Obama Caught Between Two Masters - Goldman Sachs & SEIU - Part 2. SEIU

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First Published September 24, 2009

Obama Caught Between Two Masters - Goldman Sachs & SEIU - Part 2. SEIU

Radical even among unions, the Service Employees International Union has staked a name for itself building it's two million members not just by organizing the workplace but by stealing members from other long established unions.

The genius behind this radical labor movement is Andy Stern, yet another of the many Obama backers who were youthful members of the most radical organizations of the 1960's. Andy was in the socialist SDS, Students for a Democratic Society, before setting off on a life of organizing. To his credit, SDS was rather radical but never endorsed the use of terrorist bombings like other socialist groups.




Stern, perhaps the most loved and most hated member of the labor movement in modern America, began his career as a community organizer and never looked back. During his years as recruitment coordinator for the President of the AFL-CIO he consistently pushed for revitalization of the labor union movement and refocusing American unions to consolidate and gain bargaining power.

By 2005 he was head of the SEIU and was pushing his boss, John Sweeny, President of the AFL-CIO to make reforms or he would lead a walkout from the union federation. Sweeny balked and Stern made good on his threat. Within a year he formed the Change to Win (CTW) Labor Federation, getting the powerful Teamsters and five other unions to join forces with the SEIU. It was the first new labor federation in America in 50years.



Meanwhile he targeted other unions in a radical move to build his SEIU and his membership soared to 2 million this year, the largest labor union in America, with nearly 1 million health care workers. Parlaying the millions of dollars in membership dues and lack of unions in the health care industry Stern claims he spent $60.7 million to get Obama elected. It would be the largest union and special interest campaign financing ever given to a single candidate.

What was the price of the financing for Obama? Perhaps it is most obvious in the actions by the new president. Within ten days of becoming president, on January 30, 2009, Obama signed the first three Executive Orders wanted by the unions.

The first executive order requires employers with federal contracts above $100,000 in value to post a notice in the workplace informing their employees of their rights under the National Labor Relations Act (NLRA), including the right to join a union. This order also repeals Executive Order 13201, issued by President Bush in 2001, that required federal contractors and subcontractors to post so-called “Beck notices.” Such notices, named after the Supreme Court’s decision in Communication Workers v. Beck, 487 U.S. 735 (1988) informed employees covered under the NLRA that they could not be required to join a union or maintain union membership in order to retain their jobs and that employees who are subject to a union security clause and choose not to be union members may object to the purposes for which mandatory union dues are used.

The second order applies to federal contractors who provide services to government buildings. While there are several exemptions, under this new executive order, when a federal agency changes contractors, the new contractor will be required to offer jobs to the non-supervisory employees of its predecessor. This order is designed to try to ensure that when a unionized contractor is replaced, its successor will be obliged under existing labor laws to bargain with the original contractor’s labor union.

Finally, the third order prevents federal contractors from being reimbursed in federal funds for money spent to oppose (or support) union organizing efforts among their employees. The First Amendment prevents government from interfering with an employer’s right to voice its opinion on the merits of unionization. Similar measures have been enacted in some states, with respect to their state contractors, but the Supreme Court ruled in 2008 that California ’s law to this effect was invalid because it was preempted by the National Labor Relations Act. Although a federal executive order is different than state legislation, there may be legal challenges to this executive order’s constitutionality, including a possible violation of the First Amendment. Unless and until the order is successfully challenged, however, federal contractors who still wish to oppose union organizing campaigns will need to consider the effects of this order on their ability to continue doing so without jeopardizing their federal contracts.




In another boost to organized labor, just six days later President Barack Obama on February 6, 2009, signed a fourth Executive Order, effective immediately, authorizing executive agencies of the federal government to require every contractor or subcontractor on a large-scale construction project to negotiate or become a party to a Project Labor Agreement (PLA) with one or more labor organizations. This is the fourth pro-labor Executive Order signed by President Obama since January 30th.

A PLA is a pre-hire collective bargaining agreement between contractors and one or more unions that establishes the terms and conditions of employment for a specific construction project. The stated rationale for this Order is that a PLA can promote the “efficient and expeditious completion of Federal construction contracts” by ensuring a “steady supply of labor” and the avoidance of “labor disputes” which can delay the project.

This Executive Order, which specifically revokes contrary Executives Orders issued by former President George W. Bush in 2001 and reinstates a Clinton-administration rule, was immediately hailed by organized labor. "This is yet another reason for working families to be grateful that we have a champion in the White House," Teamsters General President Jim Hoffa stated. In the same vein, Mark H. Ayers, president of the AFL-CIO Building and Construction Trades Department (BCTD), praising President Obama, stated: “The Bush anti-PLA executive order was exactly the type of special interest-driven politics and policy that American voters rejected overwhelmingly last November…. [Project Labor Agreements] provide maximum benefit to construction users; union and non-union workers; union and non-union contractors; lenders and insurance companies; and taxpayers.”




This was only the beginning.

Though stymied on the Employee Free Choice Act, (the Card Check Act), abolishment of the secret ballot in elections which would make it easier for workers to form unions, organized labor claimed a big consolation prize: the massive application of a law guaranteeing “prevailing wages” for hundreds of thousands of construction workers hired under President Obama’s economic stimulus program.

Secretary of Transportation Ray LaHood implemented guidelines to expand the scope of the 1931 Davis-Bacon Act, according to a department spokesperson. LaHood’s action will put a floor under wages paid for the more than 578,000 construction jobs that the White House estimates will be created by the end of 2010. It also marks a sharp reversal of U.S. policy on public works projects under President Bush, who in September 2005 suspended Davis-Bacon in the Gulf States after Hurricane Katrina.

Such is the power of Stern that Obama once said he consulted with SEIU on every major decision he makes. Proof of the power is that the White House, when it became obvious that the Obama healthcare initiative was in danger of losing support and faced with a series of contentious town hall meeting in August, brought Stern and SEIU in to manage the campaign for approval.




Stern dispatched the SEIU mobile centers to coordinate town halls for nervous members of the House and Senate all over the nation. They were to control and counteract the opponents to the Obama healthcare proposals including filming events with their own video teams and feeding footage to the media to make the opponents look bad. Some say the tactics of the purple clad SEIU operatives was like thugs and one SEIU staffer was arrested for beating up an older man.




Even House Majority leader Steny Hoyer was fearful enough to hire SEIU to manage his town hall where they limited questions from the crowd to 20 total when over 1500 people were at the meeting and several hundred more were outside. Hoyer spent over one hour spouting the benefits of the Obama plan before people were allowed to take the mike and in spite of the SEIU efforts to control things the crowd began to boo his responses.

In September another victory for the unions when Obama imposed heavy import tax duties on imported Chinese tires at the request of labor unions, an action against that threatens to spark a trade war between the US and China. China has already threatened to add a tariff to imports of US poultry and vehicles. The action by Obama increased the 4% tariff on Chinese tires by 35%.

Now Congress is back and it is time to see if the big payoff is made to the SEIU, passage of health care reform that allows, even gives favorable treatment, to allow Stern to organize the health care industry in America. Over 17 million people work in health care and related social services in America. SEIU now represents about 1 million of these workers while the Communications Workers of America represents about 140,000 meaning the pool of non-unionized health care workers is huge.




SEIU expects to be the primary beneficiary of the health care reform using it to open doors to unionizing this massive prize. The union dues and lobbying wealth it would generate would dwarf current spending by the unions. A public option would make it even more desirable as public workers would be much easier to organize.

Unfortunately, the more SEIU has tried to function like a well oiled corporation the more difficulties it has encountered so it remains to be seen if Stern can wrap up the gigantic payback. If anyone can he can. However, his aggressive tactics have alienate many other unions and even some of the unions he has swallowed up are now protesting their treatment and threatening to withdraw from SEIU because of his heavy-handed tactics.

Corruption in SEIU is extensive, especially in California where battles between unions and between union leaders, most instigated by SEIU, threaten to tear apart the move to grow the unions. One union official in California calls Stern a "threat to the soul" of the union movement. Claims that members dues are being used to foster socialism and other causes not approved by members, even funding programs like the disgraced ACORN program, are a source of concern.




But the most serious threat to SEIU controlling the union movement in America may be the lavish spending to buy politicians, like the $60.7 million spent on Obama. Ironically, Obama and Congress may be the only thing standing between the union and bankruptcy. Stern led the condemnation of the greed and mismanagement on Wall Street. Now he stands to fall into the same trap as his Wall Street enemies.

According to the New York Daily News, in spite of the fact Stern undertook a bitter campaign against the Bank of America and even got the CEO thrown out last spring he was borrowing an astonishing $87.7 million from the bank at the same time. In another industry it would probably be called protection money. He borrowed another $15 million from the only union owned bank in America, the Amalgamated Bank. SEIU recently reported $33 million in assets and $102 million in liabilities.

The SEIU cannot afford delays in the payback by Congress and Obama, they need money and they need it fast. There are times the investor better have the money to invest before making the big jump. If SEIU spent $60.7 million on Obama and health care yet had to borrow $102 million to cover it the accounting does not seem to add up. It will be interesting to see if Obama, Pelosi and the Democrats can maintain the sense of urgency they need to approve the bill and help SEIU or if the public discovers the truth first.

In the tale of the two Masters, the SEIU has no chance against Goldman Sachs when it comes to deciding which master will win out with the Obama administration. Goldman has billions to manipulate while SEIU must borrow money to play the money game. So far the return to Goldman has already been in the billions of dollars while the token victories given to SEIU have not even made a dent in paying their debts.

Nor can SEIU match the vast army of former Goldman executives strategically placed throughout the Obama administration and throughout the world of finance and politics. No one has ever questioned the loyalty of this massive force. Andy Stern may have attended the Wharton School of Finance but Goldman wrote the course and probably financed the school's endowment fund.

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