Labor Officials, Lawmakers Warn AFL-CIO on Social Security Politics

Organized labor has made little secret of its opposition to the Bush administration’s proposal to reform the Social Security system.  The Labor Department and certain ranking members of Congress want to make sure that the unions, led by the AFL-CIO, keep their campaign in bounds.  DOL recently issued a reminder; one might not be enough.   


In a letter dated May 3, Deputy Assistant Secretary of Labor Alan Lebowitz informed the AFL-CIO that unions may not use financial services firms’ positions on the Social Security issue as a reason to withdraw pensions from those firms.  The letter did not overtly accuse the labor federation or its member unions of breaking any laws.  But it did request the organization to clarify to member unions that their choice of pension fund managers, by law, must be based on fiduciary responsibility toward present and future retirees; the views of pension managers on the policy issues are irrelevant.  Additionally, the DOL reiterated, unions may not divert any portion of their pension funds to pay for political activity.  


Rep. John Boehner, R-Ohio, chairman of the House Committee on Education and the Workforce, and Rep. Sam Johnson, R-Tex., a subcommittee chairman, believe unions are in fact guilty of rogue behavior.  It was these lawmakers’ concerns back in March, in fact, that prompted the Labor Department’s letter of opinion.  Boehner already has called for an investigation of the AFL-CIO.  Financial services companies involved in pensions have complained as of late of union harassment because of their views on Social Security reform.


Labor officials deny they are harassing anyone.  Damon Silvers, associate general counsel for the AFL-CIO, accuses Boehner and Johnson of pressuring a federal agency to intimidate unions.  “That’s not how things work in this country,” he said.  Yet the federation acknowledges that it has asked Wachovia and Charles Schwab, both of whom do a sizable business managing union pension fund accounts, to reconsider their support of the White House plan.  Unions also have staged high-profile protests in New York, San Francisco, Washington, D.C. and about 70 other U.S. cities, many of them outside offices of brokerage firms that have voiced support of the proposal.  The AFL-CIO has focused special attention on pharmaceutical maker Pfizer because company CEO Hank McKinnell also serves as chairman of Business Roundtable, a Washington-based association that supports the plan.  


Business groups see the DOL letter as a hopeful sign.  “It clarified the stuff we’ve been harping about,” said Derrick Max, head of the Alliance for Worker Retirement Security.  “Hopefully, it’s over.”  If the Labor Department does decide to investigate the unions, Max vowed that his group would share evidence it has collected showing organized labor to be “over or around the edge” of the law.  (Roll Call, 5/5).