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Morning Bell: No Bailouts for Government Unions

Posted By Conn Carroll On January 3, 2011 @ 9:36 am In Ongoing Priorities | Comments Disabled

New York City’s Department of Investigation (DOI) announced Friday that it is looking into reports that some Sanitation Department supervisors told workers to slow their snow removal efforts as a protest against budget cuts. DOI spokeswoman Diane Struzzi told Businessweek [1]: “What we are looking at is whether there was intentional misconduct relating to the snow removal, whether or not there was a slowdown.”

The investigation was prompted by statements from City Councilman Dan Halloran (R–Queens) who told The New York Post [2] Thursday that three plow workers from the Sanitation Department and two Department of Transportation supervisors alerted him to the plot: “They were told [by supervisors] to take off routes [and] not do the plowing of some of the major arteries in a timely manner. They were told to make the mayor pay for the layoffs, the reductions in rank for the supervisors, shrinking the rolls of the rank-and-file.” Between 660 and 720 sanitation workers called in sick for the cleanup of the blizzard—more than double the usual rate [3]. But Halloran admits he has no proof of an organized slowdown, and Sanitation Officers Association President Joe Mannion adamantly denies [1] any plot: “Absolutely not, there was no slowdown.”

Any deliberate slowdown by the Sanitation Officers Association would be not only morally reprehensible but also illegal under New York state law. The Public Employees Fair Employment Act (aka the Taylor Law [4]) specifically forbids New York government unions from striking. But since its inception the Uniformed Sanitationmen’s Association has challenged the law, and Transit Workers President Roger Toussaint was even jailed for violating the law after a 2005 strike.

The sanitation union is currently upset with the mayor’s office [1] over the demotion of 100 Sanitation Department supervisors, about 10 percent of the supervisory force. As cities and states across the country continue to face mounting budget gaps [5], disputes between government unions and the populations they serve are only going to grow [6]. No less a Progressive icon than President Franklin Delano Roosevelt foresaw the inherent problem with letting government employees unionize, writing [7] in 1937: “All government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. … The employer is the whole people, who speak by means of laws enacted by their representatives in Congress.”

The problem with government unions is that, unlike the private sector, governments have no competitors. If a union ends up extracting a contract from a private firm that eats up too much profits, that firm will lose out to the competition. But when a union extracts a generous contract from government, there is no check on that spending. Instead of being disciplined by more efficient competitors, the government just pays for higher spending with higher taxes or borrowing.

But now that states have been taken over by government unions, thanks to generous donations to the controlling state political parties [8], states might be reaching the end of their credit limit. States and municipalities currently have around $2.8 trillion worth of outstanding bonds and even more hidden liabilities in the form of pensions estimated to be as much as $3.5 trillion [9].

Despite these liabilities, Moody’s recently improved the credit ratings of a number of local governments. Why? For the same reason that Moody’s gave their highest ratings to Fannie Mae and Freddie Mac: anticipated federal government bailouts. Explaining their higher ratings for state and local government debt this October, Moody’s wrote [9]: “The federal government has broadly channeled cash to all state governments during recent recessions and provided support to individual states following natural disasters.”

The American people cannot afford to bailout Wall Street, let alone Wall Street and government unions. Congress should act to make sure creditors know that states will not be bailed out by the federal government [10].

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URL to article: http://blog.heritage.org/2011/01/03/morning-bell-no-bailouts-for-government-unions/

URLs in this post:

[1] Businessweek: http://www.businessweek.com/news/2011-01-02/nyc-investigating-reports-of-work-slowdown-during-snow-removal.html

[2] The New York Post: http://www.nypost.com/p/news/local/sanit_filthy_snow_slow_mo_qH57MZwC53QKOJlekSSDJK

[3] more than double the usual rate: http://www.nypost.com/p/news/local/more_workers_catch_cold_v3XzpQhakSbrmY0LMcd6iJ

[4] Taylor Law: http://en.wikipedia.org/wiki/Taylor_Law

[5] cities and states across the country continue to face mounting budget gaps: http://www.nytimes.com/2010/12/05/us/politics/05states.html?partner=rss&emc=rss

[6] disputes between government unions and the populations they serve are only going to grow: http://www.nytimes.com/2011/01/02/business/02showdown.html?partner=rss&emc=rss

[7] writing: http://www.presidency.ucsb.edu/ws/index.php?pid=15445

[8] thanks to generous donations to the controlling state political parties: http://blog.heritage.org../2010/10/18/morning-bell-big-governments-government-union-firewall/

[9] States and municipalities currently have around $2.8 trillion worth of outstanding bonds and even more hidden liabilities in the form of pensions estimated to be as much as $3.5 trillion: http://www.nytimes.com/2010/12/05/us/politics/05states.html?pagewanted=2&partner=rss&emc=rss

[10] make sure creditors know that states will not be bailed out by the federal government: http://blog.heritage.org../2010/12/15/bailouts-or-bankruptcy-for-state-and-local-government-pension-problems/

[11] Republicans will vote to repeal Obamacare: http://thehill.com/blogs/blog-briefing-room/news/135589-healthcare-repeal-bill-coming-before-obamas-annual-address

[12] “will not vote for the debt ceiling increase”: http://thehill.com/blogs/blog-briefing-room/news/135599-graham-no-vote-to-increase-debt-ceiling-without-spending-entitlement-reforms

[13] give incoming Budget Committee Chairman Paul Ryan (R–WI) the authority: http://thehill.com/blogs/on-the-money/budget/135451-budget-skirmish-starts-over-ryan-rule

[14] waiver: http://www.washingtonpost.com/wp-dyn/content/article/2010/12/30/AR2010123005032.html

[15] oil companies are still waiting for approval to drill the first new oil well: http://online.wsj.com/article/SB10001424052970204204004576050451696859780.html?mod=WSJ_hp_LEFTTopStories

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