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Tuesday, December 16

The Senate for Sale Scandal: Balanoff-Obama and Balanoff-Blagojevich ties

"Inspector" Steve Diamond is on the case. To the chase!

Who is Tom Balanoff? Obama, SEIU and the Senate For Sale Scandal:

One of the mystery figures in the Illinois Governor Blagojevich "Senator for Sale" Scandal is the unnamed "SEIU Official" who spoke to Blagojevich about the replacement of Barack Obama in the United States Senate.

Who is it?

If we knew, what would that tell us about the role of SEIU in this scandal?

Given the optimism about the new Obama Presidency among wide segments of the labor movement, answering these questions is important.

Has SEIU Official put at risk the hopes of millions of American workers?

Certainly the sharp battle to defend the UAW now underway indicates the uphill battle labor will face.

For the record, SEIU has issued a statement that:

"We have no reason to believe that SEIU or any SEIU official was involved in any wrongdoing."

"In keeping with the U.S. Attorney's request, we are not sharing information with the media at this time."

In other words, it is conceivable that SEIU was part of a giant sting operation - that the minute they got word of Blagojevich's interest in a pay to play approach to the Senate seat they called the FBI and everything that followed was aimed at catching a Governor out of control.

Perhaps. But until that time we are left we what we have been told.

First, let's review.

In the FBI agent's affidavit which accompanies the criminal complaint filed last week in federal court, SEIU Official first appears on November 7 in a three way conversation between Blagojevich, his aide John Harris and an unnamed Advisor B. Harris opens up the discussion of the possibility of a position for Blagojevich with Change To Win, the union federation formed out of a split from the older AFL-CIO and that now includes SEIU as its most powerful affiliate.

Harris suggests that SEIU Official make Blagojevich the "head" of Change To Win in return for the appointment of a Senate candidate that Obama favors and that Obama in turn would help SEIU with its legislative agenda. Blagojevich, though, remains non-committal to the 3-way deal. He indicates a need to earn a substantial salary. Union staff positions pay salaries well below equivalent positions in the private sector.

On November 10 a conference call with Blagojevich, Harris and numerous other individuals in Illinois and D.C. makes clear that the Change To Win job is only one of a number of scenarios under consideration. Others talked about included a cabinet post, an ambassadorship and corporate board positions. Harris again raised the idea of a 3-way Change To Win deal to be put in place with the help of SEIU and Obama.

On November 12, following several other conversations in the interim that raised a new possibility, that of Blagojevich being named head of a non-profit entity with funding raised in part by Obama from wealthy individuals, Blagojevich speaks with Advisor B about the this alternative. Advisor B says he prefers the 3-way deal with Change To Win and SEIU because there would be fewer "fingerprints" on Obama's involvement.

But Blagojevich indicates he prefers the non-profit idea because he is not sure Change To Win would be around in two years' time. (This may refer to the fact that there is some discussion in labor circles that Change To Win will merge with the AFL-CIO in the near future. One of the differences that separated the two federations was the view of Andy Stern and Change To Win that labor involvement in electoral politics was not helping labor grow. Presumably that debate is over and Stern now recognizes that politics does indeed matter.)

A second conversation later that same day between just Blagojevich and an unnamed "Washington D.C.-based advisor" repeats the same debate about the alternatives: the non-profit v. the Change To Win position.

In a third conversation that same day just between Blagojevich and SEIU Official, who was in Washington, D.C. at the time, the Governor again raises the idea of the non-profit entity but there is no apparent discussion of the Change To Win position at all. SEIU Official agreed to take the non-profit idea and "put that flag up and see where it goes." Apparently, that meant discussing it with the Obama camp or with Valerie Jarrett directly.

Clearly Blagojevich was less interested in a "cushy union job" with Change To Win than has been suggested by some, including U.S. Attorney Patrick Fitzgerald. But just as clearly, SEIU Official was deeply involved in the discussions that did take place about Change To Win and the alternative, a possible new non-profit entity to be established with Obama’s help in order to secure the appointment of Valerie Jarrett as the new Senator from Illinois.

Who is "SEIU Official"?

I called SEIU last week to ask who the SEIU Official was and, in particular, if it was Andy Stern himself, as some had suggested in the blogosphere.

I was referred to an article that had appeared that very day in the Wall Street Journal that suggested, based on the Journal's review of an SEIU internal communication, that "SEIU Official" was, indeed, Tom Balanoff, simultaneously head of SEIU Local 1 (a janitors' and doorman's local union in Chicago), head of SEIU's 165,000 member statewide Illinois Council and a member of the International Executive Board of SEIU.

I was then referred to Ramona Oliver, head of Media for SEIU, but my call to her was not returned. I then called the Wall Street Journal and was told by one of their reporters that they had been told that the SEIU Official was, in fact, not Andy Stern.

The Journal reporter was not able to provide me any more information about the SEIU internal communication but did confirm that that communication was prepared only recently, after the discussions between Blagojevich and SEIU Official had taken place.

The Journal reporter was not able to shed any light on why the SEIU Official was in Washington D.C. when he spoke to Blagojevich. Balanoff’s office is in Chicago as is that of the Obama transition team, while that of Stern and Change To Win is in D.C. Of course, Balanoff likely travels for meetings to D.C. on a regular basis.

Clearly figures within SEIU were attempting to steer interest away from Andy Stern and towards Tom Balanoff.

That, of course, raises an important question: Who is Tom Balanoff?

Who is Tom Balanoff?

A review of what is known about Tom Balanoff indicates that he is, in fact, very close to Andy Stern. It seems highly unlikely that Balanoff would have carried on discussions with Blagojevich without informing Andy Stern. In fact, given his executive role in the SEIU hierarchy and his position as a director of SEIU, he would owe Stern and SEIU a fiduciary obligation to keep them fully informed about such discussions.

It also turns out that there is a close long standing relationship between Balanoff and Obama, and between Balanoff and Blagojevich.

What do we know?

Tom and Andy

Balanoff himself is a lifelong professional union staffer, joining the labor movement after earning a degree at the University of Illinois. John Sweeney, Stern’s predecessor at SEIU and now head of the rival AFL-CIO, hired him into SEIU's Research Department after earlier stints with the Fire Fighters (my late uncle's old union) and the Allied Industrial Workers.

Once he passed an apprenticeship in D.C. he became part of the International’s machinery, installed by Sweeney as a trustee controlling SEIU Local 73 in Chicago. Local 73 represents public employees in Illinois and Indiana, although Balanoff was never a public employee as far as I can tell. He later became the president of Local 73 when the trusteeship ended and control over the local was purportedly returned to its members.

One former employee of Local 73 wrote that Balanoff’s “poison is not alcohol. It’s power.” His "desire for power, for responsibility and an ability to swing with the big boys, landed him where he is, and offered him opportunities beyond his wildest hopes."

This was home turf for the Chicago born and raised Balanoff. Balanoff's father, Jim, was once in the Communist Party and was a life long Steelworkers activist who headed up the dissident District 31 which covered the huge steel mills that used to occupy south Chicago and Gary, Indiana. (See The Battling Balanoffs for a profile of the family - no longer CP'ers apparently, just "progressive" - so progressive that Tom's Dad met his Mom while both were campaigning for the CP-backed Henry Wallace in 1948.)

In 1999, Balanoff tasked by Stern, now head of SEIU, to be trustee of the corrupt Janitors Union in New York City, Local 32B-32J, once headed by the notorious Gus Bevona.

Balanoff now heads up SEIU's 35,000 member janitors' and doormans' Local 1 in Chicago though he has never been a janitor or doorman as far as I can tell. Through a series of mergers, Local 1 now has members in several states in the Midwest. And Balanoff also heads up the 165,000 member Illinois Council of SEIU, now a powerhouse in Chicago and Illinois politics.

Over the past decade he has worked hand in glove with Andy Stern to implement Stern's peculiar agenda for building SEIU power. Stern's top down bureaucratic strategy has engendered widespread criticism and more recently militant opposition from rank and file union members.

While apologists for Stern among academics and some on the left proclaim SEIU and other Change To Win affiliates to be a harbinger of a "new unionism" in America, others decry the trampling of union democracy by the sweetheart deals Stern has made with employers and the top down mandatory restructurings. Critics point to Stern’s cozying up to the authoritarian Chinese regime where a faux union was recently installed in a few Wal-Mart stores with the alleged assistance of Stern.

A key part of the Stern strategy has been using the weapon of trusteeship to force the merger of smaller locals into new centralized entities subject to influence if not control of the International itself. His major goal is to centralize the union into a smaller group of mega-locals that leave rank and file influence and union democracy behind. Across the country he has forced once locally controlled unions into large statewide, even cross border, entities run by professional staff rather than their own members. The number of professional staff in the union has multiplied several fold under this approach.

In a recent battle with California’s United Healthcare Workers (UHW), itself formed as a result of the merger of numerous smaller SEIU locals, it is alleged by UHW that Stern engaged in a "relentless, pervasive, and unprecedented campaign to target, retaliate against, discredit, and hobble” UHW as Stern and the International tried to restructure the organization and to run its charismatic and popular leader, Sal Rosselli, out of office.

(Unfortunately, Rosselli only a few years earlier was a key Stern ally in the formation of Change To Win out of the AFL-CIO. In addition, at the recent SEIU Convention he used an attack on a sister AFL-CIO union, the California Nurses' Association, as a whipping boy in order to argue that UHW is loyal to SEIU.)

According to Steve Early, an experienced and respected labor lawyer who follows SEIU closely, “SEIU trusteeships have become a tool for consolidating Stern's personal power, stifling dissent, negotiating substandard contracts, and creating an atmosphere of fear and intimidation viewed as unhealthy, even in a union that's diverse and fast-growing.”

More than 40 SEIU locals, out of 275, have been taken over by the International under Stern’s leadership. (By the way, his predecessor John Sweeney was no stranger to this bureaucratic technique. Sweeney was still head of SEIU when Balanoff was put in charge of Local 73. But when it comes to using trusteeships, Stern is Picasso whereas Sweeney was a mere Juan Gris.)

Balanoff was part of that kind of effort in Illinois and when similar efforts ran into opposition in other parts of the country, such as in Massachusetts and California, Balanoff was dispatched by Stern to quell dissent, usually in the guise of a “hearing officer” sent by the International to ferret out problems.

At a recent SEIU Convention, Balanoff "deep sixed" reform proposals made there by UHW of California so that they never made it out of the committee he chaired to the Convention floor.

Balanoff and Blagojevich

Particularly controversial has been Stern's, and Balanoff's, strategy of "organizing politicians first, workers second." This has meant funneling tens of millions of dollars into the campaigns of politicians who can then be called upon to make legal changes that mandate that thousands of previously non-union workers become dues paying union members, sometimes without the clumsy unpredictable practice of actually holding a genuine union election.

In Illinois, Balanoff and Stern have put this strategy to work with great effect.

A few years ago, Blagojevich told Stern of a politician on the rise named Rod Blagojevich. SEIU thought it could back Blagojevich’s run for governor at a time when no one else thought the Democrats had a chance of winning the post. SEIU poured money and activists into the campaign and Blagojevich eked out a narrow victory over his Republican opponent.

In return, Blagojevich used his executive authority that made it a cakewalk for SEIU to “oganize” tens of thousands of new workers into the union. The effort only became a challenge for SEIU because of the attempt by a competing union to win over the same workers.

“We told our members we had to build up our political arm in order to grow, so we increased the locals payments to the state council,” Balanoff told The American Prospect. “And we took a huge risk with Blagojevich.”

Prospect editor Harold Meyerson wrote:

“In exchange for its support, the SEIU won a specific commitment from Blagojevich: an executive order that created collective bargaining rights for the state's 25,000 home-care workers….With his executive order, Blagojevich removed those workers from legal limbo, and the SEIU won the vote of the members to represent them at the bargaining table. On February 18 of this year, Blagojevich signed an equivalent order for the state's 48,000 child-care workers, decreeing that a representation election be held within 42 days.”

Today the Wall Street Journal is reporting that yet another example of this kind of deal was underway with Blagojevich planning to sign yet another executive order that would have enabled SEIU to secure unionization of 1,200 home care workers for the developmentally disabled. Apparently, the deal was only known to SEIU and not to its major competitor in this arena, the AFL-CIO's AFSCME.

This effort duplicated a similar move in California where a deal with Governor Gray Davis led to the “unionization” of tens of thousands of home health care workers without the messy unpredictability of an actual election.

Here is how one analyst described it:

Stern has also boosted his rolls with workers who aren't really workers at all. In California, for example, Stern cannily used political contributions and organizing to reroute welfare dollars into his union and create a whole new class of members. After a decade's worth of organizing politicians in Sacramento—ex-Gov. Gray Davis got $625,000 from SEIU—and also the Los Angeles County Board of Supervisors, Stern persuaded them to create an agency that would serve as the employer for home-care workers. Then in 1999, the agency held an election so that SEIU could become the exclusive bargaining agent. When SEIU—which faced no opposition—won the low-turnout affair, 74,000 members were added to its rolls.

But most of those home-care workers are parents and children who got government money for taking care of family members or close friends. They didn't provide nursing services but simply bathed and fed their disabled children or elderly parents. Most home-care workers are part-time, working for one client. Their average pay is less than $700 a month (now minus dues to SEIU).

Stern and SEIU's strategy includes thug-like tactics used against fellow unions. When Rose Ann DeMoro, the president of the AFL-CIO's California Nurses' Association, was scheduled to be honored at a dinner sponsored by the Democratic Socialists of America in Chicago, Balanoff, a previous honoree at the annual event (see picture above), wrote to protest the award arguing, absurdly, that this widely respected and militant union was engaged in activities equivalent to the union-busting National Right to Work Committee.

At a recent meeting of Labor Notes, a major conference of labor activists held every other year in Detroit, invited De Moro to speak, SEIU bussed in dozens of union members who were told, again absurdly, that a "union buster" was speaking at the event. One participant died of a heart attack and another was bloodied in the confrontation and sent to the hospital.

Tom and Barack

Now, it turns out, labor is trying the Stern strategy on a much larger scale. They hope to use the leverage they have created with the Obama victory to put in place something called the Employee Free Choice Act, which would allow unions to be organized once again without bothering about a democratic union election.

Of course, for decades, as former Clinton era NLRB chair Bill Gould has explained, the deck has been stacked against labor in the union election process. It should be reformed to make elections fair and efficient. But instead both Change To Win and the AFL-CIO want to by pass that approach and use “card check” to create unions. This allows union organizers to avoid secret ballots and a campaign effort to gain union backing.

And to get the necessary legislative change in Congress it helps to have a relationship with the new President. Tom Balanoff knows Obama from way back. Balanoff himself explains that he first met Obama in 1993 when Obama was just out of Harvard Law School. Balanoff’s cousins on the south side of Chicago introduced Obama to Balanoff. Balanoff says they met Obama while Obama was a community organizer there in the mid-1980s.

The Balanoff family – including now a judge, politicians, and lawyers - was deeply immersed in the anti-machine wing of Democratic party politics. The Balanoffs would have been critical allies for a young Obama, who was thinking of attempting to duplicate the successful mayoral campaign of his late hero, Harold Washington.

The Balanoffs had close ties to independent black activists, likely a result of their long association with the Communist Party that had such an important presence in black south side Chicago. They were one of the few prominent ethnic families to back Harold Washington, himself once a labor lawyer in Chicago with links to the CP.

This introduction led to a close relationship between Balanoff and Obama as Obama began his rise to political prominence. Balanoff spoke on Obama’s behalf at the Democratic National Convention and was instrumental in securing SEIU’s endorsement over the more clearly pro-union John Edwards during the campaign itself.

When Obama was trailing in Nevada during the primaries, Balanoff and other Illinois unionists rode in to help, holding a conference call to sing Obama's praises to the locals. Balanoff told the media:

“He comes from us,” said Balanoff on Obama. “He understands our problems. We could count on Barack on all issues important to working families. Healthcare, general economic justice, jobs… Barack was there, not only there but oftentimes leading.”

What Can We Conclude?

Inevitably this review of what we know about the relationship of Obama, Balanoff, Stern and Blagojevich is incomplete. More questions remain – in fact, the review of what we do know leads to those questions. But that is helpful in and of itself.

For example, how did the idea of a job with Change To Win come up with Blagojevich? Could he have thought that up himself? It seems unlikely.

Did Balanoff suggest such a possibility? How could he have done so with any credibility if he had not discussed it with Stern? Although Stern is not named in the FBI affidavit did he have any discussions with Blagojevich?

Given the close relationship between Balanoff and Obama, would Balanoff have acted as an “emissary” (as SEIU Official is described in the affidavit) of Obama’s top confidante and advisor Valerie Jarrett without talking to Obama or at least someone who could credibly speak for Obama, perhaps Jarrett or Emanuel?

With Blagojevich and Rezko now safely in the hands of U.S. Attorney Patrick Fitzgerald we are likely to learn a good deal more about these questions and relationships.

Personally I favor organized labor being active in the political arena. But instead of competing with Big Business and Wall Street to pay for Democratic Party politicians it would be far more effective for labor to run their own candidates, chosen after open internal debate and by a democratic decision of union members. Alternatively, labor could join with like minded groups in the environmental and peace movements to support independent candidates.

SEIU, and others in the labor movement, have taken another approach that breeds authoritarianism not democratic participation by labor's rank and file. Pay to play is the wrong way to go for labor.

Sadly, organized labor may suffer the consequences of SEIU's apparent role in the Blagojevich scandal as much as anyone else.

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