Oregon’s Public Employee Unions and Pay-to-Play

Right From the Start

Sunday’s Oregonian carried an article on political contributions by corporations authored by David Sirota, a writer for web-based PandoDaily. Mr. Sirota is not a journalist or editorialist for the Oregonian nor for any of the wire services or major news services routinely used by the Oregonian. I point this out to demonstrate that the Oregonian had to go out searching for this one-sided article reflective of the general anti-business attitude of the Oregonian.

The essence of this article is to criticize Republicans for challenging the Security Exchange Commission’s prohibitions against corporate contributions from Wall Street investment firms who manage state pension and investment funds. These prohibitions are often referred to as “pay-to-play” prohibitions.

The bias of the author shows in his summary of the lawsuits filed by various state Republican parties and other interested parties:

“The GOP lawsuit aims to stop that promise from becoming a reality. In predicating that suit on a First Amendment argument, those Republicans are forwarding a disturbing legal theory: Essentially, they are arguing that Wall Street has a constitutional right to influence politicians and the investment decisions those politicians make on behalf of pensions.

“If that theory is upheld by the courts, it will no doubt help Republican presidential candidates raise lots of financial-industry cash. But it could also mean that public pension contracts will now be for sale to the highest bidder.” [Emphasis supplied.]

There are so many problems with this article that is difficult to recount them all. But, in large part, they all boil down to a “lack of symmetry.” For instance, no mention is made that in the 2008 presidential election, the primary beneficiary of Wall Street contributions was President Barack Obama who also continued to receive handsome contributions in the 2012 presidential election and who frequently targets Wall Street barons for high wattage private, fund raising dinners held by Mr. Obama seemingly on a weekly basis. No mention is made of the $300,000 payments made to probable Democrat presidential contender Hillary Clinton for “speeches” as she tours the nation in an attempt to establish her “bona fides.” (There are certainly no significant insights or strategies that Ms. Clinton brings to these speeches which are rich in bromides and slogans and total devoid of substance and clarity.) No, these payments are to buy access and they have been hugely successful in the cases of Mr. Obama and Ms. Clinton, but anti-Republican advocates woefully miss inclusion of Democrat activities in their condemnations.

But the real ‘elephant in the room” that Mr. Sirota ignores in the public employee unions.

Let’s use Oregon’s public employees unions as an example. Each election cycle the State of Oregon and its political subdivisions (counties, cities, school districts and regional authorities) collect and remit on a quarterly basis somewhere in excess of $130 Million to Oregon’s public employee unions. Ostensibly, the money collected is for dues to the public employee unions for use in traditional union activities such as organizing, collective bargaining and contract maintenance.

The public employees unions enjoy what is known as an “agency shop” arrangement with state and local governments – that means that you are required to join the union once you are employed by the state or local government agency. There are provisions for employees to decline membership – seldom used because of the barriers imposed by the unions – but even at that, the employee declining membership must still pay dues for “representation” by the union. There are other provisions that allow both members and non-members to decline to participate in “political activities” of the unions – seldom used again because of the barriers imposed by the unions – but even at that those declining participation must still pay for political activities that are not required to be reported under political disclosure rules.

And here’s the rub – it mirrors Mr. Sirota’s concerns about “pay to play.” Oregon’s public employees unions support almost exclusively Democrats. (There are rare instances when small amounts are contributed to Republicans or Independents in uncontested races or races in which polling demonstrates that the Democrat candidate will lose by a substantial margin.) This “exclusive” relationship is so dominant that the public employee unions are widely recognized as the financial arm of the Oregon Democrat Party. And the result is that today in Oregon every statewide elective office is held by a Democrat, all of whom have been the recipients of the public employees’ unions reportable and non-reportable largesse.

When the public employee unions sit down to negotiate a contract they are not dealing with a management with independent interests. Instead they are dealing with a management structure that owes their election in large part to the public employee unions participation. It is of little import, for instance, that the governor does not engage directly in contract negotiations because it is his appointees that do, and each of them recognizes the importance of abiding the unions interests to the governor’s (and collaterally to their) continuation in office. Pay-to-play in its rawest form. Not only do the government managers not have independent interests, they are dealing with someone else’s money – the taxpayers, with which they are demonstrably wasteful – and therefore have little incentive to bargain hard.

And it is more than just salary that is the subject of these negotiations. There are the patterns of raises. In many instance these come two a year – one a cost of living and the other a time-in-place” commonly referred to a “step increases.” They include work rules most of which are designed to limit production and thus require more employees than needed. They include benefits – Public Employee Retirement System (PERS) and healthcare – which most private sector employers acknowledge as being overly generous. And they include the requirement that the government entity pay the wages of certain members who will devote all of their time to union activities as opposed to agency activities.

But it is not just the pay-to-play elements of the public employee unions that are offensive. It is the requirement that public employees are forced into mandatory financial participation in a whole host of political activities undertaken as the primary focus of the public employees unions. Public employees can only avoid the political activities of the union that are subject to campaign finance requirements of state law. The vast majority of the activities which are political in nature and provide the underlying framework for all of the unions’ political activities are not reportable and therefore are unavoidable under the mandatory financial participation requirements of the “agency shop.”

Among these activities are:

• Candidate recruitment. This is the process of identifying and selecting Democrat candidates for pubic office. The process includes identifying, recruiting, interviewing, educating, testing and vetting potential candidates for specific offices and occurs throughout the entire state.

• Opposition research. This process has two parts. The first is to undertake the negative investigation of Democrat candidates to determine if there are any vulnerabilities as well as the means for inoculating the candidate against any such vulnerabilities. The second is to undertake the negative investigation of those opposing the Democrat candidates. Both of these require research in public records, criminal records, newspaper accounts and now, frequently, social media. It is time consuming and expensive.
• Issue identification. Support or opposition for a candidate is subject to campaign reporting requirements but identifying and supporting or opposing issues that may coincide with the candidate’s interests are not reportable. More and more the public employee unions engage in issue identification and advocacy in support of the position of candidates. The advertising costs are substantial.

• Issues polling. Polling of support or opposition for a candidate is subject to campaign reporting requirement but polling with regard to issues which coincide with the candidates interests are not reportable. Polling, regardless of purpose, is expensive and the sophistication of polling methodologies and results has made it even more so.

• Get out the vote. This is the process by which voters favorable to the unions’ position are identified and targeted to ensure that they vote to the exclusion of others. Over eight years ago a conservative campaign advisor told me that the cost of replicating the public employee unions get-out-the-vote efforts would cost in the neighborhood of $2.5 million for each election. Since that time the use of social media and data mining have made that process even more expensive, more sophisticated and more useful – as demonstrated by both of Mr. Obama’s presidential runs. There is no group available to Republicans or Independents that can replicate the unions’ activities in this area on a repetitive basis.

• Data mining of voters. The use of social media and the data mining techniques of companies like Microsoft, Google and Facebook have allowed political operatives to dissect the voting populace in order to influence their vote. Nobody does is better in Oregon than the public employee unions. The cost is large and results are phenomenal.

• Post-election analysis. After the actual election and based upon voter turnouts and post-election polling, the process begins again in selecting candidates, issues and messages.

These functions are costly, require vast financial and human resources AND go unreported. As such they are subject to the mandatory financing requirements of an agency shop and cannot be avoided by public employees who may oppose the political goals of the public employee unions and its candidates.

There is no comparison between the mandatory financial support required of public employees and the use of corporate resources to fund political activities. In the latter case you can either refuse to purchase the company’s products or refuse to purchase the company’s stock. As to the former, your only recourse is to lose your employment.

So before you get all high and mighty about whether Wall Street can bribe its way into managing pension funds, you might want to consider there are already laws, short of denying them free speech that address the issue. In contrast, the public employee unions are free to extract financial support for their political activities through mandatory dues participation from members and non-members alike – all with the full assistance and resources of the government to collect and remit that support on a quarterly basis.

There’s no question as to which is more venal.