Obama, Solis gut Bush-era union financial transparency regs

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Tina Korbe

Public employee protests in Wisconsin have forced union leaders to face something they thought they’d left behind - increased transparency and accountability.

Since President Obama took office, Hilda Solis, his Secretary of Labor, has steadily rolled back union financial transparency reforms initiated by President George W. Bush and his labor chief, Elaine L. Chao.

Thanks to Obama and Solis, unions don’t have to disclose the total value of all benefits received by union officers and employees.

They also no longer have to disclose the names of parties buying and selling union assets or itemize union receipts, although they do still have to itemize union expenditures. Union-operated trusts are almost completely off the financial reporting hook.

If the Bush reforms had been allowed to take full effect as Chao original designed them, unions would have had to do all of the above.

“Union integrity is the lone arena in which this administration has exhibited an appetite for deregulation,” said Chao, who now serves as a distinguished fellow at The Heritage Foundation.

“When it comes to regulations that fight union corruption, this administration has a unique take on the three R’s: repeal, rescind and retreat,” she said.

The Bush-era reforms applied only to private-sector unions, but some public-sector unions with private-sector members - most notably teachers’ unions, such as the National Education Association (NEA) - also had to abide by the new rules.

One important provision would even have required local chapters of these government unions to disclose financial information.

But because of union lawsuits that delayed implementation, that provision never took effect - and it was effectively killed once Obama took office.

As a result, the NEA is free to funnel money through local and state chapters without disclosing that activity.

That means union members protesting in Wisconsin, Indiana and elsewhere have no foolproof way to know what their leaders do with their dues.

“They claim they’re for democracy, but there’s no democracy within their unions,” said Don Todd, director of research at Americans for Limited Government and a former deputy assistant secretary at the Department of Labor.

“There’s no transparency. You can’t have democracy without transparency, and they oppose it. It’s a conundrum to me,” Todd said.

But suppose the transparency requirements had never been rescinded. How might union battles across the country be playing out differently?

For one thing, union members might not have been so quick to rally behind union leaders.

“If people think you’re ripping them off, it’s hard for the people to think you’re defending them,” said Don Loos, who previously worked in the Department of Labor and now serves as senior adviser at the National Right to Work Committee.

“If people see their dues being wasted, it’s hard to think those people are also looking out for your best interest,” Loos said.

On the other hand, those unions that manage their money well would face little-to-no backlash from members. As Loos put it, “If they’re doing a great job with their money, it should enhance their credibility.”

After all, as Heritage Foundation labor analyst James Sherk has pointed out, the vast majority of union officers obey the law.

“However,” Sherk writes, “a minority of union officers do misuse their position for personal gain. Since 2001, the Labor Department’s Office of Labor Management Standards has indicted 1,004 union officials for crimes such as fraud and embezzlement of members’ dues. It has won 929 convictions and $93 million in court-ordered restitution to union members.”

Union members themselves want accountability within the union. Nearly 90 percent agree that unions should disclose their spending - and 66 percent believe their leaders mostly look out for themselves, according to Sherk.

Perhaps greater transparency would also enhance the popular image of unions. Right now, more Americans favor limits on collective bargaining to reduce state budget deficits than oppose such limits, according to a recent Quinnipiac University poll.

Tina Korbe is a staff writer in the Center for Media and Public Policy, an investigative journalism unit at The Heritage Foundation.

 

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