Thursday, January 14, 2010

The Latest “Sweetheart Deal” Helps Unions — And Hurts Union Workers

Various press outlets are reporting some type of “deal” has been reached between union representatives and Democrats regarding the “Cadillac tax.”  Multiple sources over the past several days – including a Roll Call story from this afternoon – have indicated that such an agreement would exempt union-negotiated plans from the “Cadillac tax,” at least temporarily.  This would represent the latest “sweetheart deal” favoring a politically popular constituency at the expense of all Americans – and far from the only giveaway to unions in the bills (the retiree reinsurance trust fund and the construction exemption to the Senate “fair share” mandate being two other obvious union “sweetheart deals.”)

While this provision may appear to benefit unions – or at the very least union leaders, who have campaigned hard against the tax – such an agreement may not benefit union workers, if (as it appears) the changes to the “Cadillac tax” will be paid for by a further unprecedented expansion of the Medicare payroll tax to include non-wage income like dividends and capital gains.  Those income sources are the very same ones which businesses, particularly small businesses, rely on to reinvest in their firms – and higher taxes could force those firms to lower wages, delay hiring, or even lay people off.  So the upside of this agreement could be that union members will keep their current plan (at least for a while longer), but lose their job – all thanks to Democrats’ latest backroom deal.