Thursday, May 7, 2009

Billionaire Donors Split With Obama on Law That May Hurt Hotels

Three Chicago billionaires who helped fund President Barack Obama’s election campaign are fighting legislation he backs that would make it easier for unions to organize hotels they own.

Penny Pritzker, Obama’s campaign finance chairwoman and a director of Global Hyatt Corp., has told the president she is opposed to the measure, known as card check, said a person familiar with the situation. Neil Bluhm, a partner in Walton Street Capital LLC, also opposes the bill, the person said. Lester Crown, chairman of Henry Crown & Co., criticized the proposal in an interview.

For the city’s business leaders who nurtured Obama’s White House bid, card check is a gut check on support for their hometown president. Labor, which spent $100 million on Democratic campaigns last year, made it a top priority to enact a bill giving workers bargaining rights based on signing cards instead of winning a secret-ballot election.

Voting privately is “an American prerogative and shouldn’t be overturned,” said Crown, 83, whose family holdings include the Ojai Valley Inn & Spa in Ojai, California, and the Little Nell hotel in Aspen, Colorado. “The recommended legislation is absolutely the wrong thing to do.”

Pritzker, 49, and Bluhm, 71, declined to comment.

The fight over proposed labor-law revisions heated up this week when Senator Tom Harkin, the Iowa Democrat who is the chief sponsor of the card-check provision, said backers don’t have the votes to push it through. He vowed to press ahead with other elements that unions want, such as shortening the time period allowed for elections.

Labor Law ‘Imbalance’

“Many do feel there is an imbalance” in current laws that favors business over labor, he said in an interview. A compromise version may attract support from more lawmakers, Harkin said.

Under the National Labor Relations Act of 1935, employers can demand an election even if more than half of workers sign cards supporting a union. The bill would take away that right, and opponents say it would leave employees open to retaliation if they refuse to sign up.

Since the 1980s, management campaigns have defeated 19 of every 20 organizing efforts, according to Nelson Lichtenstein, a labor historian at University of California at Santa Barbara.

While the U.S. Chamber of Commerce plans to spend about $20 million this year on advertising and lobbying to block card check, labor leaders said they are determined to get a filibuster-proof margin in the Senate.

Pressuring Specter

“We are confident we will have the 60 votes to pass major labor-law reform for workers this year,” said William Samuel, the AFL-CIO legislative director.

Senate Majority Leader Harry Reid, a Nevada Democrat, said his chamber may consider the issue before the August recess.

Richard Trumka, secretary-treasurer of the AFL-CIO, threatened to withhold labor backing for Pennsylvania Senator Arlen Specter in his 2010 re-election campaign if he doesn’t vote for the bill. “We won’t be bludgeoned into supporting him just because important people, like the president, are,” Trumka said of Specter, who switched to the Democratic Party last month from the Republicans.

Unions represent about 7.6 percent of the private-sector workforce, down from 35 percent at their peak in the 1950s, according to the Bureau of Labor Statistics.

Heat on Hotels

The outcome of the debate may affect the hotel interests of Crown, Pritzker and Bluhm.

Bluhm’s investments include the Drake, Ritz-Carlton and Four Seasons hotels, all clustered near Chicago’s North Michigan Avenue shopping district. He joined the Pritzkers in developing two casinos in Niagara Falls, Canada. Pritzker runs her family’s realty group, airport shuttle service and credit checking company.

“Labor-law reform gets right into the face of these liberals who own a factory or a hotel,” where the card-check provision would have its greatest impact, said Lichtenstein, the historian.

Crown gave Obama a total of $4,600 in 2007 and 2008, the maximum allowed for individuals, Federal Election Commission reports show. He said he still supports Obama.

“I think the world of him,” Crown said. “This doesn’t have anything to do with other relationships.”

Campaign Bundler

Pritzker ran committees that generated a record of more than $745 million for the Obama campaign plus $53 million for the inauguration. Bluhm raised $160,000 in 2008 as a so-called bundler for Obama, pooling donations from other contributors, according to, a Washington-based group that tracks campaign spending.

“The president and his supporters don’t agree on every issue, nor does anyone expect them to,” said White House spokesman Tommy Vietor. “But clearly many like Ms. Pritzker, who the president asked to serve on the President’s Economy Recovery Advisory Board, are supportive of his overall economic agenda.”

Workers at the Pritzkers’ Hyatt Regency in Santa Clara, California, initiated an organizing drive last year. Managers called meetings and told employees that joining a union could cost wages and benefits, said Rigoberto Gutierrez, 55, who has worked in room service there for 12 years.

“They tried to scare us,” he said. “They told us we could lose everything.”

The matter remains unresolved.

Obama’s Vegas Slap

Pritzker and other corporate officers knew Obama’s views on labor issues when they joined his campaign. They were surprised, though, when Republicans lost so many seats in the Senate and when Obama indicated his support for card check, said the person familiar with the situation.

The Pritzkers in particular also took note of Obama’s public statement on Feb. 9 that executives shouldn’t use federal bailout money for Las Vegas trips, the person said. Later this year, the family will open a Grand Hyatt with 2,973 rooms next to the Bellagio hotel in Las Vegas.

“Obama has very carefully straddled two positions,” said William B. Gould, a former National Labor Relations Board chairman under President Bill Clinton. “He has been supportive of the bill, but he has been very careful to not speak of any particular provision.”