Daily Austerity Watch: Organized Labor Losing Credibilty

Fewer people are madder about fiscal austerity than leaders of labor unions.

Richard Trumka, the head of the AFL-CIO, was quoted last week as saying that Democrats better get on board with the union’s agenda or face the consequences.  This is particularly true if any member of Congress dares to advocate any cuts in Medicare or Social Security.   “We will spend the summer holding elected leaders in Congress as well as the states accountable on one measure: Are they improving or degrading life for working families?” he said.

Over in Europe, unions are raising alarm bells about the austerity plans being enacted there.   They have taken to the streets in huge numbers and even helped topple governments.  Labor actions are so common in Greece that they barely are worth noting any longer.   Last week, the European Trade Union Confederation laid out its ideas in a document called the “Athens Manifesto.”  International investors may not have taken kindly to a statement that suggests the country in the worst financial shape in Europe and one of the bibles of Communism.   The ETUC’s document echoes the “good old days” of organized labor in its call for a “European New Deal.”

“The ETUC will fight for a European New Deal for workers against austerity governance, cuts in pay, social security and public services; and for a European economic governance that serves the interests of the European people and not the markets including qualitative growth, full employment, strengthening the European social model,” according to the Athens Manifesto.

The European Union, where the organized labor movement is weakened though stronger than in America., is expecting its GDP growth to lag the United States.  Fears that the economic contagion will spread beyond Greece, Portugal and Ireland are rampant.  The sight of tens of thousands of anti-austerity protestors frays the nerves of investors even further than they have been since the start of the Great Recession.

Unfortunately, union leaders are fighting the battles of the 2oth Century in the 21st Century.   The U.S. has gotten itself into its current fiscal mess precisely because politicians have been afraid to touch entitlement spending.  States are buckling under the weight of their pension obligations.  Governors in Wisconsin and Ohio have curtailed the collective bargaining rights of union workers in the name of austerity.

Recently, officials said that both programs would go broke sooner than expected. It seems that it would be the height of fiscal irresponsibility not to continue with business as usual because these programs account for one-third of federal spending.  Many Americans, though, are buying the union’s arguments because all the talk about debt goes in one ear and out the other of most people before they enter a catatonic stupor.  A recent Associated Press-GfK poll “suggests that arguments for overhauling the massive benefit programs to pare government debt have failed to sway the public. … 54 percent said it’s possible to balance the budget without cutting spending for Medicare, and 59 percent said the same about Social Security.”

The problem that officials in Europe and the U.S. faces is that they have to convince voters that their economic cures are not worse than the disease.

—Jonathan Berr