If anyone wondered why the unions have pressed so hard for the EFCA bill, known better as Card Check, maybe the SEIU’s status can explain a few things. The massive union has long played politics, and plans to spend as much as $85 million in the upcoming election. However, the union finds itself a little short on funding its pension funds while at the same time attacking the investment firm that handles its accounts:
The SEIU, which has pledged $85 million to Democratic campaigns this year, wants this pressure to lead to investment decisions by KKR that Mr. Stern asserts would benefit workers: reduced CEO compensation, higher rank-and-file wages, and more emphasis on environmentalism and politics, instead of profits.
Yet in 2006, the SEIU National Industry Pension Plan, a plan for the rank-and-file members, covering 100,787 workers, was 75% funded. That is, it had three-fourths of the money it needed to pay benefit obligations of workers and retirees.
In contrast, a separate fund for the union’s own employees, numbering 1,305, participants was 91% funded. Even better, the pension fund for SEIU officers and employees, which had 6,595 members, was 103% funded.
As the Sun points out, the SEIU obviously knows how to manage pension funds, as their own funds are not underfunded. KKR manages all three national funds, so the problem doesn’t lie with KKR, either. It’s not the market, either, as all of the funds again The difference is that employers manage the contributions to member pensions, while SEIU execs manage their own funds. SEIU executives seem a lot less concerned about negotiating proper pension contributions for their members than they do for themselves — or for playing politics.
These pensions weren’t always underfunded, either. In 1996, the pensions had 110% of the necessary funding. In twelve years, the SEIU allowed employers to shortchange their members, reducing the stability of their pensions by almost a quarter.
The SEIU has launched an attack on Henry Kravis, one of the founders of KKR. They claim that Kravis doesn’t pay enough in taxes, although they stop short of calling him a cheat:
Kravis made $51,000 an hour in 2006 by buying and flipping companies, often at the expense of taxpayers or workers who lose their jobs. Yet, despite his vast income, he can pay a lower tax rate on much of his huge investment profit than nurses and teachers pay on salaries of $50,000 per year. KKR spent more than two million dollars last year on lobbying, including lobbying to defeat legislation that would have closed a lucrative tax loophole for hedge fund managers and buyout kings such as Kravis.
Yes, this is the same old “lower rate” dodge. Kravis pays a lower rate because the capital-gains tax rate is significantly lower than the income tax rate. Why? Because investments carry risk — and the tax code needs to provide incentives to those who accept that risk. Barack Obama uses this same intellectually-dishonest argument in his stump speeches, proving that neither Obama nor the SEIU understands tax policy at all.
Besides, one has to wonder why the SEIU continues to have KKR manage its own pensions if it finds KKR and Kravis so distasteful. In fact, the complaint above is doubly hypocritical; not only does the SEIU help Kravis make money, it plans to outspend him by eighty-three million dollars in this election cycle.
Maybe some of the SEIU’s members should ask why that money doesn’t get spent on making sure their pensions get fully funded. The people that the SEIU want to organize by using the Card Check legislation to intimidate them should ask about how much of their dues will go to trashing Kravis instead of taking care of their retirement needs.