Tuesday, October 12, 2010

The Poison Pill In “ObamaCare” That Helped Kill Labor Law Reform

By Steve Early


Volume 13, Issue 3, pages 405–423, September 2010

Embedded in the Patient Protection and Affordable Care Act of 2010 was a poison pill for labor. It took the form of an excise tax on higher-cost, job-based medical coverage—the so-called “Cadillac health plans” negotiated by unions themselves. This deadly political booby-trap became a major organizational distraction and resource drain during a key phase of labor's health-care campaign. Instead of mounting a broad fight for expanded social insurance, unions were forced to wage a frantic defensive struggle against taxation of worker benefits. The “Cadillac tax” backed by Barack Obama was so redolent of John McCain's own stance on health care during the 2008 presidential campaign that it produced a “working class revolt” in Massachusetts. There, a Republican opposed to the excise tax defeated the Democratic Senatorial candidate running for the late Ted Kennedy's seat in January 2010. When the Democrats' lost their filibuster-proof “super-majority” in the Senate, the already controversial Employee Free Choice Act (EFCA) became the first political casualty of “ObamaCare.”

In 2008, organized labor spent more than US$300 million electing Barack Obama and other Democrats in a costly bid to end eight years of Republican rule that was extremely damaging to workers.1 The Service Employees International Union (SEIU) was the largest single financial contributor to this multi-union campaign, reinforcing its claim to have “the most effective political program of any international union.”2 By election day, more than US$85 million SEIU dollars (including 20% of the national union's total budget) had been poured into electoral politics. Thousands of AFL-CIO and Change To Win union volunteers and staffers were deployed in key “battleground states” to help Obama defeat John McCain, an Arizona Republican who backed right-to-work laws and other anti-union measures. The potential gain justifying this huge investment of union resources was Obama's commitment to “taking up the two top items on labor's agenda—legislation to make it easier for unions to organize workers, known as the Employee Free Choice Act (EFCA) and health care reform.”3 Few knew at the time how fatally entangled these two priorities would become.

In March 2010, after much lobbying by SEIU and other unions, Congress finally passed the Patient Protection and Affordable Care Act (PPACA). Demonized by the right as “ObamaCare”—ruinously expensive and “government-run”—the president's plan mandates individual medical coverage and greatly expands the role of private insurance companies in providing it (with the help of huge federal subsidies based on income). At the same time, the legislation was found wanting by labor activists who favored a “single-payer” system or at least some “public option” for the millions of Americans who will now be herded into the reformed market for private insurance. On the road to overhauling health care, the Administration's push for PPACA always left EFCA next in line. There, it languished in second place, for a full year, until the grassroots backlash against Obama's proposed tax on higher cost health plans helped kill any chance of enacting labor law reform, as originally conceived.

While running for office, Obama repeatedly informed union audiences (if not the general public) that he favored “employee-free choice.”4 Unlike his opponent, John McCain, he was—or so he said—opposed to taxing workers' job-based medical benefits. By the time he was elected in November 2008, the country faced its worst financial crisis since the Great Depression. This gave the Democrats an unparalleled opportunity—the first since the 1930s, in fact—to link much-needed changes in federal labor law to broader economic recovery efforts. As progressive economist Dean Baker argued, “If workers are able to form unions and get their share of productivity gains, it could once again put the country on a wage-driven growth path, instead of growth driven by unsustainable borrowing.”5

In Senate races where Democratic candidates had pledged to support EFCA, business groups had just spent an estimated US$50 million on advertising depicting labor law reform as a desperate “power grab” by “union bosses” that would open the floodgates for new union organizing. Key challengers to the GOP were elected anyway, giving EFCA what then appeared to be 59 possible votes in the Senate and even more supporters in the House (where it was passed by a 241 to 185 margin in 2007). Labor's best-case head count in the Senate included all the Democrats, two independents, and one Republican—soon to become a Democrat—Arlen Specter. In the flush of victory, many believed labor was only one vote shy of having the filibuster-proof super-majority of 60 necessary to thwart a GOP filibuster like the one in 1978 that doomed labor law reform during Jimmy Carter's presidency. All it would take now, under Obama, would be continuing grassroots agitation by union members and a favorable outcome of the Minnesota recount involving Democratic Senatorial candidate Al Franken and his opponent.6

Nevertheless, there were early warning signs of presidential-elect ambivalence about EFCA. Michael Mishak reported in The Las Vegas Sun on November 30, 2008, about Obama's private fears that any push for EFCA “would be divisive” at a time when he was already planning, as promised on the campaign trail, to go “to great lengths to bridge the partisan rift in Washington that grew deeper” during the Bush years.7 As Randy Johnson, vice-president of the U.S. Chamber of Commerce, pointed out: “The Administration wants to pass the stimulus and they need the business community to do that. Trying to pass card check would be like declaring a nuclear war with the business community. It'd be Armageddon.” A key centrist Democrat, Senator Blanche Lincoln from Arkansas, was already in synch with the Chamber. She told a home-state newspaper that “focusing on this bill, this issue, isn't paramount,” because “the nation has more important issues to deal with,” like the state of the economy. She announced that she was still “undecided” on EFCA.8 Even a staunch labor backer and key member of the House leadership like Rep. George Miller (D-CA) began sending out ambiguous signals. In a postelection interview, Miller told The Chicago Tribune that EFCA was not going to be “the first bill out of the chute” in the new year, but was “not moving to the back of the train” either.9

Some union strategists worried that, if EFCA was not quickly integrated into overall economic recovery efforts, the bill would become vulnerable to attack as narrow “special interest” legislation. Labor's proposed amendments to the National Labor Relations Act would be depicted as postelection “payback” from Obama to his union supporters. The rare opportunity to make organizing rights part of a larger pro-worker package of tax cuts, home foreclosure protection, extended UI benefits, and funding for public jobs would be lost if EFCA was pigeonholed this way. In his lobbying of leading Democrats, CWA President Larry Cohen argued that labor law reform was a proven economic fix, costing taxpayers almost nothing compared with the big federal bailout of banks, insurers, and brokerage firms. Using EFCA-sanctioned “card check” campaigns to win bargaining rights more easily, hundreds of thousands of workers could finally gain a voice in personnel policy decisions. Just as the Wagner Act did, during Franklin D. Roosevelt's presidency, EFCA would restore greater balance to labor-management relations and, over time, help workers' raise their living standards again.

The First 100 Days

While this post-election jockeying around EFCA got underway, America's second largest union, SEIU, was already enjoying the spoils of victory. In a video message to members after Obama's “first hundred days” in office, then-President Andy Stern boasted that “SEIU is in the field, it's in the White House, it's in the administration!”10 Obama's policy of disclosing all visitors confirmed that Stern and SEIU Secretary-Treasurer Anna Burger were indeed in the White House quite frequently, much to the chagrin of some of their colleagues. (“Andy has better access than anyone else in labor,” one told me.)11 Patrick Gaspard, a top political operative for SEIU/1199 in New York, became the new White House political director, Karl Rove's old job under George Bush. Craig Becker, the union's associate general counsel, was in line for a National Labor Relations Board nomination. Another SEIU lawyer, John Sullivan, was tapped to join the Federal Election Commission. The key to accomplishing labor's goals, Stern told The Nation, was figuring out “how to make sure what the President wants to get done, gets done?”12

Getting anything done about EFCA soon got much harder, thanks to Arlen Specter. The Republican senator from Pennsylvania was just one month away from becoming a Democrat, much to the joy of Obama and his national party. Locally, Specter had long been regarded as a “friend of labor” by SEIU, the United Mine Workers, Steel Workers, and other unions. In 2007, he supported bringing EFCA to the floor for a Senate vote, after it was passed overwhelmingly in the House. But on March 24, 2008, while he was still in the GOP, Specter took the Senate floor to announce that he would not vote for “cloture” on EFCA again. Echoing Blanche Lincoln and other centrists Democrats, Specter declared that “the problems of the recession” made Obama's first year in office “a particularly bad time to enact Employee Free Choice.”

But there was more to Specter's speech than bad advice about political timing. The former prosecutor had discovered that in organizing campaigns where NLRB elections have been bypassed and “card check” used instead to prove majority support for unionization, workers were being subjected to “widespread intimidation” by “union officials,” who come to their “homes and refuse to leave until cards are signed.” Specter, of course, had always welcomed similar union door knocking on behalf of his own reelection many times in the past. But now he was opposed to such “strong-arm tactics,” and proposed making it an “unfair labor practice,” under the NLRA, for any union organizer to visit “an employee at his/her home without prior consent for any purpose related to a representation campaign.” In the same speech, Specter indicated his willingness to work with others in the Senate on a compromise bill that would amend the NLRA in ways more to his liking.13

Despite Specter's defection, Stern insisted that card check was still “alive and well.” But, he noted, “60 votes are required to open and close debate. Without Al Franken, one vote is getting to mean a lot more. Arlen Spector switching parties is a positive trend . . . And if he's red on card check, I couldn't get my members to vote for him. That's like being against universal health care.”14 But soon labor's most frequent visitors to the White House were backpeddling on care check themselves. In November, 2008, right after Obama's election, Stern and Burger had visited the office of The Nation, where Burger had flatly declared: “You don't need to rewrite EFCA or compromise.” Labor should just “get it through the House, into the Senate, stay in the field, and get it passed.” Yet at a meeting with editors of The Washington Post just five months later—at a time when other unions still took the position that it was too early to discuss amending the bill—Burger and Stern publicly embraced the idea of compromise. “We are on the hunt for a solution,” Stern assured The Post, strongly suggesting that expedited NLRB elections would be an acceptable substitute for requiring employer recognition based on card check. Whether it includes majority sign up or not, Stern said, the final bill had to minimize opportunities for employer misbehavior and NLRA violations. He was, as usual, extremely solicitous of Obama:

"The President has said that he has a series of things—that we agree he needs to get done—which are major for every man, woman, and child, like health care . . . We respect that we have a job to do to line up enough votes without him. I don't think there's any question there will be a vote, that this bill's time has arrived, and he will do whatever is in his power to bring this home. We just aren't there yet."15

A Health-Care Summit

Nowhere was SEIU's bond with Obama more obvious than in coalition building related to the fight for health-care reform. To “win this war,” Stern named as “our General Petraeus,” the man who had been “the mightiest labor leader in New York City,” Dennis Rivera.16 The former president of 1199/SEIU (or United Healthcare Workers-East) saw his primary mission as being intertwined with two others—labor law reform and “build[ing] a new relationship and a new paradigm with our employers at the national level.”17
After becoming head of SEIU's national care division, Rivera played a leading role in enlisting the Greater New York Hospital Association, Kaiser Permanente, and Catholic Healthcare West in a “Partnership for Quality Care,” unveiled in Washington in 2007. Two years later, on May 11, 2009, Obama met with these same “partners” at the White House, along with other powerful trade groups representing doctors, insurers, and drug manufacturers. In a buoyant email message sent to SEIU members afterwards, Stern declared that the participants at this “game-changing” gathering had made “the most significant move toward real health-care reform in our nation's history.” Stern and Rivera were, of course, the only labor officials present to “jumpstart the drive toward real reform”—by coming up with a plan to control costs.
The “cooperation” of America's “medical-industrial complex” did not come cheap and was a little shaky, right from the start.18 Stern's account echoed the official White House version of the meeting, in which representatives of the American Hospital and Medical Associations, America's Health Insurance Plans, Merck, AdvaMed, PhRMA, and other big industry players came together, and, in one day, figured out how to save US$2 trillion in health-care spending over the next decade. As a result of everyone setting aside “partisan politics,” America was now “one step closer to putting our country on a sound fiscal footing.” Unfortunately, as one Huffington Post contributor noted, there was no “enforcement mechanism or penalty” if anyone involved reneged on their part of this deal.19 Some participants started back-tracking immediately, resulting in this May 14, 2009 The New York Times headline: “Health Care Leaders Say Obama Overstates Their Promise to Control Costs.” According to reporter Robert Pear, industry executives remained very “leery of enforceable cost controls,” did not “pledge specific year-by-year cuts,” and only “agreed to slow health spending in a more gradual way.” The head of the AMA even complained that Obama's misleading spin on the meeting had “caused a lot of consternation among our members.”20

The competing priorities of health-care and labor law reform were discussed at a second White House meeting two months later. This one was a union-only session with Obama, attended by a much broader delegation from the National Labor Coordinating Committee (NLCC). With David Bonior facilitating its work, the NLCC had been launched, after high-level discussions in January, as a joint venture of the National Education Association (NEA) and the largest unions in the AFL-CIO and Change To Win.21 The primary reason for their convergence was “the political opportunity that the Obama Administration and the Democratic Congress afforded labor” to achieve goals it had long pursued in Washington, with little success.22 A secondary objective was to minimize political free-lancing like the Stern-Burger trial balloon, in The Washington Post, about abandoning card check. At their joint audience with Obama on July 13, Stern, AFL-CIO President John Sweeney, Gerry McEntee from AFSCME, James Hoffa from the Teamsters, and others present were informed by the president, in no uncertain terms, that “fixing health care” had to come first and then EFCA would be next. Some objections were raised about this sequencing. But most in the AFL-CIO/CTW/NEA delegation politely went along with the plan.

Despite this demonstration of “labor unity,” there was, by the summer of 2009, a noticeable division between the “growing ranks of single-payer, Medicare-for-all advocates and a new, institutionally weightier coalition of more than 100 labor unions and other advocacy groups called Health Care for America Now.” Created in June 2008, HCAN raised more than US$40 million from liberal foundations and labor organizations like SEIU, AFSCME, and the AFL-CIO. As David Moberg of In These Times reported, HCAN was “promoting a strategy closer to Obama's proposal that would include employer- provided or individually purchased private insurance and the option of a public plan.”23 Even when inclusion of a “public option” still seemed achievable, the SEIU-driven approach was dismaying to many single-payer advocates in labor.24 But they clearly lacked Stern and Rivera's political access and influence, not to mention HCAN's much larger funding. “Obama is really the one who is puzzling to us,” said California Nurses Association director Rose Ann DeMoro. “We were all supporters of him . . . It's hard to understand how he can expect us to rally support around a plan that will leave the big insurance companies in charge and keep hurting patients.”25

Whether or not you liked Obama's emerging plan and regardless of how you felt about putting it ahead of EFCA, the prospects for quick action on either front dimmed in August, when a patient named Ted Kennedy died of brain tumor. With Kennedy's death, the Democrats lost the 60-vote super-majority they had finally gained the previous month with the long-delayed seating of Al Franken from Minnesota. Under prior Massachusetts law, Governor Deval Patrick could have appointed a successor to Kennedy immediately. But, in 2004, the relevant statute had been changed by Democratic state legislators to make sure that Mitt Romney, Patrick's predecessor, could not appoint a replacement for John Kerry, if Kerry defeated George Bush for the presidency. The new method of filling a U.S. Senate seat vacancy required holding a special election, including party primaries beforehand, a process that would take months. Unless it was modified again, this meant Senate Democrats and Obama would be one vote of shy of the number needed to overcome any Republican filibuster during the rest of 2009 and early 2010.

So, in the Bay State, Kennedy's own labor activist constituents were mobilized to assist a frantic national union effort to replace him sooner, rather than later, in order to reach the magic number “60” again, that was deemed necessary then for both health-care and labor law reform. By late September, despite cries of hypocrisy and growing public cynicism about the situational “principles” of Democratic Party leaders, the governor's power of appointment was restored. Patrick then named Kennedy confidante Paul Kirk to the Senate seat, which he held for the next four months until the special election on January 19, 2010. As a condition of his appointment, Kirk agreed not to be a candidate himself, in a Democratic field that soon included state Attorney General Martha Coakley, Congressman Michael Capuano, and two lesser-known, but well-heeled competitors from the private sector. For the Republican primary, a then-obscure state senator and small-town lawyer named Scott Brown filed petitions as well.

Over Labor Day weekend, many of the same labor activists still signing up co-workers on petitions demanding card check (or, in Massachusetts, trying to change its election law) were unhappy to see John Sweeney raising the same white flag on EFCA that Stern and Burger waved at The Washington Post in April. In a farewell interview, the nearly retired (and plenty tired looking) AFL-CIO leader “signaled a significant shift to try to move a long-stalled pro-union bill.” Sweeney, The New York Times reported, would now “support speedy unionization elections” in place of “the much-attacked card check provision” of EFCA. In the same article, Sweeney's soon-to-be-successor, Richard Trumka, stopped short of endorsing faster votes—held five or ten days after a representation petition was filed—as a substitute for card check. Trumka stressed the need for three essential elements in any bill—stronger penalties for employer law-breaking, arbitration of unresolved first contract disputes, and some “process in which workers were free of intimidation.” Sweeney claimed that EFCA foes would have more difficulty criticizing expedited elections than card check (although there was no evidence, in the Times article or anywhere else, that his peace offering or Stern and Burger's earlier one, would reduce business opposition in the slightest). As Sweeney headed out the door after fifteen years in office, he expressed cheery optimism about EFCA. “It's going to pass this year,” he said.26

The Role of Specter and Baucus

At the AFL-CIO's September 14–17, 2009, convention in Pittsburgh, it took even more cognitive dissonance to process the mixed—and increasingly muddled—signals being sent about EFCA. Who was scheduled to speak about labor law reform and other topics on the second day of the convention? None other than 79-year-old Arlen Specter, the same Senator who had denounced card check in terms redolent of the Chamber of Commerce, just six months before. When the wrinkled and cadaverous Specter appeared on stage the next day, in the David Lawrence Convention Center, Trumka introduced him warmly. Specter reported that he was working hard on a “robust public option in health care.” He said his current stance on “employees' choice”—although not explained in any detail—met Trumka's three minimum requirements (“prompt certification,”“tough penalties,” and “binding arbitration”). According to Specter, a half-dozen Senators, including himself, Tom Harkin, and Chuck Schumer, were busy working on a new and more widely acceptable version of EFCA. The bill was likely to be passed by the end of year and would, he assured the delegates, “be totally satisfactory to labor.”27

After President Obama addressed the same crowd, with a far more rapturous reception, he and Specter flew off to Philadelphia together. There, Obama spoke at a big fundraiser for the senator, providing him with the same kind of reward for party-switching that the Pennsylvania AFL-CIO later did as well. In the meantime, confusion reigned back in the convention press gallery about whether a compromise on EFCA had, in fact, been worked out. After permitting Specter to provide the only delegate briefing about inside-the-Beltway EFCA strategy, the federation was immediately bombarded by media questions about its own current position. In a hurried briefing right after Specter's speech, Trumka claimed that “card check legislation was still in play”—leading The Wall Street Journal to report the next day that Specter's roll-out of a new “road map for putting a long-stalled overhaul of labor law back on track” was “quickly dismissed by leaders of the AFL-CIO.” In his capacity as organizing committee chair of the federation, Larry Cohen did his own media damage control, insisting correctly that until there were sixty Democratic-controlled votes in the Senate, “we don't even want to finalize a bill, because who are we discussing it with?'”28

In the weeks following the convention, Cohen and other union leaders soon had worse things to worry about, on Capitol Hill, than EFCA becoming “EFCA-lite” to please Arlen Specter. Democrat Max Baucus from Montana unveiled the bipartisan product of the long (and arrest-studded) deliberations by his Senate Finance Committee.29 The key financing mechanism of Baucus' bill took direct aim at negotiated medical plans like the ones telephone workers in the northeast had struck repeatedly to defend. Baucus proposed that expanded coverage be funded, in part, through a 40 percent “excise tax” that would be applied to that portion of the value of any employer-provided coverage that exceeded US$8,000 for individuals and US$21,000 for families. (The House, meanwhile, was developing a proposal that relied on pay-roll taxation of employers offering no health insurance, plus an income tax surcharge on individuals earning more than US$250,000 a year.) In New England, where medical costs are particularly high and the landline workforce tends to be older, the medical benefit tab of AT&T and Verizon was reaching the threshold amounts that would trigger the Baucus excise tax. As CWA's Cohen pointed out in The New York Times on October 13, “at least half our members would be in health plans subject to the tax in 2013.”30

CWA's own biggest battle against health-care cost shifting had occurred two decades earlier, when 60,000 workers from Maine to New York City struck for four months at NYNEX (the regional phone company later “rebranded” as Verizon). To avoid being stigmatized as a privileged group of union members—selfishly trying to preserve their own superior medical benefits—CWA and IBEW strikers carefully framed the central issue in dispute. Their buttons, banners, press releases, and leaflets all made it clear that the solution to medical cost inflation was “Health Care For All, Not Health Cuts At NYNEX!” Backed by allies like Jesse Jackson, Citizen Action, and Physicians for a National Health Program (PNHP), the NYNEX strike became a popular focal point for ongoing public and membership education about the need for Canadian-style national health insurance.31The enormous sacrifices by IBEW and CWA members paid off—both at the time and for years to come. They “held the line in ‘89,” won their strike, and defeated later cost-shifting attempts as well. In 2009, Verizon workers (at the former NYNEX in New York and New England) still made no premium contributions for comprehensive individual or family coverage.

Twenty years after battling to keep their own health insurance affordable (while calling for single-payer as a better alternative for themselves and everyone else), former NYNEX strikers suddenly found their medical benefits back in the news. What they and many other workers had always thought was a Chevy—that everyone should have in their garage—was now being demonized as “Cadillac coverage” by leading Democrats and White House economic advisors. In their view, high-cost union benefits contributed to medical cost inflation because they encouraged profligate use of doctors and hospitals. According to Senator Baucus (and, soon, President Obama as well), these “luxury plans” needed to be taxed, first, to restrain rising health-care costs, and, second, to raise additional revenue for Medicaid expansion and the Democrats' plan to subsidize, at great cost to the taxpayers, expanded private insurance coverage.

“Don't Tax Our Benefits!”

A political attack on their own benefits was not what labor activists anticipated when they knocked on doors, made phone calls, and cast their ballots for Obama, rather than McCain, in 2008. Back then, unions hammered away, successfully, at the Republican candidate's nefarious plan to tax worker benefits; now, a year later, they were forced to lobby frantically and expensively against the Senate Finance Committee's embrace of the same idea (albeit in a different form). In response, the president started working the White House phones personally to make sure that labor opposition did not deep-six the Baucus bill. Obama called top union officials with the same message he delivered to the NLCC in July. If health-care reform failed, the Republicans would have a victory that would doom EFCA as well. Obama knew how upset his labor friends were now about the excise tax, but that could be fixed “later in the process,” he stressed. The important thing was getting a health-care bill out of committee and onto the Senate floor as soon possible so House–Senate differences could be resolved, final legislation passed, and workers rights addressed next.

Obama's argument swayed some unions more than others. On October 14, one day after the Baucus bill was reported out of the Finance Committee, the AFL-CIO, AFSCME, USWA, CWA, and other labor organizations went ahead with ads in major newspapers opposing the proposed “new tax on middle-class benefits.” SEIU was not among them. As Dennis Rivera explained: “Every group has to determine their own strategy and tactics. We believe expressing directly how we feel to the principals is the best way to do that.” By then, Stern's “General Petraeus” had a history of holding his fire on the excise tax. When the White House first started floating the idea, this was SEIU's response, as reported in The Times: “Rivera said that, while his organization was ‘predisposed not to agree to the taxing of benefits’, he would wait to pass judgment. The union, Mr Rivera said, wants to see how any tax changes fit into the overall effort to revamp the health care system. ‘We need to see the total picture’, he said.”32

By October of 2009, most other unions had seen enough of “the total picture” to know that benefit taxation was a very undesirable part of it. They were feverishly mobilizing their members and lobbying inside-the-Beltway against this threat. So Rivera was asked, by one reporter, whether SEIU's public reticence about Cadillac tax criticism was related to the fact that many of its members “have no or low-cost healthcare insurance,” and therefore would not be impacted by the tax. Rivera responded that SEIU did indeed have “pockets of members” who are “in the same situation as other unions.” His union did not endorse the anti-excise tax ad because “we chose to communicate our views privately,” he explained again. On the prospects for a “public option,” Rivera was as optimistic as ever. “I believe we have an excellent opportunity of having a government plan that can bring down the costs of insurance. It's going to be in the bill.”33

There were several problems with this upbeat scenario—the main one being that the carrot of labor law reform, dangled repeatedly by Obama, to keep unions in line on health care, always remained just out of reach, for one reason or another. Meanwhile, labor's costly, time-consuming organizing against the excise tax did have an impact, but Cadillac-bashing remained very much in vogue. When Democratic Majority Leader Harry Reid brought his own bill to the Senate floor, the “luxury insurance tax” remained intact, in modified form—and only five Democrats backed a GOP move to strike it from Reid's bill.34 For his part, Obama, remained hands-off throughout most of “the process,” except in one area. He ended up taking a firm stand in favor of taxing benefits, while simultaneously failing to press for either “a public option or a strong employer mandate to provide insurance.”35

In my home state of Massachusetts, union members and leaders were not pleased with Obama's flip-flop on benefit taxation. The Boston Globe ran a front-page story, headlined: “Stalled Agenda Irks Labor Leaders—Unions See Little Action from Democrats in D.C.” In that article, our state-fed president Bobby Haynes, expressed much exasperation with the president. “It's beyond belief to me,” Haynes said. “If you can't deliver health care, and you can't deliver jobs, and you can't deliver [card check legislation], and you can't figure out how to take care of the working people of this great city and country, you don't deserve to stay in office.” Anna Burger was among those interviewed, inside-the-Beltway, who preached patience with the president; Obama just needed a little more time on health care so he could “get it finished first,” she said. While other union officials were worried about the possible negative impact of “reform” on their own members, Burger insisted that “the larger goal of getting closer to universal health care is most important.”36

In Massachusetts, many local unions were, by now, mobilizing to keep Ted Kennedy's seat in Democratic hands. SEIU is the largest combined private/public sector union in the state. It represents 75,000 workers in state and local government, health care, and property services, and, thus, its political endorsement is highly valued. The SEIU State Council announced that its choice of candidate would be “determined through a member-driven process that included a candidate forum” open to all dues payers. More than 300 people turned out for this pre-primary event on October 3, 2009, which featured presentations by Coakley, Capuano, and their two lesser-known opponents. The contest for SEIU backing came down to a competition between the first two candidates; in a paper ballot straw poll conducted at the forum, those present favored Capuano by a narrow margin. Capuano is the former mayor of Somerville, with a reputation for being a feisty urban populist; among his fans were the SEIU janitors local in Boston. Using their domination of the state council, officials from 300,000-member 1199/SEIU, headquartered in New York, ignored the preference of Massachusetts rank-and-filers, as expressed in the “member-driven process.” They lined up two smaller locals on their side, and delivered SEIU's support to the bland and cautious Martha Coakley.

With SEIU dollars, door-knockers, sign-holders, and phone bankers at her disposal—plus other union backing—Coakley defeated Capuano by a 47% to 28% margin. After the primary, “Coakley started with huge leads in polls as she entered the general election against Scott Brown.” But, unbeknown to her supporters at the time, it was all down hill from there. Coakley refrained from stressing economic issues in a state where blue-collar workers were bearing the brunt of joblessness even before the 2008–2009 recession made their plight far worse. EFCA—as a way of strengthening workers rights and helping them boost their living standards—was never mentioned, except when she was addressing union audiences. But the sleeper issue that really had her plummeting in the polls before long—particularly among labor voters—was health care. On January 7, twelve days before the special election, Obama made it clear that he favored “the so-called Cadillac tax as a feature of the health-care bill that cleared the Senate on Christmas Eve.” Labor was still lobbying for its preferred financing mechanism, which included the tax increase on the wealthy contained in the corresponding House bill. But Obama insisted the two bills be reconciled his way. He “put pressure on the House to drop its approach and adopt the Senate tax as part of a compromise between the two bodies.” The media immediately noticed that this new “more active role” was “a change for the White House, which for months gave wide latitude to Congress as it shaped legislation.”37

A “Working-Class Revolt”

In Massachusetts, voters thus had a choice between the candidate of the Democratic Party establishment—eager to get to Washington and be the 60th vote for Obama's plan—and an affable, photogenic Republican who promised to champion the cause of workers by voting against taxation of their benefits. A former Tufts University basketball player, Brown had received the reelection endorsement of the Massachusetts AFL-CIO in 2008 because, as a state senator, he favored building gambling casinos. While Coakley was conducting a kind of Rose Garden campaign—replete with photo ops of her accepting a series of organizational endorsements—Brown was tooling around the state, like a building trades guy himself, in a green GMC pick-up truck. Benefiting from gusts of local Tea Party wind, he started to attract bigger and more enthusiastic crowds. In the state legislature, Brown had voted for the bipartisan bill, backed by Romney, the Democratic legislative majority, and SEIU, that created the Massachusetts model for “ObamaCare.” But unlike Coakley, he was able to exploit the fact that our Bay State experiment with “universal coverage” has done little to curb cost shifting from employers to employees, wherever the latter still have job-based benefits, union negotiated or not.

The Massachusetts plan required other residents, under penalty of a fine, to buy individual insurance policies at their own expense (or with subsidies from the state, if they could qualify for them, based on income). But the high out-of-pocket costs associated with some state-approved plans made them unaffordable for people who had chronic conditions requiring frequent doctor visits and prescription drug refills. At the same time, the proposed excise tax in Washington sent a message to recession-battered “blue-collar workers that you should pay higher taxes and get lower benefits to help finance coverage for the uninsured.”38 From Boston to the Berkshires, this was additionally unpopular because the local “uninsured” had already been taken care of already—or so we had been told—by the Massachusetts plan.

To neutralize labor's continuing resistance to the “Cadillac tax,” the White House convened what became a protracted bargaining session, ending on January 14. In the run-up to those talks, AFL-CIO President Rich Trumka had been reminding his fellow union leaders, on Obama's behalf, that any derailing of health-care reform now, due to labor opposition, would be a victory for the GOP and, thus, the death-knell of EFCA.39 The bargaining committee, composed of national union presidents from the AFL, CTW, and NEA, was pleased with the changes it wrung from the White House: exemption of union-negotiated plans and those covering state and local employees until 2018, higher dollar thresholds for when the 40% tax would kick in, carve-outs for particular occupational or demographic groups, and other concessions. A CWA message to local union leaders emphasized that delaying the effective date of the tax would “give us at least one and, in some cases, more than one round of bargaining to address the impact on our members'”—a prospect not entirely reassuring, given current trends in medical cost inflation and related concession bargaining.40

But, for labor as an institution, the public perception created or enhanced by this White House settlement was hardly positive (and came much too late to alter the Senate election results in Massachusetts). As American Prospect co-editor Robert Kuttner pointed out, administration deal-making with “special interests”—as personified by the Stern/Rivera-assisted session at the White House in May, 2009—resulted in “exactly the wrong framing” for Obama's health-care reform campaign. “The battle should have been about the president and the people versus the interests,” argued Kuttner. Instead, by pursing an “interest group strategy” (that greatly limited the scope of proposed reforms, no matter how popular they were), “more and more voters concluded that it was the president and the interests versus the people.”41 And now, it seemed, unions had cut their own insider deal, making them appear to be just another “special interest” too. Rather than take a stand for all workers, as CWA had done twenty years before during the NYNEX strike (and other contract struggles), organized labor had negotiated a complicated agreement with Obama that left wage earners without collective bargaining rights far more exposed to the excise tax.42

Meanwhile, with Brown no longer considered a sure loser or even a long-shot candidate, out-of-state money started pouring into his campaign. Between New Year's Day and January 19, 2010, he raised an astonishing US$14 million. So local Democrats and their labor allies began to panic. Obama himself flew up to Boston, on Sunday, January 17, for an election eve rally and voter pep talk on Coakley's behalf. In the closing days of the race, national labor, feminist, and environmental organizations unleashed “the most blistering assault of late attack ads the state has ever seen.”43 SEIU contributed US$685,000 worth of negative ads to this Washington-directed “air war.” They were dark, gloomy warnings that Brown was “out of step with the mainstream,” accompanied by music that seemed lifted from a horror film soundtrack. As one disgusted former SEIU organizer observed, this huge ad buy was like a “Saturday Night Live parody of bad political advertising,” completely out of touch with the electorate and “an insult to its intelligence.” In every mainstream media post-mortem on the election, the “desperate multi-million dollar carpet-bombing” of Brown was deemed to have hurt labor's candidate more than it helped her.44

By election day, most labor voters still had not gotten the good news from Washington about their eight-year exemption from the “Cadillac tax.” Or they had simply decided to strike a blow—with a vote for Brown—against benefit taxation altogether. Forty-two percent of those who cast ballots on January 19 believed that Obama wanted to tax their health insurance, and those voters favored Brown by a two to one margin. “Sizeable majorities of Brown voters saw the Democrats' plan, if passed, as making things worse for their families, the country, and the state.”45 In a state where union-endorsed candidates for federal office regularly get 65 percent of the labor vote, Coakley only got 46 percent to Brown's 49 percent, losing 52 to 47 percent overall. Among Massachusetts voters who are not college graduates, Obama had beaten McCain by a 21 percent margin just fourteen months before; Coakley lost just as badly to Brown in this same group, reflecting a huge 41 point net swing away from the Democrats among predominantly blue-collar voters.46 Overall, Coakley received 850,000 fewer votes than Obama, while Brown only got 50,000 more than McCain—an indication of the huge stay-at-home voter factor, particularly in urban, blue-collar Democratic Party strongholds, that enabled the challenger to win.

To explain this defeat, the AFL-CIO highlighted the results of a postelection voter survey by Hart Research Associates. The pollsters declared that a “working-class revolt” had occurred in Massachusetts. It was an embarrassing finding indeed, given the fact that labor's own Senatorial candidate, plus its friend in the White House, were key targets of the “revolt,” and the national GOP its main beneficiary.

The Death of EFCA

The combination of union hubris, political gullibility, compromise, and miscalculation that helped seal the fate of EFCA was the subject of much right-wing derision. “Scott Brown pulled off a miracle for non-union employers!” crowed one anti-union lawyer, on his blog. “Those Democratic politicians blew the best chance Big Labor ever had to see real changes in the law that would keep Big Labor from becoming extinct, just like the dinosaurs.”47 Not only had the Democrats lost their Senate “super-majority”—needed to pass EFCA in any form—but the Senate's quick seating of Brown meant that the nomination of SEIU lawyer Craig Becker lacked the 60 votes needed to end a Republican filibuster. On February 10, just 52 senators ended up backing his appointment, with Blanche Lincoln from Arkansas joining Brown in voting “No,” along with Democrat Ben Nelson from Nebraska, who claimed that Becker was too pro-“card-check.”
This development left Washington Post columnist Harold Meyerson nearly apoplectic. He declared that the first year of Obama's presidency was “close to an unmitigated disaster” for labor. The “Senate's inability to pass EFCA” was particularly “devastating and galling” because, in Meyerson's view, the compromise that jettisoned card check “had a shot at winning”—if it had been brought to a vote in late 2009, when Ted Kennedy's seat was still filled by Paul Kirk. Instead, Obama and Reid asked the unions, yet again, “to wait until health care reform had passed.”48

In Washington, DC labor circles, labor law reform was, by now, an awkward topic. In late January 2010, the AFL-CIO's Legislative Director Bill Samuel told Workers Independent News that: “We don't see it being dead . . . We're obviously re-evaluating our strategy.” Speaking at the Center for American Progress, SEIU's Anna Burger waffled as well. “If we really want to get this economy going again, we need to figure out a way to pass the Employee Free Choice Act,” she said. “Does 60 matter? Sure it matters. Is there a way that we can try to make the Senate understand that we have to do what's good for America, what's good for working families? I don't know. That's the challenge we have. . . .” Obama might have helped with this challenge just a day later when he delivered his 2010 “state of the union” address to Congress. Instead, he never once mentioned EFCA (or the state of unions), thus signaling to the assembled solons that the time for labor law reform had indeed come and gone again.
In the past, under Jimmy Carter or Bill Clinton, the consolation prize for labor when the Democrats have failed to enact NLRA changes, was at least a more worker-friendly NLRB. But, one quarter of the way through Obama's first (and perhaps only) term, the five-member NLRB was still operating with only two decision makers, one a designee of the Democrats and the other holding a seat reserved for a GOP nominee. Their “bipartisan” handling of 500 “noncontroversial” cases, during the previous two years, was facing a Supreme Court challenge, by employers (who soon won their argument that a minimum of three members was necessary for NLRB rulings to be enforceable by the federal judiciary). CWA's Cohen pointed out that, with just two active Board members, “thousands of fired workers can get no justice and hundreds of thousands have no bargaining rights as every critical case at the national level is frozen.” (Thanks to the Supreme Court's action in June 2010, many cases already processed will have to be re-decided, creating additional delays.)

Obama responded to this on-going debacle by failing to use his first opportunity to name Becker and upstate New York labor lawyer Mark Pearce to the Board, via a recess appointment, thus further prolonging the life of a “crippled NLRB.” CWA and other unions urged their members to begin a phone calling and emailing campaign urging the White House to use the next round of recess appointments to restore the Board to something resembling normal functioning. In late March, Obama finally named both Becker and Pearce to the NLRB for limited terms ending in December 2010. (Pearce was later confirmed to serve for a full term ending in 2013.)

Two years into Obama's presidency, the NLRB's new pro-labor majority has yet to reverse the anti-card check decisions issued by their predecessors (although the Board's Dana decision is now under review). There was also no fast-tracking of NLRB rule-making that might provide quicker unionization votes—a version of the "expedited election" substitute for card check that was embraced by some in Congress (and labor) as part of “EFCA-lite.”49 CWA, SEIU, USWA, and other unions did spend $5 to $10 million on a Democratic primary challenge to Blanche Lincoln in Arkansas, as payback for her EFCA opposition (even though her opponent quickly distanced himself from card check, too). Although forced into a close run-off vote, Lincoln won the nomination, after getting strong support from both Obama and Bill Clinton. The contested race for the Democratic senatorial nomination in Pennsylvania became, according to the state fed president there, “the first primary election in a long time where we've gone all out.”50 Unfortunately, the AFL-CIO, SEIU, and other unions went “all out” for the wrong candidate—Arlen Specter, who didn't just oppose card check, but “single-handedly killed the entire bill,” in the words of one embittered ex-SEIU staffer who worked on the EFCA campaign.51 It was left to Democratic primary voters to punish the Republican-turned-Democrat, who lost by a 54 to 46 percent margin to Congressman Joe Sestak.

In late March, 2010, President Obama was finally able to use the budget reconciliation process to get his Patient Protection and Affordable Care Act through Congress, while denying the Republican minority in the Senate any filibustering opportunities. Labor reactions to the administration's victory were a political Rorschach Test—a reliable indicator of who saw labor's glass half empty under Obama or already overflowing. Although not without company, SEIU definitely fell in the latter category. “We did what generations have hoped to do,” Andy Stern proudly declared. “We changed our nation and declared healthcare a right.”52 In turn, the Obama Administration was glad to acknowledge to Business Week that Stern “helped shape the strategy that ultimately won passage of the health-care overhaul legislation.”53 In an interview shortly before he stepped down as SEIU president in April 2010, Stern defended whatever trade-offs were necessary for victory. “Any decent country that wants to have basic opportunity for people has to have a health-care system,” he said. “So that's why we've never tried to imagine having Free Choice or anything that we're interested in come before health care.”54

John Wilhelm, president of UNITE HERE, was less forgiving of SEIU's White House-friendly prioritizing of labor's top two demands. In an angry speech to the AFL-CIO executive council in February, 2010, he accused his one-time Change To Win ally of being a “willing participant with Democrats who engage in divide and conquer.” Said Wilhelm:

"Stern provides cover for gutting our key priorities. Health-care reform was knocked off the rails right from the beginning when Stern bargained deals first with the hospital industry and then helped with Big PhRMA. Having thus walled off two of the most profitable players, is it any surprise that the Administration went looking for sources of money to pay for reform and found taxing our member's health plans? And how about card check? Stern gave the OK to strip our card check bill of card check before the rest of us even discussed that."

With both EFCA and even “EFCA-lite” on ice for now, Wilhelm was not alone in bemoaning labor's lost political opportunities, circa 2009–2010. Another AFL-CIO national union president, also active in the EFCA fight, was less willing to single out SEIU for any special blame. But he sadly acknowledged: “It's the end of labor law reform for another generation.”55 And the problem with that kind of timeline was well-noted by Harold Meyerson: “When the next chance to rewrite labor law comes around, the rate of private sector unionization could be down to trace elements."56

  • 1 Harold Meyerson, “Under Obama, Labor Should Have Made More Progress,”The Washington Post (February, 10, 2010), A17. Some estimates of total 2008 election spending by labor range as high as US$450 million.
  • 2 Chris Maher, “SEIU Campaign Spending Pays Political Dividends,”The Wall Street Journal (May 16, 2009).
  • 3 Maher.
  • 4 See, for example, a typical statement by then-Senator Obama in The Chicago Tribune on March 4, 2007: “We will pass the Employee Free Choice Act. It's not a matter of if, it's a matter of when.”
  • 6 For more on labor's impressive and, many ways, unprecedented 2007–2009 campaign of grassroots activity on behalf of labor law reform, see Steve Early, “Back to the Future With EFCA?” in Embedded With Organized Labor: Journalistic Reflections on the Class War at Home (New York: Monthly Review Press, 2009), 166–76.
  • 7 Michael Mishak, “Tone of Card-Check Support Shifts,”Las Vegas Sun (November 30, 2008), 13. Readers of The Audacity of Hope: Thoughts on Reclaiming the American Dream (Random House, New York, 2006) already knew that finding “bipartisan solutions” was a major pre-occupation of Obama. This book, the president's second, is full of longing for a new “era of consensus” that would replace the past “era of division” in Washington, DC policy-making circles.
  • 9 See George Miller interview in The Chicago Tribune, November 18, 2010. Miller also told Reuters a month later that the deepening economic crisis must take precedence over the Employee-Free Choice Act (http://www.guardian.co.uk/business/feedarticle/8308365). Speaker Nancy Pelosi's later decision not to hold a House vote on labor law reform until after the Senate reached the needed complement for cloture and acted first on EFCA created an additional procedural problem in the days immediately following January 19, 2010. After Republican Scott Brown was elected in Massachusetts on that date, there was a brief period before his victory was certified and he was sworn in, when Democrats could have theoretically moved forward on EFCA, in some form. But, unlike the situation with health care at that point, there was no House bill on workers rights already passed, to give EFCA even the slightest, remaining bit of momentum among Democrats who had long since lost the stomach for pushing it.
  • 10 Maher.
  • 11 Interview with author.
  • 12 Katrina Vanden Heuvel, “Andy Stern on the New Moment,”The Nation magazine blog post (November 25, 2008).
  • 13 See “Spector Speaks on the Employee Free Choice Act/Card Check,” full text of floor statement released by his Senate office on March 24, 2009.
  • 14 As quoted in interview with Michael Mishak, “Unplugged: The SEIU Chief on the Labor Movement and Card Check,”The Las Vegas Sun (May 7, 2009).
  • 16 Steven Greenhouse, “New Yorker Leads Labor Charge for Health Reform,”The New York Time (August 27, 2010), A-12.
  • 17 See interview quoted in Leon Fink and Brian Green, Upheaval in the Quiet Zone: 1199SEIU and the Politics of Health Care Unionism, 2nd ed. (Chicago: University of Illinois Press, 2009), 290.
  • 18 Paul Krugman, “Blue Double Cross,”The New York Times (May 22, 2009), A25.
  • 20 See article by Robert Pear, The New York Times (May 15, 2009), A18.
  • 21 See “Joint Statement of International Union Presidents' Meeting,” issued January 7, 2009, announcing the 12-member NLCC's goal of “creating a unified labor movement that can speak and act nationally on the critical issues facing working Americans.” As reported by Steven Greenhouse in “Labor Calls for Unity After Years of Division,”The New York Times (January 8, 2009).
  • 22 Harold Meyerson, “Which Union Do I Belong To Now,”The American Prospect (April 9, 2009).
  • 23 David Moberg, “Moving Obama Left,”In These Times (August 25, 2008).
  • 24 As Labor Notes reported, SEIU staffers in the field “actively tried to suppress heath care activists in and outside of labor pushing for a more sweeping version of health-care reform than SEIU deemed politically feasible.” See Mark Brenner, Mischa Gaus, and Jane Slaughter, and Paul Abowd, “Andy Stern's Legacy” (April 16, 2010), http://labornotes.org/blogs/2010/04/andy-sterns-legacy-right-questions-wrong-answers(accessed July 8, 2010).
  • 26 Steven Greenhouse, “Union Head Would Back Bill without Card Check,”The New York Times (September 5, 2009), A-13.
  • 27 See Steve Early, “Spector in Pittsburgh: Punishment and Reward at AFL-CIO Convention,”Working In These Times (September 15, 2009).
  • 28 Melanie Trottman, “Spector, Unions Disagree on Path for Overhaul of Labor Laws,”The Wall Street Journal (September 16, 2009), A-5.
  • 29 In May 2009, Baucus had three days of hearings, with 24 witnesses, but not one was a single-payer advocate. When representatives of Single Payer Action objected to this at the hearing, Baucus ordered the arrest of 13 doctors, nurses, and other activists.
  • 30 Steven Greenhouse, “Congress is Split on Effort to Tax Big Health Plans,”The New York Times (October 13, 2009), A-18.
  • 31 For more on the use of strikes and contract campaigns to build support for real health-care reform, see Steve Early, “Labor's Health Problem,”The Nation (July 7, 2003).
  • 32 Jackie Calmes and Robert Pear, “Administration Open To Taxing Health Benefits,”The New York Times (March 15, 2010), A1.
  • 34 Under the Reid version, plans whose premiums exceeded US$23,000 a year for families and US$8500 for individuals would be subject to the excise tax. See Bill Salganik, “Tax Would Hit Those with ‘Too Much’ Insurance,”Labor Notes (February 2010), 11.
  • 35 Jane Slaughter, “Anger Boils Over Health Care Bill,”Labor Notes (February 2010), 1, 11.
  • 36 Susan Milligan, “Stalled Agenda Irks Labor Leaders,”The Boston Globe (October 12, 2009), 1.
  • 37 Peter Nicholas, “Obama Backs Health Plan Tax,”The Chicago Tribune (January 7, 2009).
  • 38 See Congressman Jerry Nadler (D-NY) quoted by Robert Pear and David Herszenhorn in “Labor Campaigns against Tax on Health Plans,”The New York Times (January 13, 2010).
  • 39 See Jane Slaughter, “Anger Boils Over Health Care Bill,”Labor Notes (February 2010), 13.
  • 40 CWA Newsletter, January 15, 2010, which includes the disclaimer that “this is not the [health care plan] we would have written if we were the sole author.” See also for example, Sean Murphy, “Health Tax on ‘Cadillac Plans’ May Wallop Many Communities',”The Boston Globe (April 5, 2010), A6, with its grim prediction of further cost-shifting in the Massachusetts public sector “if high end plans aren't scaled back” before the excise tax kicks in.
  • 41 Robert Kuttner, “A Wake Up Call,”The Huffington Post (January 17, 2010).
  • 42 As Jane Slaughter reported in Labor Notes, some representatives of unionized workers, who were not at the White House, even questioned the value of the excise tax agreement for their members. IAM President Thomas Buffenbarger continued to insist that “no bill is better than this bill. We don't care what the amount is they peg it to. Because of inflation, whatever number will be gobbled up pretty quickly.” Firefighters President Harold Schaitberger claimed “his union didn't ask for the special, higher threshold for first responders” that would not benefit those included in the same insurance pools with other public workers. “We're not going to buy into a special deal for us,” Schaitberger said.
  • 43 See Brian Mooney, “Voter Anger Caught Fire In Final Days,”The Boston Globe (January 20, 2010), A1.
  • 44 Mooney, A1.
  • 45 Dan Balz and Jon Cohen, “Brown Rode Anti-Washington Wave,”The Washington Post (January 23, 2010).
  • 46 See Guy Molyneux and Mark Bunge, Hart Research Associates, Memorandum on its “Election Night Survey of Massachusetts Senate Voters” (January 21, 2010).
  • 48 Meyerson, “Under Obama.”
  • 49 See Stephen Greenhouse, “Deadlock Is Ending On Labor Board,”The New York Times (April 1, 2010), B-1. In May, 2010, labor did get a boost from the new more pro-worker majority on the National Mediation Board (NMB). The NMB declared that unions seeking certification under the Railway Labor Act only needed to get a simple majority vote among those participating in NMB-conducted representation elections. In the past, many of these elections had been lost due to the old requirement that unions get a majority among all the workers eligible to vote.
  • 50 Marc Levy, “Specter Fights for Votes in New Party,” The Boston Globe, May 14, 2010, A7.
  • 52 See March 25, 2010 SEIU press release on “Hope, Progress, Change . . . An American Dream.”
  • 55 Author Interview.
  • 56 Meyerson, “Under Obama.”

(Steve Early is the author of The Civil Wars in U.S. Labor forthcoming in February, 2011, from Haymarket Books. This article is an excerpt from that book. Early worked for 27-years as a CWA organizer, was involved in telephone industry bargaining and strikes over health care issues, and was active in the campaign for EFCA).