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Obama's Pro-Union Bent Stands in the Way of Economic Growth
Posted By:  - 05/11/11

This recession has been long on horror stories. From persistent unemployment to crisis-level deficits, there have been very few things to provide us with any sense of optimism, much less cheer about. But Boeing has been the rare glimmer of hope. In the darkest days of the recession they made a decision to invest $1 billion in a new factory in South Carolina. It was a project that employed thousands in the construction phase and now promises to employ thousands more  as workers are being trained to build planes in the brand new 1.2 million square foot plant.

Unfortunately, what should have been an American success story, a reminder of the promise of America’s unrivaled free-markets, has instead become yet another depressing episode of government intervention.

The National Labor Relations Board (NLRB), which has taken a decidedly pro-union turn under the Obama Administration, filed a complaint in late April over its decision to open the plant in South Carolina rather than Washington State where it has operated a production facility for the last 20 years.

At issue is whether Boeing acted in a “retaliatory” manner in deciding to expand production in South Carolina, which is a right to work state, versus union-friendly Washington. Admittedly, Boeing has had significant trouble in their dealings with unionized workers. In the past 20 years, Boeing union workers have gone on strike four times, the longest being 69 days. Analysts estimated that the most recent strike in 2008 costs the company as much as $120 million per day. What the NLRB is labeling “retaliation” most would consider sound business judgment.

As Boeing CEO Jim McNerney explained in an op-ed in today’s Wall Street Journal,

Our decision to expand in South Carolina resulted from an objective analysis of the same factors we use in every site selection. We considered locations in several states but narrowed the choice to either North Charleston (where sections of the 787 are built already) or Everett, Wash., which won the initial 787 assembly line in 2003.

Our union contracts expressly permit us to locate new work at our discretion. However, we viewed Everett as an attractive option and engaged voluntarily in talks with union officials to see if we could make the business case work. Among the considerations we sought were a long-term "no-strike clause" that would ensure production stability for our customers, and a wage and benefit growth trajectory that would help in our cost battle against Airbus and other state-sponsored competitors.

The move did nothing to eliminate or even reduce production in Washington’s Puget Sound area. In fact, Boeing continues to add jobs in Washington. The New York Times reported that Boeing has increased its unionized employment by 2,000 workers since its decision to expand to South Carolina. Furthermore, within the past year Boeing has added another manufacturing facility in Illinois, a pro-union state.

 The NLRB’s complaint is nothing more than a naked assault on America’s free market heritage. Such unprecedented legal action attempts to insert the pro-union desires of the Obama Administration for the economic and financial sense of the company when making business decisions. The end result of such blatant overreaching will be to further push economic growth overseas.

Our corporations are already laboring under the second highest corporate tax rate in the world and an antiquated “worldwide” tax system that double-taxes their repatriated earnings. Is it wise to now intimidate them into only locating in union-friendly states which may demand uncompetitive wages or benefits? As Senate Republicans stated in their letter to President Obama, “America will not win the future if Washington penalizes workers in states that have discovered winning economic strategies.”

Sadly, it appears Obama’s vision for winning the future has little to do with fostering economic growth, and a lot to do with placating his union friends.

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A win for taxpayers in Wisconsin
Posted By:  - 03/10/11

After weeks of protest and political theatrics, Wisconsin's legislative leaders finally overcame obstructionists in the General Assembly to pass a major overhaul of the state's collective bargaining laws for state workers that has been championed by Governor Scott Walker. The Governor has indicated he will sign the bill at the first opportunity. This is a major win for taxpayers in Wisconsin.

Thanks to the steadfast determination of Governor Walker and like-minded legislators to see this reform through, Wisconsin's government, especially at the local level, will have the tools necessary to tacke the state's $137 million deficit this year and the $3 billion deficit in the next state budget. Additionally, officials will be able to tackle the growing costs of public employees before they eat up the state's finances. No longer will government and taxpayers be beholden to union demands to annually increase spending for their priorities. Instead, the government will be able to determine what it really needs to spend money on and what it can do without.

Some say that this action by Walker is an outright attack on public workers and threatens to turn Wisconsin into a third world country. But as my friend Josh Barro at the Manhattan Institute points out, the Wisconsin reform is neither new or breathtaking:

"Only 26 states have laws that grant collective-bargaining privileges to substantially all public employees. Twelve have laws that give collective bargaining to some workers, and twelve have no statewide collective-bargaining law at all, though some municipalities may grant bargaining rights in those states."

"And as I have been pointing out until I get blue in the face, most federal civilian workers do engage in collective bargaining, but wages and benefits are excluded from that bargaining, rendering it very limited. Far from seeking to strengthen the hand of federal-employee unions, Barack Obama has sought to impose a two-year wage freeze on federal workers through the budget process. If the federal government had a bargaining law like the one Wisconsin has today, he would be unable to do that."

Although some will continue to spin this reform for their own political purposes, taxpayers in Wisconsin can breath a little easier with the knowledge that their government is finally waking up to the need to break through the status quo and willing to make the reforms necessary to save the state from fiscal collapse under high and growing costs.

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The Buckeye Way
Posted By:  - 03/06/11

While we watch the continuing showdown in Wisconsin between Governor Scott Walker and the state’s public sector unions, the Wall Street Journal Editorial Board says (subscription required) we should also pay attention to what’s happening in Ohio and the important lessons it has to teach those who believe in reforming government.

Like Wisconsin, Ohio is considering a bill that would limit collective bargaining for state and local public employees to wages. The bill would also tie salaries to merit rather than seniority, require more employee contributions towards health benefits, prohibit public employees from striking, and reform binding arbitration for union contract negotiations. Some commentators call these proposals extreme, but what Ohio is proposing is less radical than what has been in effect in the private sector for years; for example, the bill would require that workers pay 20% towards health benefits, three percent less than what private sector workers in Ohio pay for their health.

Reform to collective bargaining is part of Governor John Kasich’s plan to revitalize Ohio, a state that was once the center of the nation’s industry. Ohio currently faces budget deficits totaling $8 billion over the next two years and has one of the ten worst state and local tax burdens in the country. If the bill were already law, the Kasich administration estimates that it would have saved $216 million for the state last year and $1.1 billion for local governments. 

Also, like in Wisconsin, Ohio has attracted huge protests and threats of political payback at the ballot box fill the air in Columbus. However, Kasich and his fellow Republicans, who control the General Assembly, have stood firm against the onslaught. On Wednesday, the State Senate passed the bill 17-16 despite howls from the throngs of protestors surrounding the State House. The bill is now before the lower house of the Assembly.

What the Buckeye State teaches us is that to properly reform government, policymakers must be willing to propose serious reforms to the fundamental structures of government and see them through despite the odds. The public sector is a strong, entrenched interest that seems intent on preserving the status quo. To stop these reforms, the public sector has used its tremendous financial and political resources to generate opposition. Policymakers, unfortunately, tend to succumb under this pressure, which leaves the status quo in place. They do so out of fear of electoral consequences. But, as former Michigan Governor John Engler showed the country during the 1990s, tough reforms can pay policy and political dividends. After reforming welfare, reducing taxes, and cutting government, Engler won reelection by a huge margin.

But in order to reap dividends, policymakers must succeed. If policymakers in Ohio, Wisconsin, and other states don’t carry out the reforms that the public has demanded, the public will conclude that those policymakers are just another bunch of ineffective or, worse, lying politicians. The public tends to turn out of office politicians who are fickle or deceitful. As the Journal wisely notes, “Traumatic as it can be trying to reform government, it is lethal to try and fail.” Let’s hope that policymakers in Ohio, Wisconsin, and elsewhere see through the trauma and don’t fail to reform.

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Showdown in Wisconsin
Posted By:  - 02/18/11

Picture this: protestors storming the capitol. State workers declaring that their pay and benefits are sacrosanct. University students banging drums and wearing red shirts. Schools shut down. Soldiers on standby ready to assume control of vital government services. Am I talking about Paris, France? Or Athens, Greece? Nope, I just described the scene right now in good ole Madison, Wisconsin.

 

The brouhaha in Wisconsin is in response to Governor Scott Walker’s proposal to end the ability of most government employees to collectively bargain for benefits such as health care and pensions. Although workers could still bargain for wages, increases would be capped at the CPI or another rate through a voter referendum. Walker also wants to require state workers to contribute 5.8% of their salary towards pensions and pay 12.6% of their health insurance premiums. By contrast, private workers contribute 7.5% towards retirement and pay 20% of health insurance premiums, on average.

 

Walker says he is doing this because he is facing a budget crisis. Wisconsin will run a budget deficit of $137 million this year and a $3.6 billion deficit in the next budget. The governor, a former chief executive of Milwaukee County, estimates that if he does not have the ability to demand more concessions from public sector unions, he will be forced to layoff 5,500 employees or roll back major government programs, like Medicaid.

 

The public sector unions and their allies have responded strongly in opposition to the proposal. Thousands have turned out to the state capitol, filling the hallways, blocking access to the General Assembly’s chambers, and banging on windows. Public schools in Madison actually closed on Thursday because 40% of the teachers called in “sick.”

 

But the twists and turns continue. Although the Senate scheduled a vote on the Governor’s proposal for Thursday, the vote did not happen; the entire Democrat caucus was nowhere to be found. Republicans control the General Assembly and reportedly have the votes to pass the Governor’s proposal, but they are one vote short of a quorum to conduct business. With the Democrats gone, there are not enough Senators in the chamber to hold a vote. According to some reports, the caucus decamped to a Best Western hotel in Rockford, Illinois, which is outside the jurisdiction of the Wisconsin State Patrol. More rallies, for and against the governor’s proposal, are planned for the weekend. It’s anyone’s guess as to what happens next.

 

The unions are targeting this reform because collective bargaining is the source of their power. By reforming collective bargaining, governors and legislators would have a stronger hand in contract negotiations to demand concessions to balance budgets and save taxpayers money. Some argue that reforming collective bargaining and labor laws could be a more realistic alternative to dealing with health care and pension costs than state bankruptcy. The stakes are high for both sides. Whatever happens in Wisconsin over the next several days will have ramifications for the rest of the nation.

This entry also appears at State Budget Solutions.

 

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Ohio and Wisconsin move to limit collective bargaining
Posted By:  - 02/15/11

Ohio and Wisconsin, two heavily unionized states awash in red ink, are about to make some major changes to the laws that govern public employees. The legislatures in both states are considing measures that would significantly change collective bargaining rights for state workers in an effort to find budget savings.

Public employee unions have successfully used collective bargaining to obtain higher wages, guarantee jobs, and more generous benefits, including for healthcare and pensions, for their members. However, some feel that collective bargaining has been abused, extracts high costs on the state and taxpayers, and is increasingly irrelevant given other laws that govern the workplace. In Ohio, for example, a report by the Buckeye Institute shows that state employees earn more than private sector employees in 85 of the state's 88 counties. In fact, public employees unions have used collective bargaining to guarantee wage increases for government workers even as the private sector lost jobs. Since 2000, Ohio has lost 612,700 private sector jobs, but the state lost a net of only 1,600 government jobs.

Today and Thursday, the Ohio Senate is hearing testimony on Senate Bill 5, authored by Senator Jones, which would eliminate collective bargaining for state workers in Ohio. In Wisconsin, Governor Scott Walker is proposing in his budget to limit collective bargaining for state workers (except police and firefighters) to the issue of wages. Additionally, Walker is proposing to require “government workers to contribute 5.8 percent of their pay to their pensions, much more than now; and requiring state employees to pay at least 12.6 percent of health care premiums (most pay about 6 percent now).”

Walker says he is doing this because the state is broke and it’s time to pay up. This year, Wisconsin faces a budget gap of $137 million and a deficit worth several billion dollars over the next few years. If Walker can’t save money through reducing the cost of government employees, he fears he may have to lay off about 6,000 state workers or eliminate Medicaid altogether.

With states like Ohio and Wisconsin facing serious fiscal challenges in the months ahead, it doesn't make much sense to continue to keep the hands of governors and legislatures tied when they negotiate with government workers. Failing to change collective bargaining laws could leave the states forced to make extremely painful choices that no one wants to contemplate.

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Reflections on CPAC
Posted By:  - 02/12/11

Today is the third and final day of the 2011 Conservative Political Action Conference (CPAC), the largest annual gathering of conservatives and libertarians in the nation. After three days of staffing a well-visited booth, meeting with dedicated activists, and listening to dynamic speakers, I’m looking forward to some rest and relaxation, but also to what the future holds for the conservative movement.

This year’s CPAC had the highest number of attendees (11,000) in the history of the conference. CPAC speakers ranged from Rep. Paul Ryan of Wisconsin, the House Budget Committee Chair, to Governor Mitch Daniels of Indiana, a potential presidential candidate who gave, in my view, an outstanding keynote address, which you can read here. Also, CPAC 2011 featured a number of new participating organizations that focus on both activism and policy related to social, economic, and political issues at the federal, state, and local levels.

While attending CPAC, I had the opportunity to participate in a number of discussions about important tax and fiscal policy issues facing the United States. NTUF hosted a discussion about entitlement reform that featured experts such as Rep. Devin Nunes, Maya MacGuineas, Douglas Holtz-Eakin, Steven Moore, and Dan Mitchell. The bottom line of their presentation was that we need to start tackling the problem of runaway entitlement spending before it’s too late.

But budget reform should not be restricted to social programs. CPAC also featured a panel on how the nation can reduce defense spending to a more manageable level without jeopardizing readiness. As a former military aide to a fiscally conservative Member of Congress, I was pleased to hear all of the views presented and the many ideas for maintaining an affordable defense posture. The passion the attendees displayed at the panels, and in conversations with me at the NTU table, was striking.  It bodes well for conservatives if these activists carry their views home and remain outspoken and active in the political process.

For the last several weeks, there has been a lot of talk in the media about differences in the conservative movement over certain policies and suggestions that these differences spell certain doom the conservative movement.  After three days of observing conservatives of all stripes from across the country, I can unequivocally say that reports of destructive differences among conservatives are greatly exaggerated. In fact, I would argue that the conservative movement has never been stronger and ready to bring real solutions to the many serious problems facing the nation.

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Tune into NTU's State of the Union Coverage tonight
Posted By:  - 01/25/11

Tonight at 9 p.m. EST, the National Taxpayers Union's crack government affairs and policy analysis teams will provide special online coverage of the President’s State of the Union Address, and we want you to be there and be a part of the discussion. We will be breaking down the President's proposals and what they will mean for taxpayers. Details on how you can join the conversation are below.

  • If you have a Twitter account, use the hash tags #NTUSOTU and #SOTU to link to our discussions and analyses. Hash tags are like keywords for Twitter. Just use them in each of your messages to link to the ongoing dialogue. Remember to also follow @NTU and @NTUF for all the latest commentary!
  • You can also log onto NTU’s Facebook page, where we will constantly update our newsfeed with links, comments, and memorable quotes. Be sure to join our page by clicking "Like"!
  • Even if you don’t have a Twitter of Facebook account, you can still share your thoughts and opinions by going to our special chat room. Join the chat here.
  • NTU will also be updating our blog, Government Bytes, as the night progresses. You can comment on each post as well! Just click on the “Post a Comment” link and speak your mind.

We look forward to seeing you online tonight at 9 p.m. EST!

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A Blueprint for Rebuilding Ohio?
Posted By:  - 12/22/10

Earlier this week, the Ohio Chamber of Commerce released a report, "Redesiging Ohio," which outlines several proposals for reforming the state to foster for economic prosperity. According to the Chamber,

"Ohio is facing an unprecedented fiscal crisis. Although we're not alone, we would be remiss in not taking this opportunity to transform our state government to one that is sustainable and provides greater value to our citizens. Getting more for less is both the best response to our current crisis and a necessary step toward building a strong state economy that can compete in the 21st century. The time for action is now. Our state government must become more flexible, adaptable and innovative -- searching constantly for new ways to improve services and heighten productivity."

The report is the product of a year's worth of work by the major local and regional chambers of commerce in Ohio. It's well worth a read.

Among the recommendations called for in the report are basic but important reforms, such as a move towards priority-based budgeting. Other reforms are much bolder, such as linking salaries to performance rather than longevity. While there are some problematic recommendations, especially with regards to failed policies like the film production tax credit, Redesiging Ohio is a good start to reforming the Buckeye State. Many of these recommendations have been endorsed by Governor-elect John Kasich and the GOP majorities in the Ohio House and Senate. However, entrenched interests who survive because of the status quo will not accept many of these recommendations. Expect to a see a spectacular fight over the implementation of these recommendations in the weeks ahead.


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Conservation Corps Scored at $16 Billion in Tab
Posted By: Dan Barrett - 12/14/10

Tab Insert

This week’s Taxpayer’s Tab covers a variety of legislation introduced during the 111th Congress, ranging from improving America’s small town infrastructure to eliminating sex-based pay-discrimination.

The 21st Century Civilian Conservation Corps Act -- this week’s Most Expensive Bill -- would reestablish the Depression-era program at a cost of $16 billion each year. The Corps is intended to employ people, especially out-of-work veterans and people who have exhausted their unemployment benefits, by improving America’s parks and forests.

Be sure to check out the WildCard -- a bill to get kids and families outdoors through community program grants. You might be interested how much it costs…

The bills highlighted in Issue 23 of The Taxpayer’s Tab include:

  • HR 6456/HR4318, 21st Century Civilian Conservation Corps Act
  • HR 6246, Rural Energy Communities Development Act of 2010
  • S 3772, Paycheck Fairness Act
  • HR 6426, Moving Outdoors in Nature Act of 2010
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It's time to privatize workers' comp in Washington State
Posted By:  - 10/28/10

Taxes and bonding are not the only fiscal policy issue that Washington voters will decide on Tuesday, November 2nd. With Initiative 1082, Washingtonians will have an opportunity to end the state’s costly monopoly on workers’ compensation insurance.

 

As we stated in our 2010 Ballot Guide: The Taxpayers Perspective, Initiative 1082 would allow privatize the workers comp insurance market in Washington by allowing private insurers to compete to sell the insurance products that provide medical benefits and wages to employees who are injured on the job. Some larger businesses in Washington are able to self-insure. But others must buy their workers comp insurance from the state’s Department of Labor and Industries because Washington is one of four states nationwide with a monopoly on workers’ comp.

 

The cost of a government monopoly for workers’ comp compared to a private market is striking. In Washington, a worker with a time loss claim misses an average 270 days of work. But in the neighboring state of Oregon, which relies on privately-provided workers’ comp, that same worker misses an average of only 70 days of work. Moreover, Washington has the nation’s highest rate of lifetime pension awards for permanently disabled workers.

 

Despite a decline in the numbers of claims, insurance taxes have climbed 53% over the last decade. Meanwhile, Oregon hasn’t increased its premiums for almost two decades. Washington increased premiums eight percent last year, yet Washington’s auditor reports that the state’s accident fund will likely become insolvent in two years and requires another larger premium increase to remain viable.

 

While the legislature has dithered, businesses have moved to privatize and save the workers’ comp market in Washington by getting Initiative 1082 on the ballot. Special interests, including organized labor and trial lawyers, have predictably lined up against the measure, claiming that private industry cannot be trusted. But has the government done any better? The facts do not suggest it. Fortunately, voters will have the final say on Tuesday.

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