updated 5/4/2005 4:11:21 PM ET 2005-05-04T20:11:21

The Labor Department cautioned organized labor in a letter made public Wednesday not to use money from pension funds to lobby against President Bush’s proposal to overhaul Social Security.

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“The department is very concerned about the potential use of plan assets to promote particular policy positions,” Alan D. Lebowitz, a department official, wrote AFL-CIO’s top lawyer.

In the letter to Jonathan P. Hiatt, AFL-CIO’s general counsel, Lebowitz also wrote that officials charged with administering multistate pension funds must not hire or fire service providers primarily on the basis of their positions on Social Security legislation.

Damon Silvers, an AFL-CIO lawyer, said, “We don’t disagree with the Department of Labor that plans should not be lobbying on Social Security. However, we believe, and we believe the department agrees, that the plans ought to be able to educate their participants on matters directly related to their retirement security.”

As for hiring decisions about investment companies, Silvers said, “we have no problem” with the letter. He said the AFL-CIO has considered a company’s position on Social Security as a “collateral issue,” and not as the sole or primary basis for a decision.

Lebowitz sent the letter after GOP Reps. John Boehner of Ohio and Sam Johnson of Texas requested an investigation.

The Labor Department letter to the AFL-CIO marked a political turnabout of sorts. Democrats have complained for months that the White House has improperly used the Social Security Administration itself to lobby on behalf of Bush’s proposals.

Rep. Henry Waxman, D-Calif., has asked the Government Accountability Office, the investigative arm of Congress, to determine how much the administration’s effort is costing. “Using taxpayer resources to mount a sophisticated propaganda and lobbying campaign is an abuse of the president’s high office,” he said earlier this year.

Last month, the AFL-CIO trumpeted success in persuading one financial services company, Waddell & Reed, to drop its membership in the Alliance for Worker Retirement Security, a group lobbying for personal accounts. The announcement came a day before the labor federation planned a demonstration at the firm’s headquarters outside Kansas City, Mo.

Organized labor opposes Bush’s call for Social Security solvency legislation that would also allow younger workers to divert a portion of their payroll taxes into personal accounts.

Democrats also are strongly opposed, and congressional Republicans are moving slowly, fearful of potential political repercussions.

Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee, has announced plans for weekly hearings beginning this month on retirement issues, including Social Security. Among the witnesses scheduled to testify is Robert C. Pozen, an investment company executive and architect of a plan to help restore solvency to Social Security.

Bush spoke favorably last week of Pozen’s approach, which would reduce benefits promised to future middle and upper income retirees.

Thomas said last week he hopes to present legislation to the committee in June. Speaker Dennis Hastert, R-Ill., said during the day he wasn’t going to be “nailed down to one specific timetable” for a vote by the full House.

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