POLICY BRIEF FROM AMERICANS FOR TAX REFORM

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Trojan Horse:
Understanding How Shays-Meehan Exempts Most Labor Union Political Action from New Restrictions

Complete Report

By

Ronald Nehring of Americans for Tax Reform
Jami Lund of the Evergreen Freedom Foundation, and
Shawn H. Stair of The Commonwealth Foundation

Revised February 4, 2002

Congress is about to once again consider legislation further regulating federal elections. The Bipartisan Campaign Reform Act of 2001 (HR 2356), sponsored by Representatives Christopher Shays and Martin Meehan, would have the effect of curbing citizen involvement in the political process while conspicuously leaving organized labor officials free to continue extracting millions of dollars in compulsory union dues for unrestricted political use in a host of areas. Meanwhile, the adverse corrupting influence of labor officials unaccountable to their own members is a critical issue that is left completely ignored.

One of the most egregious problems of the current campaign finance system is the routine use of union members' compulsory union dues for political and ideological purposes unrelated to the union's role as a bargaining representative. Every year, millions of dollars are excised directly from workers' paychecks and diverted to fund political and ideological campaigns to elect candidates who subscribe to the political agenda set by union officials, without regard to the beliefs or consent of the individual union workers who earned those dollars in the first place.

Union workers told to either pay for union politics, or quit and lose important workplace rights

Typically, union officials demand members who object to the political use of their dues resign their membership and become mere "agency fee payers" (in states without Right to Work laws.) Workers have many sound reasons to not give up their union membership. For instance, workers may wish to retain their right to vote on the union-negotiated contract, while others may not wish to jeopardize union representation in grievance proceedings with their employer. Other workers may not wish to give up union benefits, such as pensions and professional liability insurance. Finally, union officials often resort to intimidation, discrimination and threats to discourage workers from leaving the union.

Under Shays-Meehan, union members who object to the political use of their dues would continue to face a difficult decision: resign their union membership, and in doing so lose their union benefits, lose their right to vote on their contract and risk retaliation from their union overseers; or, continue to watch as their hard-earned money is used to elect candidates they oppose, and advocate public policies with which they disagree.

Missing the Target: Understanding Union Political Spending

An examination of how organized labor engages in political actions makes clear that the soft money and issue advocacy restrictions contained in the legislation will have little impact on how labor conducts political warfare.

Much media attention has focused on "issue advocacy" television advertising conducted by national groups such as the AFL-CIO and AFT. This level of attention is expected, given that Washington lawmakers, reporters, and pundits can more easily view and respond to television ads broadcast and rebroadcast in Washington than other less visible political activity conducted outside the Beltway.

Yet, labor's real political muscle is flexed at the local, grassroots level by more than 45,000 union locals, over 2,000 intermediate groups (such as district councils), and over 150 parent regional, national and international unions. Indeed, these local organizations account for over 45% of all union revenue and assets.(1)

Rutgers University Economics Professor Leo Troy estimates America's 16 million union members and agency fee payers contribute $12.8 billion annually to organized labor. Of this, roughly $6 billion goes to union locals, $5.1 billion goes to national union groups, and the remainder is funneled to intermediate groups.

Litigation involving the use of compulsory union dues for politics, most notably in Beck and Abood v. Detroit Board of Education, has found that in these cases, over 80% of union dues collected were used for purposes other than collective bargaining, contract administration, and grievance adjustment ("financial core" activities). Assuming these proportions are applied across the entire union movement, organized labor is left with $10.2 billion each year to expend on activities the U.S. Supreme Court has ruled are completely unrelated to the union's role in serving as a bargaining representative for its members.

Table 1 highlights these estimates. Column A shows an estimate of union spending on collective bargaining, contract administration, and grievance adjustment, the only duties the Supreme Court has ruled are related to the union's role as bargaining representative. Only 20% of union spending is estimated to be in this area, a figure derived from Beck and Abood. Column B shows the funds labor has available for all other purposes, including political activity: $4 billion at the national level, $1.3 billion among intermediate groups, and $4.8 billion for use by locals.

Table 1. Estimates of Funds Available for Activities Unrelated to Union Duties as Bargaining Representative(2)
(in millions of dollars)

Under Shays-Meehan, labor would be unable to use any portion of this $10.2 billion to make soft-money contributions to the federal political party committees. While this may seem to be a significant restriction, it is not.

In testimony before the Senate Committee on Rules and Administration on April 12, 2000, Laurence Gold, Associate General Counsel of the AFL-CIO, admitted that a soft-money ban would have little impact on the union's political activity. Why? Mr. Gold explained that the overwhelming majority of his union's political activity does not take place through soft money contributions to party committees. Rather, the AFL-CIO relies on tactics entirely unrelated to soft-money contributions. Echoing Mr. Gold, AFL-CIO political director Steve Rosenthal has said, referring to direct AFL-CIO soft money contributions to party committees, "the money we spend is the smallest thing we bring to the table."(3)

In other words, union soft money spending on party committees will be curtailed, but soft money spending on political functions waged by the unions themselves will not.

Some of this spending takes place in the form of issue advocacy advertising, usually television commercials critical of a candidate, but avoiding use of explicit language urging voters to cast their ballots for or against the candidate. While Shays-Meehan would restrict this form of speech near an election, issue advocacy also does not constitute the bulk of labor's political activities.

As mentioned above, most unregulated political action by labor takes place at the grassroots level, through more than 45,000 locals and intermediate groups. As Table 2 illustrates, S. 2356 would have absolutely no impact on spending in a vast array of categories.

Table 2. Union political activities unaffected by Shays-Meehan

Labor has already shifted away from activities covered by Shays-Meehan

Because the legislation does not impact how labor collects its political money, does not restrict the amount unions may collect for such purposes, and only restricts expenditures in the narrow issue advocacy and soft-money contributions areas, it is not unreasonable to assume labor's political strategists will quickly modify their spending plans to focus even more heavily on unrestricted activities like those listed above.

Indeed, labor has already shifted spending away from issue advocacy in an effort to further bolster the grassroots activity unaffected by Shays-Meehan.

Following the Republican takeover of Congress in 1994, a coalition of unions attempted to dislodge Republican House members in 36 targeted districts through a massive television issue advocacy campaign in 1996.

That effort was largely unsuccessful when only a handful of the weakest freshman House Republicans were defeated. Labor recognized its political dollars could be more effectively spent at the grassroots level. "In 1998, we really saw the turning point in regard to effective grassroots organization for the American labor movement," said Gerald McEntee, leader of the American Federation of State, County and Municipal Employees (AFSCME).(4)

The result? "Gingrich said they would pick up House seats, Lott said they would pick up in the Senate. They lost; the Republican right wing lost a tremendous number of seats in the House. In California, we elected Gray Davis," said McEntee.(5) While labor's strategic goal of defeating Republicans remained the same, the tactical shift paid off.

In 2000, the AFL-CIO was not shy about declaring its own level of in-kind contributions to mostly Democratic candidates. Among its claims:(6)

• Registered 2.3 million new union household(7) voters.
• Made 8 million phone calls to union households.
• Distributed more than 14 million leaflets at union worksites.
• E-mailed some 60,000 E-VOTE cards urging people to vote.
• Supported 901 union members running for office.
• Ordered 3.5 million leaflets through the AFL-CIO website.
• Mobilized more than 100,000 union volunteers to get out the vote from Miami to Seattle, from San Diego to Boston and from Austin to Detroit.
• Trained more than 1,000 Labor 2000 coordinators for worksites, local unions, central labor councils and state federations.
• Sent more than 12 million pieces of literature to union households from the national AFL-CIO alone.

Labor did not restrict its activities to the general election. For example, in Iowa the AFL-CIO and the Iowa State Education Association sent four mailings to 25,000 homes, and distributed a five-minute video to its members, featuring AFL-CIO President John Sweeney endorsing Vice President Gore, and Gore speaking to a chanting union crowd. The union and its allies dispatched 35 organizers to the state, and even "parked a tractor-trailer next to the Gore headquarters in Iowa City and made thousands of calls to union homes from the trailer."(8)

Also in 2000, the American Federation of Teachers spent at least $346,000 from its general treasury to communicate its support for Vice President Gore to its more than one million members during the primary election season alone. The National Education Association (NEA) similarly spent more than $1.1 million to advocate for Vice President Gore, in addition to other (mostly Democratic) candidates for Congress, in communications to the union's membership.(9)

Table 3 lists union political spending aimed at member and retiree households. This unregulated, unlimited spending, which for the four unions listed totaled more than $6.9 million in 2000 alone, would be unaffected by S. 27.

Table 3. Union Political Spending Directed at Union Households in 2000

*In one section, AFT did not differentiate between dollars spent on Gore and named Congressional candidates (all Democrats). In another line item AFT simply reported it was spending in support of Gore and unnamed Congressional candidates.

Field staff dispatched into targeted districts

During the summer of 2000, the NEA, acting more like a political party than a union, identified 27 competitive House districts where a concerted effort by the union could help a Democrat defeat a Republican. The NEA's national office then dispatched one field operative into each of these districts, armed with CD-ROM lists of all of the union's members in each district, each member's demographic background, and their workplace. The field operatives were directed to organize "volunteers" from local public schools in support of the Democratic candidate.

Each operative was supported by a centralized voter identification program aimed at determining which NEA members were still undecided, then tailoring direct mail advocacy pieces to these members, specific to each member's vote-determinative issues. The union is now working to recruit one member for each school in America to work on organizing political action.

While labor officials may claim these efforts are "only" directed to their members and retirees, the reality is that these campaigns reach far beyond these groups. To labor, anyone living in a household with at least one union member is a fair target for voter contact. Meanwhile, unions now routinely publish their political propaganda on their websites. While they claim this information is directed at union members and retirees, the truth is this information is accessible to anyone, and is thus not "directed" solely at these groups. Recently the Landmark Legal Foundation filed complaints with the Federal Election Commission over these practices.(10)

In addition to the aforementioned in-kind spending, unions may also circumvent the legislation to continue impacting federal elections through a host of other means, including certain types of independent expenditures, certain contributions to state party organizations, contributions to state and local candidates' voter registration and turnout programs not technically defined as "federal", and working through third-party surrogate groups under the guise of "community outreach" programs.

In short, rather than restricting organized labor's political activity, Shays-Meehan
can be expected to force a handful of union accountants to do some minor tinkering with labor's political budgets. Total spending will be reshuffled, not restricted.

Union corruption and campaign finance

The campaign finance "reformers" consistently cite the need to purge the "system" of the "corrupting influences" of "big money." Yet, by conspicuously allowing union officials to continue extracting campaign cash from workers paychecks without permission, and eroding existing protections, they allow corrupt union officials to continue making a mockery of the democratic process without effectively being held accountable to their members.

For example, consider the 1996 campaign to legalize marijuana in California. The proponents of that successful ballot initiative found financial support from an unlikely source: the International Brotherhood of Teamsters. Under the leadership of Ron Carey, the union contributed $195,000 in member dues to a campaign to make pot more readily available to California's children.(11) How many Teamsters would have endorsed such a contribution?

The contribution to the "medical marijuana" initiative turned out to be part of an elaborate and illegal contribution-swap scheme in which supporters of the initiative contributed to the Ron Carey re-election campaign committee (ironically named, "Teamsters for a Corruption-Free Union"), and in turn, the Carey leadership contributed an equal amount to the marijuana initiative, using Teamsters funds. This corruption occurred despite the fact that the election itself was paid for and monitored by the Justice Department. A new election was eventually called, and Carey prohibited from participating.

The games union officials play with member dues often continue even in the face of staggering corruption charges. District Council 37 of the American Federation of State, County and Municipal Employees (AFSCME) in New York is arguably the most corrupt union in America.(12) By June 1999, 27 DC37 officials were indicted for stealing millions of dollars from the union through kickbacks and other schemes, and for rigging a 1996 membership vote to ratify the union's contract with the City of New York. That same month, AFSCME officials endorsed and pledged union resources to the presidential campaign of Vice President Al Gore. AFSCME members described the endorsement process as "convoluted and undemocratic."(13) As Newsday opined: "While AFSCME promised to restore democracy as well as fiscal integrity to [DC37], the membership never got to vote on the endorsement."

Abuse of workers' political rights is not restricted to the largest labor organizations. For instance, consider the case of the International Association of Firefighters Local 22 in Philadelphia. In June 1999, the local agreed to pay an $80,000 settlement for failing to follow the simple procedures the Supreme Court outlined in its Hudson decision for determining and collecting the agency fees paid by nonunion workers. The union "failed to provide an adequate explanation of the basis for the fee or major categories of expenses, to have an independent auditor verify its calculations, or to establish procedures for nonmembers to challenge the amount of the fee before an impartial decisionmaker and hold the challenged amount in escrow, as required by Hudson."(14)

There is no shortage of methods union officials have concocted to thwart workers' attempts to exert some control over the use of their dues. As D. Mark Wilson, a labor economist for The Heritage Foundation notes, "workers who object to the use of their dues for political purposes usually must do so within a limited period each year. This means, for example, that Teamsters who objected to their union's decision to spend $195,000 on a campaign to legalize the use of marijuana in California may have to wait an entire year before exercising their right to receive a refund for the portion of their dues that went to this campaign."(15) As one worker testified before Congress:

I wrote the letters required by law, but somehow they kept getting lost. ... I wrote several letters that, according to the union official that I was dealing with were never received or were not worded properly.... I kept calling the union office, at least three or four additional times, to find out the status of my request. Finally in desperation, I wrote another letter and had my husband drive to the San Diego Teachers' Union office, hand carry the letter and had a copy of the original letter dated and time stamped. That was the only way that I finally was able to exercise my right...(16)

S. 27 would do nothing to make union officials more accountable for how they wage political and ideological warfare. In fact, past behavior on the part of union officials should compel Congress to give union members maximum control over how their dues are allocated and collected.

Congress could put an end to this political extortion by giving workers more control over their own dues. For example, The Worker Paycheck Fairness Act (H.R. 2434, 106th Congress) would require union officials to obtain the up-front permission of members before using a portion of their dues for political or other activities unrelated to the union's duty as exclusive bargaining representative. Representatives Shays and Meehan, however, have consistently refused to include this language in their legislation.

Under the "reformers'" idea of campaign finance reform, union officials are free to engage in unlimited lobbying and issue advocacy without asking a single union member for his or her permission to use their dues for such purposes. Indeed, many of the ideological battles joined by labor officials concern highly controversial issues wholly unrelated to the union's role of representing workers to their employers, including:(17)

• Abortion: Through their various political committees, the following unions have made contributions to Emily's list: AFL-CIO, AFSCME, CWA, SEIU, and UAW.
• Balanced budget: AFSCME made the defeat of the Balanced Budget Amendment its "number one" legislative priority in 1995.
• Official English: The NEA, UAW and AFL-CIO have lobbied against legislation making English the official language of the United States. Eighty percent of Americans support such legislation.
• Racial preferences: The AFL-CIO recruited and trained 1,000 activists in 1996 to, among other things, fight the California Civil Rights Initiative (CCRI), the successful ballot measure ending racial preferences in California state hiring and contracting. Other unions that campaigned against CCRI included: the California Teachers Association, the United Farm Workers, the Coalition of Black Trade Unionists, and local affiliates of the American Federation of Teachers and the SEIU. Meanwhile, 80% of Americans of all races oppose racial preferences.
• Taxes: The AFL-CIO lobbied against passage of the $500 per child tax credit, and other tax-reduction measures.
• Welfare reform: AFL-CIO President John Sweeney described the 1996 welfare reform law as "anti-poor, anti-immigrants, anti-women and anti-children." AFSCME aggressively lobbied against imposing any time limits on cash benefits to welfare recipients.

In each case, labor's membership is forced to fund these efforts through their dues payments.

Conclusion

A central aim of any campaign reform effort should be to ensure every dollar enters the political system voluntarily. Unfortunately, the Bipartisan Campaign Reform Act will do nothing to stem the flow of tens of millions of dollars being collected from workers without their permission.

Labor's systematic abuse of dues, collected under the auspices of collective bargaining, to the tune of tens or hundreds of millions of dollars, distorts and corrupts the political process at least, if not more, than the soft money donations vilified by Representatives Shays and Meehan. To act against soft money contributions to party committees and issue advocacy while turning a blind eye to this abuse of American workers raises serious questions concerning just how "fair" and "bipartisan" this legislation will be in practice.

Shays-Meehan will not prevent the involuntary collection of campaign dollars, nor will it significantly impact how organized labor wages political warfare. Large labor unions like the National Education Association, the AFL-CIO, the Service Employees International Union, the American Federation of Teachers, and others, have organized themselves much like political parties, with political directors and field staff mobilizing more than 16 million union households in support of usually Democratic candidates for federal office.

Under Shays-Meehan, soft money contributions to party committees are curtailed, but most soft money spending by the unions themselves is not. Congress has an opportunity to enact meaningful campaign reform that respects the First Amendment rights of America's working men and women. Unfortunately, Shays-Meehan does not achieve this goal. While the sponsors of this legislation may intend for it to fairly apply to all groups and individuals, the impact will lopsidedly benefit labor officials and the candidates they support.

NOTES

1. Professor Leo Troy, in testimony before the Senate Committee on Rules and Administration, April 12, 2000.
2. These figures represent only rough estimates, since most unions are reluctant to accurately disclose their spending, and disclosure reports required by the Department of Labor are notoriously weak.
3. USA Today, October 30, 2000
4. "Labor Seeks Rise in Political Clout," Pittsburgh Post-Gazette, Aug. 14, 2000.
5. Ibid.
6. AFL-CIO website (www.aflcio.org), Labor 2000
7. The use of the term "household" is significant. Union political activity does not only touch its members, but also the entire family household of every member and retiree.
8. "Outside Funds Powerful in Primaries," Laura Meckler, Associated Press, July 17, 2000
9. "NEA, AFT Dig Down to Details in Effort to Mobilize Members," Education Week, November 1, 2000
10. See www.landmarklegal.org
11. Editorial, "Unions and Politics," San Diego Union-Tribune, January 7, 1998, p. B6
12. According to the National Legal and Policy Center's Organized Labor Accountability project.
13. Newsday, June 11, 1999
14. Bureau of National Affairs, June 16, 1999
15. D. Mark Wilson, "California's Proposition 226: What it means for Union Members and Their Family Budgets," Backgrounder No. 1171, April 20, 1998
16. Nadia Q. Davies, testimony before the Subcommittee on Employer-Employee Relations, Committee on Education and the Workforce, U.S. House of Representatives, 105th Cong., 1st Sess., December 11, 1997.
    
17. Kenneth R. Weinstein, "From Meany to Sweeney: Labor's Leftward Tilt," Backgrounder No. 1094, The Heritage Foundation, October 4, 1996