Wintery Knight

…integrating Christian faith and knowledge in the public square

Twinkies company liquidates due to demands of greedy labor union

The Wall Street Journal explains.

Excerpt:

Hostess Brands is going to liquidate, a blow to lovers of Twinkies, Wonder Bread and Drake’s Coffee Cakes all around the globe.

But CEO Gregory Rayburn told CNBC today that as the company winds down its operations after failing to reach an agreement with a union, it will try to sell its various brands. There are 30 separate brands under the companies sugary umbrella.

[...]Rayburn, a restructuring veteran brought in for the bankruptcy, did not shy away from blaming the striking bakers’ union for the liquidation after the company put out an ultimatum earlier this week for them to return to work or face this consequence. He told the television network the union hasn’t “returned our calls in a couple of months.”

There is a silver lining to this story, though:

The reason: insurmountable (and unfundable) difference in the firm’s collective bargaining agreements and pension obligations, which resulted in a crippling strike that basically shut down the company… [the company] was unable to survive empowered labor unions who thought they had all the negotiating leverage…  until they led their bankrupt employer right off liquidation cliff.

[...]Hostess’ numerous brands will be bought in a stalking horse auction by willing private buyers, however completely free and clear of all legacy labor and pension agreements which ultimately led to the company’s liquidation.

Now that’s progress. But what causes union bosses to be so uninformed and ignorant of basic economics? How is it that they do not understand how businesses work?

Consider this quote from Richard Trumka about the looming fiscal crisis:

AFL-CIO President Richard Trumka has declared there’s no fiscal cliff and any address of runaway government spending is just “a manufactured crisis.”

[...]“‘Take what the media are calling ‘the fiscal cliff.’ There is no fiscal cliff!” Trumka thundered at a National Mediation Board Conference Thursday, sounding like an alcoholic pleading for one last swig well before he hits rock bottom.

[...]“What we’re facing,” he said Thursday, “is an obstacle course within a manufactured crisis that was hastily thrown together in response to inflated rhetoric about our federal deficit.

“But all the deficit chatter has distracted us from our real crisis — the immediate crisis of 23 million unemployed or underemployed workers. It’s time to protect Social Security benefits. It’s time to protect Medicare and Medicaid benefits. And it’s time to raise taxes for the richest 2%,” he went on.

In short, Trumka is arguing that there’s no such thing as too much government spending, that deficits don’t matter and that entitlements cannot be cut. Such denialist thinking is beyond irresponsible in the face of a $16 trillion debt, highest on global record and a sign of an irrational agenda often followed by would-be tyrants.

Trumka is trying to intimidate congressional Democrats into intransigence on a debt deal with Republicans to restore the solvency of the U.S. Instead, he wants them to stand fast on the idea that the debt, deficit and entitlements can be addressed simply by taxing higher-income earners who already account for more than half of federal income-tax revenue.

This is the kind of irresponsible thinking that has triggered riots in Greece and Spain — a belief that the money is there and only the meanness of austerity is keeping the common man from his share.

In reality, the money is not there — the pot is empty. Medicare and Social Security are now on “unsustainable paths,” paying out more in benefits than they take in, with their trust funds projected to run dry by 2024 and 2033, according to their own trustees.

Socialism is meeting its natural end — which, in the words of former U.K. Prime Minister Margaret Thatcher, is when it “runs out of other people’s money.”

Unions don’t make anything on their own, only businesses do. And they just don’t understand that. They don’t understand that at some point it is possible to suck too much blood from the host so that the host dies.

I feel bad for the conservatives who are forced to join these labor unions and pay dues to greedy union bosses who don’t understand capitalism or economics. My recommendation is that individual states pass right-to-work laws. Right-to-work states have created FOUR TIMES as many jobs as forced unionization states, since 2009. That’s what happens when you embrace freedom and capitalism.

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What is issue 2? Should you vote no on Ohio issue 2?

In the 2010 mid-term elections, Republican John Kasich won the governorship and promised to balance the state’s budget by reining in the state’s spending on salaries and benefits for public sector union employees. To accomplish this, the Ohio legislature pass Senate Bill 5. However, an effort is on the ballot to repeal the law, and Ohio voters will get a chance to keep or scrap the law on Tuesday, November 8th, 2011.

Here’s what Ohio’s State Issue 2 is all about:

Issue 2 makes some very fair and common sense requests of our government employees to give local communities the flexibility they need to get taxes and spending under control, while providing the essential services that we rely on.

  • It allows an employee’s job performance to be considered when determining compensation, rather than just awarding automatic pay increases based only on an employee’s length of service.
  • It asks that government employees pay at least 15 percent of the cost of their health insurance premium. That’s less than half of what private sector workers are currently paying.
  • It requires that government health care benefits apply equally to all government employees, whether they work in management or non-management positions. No special favors.
  • It asks our government employees to pay their own share of a generous pension contribution, rather than forcing taxpayers to pay both the employee and employer shares.
  • It keeps union bosses from protecting bad teachers and stops the outdated practice of laying off good teachers first just because they haven’t served long enough.
  • Finally, it preserves collective bargaining for government employees, but it also returns some basic control of our schools and services to the taxpayers who fund them, not the union bosses who thrive on their mismanagement.

Even under the reforms of State Issue 2, Ohio’s government employees will still receive better pay, better health care and better retirement benefits, on average, than the vast majority of Ohioans who work in the private sector.

There are a number of myths going around about Issue 2, and it’s important to set the record straight, so I’ll do that below.

Ohio Average Pay: Public vs. Private

Ohio Average Pay: Public Unions vs. Private

Myths and truths about Ohio State Issue 2

Here’s a common myth:

State Issue 2 would “cut salaries and benefits.”

The truth:

Issue 2 would not cut salaries or benefits for any government employee. Employees would simply be asked to pay a modest share of their benefits, just like employees in the private sector do. For health care coverage, they would pay at least 15% of their overall plan. (Many local government employees currently pay less than 9% of their health care premium, while the average private sector worker pays upwards of 30%.) In addition, employees would be required to pay their personal share of a retirement plan (only 10%), rather than asking taxpayers to pay that share. That’s not too much to ask at a time when many private sector workers get no retirement benefit at all. Finally, Issue 2 requires that benefits apply equally to all public employees, so no one gets special treatment.

And another common myth:

State Issue 2 will eliminate government employee pensions.

The truth:

Government employees will still get a very generous pension benefit – an annual payment that averages their three highest annual salaries. That’s a pretty nice deal, when many private sector workers get no retirement benefit at all. State Issue 2 only ends a practice where some government union contracts require taxpayers to pick up the tab for BOTH the employer AND employee shares of a required pension contribution. In this economy, it’s simply not right to ask struggling taxpayers to foot the bill so government employees can get a free retirement. Issue 2 simply says government employees should pay their required share (10 percent) and taxpayers will contribute the employer share (14 percent).

Another myth:

State Issue 2 will cut teacher salaries.

The truth:

That’s one of the scare tactics government unions are using to turn people against these reforms. Nothing in Issue 2 determines salary levels. It only ends the practice of handing out automatic pay raises, or “step” increases, and longevity pay – or bonuses just for holding the job for a certain period of time. Issue 2 also asks that performance be added as a factor in teacher compensation, a goal President Barack Obama set out in his national education policy in 2009.

And another myth:

State Issue 2 will cost jobs

The truth:

Just the opposite is true. Ohio’s state and local tax burden ranks among the top third in the nation. As a result, companies large and small have left our state in pursuit of better tax incentives elsewhere, taking hundreds of thousands of jobs with them. If Ohio hopes to compete for new job growth, we have to make our state a more affordable place to live, work and do business. That starts with getting the cost of government under control so we can direct more of our limited resources into economic development, community revitalization and better schools.

More myths about Ohio State Issue 2 are corrected on this page.

Newspaper endorsements

So far, Issue 2 has been endorsed by several Ohio newspapers, including the biggest ones.

The Cleveland Plain Dealer:

The fiscal picture of local governments and school districts, especially, will improve as they are able to right-size their work forces and their expenditures on services. That will happen over time, not overnight, as new contracts are established.

Repeal SB 5, though, and it’s going to be awfully hard for local governments to manage their payrolls without resorting to larger-scale layoffs than would otherwise be necessary. And local governments will continue to be hamstrung by anti-merit seniority rules that lead to worker complacency and protect dead weight and time-servers.

Voting YES on Issue 2 will prevent layoffs by keeping public sector wages and benefits in line with what the private sector can afford to pay.

The Columbus Dispatch:

Despite the insistence of opponents, the effort to reform Ohio’s out-of-balance collective-bargaining law is not an expression of disrespect for or dissatisfaction with Ohio teachers, police officers, firefighters and other government employees. It is a much-needed attempt to restore control over public spending to the public officials elected to exercise that control.

It does not assert that public employees are worth less than the compensation they’re receiving, only that the compensation has grown faster than the public’s ability to pay for it.

[...]With more ability to control the escalation of salary and benefit costs, governments won’t be forced as often to impose layoffs, and might be able to afford to keep even more police and firefighters on the streets.

Again, no one is saying that public sector workers don’t matter – the question is whether we can afford to give them better wages and benefits than the private sector workers who are their customers and their employers. Public sector workers work for the public, and the public can only afford to pay so much.

Conclusion

Government employees are paid 43% more than private sector employees, in salary and benefits:

I think that people who care about the long-term prosperity of Ohio should vote “YES” on Issue 2 to make public and private salaries and benefits MORE EQUAL. Ohio is facing enormous economic pressure from the global recession, and everyone has to make sacrifices. Now is not the time for public sector workers to insist on higher wages and benefits, especially when the private sector workers who pay their salaries don’t make as much money, nor do they get the pensions, nor do they get the better job security. Ohio voters can certainly go back and renegotiate union salaries and benefits when Ohio is out of the recession.

Click here to learn more about Ohio State Issue 2.

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Wisconsin Supreme Court strongly upholds Walker’s union restrictions

Remember when that awesome Republican governor Scott Walker limited the unions from extorting massive amounts of money from the state using their collective bargaining powers? Well, some judge halted the legislation. That judge has now been overruled by the Wisconsin Supreme Court.

Here’s the story from the Milwaukee Journal-Sentinel. (H/T PJ Tatler)

Excerpt:

Acting with unusual speed, the state Supreme Court on Tuesday ordered the reinstatement of Gov. Scott Walker’s controversial plan to end most collective bargaining for tens of thousands of public workers.

The court found that a committee of lawmakers was not subject to the state’s open meetings law, and so did not violate that law when it hastily approved the collective bargaining measure in March and made it possible for the Senate to take it up. In doing so, the Supreme Court overruled a Dane County judge who had halted the legislation, ending one challenge to the law even as new challenges are likely to emerge.

The changes on collective bargaining will take effect once Secretary of State Doug La Follette arranges for official publication of the stalled bill, and the high court said there was now nothing to preclude him from doing that. La Follette did not return a call Tuesday to say when the law would be published.

[...]The court ruled that Dane County Circuit Judge Maryann Sumi’s ruling, which had held up implementation of the collective bargaining law, was in the void ab initio, Latin for invalid from the outset.”The court’s decision …is not affected by the wisdom or lack thereof evidenced in the act,” the majority wrote. “Choices about what laws represent wise public policy for the state of Wisconsin are not within the constitutional purview of the courts. The court’s task in the action for original jurisdiction that we have granted is limited to determining whether the Legislature employed a constitutionally violative process in the enactment of the act. We conclude that the Legislature did not violate the Wisconsin Constitution by the process it used.”

The court concluded that Sumi exceeded her jurisdiction, “invaded” the Legislature’s constitutional powers and erred in halting the publication and implementation of the collective bargaining law.

Ace of Spades explains what the phrase “ab initio” means.

Excerpt:

Generally, when a higher court calls bulls**t on a lower one, it’s called a remand, a declaration that the lower court got it wrong, and to try again.

Commenters are telling me the court ruled here ab initio, which (context clues, it’s been forever since I did anything law-oriented) means it’s expunged from memory altogether as being improperly entertained from the start, which means there is no remand to the lower court to try again. The higher court has said “Not only did you get this wrong, you got it so wrong we don’t trust you with another bite at the apple, so we’re directing your decision from here. It’s over. Done. Finished. Kaput.”

And more. This judge, Sumi, attempted not to rule a law unconstitutional but a bill — a not-quite-yet-a-law — unconstitutional, as she ordered the law to be unpublished, that is, to remain a bill without going to the final step to make it a law.

Ace actually brought out the flaming skull and the bear for this story… so it must be big.

Here’s some other good news from Wisconsin – they just passed a bill to legalize concealed carry. That’s good for law-abiding citizens and bad for criminals, who will now have a tougher time committing crimes.

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Veronique de Rugy debunks myths about public sector pension liabilities

From Reason magazine. (H/T Hyscience)

Bullet point summary:

Myth 1: Unfunded state pensions do not represent an immediate threat and are therefore not in crisis.
Fact 1: In the best case scenario, some state pension funds will run out as soon as 2017. And the longer the states wait to fully fund their pensions, the more drastic the financial consequences will be.

Myth 2: State debt accurately reflects state liabilities. And state default is not a concern because the federal government will bail the states out before they reach that point.
Fact 2: Many government pension liabilities are kept off the books, so most states and cities underestimate their actual debt.

Myth 3: State and local workers are not overpaid. And even if they are, changing their compensation won’t make a difference.
Fact 3: While this is a complex issue, the total compensation package for state workers does tend to exceed that of their private-sector counterparts.

Myth 4: The financial crisis, which caused a depreciation of pension assets, is the real culprit behind pension underfunding.
Fact 4:
While the recession dealt a severe blow to state pensions, the problem of pension underfunding dates back to the early 2000s. Many states had already failed to cover the cost of promised benefits even before they felt the full weight of the Great Recession.

And conclusion:

Here’s the bottom line: We can argue endlessly over when the pension plans will run out of cash, or what the true value of the unfunded liabilities is. We can even debate what the true meaning of being broke. But there is one issue where there is no room for debate. Once the pension plans run out of money, the payments will have to come out of general funds, meaning out of the pockets of taxpayers. If the states want to avoid this, they must push through reforms as soon as possible. A good first step would be to switch to accounting methods that show the true market value of their liabilities. Once those methods are in place, lawmakers should consider moving away from defined benefit pensions.

What states like Wisconsin and Ohio are doing is completely necessary. This is a real crisis, and we need to act now to make sure that taxpayers are not squeezed when the money runs out.

Filed under: News, , , , , , , , , , , , , ,

Ohio Republicans pass bill to cut bloated union salaries and benefits

From the Wall Street Journal.

Excerpt:

Ohio state senators narrowly approved a bill that would prohibit public-employee unions representing 400,000 state employees from bargaining over health benefits, pensions and working conditions.

While national attention has focused for weeks on a similar battle in Wisconsin, the vote, by 17-16 in Ohio’s Republican-controlled Senate, virtually ensured that the Buckeye State will become the first to strip collective bargaining rights from public employees as a means of grappling with gaping budget deficits.

The bill now goes to the House, where the Republicans have a 59-40 majority. If approved, as expected, it will move for signature to Republican Ohio Gov. John Kasich, who supports the bill.

[...]Republican lawmakers say worker pay and benefit cuts are needed to offset projected budget shortfalls. “If we’re going to grow in Ohio, we cannot raise taxes,” Republican state Sen. Keith Faber said Wednesday.

[...]Union officials began a coordinated effort to try to block bills in Wisconsin and Ohio that would curtail collective bargaining rights for public workers, and right-to-work legislation introduced in 13 states, including New Hampshire and Missouri. Those bills would allow workers in the private-sector to opt out of paying dues or belonging to a union. Such legislation threatens the unions’ funding and their political clout heading into the 2012 elections.

In Wisconsin, Republican state senators passed a resolution fining the 14 Democrats who left the state Feb. 17 to prevent a vote on Republican Gov. Scott Walker’s bill restricting public employees’ collective-bargaining rights. The vote on the resolution didn’t require a quorum, unlike the budget bill that would curb bargaining.

The Wisconsin Democrats, who are in Illinois, will be fined $100 a day for their absence when the Senate is in session. Several of the Democrats went to Kenosha, Wis., Monday to meet with Republican Wisconsin Senate Majority Leader Scott Fitzgerald, said Fitzgerald spokesman Andrew Welhouse. But the fines seemed to set back efforts to break the impasse.

Remember that Indiana Republicans are proposing a right-to-work bill, which would allow workers to OPT OUT of paying union dues, which are just used to campaign for Democrats and leftists causes anyway. This bill would break the backs of the unions.

Buckeyes and Badgers and Hoosiers, oh my!

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