Richard Trumka, president of the AFL-CIO, gave a luncheon speech at the National Press Club on Monday mostly offering the standard class warfare interpretation of the economy and politics. Amid the half-newsy remarks about health care, excise taxes, and the electoral plans for labor, Trumka also repeated his pitch for the union’s “Five Point Plan for Jobs.” From the prepared text:

The AFL-CIO’s five-point program will create more than 4 million jobs—extending unemployment benefits, including COBRA; expanding federal infrastructure and green jobs investments; dramatically increasing federal aid to state and local governments facing fiscal disaster; direct job creation where feasible; and finally, direct lending of TARP money to small and medium sized businesses that can’t get credit because of the financial crisis.

Though rarely noted outside of union speeches and blog posts, this plan may eventually be seen as an important transition in labor history, representing the moment when even old line unions like the AFL-CIO came to base their entire existence on government. Every single point in that program depends on federal government action and spending.

The same dependency is also manifested in labor’s allegiance to the Employee Free Choice Act: Having sunk to representing less than 8 percent of the private sector, organized labor now wants to use the power of the federal government to force workers into union membership against their wills. In the Q&A period, Trumka claimed, “I think you’ll see the Employee Free Choice Act pass in the first quarter of 2010, you’ll see it have some real effect, we will start creating and making good jobs in this country again.”

If the government lets us.

AEI scholar Peter Wallison predicted the failure of Fannie Mae and Freddie Mac many years before they collapsed, recognizing that their status as government-sponsored enterprises invited risky behavior, prolonged through their political clout. Such demonstrated foresight is a good argument for paying attention to Peter when it comes to financial regulation. That, and his ability to explain the mind-numbing issues clearly.

So one reads his Wall Street Journal op-ed on the financial regulatory bills in Congress with a gulp. From “The Permanent TARP“:

The Frank bill seems intended to regulate all financial firms as though they are banks. Thus it requires financial activities to be transferred out of operating companies into a separate entity, which would then be regulated like a bank (even in its relations with its parent company).

The Dodd bill is a blunter instrument, proposing to regulate all companies that include financial activities “in whole or in part.” But almost all companies—retailers, manufacturers and service organizations—engage in some financial activities, if only to promote the sale of their products and services. If the administration’s health-care proposal has the potential to nationalize one-sixth of the economy, Messrs. Frank and Dodd are bidding to cover the rest.

And …

Putting it bluntly, the administration’s proposal, and the House and Senate draft bills, would establish too big to fail as national policy. Whether the companies are regulated by the Fed or by a new agency, they will still have been marked as threats to economic well-being—and thus seen by creditors and investors as specially protected by the government. This will give them the same advantages enjoyed in the mortgage business by Fannie Mae and Freddie Mac, with the same result for competitors and taxpayers.

Front page, Washington Post, “U.S. to cut pay for bailed-out bosses“:

NEW YORK — The Obama administration plans to order companies that have received exceptionally large amounts of bailout money from the government to slash compensation for their highest-paid executives by about half on average, according to people familiar with the long-awaited decision.

Page 16A, Washington Post, “Rescue efforts shift to small business”:

The Obama administration is winding down several massive rescue programs that aided large banks and automakers during the heat of the financial crisis, while launching more moderate initiatives to help small businesses and the housing market….

The Troubled Assets Relief Program, or TARP, will now focus on the ailing housing market and small businesses, which are seen as vital to the economic recovery because they employ so many workers, officials said.

The Obama Administration has identified a real problem, the lack of credit for small business, and it’s good the White House is searching for solutions.

But we now know that accepting TARP money brings with the federal government’s control over the most basic of business decisions, such as the setting of compensation. If you’re a small business owner offered government financing under TARP, you’d have to be skeptical.

Maybe the salary won’t be an issue, but who knows what other strings might be tied to the aid? A neutrality agreement on union organizing? The parceling out of reserved parking spots?

UPDATE More from John Hinderaker, “Cut Their Pay and Send Them Home.” He writes: “One of the basic problems with the ever-increasing intrusion of the federal government into our economy is that questions that should be economic become political. What becomes most important is not providing the best product or service at the best price, but having the most pull in D.C.”

From Bloomberg, “Bush Signals Swift Decision on Funds for GM, Chrysler“:

Dec. 15 (Bloomberg) — President George W. Bush said deliberations by his administration on whether to tap a bank bailout fund to keep General Motors Corp. and Chrysler LLC out of bankruptcy “won’t be a long process” because of the “fragility” of the U.S. automakers.

The president, traveling on Air Force One from Iraq to Afghanistan last night, said he “signaled” his administration is considering using money from the $700 billion fund. Bush said he’s “not quite ready” to announce any rescue plan.

Also from Bloomberg, “GM, Chrysler Failure Would Push Economy Into Abyss“:

Dec. 15 (Bloomberg) — The U.S. risks sliding into a deeper economic slump if General Motors Corp. or Chrysler LLC shuts down because President George W. Bush doesn’t provide short-term financial assistance.

“We’re already in a deep recession in my state, as we are in most of the 50 states,” Senator Sherrod Brown, a Democrat from Ohio said on CBS’s “Face the Nation” yesterday. “And this would just plunge us deeper into economic problems, into a hole that it would take a long, long time to extricate ourselves from.”

A bankruptcy filing by either company would mean production cuts and plant closings, and tens of thousands of workers would be fired, industry analysts say. That would cause many suppliers to collapse, triggering more job losses, straining the cities and states where the car and parts companies operate, as well as federal safety-net programs.

This statement went out this morning:

NAM ENCOURAGES WHITE HOUSE TO USE TARP FUNDS FOR AUTO COMPANIES
Engler Urges Bush Administration to Act Quickly

WASHINGTON, D.C., December 12, 2008 – In response to the Senate’s failure last night to approve financial assistance for domestic automakers, and the White House statement this morning that it is considering using funds from the Troubled Asset Relief Program (TARP) for this purpose, the National Association of Manufacturers President and Chief Executive Officer John Engler issued the following statement:

Manufacturers are greatly disappointed by the Senate’s failure last night to approve funding for the domestic automakers that has already been approved by the House. The nation is in recession. Our economy is in dire condition and vulnerable to more dramatic shocks if we allow one or more of the Detroit-based auto companies to fail. In fact, according to some estimates, the collapse of just one of the domestic automakers could lead to a rise in unemployment by 3.0 to 8.9 percent in the nine hardest hit states. Every state would be affected and the supply chain that serves all automakers – domestic and foreign-based – would be damaged. Increased government payments and tax losses could exceed $150 billion in the first three years. We simply cannot permit this to happen.

This morning the White House indicated it may be willing to transfer emergency funds to the auto companies from the TARP. We fully support this action, applaud the White House for considering this necessary step, and encourage the Administration to move quickly.

The air is crisp and cool in D.C. this morning, but the political atmosphere wafts miasmic as Congress returns to the Capitol to consider economic stimulus legislation. Maybe one last round of partisan recriminations will clear the air …

Judging by news reports, little in the way of stimulus will actually pass or be signed into law by President Bush. Rep. Barney Frank (D-MA) will announce his plan to loan money to the auto manufacturers, but in drawing from the previously passed TARP financial aid program, he’s run into opposition from the White House and prominent Republicans like Sen. Richard Shelby of Alabama.

Anyway…the headlines that caught our eye, including the Freep’s story that moved this morning:

Detroit Free Press, “White House refines position on auto aid“:

WASHINGTON — The White House stressed today that it supports help for the struggling auto industry, but believes it should not be taken from the $700-billion financial system rescue program.

As lawmakers were returning to a lame duck session to focus on the troubled industry, President George W. Bush’s chief spokeswoman issued a statement saying the administration “does not want U.S. automakers to fail.” She complained that reporting on the issue has involved “attempts to shorthand the administration’s position.”

Perino’s early morning statement also made clear, however, that the administration steadfastly opposes drawing funds from the bailout plan to help Detroit. She said the $25 million that Democrats favor taking from the rescue plan should come, instead, from a Department of Energy program previously approved to develop fuel-efficient vehicles.