Union Corruption and the Obama Presidency

Don't be hoodwinked, don't be bamboozled, don't fall for the okey-doke
Don’t be hoodwinked, don’t be bamboozled, don’t fall for the okey-doke…

If any among my dear readers have ever flicked on a light switch at midnight in a kitchen infested by roaches, they will have seen the stomach-turning sight of a room in sudden, swarming motion as hundreds of roaches scuttle for the cracks at the edges of the room. Roaches don’t like the light. They prefer to operate in the dark. The way to cure a roach infestation is to keep the light on and clean the house, throwing out nesting materials (even behind walls) and poisoning the roaches where they hide. Unfortunately, all too many people, in the face of an infested kitchen, simply shudder, turn off the light, and go back to bed. A particularly determined denier of roach-reality might prefer to paint over the light fixtures with black paint. That would hide the roaches from sight for good.

Apparently, under the Obama administration, the Department of Labor doesn’t mind roaches so much as it curses the light that reveals them and tells us, the Americans who live in the house, to go back to sleep. For instead of fostering transparency, one of Obama’s key words when running for president, the Dept. of Labor fosters opacity when it comes to what unions are doing with the money they hold on behalf of their members, just like the AFL-CIO wants.

The Indiana State Teachers Association’s Insurance Trust exists to pay benefits for disabled teachers. It has $19 million in assets against $86 million in liabilities, is the subject of a FBI investigation, and is being taken over by the NEA. The ISTA’s trust is in such bad shape because of funny business from the former executive director and the investment broker he chose to manage the trust. Most likely taxpayers will be stuck with the bill. James Sherk and Dan Lips write about the mess for NRO.

Sunlight protects against corruption and unethical practices. Congress passed the Labor Management Reporting and Disclosure Act (LMRDA) in the wake of scandals in the 1950s involving ties between organized labor and organized crime. Congress believed that workers had a right to know how their unions spent their dues. Lawmakers hoped that transparency would discourage kickbacks to the mob.

For over 40 years, however, the Department of Labor barely enforced the law. The disclosure forms allowed unions to list multimillion-dollar line items for “other” and “miscellaneous” expenses with no further details. In practice, the law did nothing to hold unions accountable.

Elaine Chao, President Bush’s labor secretary, made changing that a priority. Her Labor Department enacted reforms that required unions to itemize their expenses and meaningfully disclose their finances. By the end of her tenure, Secretary Chao (who now works with us as a distinguished fellow at the Heritage Foundation) had updated the LM-2 union financial disclosure form, the LM-30 conflict-of-interest-reporting form, and the T-1 forms for union trusts.

Other unions have been caught recently with their hands in the cookie jar: SEIU for instance. The Obama administration’s Department of Labor is rolling back Secretary Chao’s transparency reforms and returning to the previous, opaque standard for union financial reporting. Union members might as well look forward to their pension funds and insurance trusts going broke, just like the ISTA did. For the teeth of the LMRDA are being removed.

Is this the transparency Obama promised? Or is it the opacity his rivals saw in him? To echo the words of Obama:

Don’t be hoodwinked, don’t be bamboozled, don’t fall for the okey-doke no matter what Barack Hussein Obama may say.

Truth to power!


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