What Role Does Fear Play in Obama's Debt Ceiling Strategy

President Obama kicked off last weekend with a testy Friday night press conference warning of the drastic consequences of failing to raise the debt limit, the havoc it would wreak on financial markets, and the disastrous repercussions for the poor and middle class. That message of fear was reiterated throughout the weekend, bookended on Monday by a senior White House official who says there’s a 50/50 chance that the standoff in Washington will not be resolved by the August 2 deadline.

But it’s not fear for fear’s sake. The White House is employing the same cynical, irresponsible political strategy to force Congress’ hand that it started in January, using Wall Street as its foil. This morning, NPR—as usual and unsurprisingly—had the zeitgeist of the Obama White House just right. Cokie Roberts, its long-time commentator, said:

[T]here’s a certain element of waiting for the markets to weigh in and show Congress that they have to get serious here…You see the Administration almost kind of, almost daring the markets to respond, yesterday saying that the Congress had to act by 4:00 yesterday afternoon before the Asian markets started to open.

How true, and how irresponsible. The Obama Administration spent all weekend trying to talk down markets, hoping to make use of any artificial drop for political purposes.

Never mind that the financial security of hundreds of millions of Americans and others would be injured in the process. The Administration needs what it has already dubbed “the Boehner drop”—named after Republican Speaker of the House John Boehner—to try to get its way in the debt ceiling negotiations.

The attempt by senior members of the Administration, including Treasury Secretary Timothy Geithner, to make markets even more nervous than they are was noticed by other journalists. Veteran financial journalist Charles Gasparino vented his frustration on ABC’s This Week with Christian Amanpour by saying “it’s irresponsible for Geithner to go out there to talk about default. If he’s worried about the Asian markets tonight, why does he mention default? We are not going to default. We have cash on hand to pay bond holders.”

But that is the political game the White House is playing—and it’s a dangerous one. Investment adviser James Rickards wrote to Politico‘s Playbook, “Geithner and Obama are foolish to try to ‘scare’ markets over the debt ceiling. Markets are already scared. They’re looking for reassurance and a more mature dialogue.”
Instead, we have the President and his legion of foot soldiers running amok, hoping to threaten the markets to achieve their political ends.

But amid the maneuvering, there have been some moments of unvarnished honesty, if only accidental. Yesterday, White House deputy press secretary Dan Pfeiffer admitted on Twitter that President Obama will likely sign any debt deal Congress sends his way. Heritage’s Rory Cooper writes:

This revelation came in an exchange with Stephen Gutowski, the blogger known as The College Politico. Gutowski asked Pfeiffer: ‘Do you see a scenario where the house & senate pass a deal but the President doesn’t sign it?’ and Pfeiffer responded: ‘No, bc only something that has R and D support can pass both bodies.’

With those words, Pfeiffer highlighted a truth that has become increasingly clear. Obama is not the mediator of a grand bargain the White House has attempted to portray him to be, Cooper explains. Instead, his role in the debt ceiling debate has been subordinated to the House and the Senate, leaving him with nothing but veto threats, ultimatums, and rhetoric designed to force a resolution that suits his political ends.

Since Congress holds the cards, it’s up to them to get the job done. Now they should listen to their employers—the American people—and deliver a solution that meets the test of Moody’s and Standard & Poor’s to bring down our debt ratio through spending cuts, not tax hikes, and preserves our nation’s ability to defend itself.


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Originally published July 29, 2011, by, and used with the permission of, the Heritige Foundation.

Federal Budget Truths

The Washington Post babbled once again today about Barack Hussein Obama inheriting a huge deficit from Bush. Amazingly enough, a lot of people swallow this nonsense. So once more, a short civics lesson.

Budgets do not come from the White House. They come from Congress and the party that controlled Congress since January 2007 is the Democrat Party.

Furthermore, the Democrats controlled the budget process for FY 2008 and FY 2009 as well as FY 2010 and FY 2011.

In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.

For FY 2009 though, Nancy Pelosi and Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep government running until Barack Hussein Obama could take office. At that time, they passed a massive omnibus spending bill to complete the FY 2009 budgets.

And where was Barack Hussein Obama during this time? He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete FY 2009.

If the Democrats inherited any deficit, it was the FY 2007 deficit, the last of the Republican budgets. That deficit was the lowest in five years, and the fourth straight decline in deficit spending. After that, Democrats in Congress took control of spending, and that includes Barack Hussein Obama, who voted for the budgets.

If Obama inherited anything, he inherited it from himself.

In a nutshell, what Obama is saying is I inherited a deficit that I voted for and then I voted to expand that deficit FOUR-FOLD since January 20th.

There is no way this will be widely publicized by the dominant leftist media. So each of us must send it on. This is your chance to make a positive difference, and save your country from even further disastrous spending by the Democrats.

The Right to Work: A Fundamental Freedom

Boeing is a great American company. Recently it has built a second production line—its other is in Washington State—in South Carolina for its 787 Dreamliner airplane, creating 1,000 jobs there so far. Who knows what factors led to its decision to do this? As with all such business decisions, there were many. But the National Labor Relations Board (NLRB)—a five-member agency created in 1935 by the Wagner Act (about which I will speak momentarily)—has taken exception to this decision, ultimately based on the fact that South Carolina is a right-to-work state. That is, South Carolina, like 21 other states today, protects a worker’s right not only to join a union, but also to make the choice not to join or financially support a union. Washington State does not. The general counsel of the NLRB, on behalf of the International Association of Machinists union, has issued a complaint against Boeing, which, if successful, would require it to move its South Carolina operation back to Washington State. This would represent an unprecedented act of intervention by the federal government that appears, on its face, un-American. But it is an act long in the making, and boils down to a fundamental misunderstanding of freedom.

Where does this story begin?

The Wagner Act and Taft-Hartley

In 1935, Congress passed and President Franklin Roosevelt signed into law the National Labor Relations Act (NLRA), commonly referred to as the Wagner Act after its Senate sponsor, New York Democrat Robert Wagner. Section 7 of the Wagner Act states:
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.

Union officials such as William Green, president of the American Federation of Labor (AFL), and John L. Lewis, principal founder of the Congress of Industrial Organizations (CIO), hailed this legislation at the time as the “Magna Carta of Labor.” But in fact it was far from a charter of liberty for working Americans.
Section 8(3) of the Wagner Act allowed for “agreements” between employers and officers of a union requiring union membership “as a condition of employment” if the union was certified or recognized as the employees’ “exclusive” bargaining agent on matters of pay, benefits, and work rules. On its face, this violates the clear principle that the freedom to associate necessarily includes the freedom not to associate. In other words, the Wagner Act didn’t protect the freedom of workers because it didn’t allow for them to decide against union membership. To be sure, the Wagner Act left states the prerogative to protect employees from compulsory union membership. But federal law was decidedly one-sided: Firing or refusing to hire a worker because he or she had joined a union was a federal crime, whereas firing or refusing to hire a worker for not joining a union with “exclusive” bargaining privileges was federally protected. The National Labor Relations Board was created by the Wagner Act to enforce these policies.

During World War II, FDR’s War Labor Board aggressively promoted compulsory union membership. By the end of the war, the vast majority of unionized workers in America were covered by contracts requiring them to belong to a union in order to keep their jobs. But Americans were coming to see compulsory union membership—euphemistically referred to as “union security”—as a violation of the freedom of association. Furthermore, the nonchalance with which union bosses like John L. Lewis paralyzed the economy by calling employees out on strike in 1946 hardened public support for the right to work as opposed to compulsory unionism. As Gilbert J. Gall, a staunch proponent of the latter, acknowledged in a monograph chronicling legislative battles over this issue from the 1940s on, “the huge post-war strike wave and other problems of reconversion gave an added impetus to right-to-work proposals.”

When dozens of senators and congressmen who backed compulsory unionism were ousted in the 1946 election, the new Republican leaders of Congress had a clear opportunity to curb the legal power of union bosses to force workers to join unions. Instead, they opted for a compromise that they thought would have enough congressional support to override a presidential veto by President Truman. Thus Section 7 of the revised National Labor Relations Act of 1947—commonly referred to as the Taft-Hartley Act—only appears at first to represent an improvement over Section 7 of the Wagner Act. It begins:

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any and all such activities. . . .

Had this sentence ended there, forced union membership would have been prohibited, and at the same time voluntary union membership would have remained protected. Unfortunately, the sentence continued:

...except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.

This qualification, placing federal policy firmly on the side of compulsory union membership, left workers little better off than they were under the Wagner Act. Elsewhere, Taft-Hartley did, for the most part, prohibit “closed shop” arrangements that forced workers to join a union before being hired. But they could still be forced to join, on threat of being fired, within a few weeks after starting on the job.

Boeing’s Interest, and Ours

It cannot be overemphasized that compulsory unionism violates the first principle of the original labor union movement in America. Samuel Gompers, founder and first president of the AFL, wrote that the labor movement was “based upon the recognition of the sovereignty of the worker.” Officers of the AFL, he explained in the American Federationist, can “suggest” or “recommend,” but they “cannot command one man in America to do anything.” He continued: “Under no circumstances can they say, ‘you must do so and so, or, ‘you must desist from doing so and so.’” In a series of Federationist editorials published during World War I, Gompers opposed various government mandate measures being considered in the capitals of industrial states like Massachusetts and New York that would have mandated certain provisions for manual laborers and other select groups of workers:

The workers of America adhere to voluntary institutions in preference to compulsory systems which are held to be not only impractical but a menace to their rights, welfare and their liberty.

This argument applies as much to compulsory unionism—or “union security”—as to the opposite idea that unions should be prohibited. And in a December 1918 address before the Council on Foreign Relations, Gompers made this point explicitly:

There may be here and there a worker who for certain reasons unexplainable to us does not join a union of labor. This is his right no matter how morally wrong he may be. It is his legal right and no one can dare question his exercise of that legal right.

Compare Gompers’s traditional American view of freedom to the contemptuous view toward workers of labor leaders today. Here is United Food and Commercial Workers union strategist Joe Crump advising union organizers in a 1991 trade journal article: “Employees are complex and unpredictable. Employers are simple and predictable. Organize employers, not employees.” And in 2005, Mike Fishman, head of the Service Employees International Union, was even more blunt. When it comes to union organizing campaigns, he told the Wall Street Journal, “We don’t do elections.”

Under a decades-old political compromise, federal labor policies promoting compulsory unionism persist side by side with the ability of states to curb such compulsion with right-to-work laws. So far, as I said, 22 states have done so. And when we compare and contrast the economic performance in these 22 states against the others, we find interesting things. For example, from 1999 to 2009 (the last such year for which data are available), the aggregate real all-industry GDP of the 22 right-to-work states grew by 24.2 percent, nearly 40 percent more than the gain registered by the other 28 states as a group.

Even more dramatic is the contrast if we look at personal income growth. From 2000 to 2010, real personal incomes grew by an average of 24.3 percent in the 22 right-to-work states, more than double the rate for the other 28 as a group. But the strongest indicator is the migration of young adults. In 2009, there were 20 percent more 25- to 34-year-olds in right-to-work states than in 1999. In the compulsory union states, the increase was only 3.3 percent—barely one-sixth as much.
In this context, the decision by Boeing to open a plant in South Carolina may be not only in its own best interest, but in ours as well. So in whose interest is the National Labor Relations Board acting? And more importantly, with a view to what understanding of freedom?

Public Sector Unionism

As more and more workers and businesses have obtained refuge from compulsory unionism in right-to-work states in recent decades, the rationality of the free market has been showing itself. But the public sector is another and a grimmer story.

The National Labor Relations Act affects only private-sector workers. Since the 1960s, however, 21 states have enacted laws authorizing the collection of forced union dues from at least some state and local public employees. More than a dozen additional states have granted union officials the monopoly power to speak for all government workers whether they consent to this or not. Thus today, government workers are more than five times as likely to be unionized as private sector workers. This represents a great danger for taxpayers and consumers of government services. For as Victor Gotbaum, head of the Manhattan-based District 37 of the American Federation of State, County and Municipal Employees union, said 36 years ago: “We have the ability, in a sense, to elect our own boss.”

How this works is simple, and explains the inordinate power of union officials in so many states that have not adopted right-to-work laws. Union officials funnel a huge portion of the compulsory dues and fees they collect into efforts to influence the outcomes of elections. In return, elected officials are afraid to anger them even in the face of financial crisis. This explains why states with the heaviest tax burdens and the greatest long-term fiscal imbalances (in many cases due to bloated public employee pension funds) are those with the most unionized government workforces. California, Illinois, Massachusetts, Michigan, Nevada, New Jersey, New York, Ohio and Wisconsin represent the worst default risks among the 50 states. In 2010, an average of 59.2 percent of the public employees in these nine worst default-risk states were unionized, 19.2 percentage points higher than the national average of 40 percent. All of these states except Nevada authorize compulsory union dues and fees in the public sector.

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Fortunately, there are signs that taxpayers are recognizing the negative consequences of compulsory unionism in the public sector. Just this March, legislatures in Wisconsin and Ohio revoked compulsory powers of government union bosses, and similar efforts are underway in several other states. Furthermore, the NLRB’s blatantly political and un-constitutional power play with regard to Boeing’s South Carolina production line is sure to strike fair-minded Americans as beyond the pale. Now more than ever, it is time to push home the point that all American workers in all 50 states should be granted the full freedom of association—which includes the freedom not to associate—in the area of union membership.

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The preceding is adapted from a lecture delivered at Hillsdale College by Mark Mix, on January 31, 2011, during a conference co-sponsored by the Center for Constructive Alternatives and the Ludwig von Mises Lecture Series. MARK MIX is president of the National Right to Work Legal Defense Foundation, as well as of the National Right to Work Committee, a 2.2 million member public policy organization. He holds a B.A. in finance from James Madison University and an associate’s degree in marketing from the State University of New York. His writings have appeared in such newspapers and magazines as the Wall Street Journal, the Washington Times, the Detroit Free Press, the San Antonio Express-News, the Orange County Register and National Review.


Reprinted by permission from Imprimis, a publication of Hillsdale College.

Obama Administration Approves Illegal Reporting Requirement

On Monday, the Justice Department announced that it will proceed with a controversial reporting procedure that will require federally licensed firearms retailers in states bordering Mexico to report multiple sales of semi-automatic rifles.

Last fall, the reporting procedure was proposed as an “emergency" measure by the Bureau of Alcohol, Tobacco, Firearms and Explosives. The procedure specifically calls for all of the firearm retailers in California, Arizona, New Mexico and Texas to report multiple sales, or other dispositions, of two or more .22 caliber or larger semi-automatic rifles that are capable of accepting a detachable magazine and that are purchased by the same individual within five consecutive business days. For example, a dealer would have to tell the government every time a deer hunter in Sacramento or Amarillo finds a good deal on a pair of semi-auto .30-06s like the popular Remington 7400.

The BATFE has no legal authority to demand these reports, and the flood of new paperwork (BATFE estimates 18,000 reports per year) will waste scarce law enforcement resources that should be spent on legitimate investigations.

Deputy Attorney General James Cole said in the DOJ statement that this new reporting measure “will improve the ability of the Bureau of Alcohol, Tobacco, Firearms and Explosives to detect and disrupt the illegal weapons trafficking networks responsible for diverting firearms from lawful commerce to criminals and criminal organizations.”

As anyone who watches the news is aware, the BATFE has recently come under intense scrutiny due to its involvement in, and handling of, the ill-conceived and ill-fated “Fast and Furious” operation. "Fast and Furious" was a part of the five-year-old "Project Gunrunner" program and encouraged Arizona gun stores to sell thousands of guns to suspicious buyers, despite objections from dealers and BATFE field agents alike.

House Judiciary Committee Chairman Lamar Smith (R-Texas) called the new policy "the height of hypocrisy," and said the Obama administration is restricting the gun rights of border state citizens "when the administration knowingly and intentionally allowed guns to be trafficked into Mexico.” Smith went on to say, “Limiting the Second Amendment rights of law-abiding citizens is not going to solve the problem."

Earlier this year, the U.S. House of Representatives voted on and passed, by a vote of 277 to 149, an amendment to H.R. 1 offered by Reps. Denny Rehberg (R-Mont.) and Dan Boren (D-Okla.) that prohibits the use of federal funds for the reporting scheme.

Unfortunately, the amendment was not included in the final version of the bill as a result of Senate inaction. In March, U.S. Sens. Jon Tester (D-Mont.) and Richard Burr (R-N.C.) introduced legislation (S. 570) “to prohibit the Department of Justice from tracking and cataloguing the purchases of multiple rifles and shotguns." The bill would prohibit the use of federal funds for a multiple sales reporting scheme proposed by the Bureau of Alcohol, Tobacco, Firearms and Explosives. Please contact your Senator and encourage him or her to cosponsor S. 570 to stop this blatant abuse of power. You can reach your Senators at (202) 224-3121 or send them an e-mail by clicking here.

Commenting on the DOJ announcement, NRA-ILA Executive Director Chris W. Cox said, “$40 billion transnational criminal enterprises don't fill out paperwork and are not deterred by paperwork violations. This is a blatant effort by the Obama administration and ATF to divert the focus of Congress and the general public from their gross incompetence in the 'Fast and Furious' scandal. This scheme will unjustly burden law abiding retailers in border states. It will not affect drug cartels and it won't prevent violence along our borders. The BATFE and the Administration lack the statutory authority to do this and the NRA will file suit as soon as BATFE sends the first demand letters.”