July 18, 2007
by Diana Furchtgott-Roth
What would you do if you headed a union that spent member dues on high executive salaries, golf outings at lavish resorts, Learjets, and who knows what else? You would not want anyone to know much about your spending, nor would you want the federal government looking too closely.
When in a bind, you turn to your friends in Washington — those on Capitol Hill who benefit from your fundraisers. Yesterday, the U.S. House of Representatives begins debated on President Bush's proposed 2008 Department of Labor budget. Curiously, the House Democratic leadership wants to reduce funding for only one of the department's oversight offices — the Office of Labor Management Standards, which monitors union financial disclosure.
Although the president wants to increase the budget of OLMS by $9 million to $57 million, the Democrats' bill would cut this appropriation by $2 million, or 4%, from the 2007 level of $48 million.
In contrast, the Democrats who shaped the bill in the Appropriations Committee would increase spending for all other oversight offices in the Labor Department — including those monitoring mines, occupational safety, wages and overtime, and employee pensions.
Rep. John Kline of Minnesota offered an amendment to keep OLMS funding at current levels. A former active-duty Marine, he is used to tough fights, but his amendment is expected to be defeated.
It's not that Congress is cutting OLMS as a sign of new-found frugality. The committee would give the Labor Department $935 million more than the president requested.
Federal law has required some financial disclosure for unions for many years. But the failure of the Clinton administration to require union compliance left a gaping hole in union members' ability to find out about union expenditures — expenditures funded with their dues. Between 1985 and 1995, the number of full-time equivalent employees at OLMS declined to 299 from 464 — it's now up to 351.
OLMS is to unions what the Securities and Exchange Commission is to corporations. In 2005, just four years after the passage of the Sarbanes-Oxley Act, which required greater disclosure of corporate finances, the Labor Department began to require more information on union spending. At the same time that House Democrats want to cut OLMS funding by $2 million, it wants to expand the SEC budget by $16 million above 2007 levels, $3 million above the president's proposal.
You might think that Congress would look out for the interests of the millions of voting union members who want financial accountability. But it is union officers, not members, who usually decide which politicians receive campaign contributions. Those contributions go to members of Congress who will make sure that the Department of Labor does not look closely at union finances.
If you listened to the House floor debate on the Department of Labor spending yesterday on C-SPAN, you heard from those who have been well rewarded for looking after the interests of the union leaders, if not their members.
In the 2006 election cycle, the speaker of the House, Nancy Pelosi, received $260,000 from unions that contributed at least $10,000 each to her campaign, according to public campaign finance data compiled by the Center for Responsive Politics. Not surprisingly, Mrs. Pelosi supports reducing the OLMS funding.
So too does the chairman of the House Appropriations Committee and its Labor subcommittee, David Obey of Wisconsin. Mr. Obey's forms revealed that he received more than $100,000 in union money. Indeed, it was Mr. Obey's subcommittee and full committee that did the detailed work to reduce the OLMS spending.
The chairman of the Education and Labor Committee, George Miller of California, reported that he received at least $191,000 from labor unions. He too supports trimming OLMS.
It's not as though OLMS has been doing a poor job. Since 2001, OLMS's audit program has assisted the Justice Department in obtaining more than 775 criminal convictions and $72 million in court-ordered restitution for union members.
OLMS is the only office in the government responsible for making sure union members have accurate information about union spending, filed in annual disclosure reports with the Labor Department. The Labor Department publishes these forms on its Web site.
Some of the spending is open to question. Take golf, for instance. New York's Stage and Picture Operators reported spending $92,000 at Florida's Westin Innisbrook Golf Resort at an executive board meeting in 2006.
Learjets are hardly a more worthwhile use of union dues. Yet public OLMS records show that the Machinists Union in Upper Marlboro, Md., paid more than $1.5 million for Learjets, pilots and maintenance.
And OLMS forms show that the executive vice president of the Journeymen and Allied Trades, headquartered in Briarwood, N.Y., Peter DeVito, was paid more than $450,000 in 2005, the same as the secretary/treasurer of the organization, Edward Byrne. The president of the International Longshoremen's Association headquartered in New York, John Bowers, was paid more than $413,000 in 2005.
Perhaps there's nothing wrong with spending union dues on golf or on high salaries for union bosses. Perhaps the rank-and-file don't disapprove — if they know. But do they know? They're entitled to the best information available, which requires audits from OLMS. In 2006 OLMS had the staff to audit only 4.6% of unions required to file the forms. That's why it needs more funding, not less.
Detailed union financial disclosure reports are bad news for labor union bosses. This year they want to have the last laugh by ensuring that Congress shrinks part of the OLMS budget. Will they get away with it?
This Op-Ed was featured in The New York Sun issue of July 18, 2007.
Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, was a Senior Fellow at Hudson Institute from 2005 to 2011.