By Ian Mckendry

WASHINGTON (MNI) – The AFL-CIO is holding a rally in New York city
Thursday, — the group will ask for more funding for public sector jobs
as well as “Wall Street reform.”

“Wall Street has gotten its bailouts. Now it’s time for Main Street
to get some immediate help,” an AFL-CIO spokesman said.

Referring to state budget deficits, the AFL-CIO says,”States have
responded by cutting expenditures, services and critical staff including
nurses, teachers, firefighters and other first responders, actions that
actually deepen the economic downturn by reducing economic activity.”

Some experts disagree, saying exorbitant union salaries and pension
funds may weigh heavily on state budget shortfalls.

Chris Edwards, Director of Tax Policy Studies at the CATO Institute
said public-sector unions impose extra cost burdens and hardships
on states, and argues that there is a correlation between the size of a
union within a state and a state’s debt.

“As the union share increases, a state tends to have a higher
government debt load,” Edwards said.

“The correlation is likely caused by the fact that unionized
government workers are powerful lobby groups that push for higher
government-worker compensation and higher government spending in
general” he added.

The AFL-CIO defines its jobs agenda as follows:

1. Extend the lifeline for jobless workers.

2. Rebuild America’s schools, roads and energy systems.

3. Increase aid to state and local governments to maintain vital
services.

4. Put people to work doing work that needs to be done.

5. Put TARP funds to work for Main Street.

Each point of the agenda calls for increased spending.

Andrew Biggs, a resident scholar at the American Enterprise
Institute, said overspending has led the U.S into fiscal trouble.

“A CBO projection on the future fiscal gap shows that spending, not
tax cuts, is the real driver [to fiscal problems] ,” Biggs said.

“It’s hard to argue that our looming budget problems derive from
‘too little taxes’ when by any historical standard taxes will rise to
record levels even before the fiscal gap is addressed,” Biggs added.

According to Edwards, municipal bond debt was relatively flat in
the 1990s and was at $1.2 trillion in 2000 but has jumped to a current
level of $2.3 trillion — nearly doubling in a 10-year span.

“There’s a mad rush here to spend money now and get states further
into debt,” Edwards said, adding, “We’re putting all these costs onto
the next generation.”

“I think the unions push states further into debt and make it
harder for them to dig out and restructure in times like now,” Edwards
said.

The Center on Budget and Policy Priorities said in a report that 48
states have addressed or still face budget shortfalls in 2010.

“States’ fiscal problems will continue into the next fiscal year
and likely beyond. Fiscal year 2011 gaps — both those still open and
those already addressed — total $103 billion or 17 percent of budgets
for the 42 states that have estimated the size of these gaps,” the
report said.

California may be the canary in the coal mine.

In a Stanford University report — California’s three largest
pension funds were estimated to have over a half trillion dollar funding
shortfall.

Villejo, California has drawn the attention of the nation (and
unions) since it filed for bankruptcy in 2008 to get out from underneath
bloated union salary’s and retirement packages.

A Cato Institute report said police and firefighter salaries and
pensions made up 74% of the city’s $80 million general fund.

Still, 10,000 union supporters are descending on Wall
Street Thursday, and will continue the Goldman Sachs bashing that went
on in the Senate Tuesday.

The AFL-CIO is expected to have a similar protest next month in
Washington.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$$CR$,M$U$$$,MFU$$$]