Obama Set to Block Labor Department Transparency Rules

President Barack Obama frequently has vowed to make ethics in government a top priority. On January 21, his first full day in office, he announced, “Let me say it as clearly as I can: Transparency and the rule of law will be the touchstones of this presidency.” He had timed his words to coincide with separate executive orders that froze the pay of White House officials whose salaries exceeded $100,000, imposed gift bans on political appointees, and restricted lobbyists’ access to government jobs.  Yet this “new era of openness,” as the president termed it, apparently hasn’t extended to oversight of supportive organizations – like labor unions.

On February 3, the U.S. Department of Labor (DOL) stated that it would impose a 60-day delay on implementing a final rule issued during the waning days of the Bush administration. The action was based on a memorandum signed on January 20, Inauguration Day, by Obama’s chief of staff, Rahm Emanuel, advising all federal agencies to extend by 60 days the effective date of regulations not yet published in the Federal Register. The administration may deny it, but the move gives every appearance of political payback.

DOL’s Office of Labor-Management Standards (OLMS) on January 16 had issued a lengthy final regulation (RIN: 1215-AB62) appearing in the January 21 Federal Register and set to take effect on February 20. The rule change would: 1) require disclosure of certain receipts and compensation not covered in changes to Form LM-2 introduced in 2003 and upheld in court two years later; and 2) authorize the department to rescind the right to file the simpler Form LM-3 if a union had been habitually delinquent or deficient. The intent was to keep union officials clear of conflicts of interest.

The White House has gone on the offensive even though the full Senate has yet to approve the nomination of Hilda Solis as labor secretary. Not only do Obama’s people seek a 60-day delay on the new rule, they appear to want to rescind it. The administration transition team earlier reportedly favorably commented on an AFL-CIO memo calling for the administration to roll back all Bush-era DOL disclosure rules. The AFL-CIO for years has been insisting that toughened record-keeping requirements are unnecessary and costly. Yet that claim doesn’t square away with the record. The first year of compliance with the expanded LM-2 form, for example, cost the federation only $54,150. And the added required details have proven useful in detecting numerous acts of embezzlement and fraud, especially as all submitted forms must be available for online viewing.

Opponents of the administration note that union officials are likely to abuse the trust of members in absence of strict Labor Department monitoring, especially in non-Right to Work states where maintaining one’s job is conditioned upon dues payments. In a letter to OLMS Director Denise M. Boucher dated February 9, Mark Mix, president of the Springfield, Va.-based National Right to Work Legal Defense Foundation, explained:

I am writing to urge you to prevent delay in implementation of final rule RIN 1215-AB62 regarding Labor Organization Annual Financial Reports. At a time when many are questioning the perks and special benefits of corporate executives, this is not a time to continue the concealment of union executive perks and benefits. During this tight economy, the rule that the Obama White House intends to delay provides union members and non-members who are forced to pay union fees as a condition of continued employment with valuable information about union officers’ use of their money.

Mix provided a few examples of union sleight of hand that the latest revised LM-2 form likely would discourage. The International Association of Machinists spends millions annually on its LearJet, but the actual cost of each flight does not correspond to any one person’s name. In 2005, Plumbers Local 98 in Michigan disbursed $491,252 worth of fringe benefits to nine full-time officers, an average of nearly $55,000 per officer. If the Obama administration cancels the new rule, it would hamper the ability of union members to see if their representatives are paid in accordance with their organizations’ constitution.

The Obama White House doesn’t seem impressed by such appeals. The president and his top aides owe much of their careers to organized labor. Chief of Staff Rahm Emanuel previous to his current job had chaired the Democratic Congressional Campaign Committee. During his tenure, the committee had received over $1.1 million in direct contributions from organized labor during the 2008 election cycle. And the Service Employees International Union donated $27 million in PAC money to Obama’s presidential run. Obama knows who his friends are, which is why he won an endorsement from the SEIU early in 2008. “I’ve spent my entire adult life working with SEIU,” he noted at the union’s Political Action Conference in September 2007. “I’m not a newcomer to this. I didn’t just discover SEIU on the campaign trail…So we all know what we need to do to reverse the anti-labor policies of this (Bush) administration.” A month into office, President Obama has proven to be a man of his word. Unfortunately, his word may provide a license to steal for union officials, business agents and office employees. (speroforum.com, 1/9/09; Daily Labor Report, 2/2/09; CCH Aspen Publishers, 2/6/09; National Right to Work Legal Foundation, 2/9/09).