Legal Favoritism

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I missed this when it was posted.  I'm posting it now because I think it is extremely important.  This article is based on two sources, a Wall Street Journal article on April 14th and a Big Government article by John Loudon.

According to the Wall Street Journal, a federal rule went into effect April 13th that would "require "project labor agreements" for all construction projects larger than $25 million. This means that only contractors that agree to union representation are eligible for work financed by the U.S. taxpayer."   This is the result of an executive order signed by President Obama early in his presidency. 

The Big Government article points out:

"The cronyism that the Wall Street Journal discusses is the cynical modification to these policies that began creeping into contracts about 20 years ago.  It stipulates that no matter what the jurisdictional issues are, all of the workers will be supporting the union pension fund."

There are a few problems with this law.  Only 15% of construction workers are unionized.  To demand that all government construction work be unionized seriously hampers the competitive bidding process--non-union contractors cannot submit bids. 

A White House economist stated that this would cut costs, but according to the Wall Street Journal, that is simply not true:

"Mr. Bernstein could check all this with the Department of Veterans Affairs, which last year commissioned an independent study showing the Obama project labor agreements would likely raise the VA's construction costs for hospitals by as much as 9% in three of five markets--Denver, New Orleans and Orlando. In two others, New York and San Francisco, the study predicted a mixture of small cost increases and small cost savings."

According to Big Government, pensions are the root of the problem:

"The worst part of the Obama executive order is the real reason for it.  According to a September, 2009 report by Moody's Investor Services, construction union pensions in 2008 were just 54% funded.  Just like Social Security, the promised union pensions were too fat.  They were built on the similar demographic flaw of social security.  The system would pay full benefits to the earliest retirees, but would only be able to continue to do that if the ratio of workers to retirees is sustainable.  So what does it mean when the ratio fails?  How do you restore the footing on a plan so underfunded when the ration of worker to retiree continues to get worse?"

The question is, "What is the solution to the problem of favoritism in government?"  The answer actually is fairly simple.  Big Government concludes:

"As broad as the problem is, there are many ways to fight it.  If you are a contractor, join your local merit shop contractor association.   Let your Congressional delegation know that you are 100% against private pension fund bailouts.  Meanwhile, pay attention to all elections, not just those for partisan offices.  At least take note whether your public boards are working for you.  Finally, consider becoming a candidate yourself.  There may not be as much glamor in a City council seat, but there just may be an ABC chapter that is hungry for a candidate, willing to donate some seed money.  Help them help you."

Paying attention to politics at all levels has always been a good idea, but I don't think it has ever been as necessary as it is now.  If Americans do not begin to vote against the kind of favoritism that this administration is showing toward unions (violating backruptcy law in government takeovers, limiting the bidding process on construction projects, etc.), we are going to find ourselves living in a country where freedom is a distant memory.

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This page contains a single entry by Granny G published on April 26, 2010 6:31 AM.

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