra.”

While the FBI cites progress in cleaning things up, the history has not been forgotten by Middle America.

The second problem is that union policies are bad for the economy — and for the unions themselves.

To the extent that government’s support of unions succeeds in driving up wages, those policies will reduce employment and make the slow labor recovery worse. To the extent that unionization spreads to new firms, we can expect the higher associated costs to reduce growth, and even, as was the case with U.S. automakers, help propel the companies into bankruptcy.

Membership Dropping

In this world of unintended consequences, perhaps the most predictable of 2009 was the further decline in private-sector unionization that occurred in Obama’s first year. Even while he was giving away the store to the unions, private-industry unionization dropped to 7.2 percent in 2009, according to the Bureau of Labor Statistics. That number was 27 percent in the 1950s.

Unionization continues to decline because unions are such a destructive force. When the economy got weaker, unionized businesses were the weakest. When unionized businesses looked ahead to a world with Obama appointees administering labor laws, they decided to close up shop.

Even after political defeat in Massachusetts, Obama has aggressively pursued the expansion of this destructive force. If that continues, America’s unions will do for Obama what they have done for so many others: cost him his job.

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. The opinions expressed are his own.)

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