Political Hay

Hands Off Big Labor

Government oversight of unions is the only area where the Obama administration favors budget cuts and less regulation.

By 5.8.09

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The Obama administration has delivered a strong message to crooked union bosses everywhere: happy days are here again.

On Thursday President Obama, who has pledged to usher in a new era of fiscal responsibility, touted $17 billion in proposed cuts to his $3.4 trillion budget. The media noted that about half of the reductions came out of the defense budget, but lost in most reports is the fact that the administration also slashed funding for the only entity in government tasked with policing unions.

Under the leadership of Secretary Elaine Chao from 2001 through this January, the Labor Department beefed up the Office of Labor-Management Standards. During this time, the division's actions led to 929 convictions of corrupt union officials and to the recovery of more than $93 million on behalf of union members. Yet the Obama administration has proposed slashing the unit's budget by more than 9 percent, from $45 million in 2009 to $41 million in 2010.

Funding for the agency, which was created in 1959 as part of legislation to root out union corruption, represents a tiny fraction of the projected $13.3 billion 2010 Labor Department budget.

It would be one thing if the reduction were part of a broader belt-tightening throughout the Department of Labor, but the administration boosted funding for the Wage and Hour Division, Office of Federal Contract Compliance Programs, and the Occupational Safety and Health Administration - all of which regulate businesses.

"The administration is cutting the budget of the only agency in government that monitors labor union activity, while at the same time ratcheting up the budget of all other enforcement agencies against employers," Chao told TAS in reaction to the news.

The OLMS budget cuts come on the heels of a recent decision by the Labor Department to loosen union financial disclosure rules, a blow to transparency that will make it more difficult for union members to examine the finances of the organizations to which they are paying dues, as well as the conflicts of interest of labor leaders.

The Obama administration's hands-off policy toward big labor should not come as much of a surprise. Unions played a key role in Obama's election by helping him with fundraising and organizing, and his choice for Labor Secretary, Hilda Solis, has a cozy relationship with unions.

Solis was first elected to Congress in 2000 as a union candidate, and as a member of the House of Representatives from 2001 until this year, she racked up perfect or near perfect vote ratings from every major union. She also served as treasurer of American Rights at Work, a pro-labor group that maintained the "Shame on Elaine" attack website aimed at her predecessor, Chao.

In its justification for the OLMS cut, the Obama administration asserted that, "Since 2001, OLMS' budget has increased by almost 50 percent, without commensurate increases in workload."

But Don Todd, deputy assistant secretary at OLMS from 2001 through this January, dismissed the Obama administration's claim.

"They're just talking through their hats," Todd said "They're trying to justify the unjustifiable, and that is they don't want oversight of unions."

During the Clinton administration, the staff of the division dwindled by more than a quarter and the number of audits performed on unions dropped 70 percent.

"From 1992 to 2000, the Office of Labor-Management Standards was significantly weakened to the point where it couldn't carry out its legislative function - to protect the rights of rank and file members," Chao said.

During Chao's time at the Department of Labor, the number of audits that the agency performed on unions went up roughly fourfold from where they were by the end of the Clinton administration.

On Thursday, Solis was asked about the OLMS cuts during a web chat about the 2010 budget.

"OLMS' staffing levels will be returned to essentially the same levels it maintained in fiscal years 2001, 2002, and 2003," she said. "During this period, OLMS maintained vigorous and effective enforcement of the law."

But in reality, in 2003, the number of audits performed by OLMS was just a third of the number being performed by 2007.

Despite the budget increases during this decade, the office hasn't even returned to its pre-Clinton era staffing levels. By the end of the Bush years, the staff had increased to about 350, but was in charge of overseeing roughly 20,000 labor organizations. Now the agency will have to return to getting by with even fewer employees.

Nathan Mehrens, who served at the OLMS under Chao, said that when the budget is cut at OLMS, audits will the first activity to be affected, because there are many mandatory functions that the division has to perform. Auditing, he said, is seen as a task to be conducted as time permits.

"While [audits] do uncover embezzlements, [they] are more powerful as a tool to deter these crimes before they happen," Todd explained. "With the cuts they are putting in effect there will be no cop on the beat. Union officers and employees will know that. It would be like a big budget cut at the [Securities and Exchange Commission]. Those who might otherwise resist temptation are given the impression that the chance of discovery is slight."

On May 20, 2008, Thomas Wallace, a former treasurer of the Amalgamated Transit Union, plead guilty and agreed to repay more than $450,000 he embezzled from the union by forging checks to himself. The case represented just one of 103 convictions OLMS achieved last year.

Aspiring union crooks who concoct similar schemes to steal money from workers can rest a lot easier now that Washington has a new sheriff in town.

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Philip Klein is The American Spectator's Washington correspondent. You can follow him on Twitter at: http://twitter.com/Philipaklein