AFSCME Council 81 members brought their message to the Legislative Hall in Dover. (Photo by Edward Savaria)

Hundreds of AFSCME Council 81 members rallied at the Legislative Hall in Dover, Delaware to make sure legislators heard their message: “NO PAY CUT!”

To meet the state’s $800 million budget deficit, Gov. Jack Markell (D) has proposed slashing state employee salaries by 8 percent. Meanwhile, attrition, hiring freezes and funding cutbacks are already taking their toll on public services.

As Council 81 Exec. Dir. Mike Begatto said:

“An 8 percent pay cut for public employees would be an economic disaster for Delaware. It would take 91 million dollars out of Delaware’s economy. That will deepen our recession. It would hurt small businesses and it would be bad for every Delaware taxpayer.”

The rally featured a large “pledge card” for legislators to sign and express their support for no pay cuts and finding more responsible sources of revenue. See a video of the commitment rally here.

“I’m a single parent and if my pay is cut 8 percent, I won’t be able to provide for my family,” says AFSCME member Anthony Episcopo, a social worker who processes requests for food stamps and Medicaid. “There are more responsible ways to balance the state’s budget than on the backs of Delaware’s teachers, nurses and law enforcement officers.”

AFSCME members have proposed a number of alternatives to address Delaware’s budget constraints, including increasing the annual licensing fee from $250.00 to $350.00 a year for 580,000 Limited Liability Corporations chartered in the state and tapping into the state’s so-called “rainy day fund” to prevent more cutbacks.

Now it’s time for legislators to listen and do the right thing.

This entry by AFSCME President Gerald McEntee is cross-posted from Huffington Post and Oxdown Gazette.

In recent days, two generally progressive commentators have written in favor of taxing all or part of the value of employer provided health benefits as a way of paying for some of the costs of health care reform. They’ve suggested that AFSCME might “kill” health care reform because of our opposition to taxing the value of benefits. Of course we reject that characterization of our efforts.

In fact, AFSCME plays a leading role in the effort to pass real health care reform. Our stand against taxing benefits is grounded in a conviction that regressive taxation cannot cure our health care ills. Just as importantly, we are concerned that linking an unpopular tax to health care reform could kill our efforts to provide health care for all.

The argument in favor of taxing benefits centers on two points. First, like all tax exclusions and deductions, the exclusion of health benefits from taxation is worth more to higher income individuals who are in higher tax brackets. Second, the federal government foregoes $145 billion annually by shielding employer-sponsored health care benefits from taxation. Fair enough.

But there are real risks that come with a tax on health benefits. They include the likelihood that employer-sponsored insurance will be destabilized at a time when it should be reinforced; the disparate impact a change in policy will have on people who are older, sicker or in higher cost areas; the disproportionate burden a change will have on children and families; and an erosion of benefits and shifting of risk to individuals.

Some argue in favor of a compromise that would tax only “Cadillac” or “gold-plated” health insurance plans. But that won’t work. Just last month, The Commonwealth Fund reported that “many so-called “gold-plated” health benefit premiums are high only because insur­ance costs vary according to the size of the firm, the geographic region in which it is located, and the com­position of the employer’s risk pool.” Establishing a universal cap in today’s insurance market, they noted, “will have a disproportionate impact on workers in small firms, high-cost areas, and expensive risk pools.”

In addition, we need to consider the wisdom of taxing health benefits in light of the alternatives. For example, according to the Senate Finance Committee, the favorable tax treatment afforded to Capital Gains and Dividend income costs the government $178 billion per year. However, unlike the tax treatment of health benefits which goes to a broad swath of the American public, a very narrow economically privileged slice of taxpayers benefit from this favorable treatment.

This begs the question: why levy a tax on working people when this inequitable favorable tax treatment, primarily available to the wealthy, remains in place? Many of the same progressives who advocate taxing health benefits have rightly railed against rising income inequality and the dangers it presents to robust economic growth. Why not fund health care, mostly for low income underinsured and uninsured people, while simultaneously addressing one of the biggest causes of wealth inequality?

The introduction of the health benefits tax could well be the death knell for health care reform. In the historic 2008 election campaign, then Senator Barack Obama campaigned hard against the taxation of benefits, a key component of John McCain’s health care policy. President Obama recognized the taxation of benefits is unacceptable to the American public and made it a centerpiece of his campaign. He spent tens of millions of dollars on advertisements slamming McCain on the issue.

If anything, public opposition to a tax on benefits is growing. Recent polling indicates that 80 percent of likely voters oppose taxing the value of benefits while only 17 percent support it. Strong majorities oppose a health care tax without regard to political affiliation.

AFSCME opposes the health benefits tax because it could “kill” health care reform. Is there any better way to give Republicans cover to protect the insurance industry and their right wing cronies, and vote against reform, than to let them frame the issue as opposing a very unpopular tax? Do we hear Republicans campaigning in favor of taxing health benefits? Sometimes, progressives must be saved from themselves. That’s what we are doing when we stand clearly in opposition to taxing benefits that America’s working families earn on the job.

This Sunday night, the CBS News program “60 Minutes” will feature a story on American International Group (AIG), the failed insurance giant bailed out by taxpayers with more than $180 billion.  AFSCME has been a long-time critic of AIG and its top management.  In the years before the company imploded, AFSCME repeatedly warned that AIG’s board and management were acting in ways that threatened the interests of shareholders, including the pension funds of AFSCME members and other working Americans.   In early 2005, for example, AFSCME International President Gerald W. McEntee stated “AIG’s business practices put shareholders at risk for significant losses.”

Richard Ferlauto, director of corporate governance and pension investment at AFSCME, was interviewed for the “60 Minutes” story and is expected to be included in their report.

Tune in to “60 Minutes” this Sunday (May 17) at 7 p.m. ET on CBS.

And join our campaign against AIG at: www.afscme.org/greed

Did you know that Citigroup CEO Vikram S. Pandit raked in a sweet $38 million in total compensation last year while running his company to the ground? Let’s not forget that Citigroup has already received $45 billion in federal bailout funds. It isn’t a coincidence that AFSCME has made repeated calls for more accountability at the company.

Or what about FedEx Corp. CEO Frederick Smith, who earned more than $10 million in total compensation in 2008? Smith, by the way, is an active opponent of unionization for his employees. While he gets a more than generous salary, FedEx Ground classifies its drivers as independent contractors so it doesn’t have to provide them with basic benefits such as health care coverage.

Despite the worst economic crisis since the Great Depression, companies continue to reward CEOs for poor performance. Haven’t these people learned their lesson? See for yourself at the AFL-CIO’s 2009 Executive PayWatch website which documents these and other outrageous examples of CEO behavior.

And while you’re at it, make sure to visit the special section on companies that lobby against their workers’ right to form a union. Also, click on the link on pay practices at other companies that have received taxpayer assistance.

You’re bound to be (unpleasantly) surprised, but this is also why AFSCME has taken the lead in the fight against corporate greed and protecting workers’ pensions. Learn more about AFSCME’s shareholder activism here.

This afternoon, the U.S. Senate passed President Obama’s budget by a vote of 53 to 43. The budget resolution had easily passed in the House earlier in the day by a margin of 233 to 193.

AFSCME President Gerald W. McEntee applauded the action by Congress which underscores President Obama’s first 100 days in office:

“This budget marks another important step on the road to economic recovery; one that paves the way for health care for all. Combined with the passage of President Obama’s jobs and economic recovery bill, the expansion of health care for children and the Lilly Ledbetter fair pay act, this budget shows the enormous progress we have made in changing the direction of our nation for the better.”

In honor of Tax Day, this story from a 2003 issue of AFSCME’s Public Employee magazine seems fitting.

Tip O’Neill, the late and great Speaker of the U.S. House of Representatives, loved to tell this story.

A constituent of mine woke up one morning and turned on the radio to listen to the weather report, provided by the National Weather Service. He heard a snow plow go by, clearing his street. He made a cup of coffee with clean water (assured by the Clean Water Act). He also cooked up some eggs and bacon — food products that were certified by the U.S. Department of Agriculture; he didn’t worry for a moment that his family might be poisoned.

The man kissed his children goodbye as they waited for the bus to take them to the public elementary and high schools. His oldest daughter, who wanted to go to college, was applying for government financial-aid loans; so on his way to the subway, he dropped her application letters in the mailbox. He passed the senior housing where his mother resided — and where she received a monthly Social Security check, high-quality health care paid for by Medicare, and a secure, warm environment to live in. Half the cost of the subway ride he took to the airport was subsidized by state and federal transportation funds. He flew to Washington to see me on a plane whose safety was ensured by Federal Aviation Administration inspectors and a flight made safe by federally operated security checkpoints. On his way to the Capitol, he stopped for an hour to enjoy the Smithsonian Institution’s National Museum of American History (no admission fee).

Then the man went to his meeting with me. He burst into my office complaining that “I never get anything for my tax dollars!”

AFSCME has been a leader in the fight to restrain undeserved CEO pay and to make corporate boards more democratic and accountable. That’s why AFSCME, the Connecticut State Treasurer and the AFL-CIO recently wrote to AIG trustees who control the government block of 78% voting power urging them to hold the Board of Directors accountable for its poor decision making on matters of executive compensation. Those decisions were wrong and an inexcusable misuse of corporate assets. And they cost taxpayers as well.

After the public outrage over AIG using taxpayer funds to award massive bonuses to employees in the division that was responsible for its near collapse, the Wall Street Journal reported this week on AFSCME’s work to ensure that taxpayers’ money is spent effectively to jumpstart our economy.

It’s time for AIG to right its course by getting a new, more accountable board and taking measures to ensure that shareholders’ (including the taxpayers) interests come first. Public outrage over lavish pay has encouraged new proposals tying executive bonuses to performance and to have boards that are transparent and accountable to shareholders. An increasing number of companies are including provisions to give shareholders a say on executive pay, including Hewlett Packard, Occidental Petroleum, and Ameriprise Financial. AFSCME is urging Charles Schwab and JPMorgan Chase to adopt “bonus banking” provisions to require that executive bonuses be paid out only if the company maintains positive performance over time.

A great ad recently put out by Americans United for Change on the Republicans’ attack on the President’s budget and their alternative plan – or lack there of.

From Americans United: “After weeks of bashing President Obama’s budget plan that lays a solid foundation for renewing our economy through investments in health care, education, and energy, House Republicans have finally come forward with their “alternative” budget.  Funny thing is, it doesn’t contain a single number. Instead it criticizes the President even more and calls for a redo of the last eight years: more tax breaks for millionaires and corporations that outsource American jobs.  They even threw their scheme for privatizing Social Security in there. The American people are not interested in traveling down the exact same road that led the nation into this economic crisis to begin with.”

On Wednesday night, the House Budget Committee adopted a budget outline by a party-line vote of 24-15 that will advance President Obama’s visionary budget goals.  The Budget Committee’s plan includes funding to reform our health care system and so-called “reconciliation” instructions that would allow legislation implementing Obama’s health care and education policies to move through the Senate without the 60 votes needed to avoid a filibuster.  The Committee considered and rejected 27 of 28 Republican amendments, including one by ranking member Paul Ryan (R-WI) that would have barred the use of a health care reserve fund to pay for the creation of a public health insurance plan option.  The House budget plan advances President Obama’s commitment to invest in domestic priorities, including annually-funded programs administered by state and local governments.

On Thursday, the Senate Budget Committee adopted its version of a budget blueprint also on a party-line vote of 13-10.  It includes a “reserve fund” for both health care and education legislation, which cannot add to the budget deficit.  The Senate plan does not include reconciliation language and therefore would require 60 votes to pass health care reform legislation.   The Budget Committee rejected Republican proposals to cut funding and to freeze non-defense annually-funded domestic spending at its current levels.

Also, this week, a new ad (see video) backing President Obama’s budget blueprint by Americans United for Change—a coalition of unions including the AFSCME, community, environmental, progressive and other groups—urges viewers to call Congress to support Obama’s budget because it:…will rebuild our economy on a solid foundation. Jobs, health care, education, clean energy reform. On this foundation we can build real, long-term economic prosperity for all Americans.

As pointed out at AFL-CIONow blog, Republicans in both houses offered up their usual scorn and criticism, but no alternative of their own to the eight years of co-rule with the Bush administration. During those eight years, the TV ad points out, the administration “turned our economy into a house of cards,” adding: Last fall, that house came tumbling down.

When asked about the ”just say no” stance Republicans have taken on the budget, Obama said:

Their alternative is to stand pat and to simply say, “We are just going to not invest in health care. We’re not going to take on energy. We’ll wait until the next time that gas gets to $4 a gallon. We will not improve our schools. And we’ll allow China or India or other countries to lap our young people in terms of their performance. We will settle on lower growth rates, and we will continue to contract, both as an economy and our ability to provide a better life for our kids.”

That, I don’t think, is the better option.

As the U.S. House and Senate begin key work on President Obama’s budget request, AFSCME Indiana Council 62, working with state legislative leaders and two other groups, encouraged the Indiana congressional delegation to support President Obama’s budget plan to rebuild and renew America this week.  “Without the president’s budget, we’re concerned that our school systems … will collapse because they don’t have the money available and the state does not have the money available,” said Lettie Oliver, associate director of AFSCME District 62, which is based in Indianapolis. “We’re also looking to ensure that we have health care for everybody. … I’m more concerned about the price tag and the devastation of American citizens without the president’s budget.”

Oliver was joined by state Rep. Bill Crawford, Chair of the Ways and Means Committee; Rep. Dennis Tyler, Vice Chair of the Labor and Employment Committee; Rep. John Bartlett, Chairman of the Government and Regulatory Reform Committee; LuCinda Hohmann of Environment America; and Jeremy Funk of Americans United for Change urged members of Congress to end the failed policies of the Bush era by supporting real commitments to health care, education and restarting our economy.

Americans United for Change also unveiled a new ad airing this week in support of the President’s budget plan on broadcast television in the Indianapolis, Ft. Wayne, Terra Haute, and South Bend media markets.