Our guest bloggers are Karla Walter, Senior Policy Analyst, and David Madland, Director of the American Worker Project at the Center for American Progress Action Fund.

Conservatives these days love to hate government workers—arguing that the highly unionized public sector workforce is overpaid and largely responsible state and federal governments’ budget woes. The poster child for the anti-public sector onslaught, former Minnesota Governor Tim Pawlenty (R), claims:

Unionized public employees are making more money, receiving more generous benefits, and enjoying greater job security than the working families forced to pay for it with ever-higher taxes, deficits and debt. How did this happen? Very quietly. The rise of government unions has been like a silent coup, an inside job engineered by self-interested politicians and fueled by campaign contributions.

Critics of public sector unions will likely use the 2010 union membership rates — released today by the Bureau of Labor Statistics — to add fuel to the anti-government worker fire. Total unionization rates dropped to record lows in 2010, to just 11.9 percent of the American workforce. And now, most union members (51.8 percent) are government employees, rather than private sector workers, which has been the case since 2009, when just over fifty percent of union members were government employees.

However, the public sector’s increasing share of total union membership is no “coup” as Pawlenty argues. Public sector unionization rates have remained unchanged for the last 30 years. Just under 36 percent of government workers were unionized in 1980, and 36.2 percent of them were union members in 2010. As the chart below demonstrates, the public sector’s share of total union membership is only increasing because private sector unionization rates are in major decline, shrinking from 20.1 percent of the total private sector workforce in 1980 to 6.9 percent in 2010:

And numerous studies have debunked the myth of overpaid government workers. As a 2010 report from the Center for Economic and Policy Research noted:

When state and local government employees are compared to private-sector workers with similar characteristics, state and local workers actually earn 4 percent less, on average, than their private-sector counterparts.

To be clear, today’s announcement of the 2010 unionization rates is cause for real reason concern. But policy makers should be far more worried about private sector unions than those in the public sector. More than half of non-managerial workers say they would vote to join a union if they could, but current government policies make it nearly impossible for private sector workers who want to join together in a union to do so — and consequently private sector unionization rates have plummeted.

In contrast, the stability of public sector unionization rates demonstrates that when workers are able to freely choose to join together in unions, they often do so. Without major reforms to make it fairer for workers trying to form unions, we will continue to see union numbers fall.

*Sources: Union membership rates from 1980 to 2009 are from the “Union Membership and Coverage Database,” (Barry T. Hirsch and David A. Macpherson, www.unionstats.com), 2010 union membership rates from the Bureau of Labor Statistics.

House Budget Committee Chairman Paul Ryan (R-WI) was announced today as the Republican who will be responding to President Obama’s State of the Union address next week. Ryan has gained a (largely unearned) reputation as a fiscal hawk due to his radical Roadmap for America’s Future, under which the U.S. budget will eventually be balanced (after federal debt surpasses 100 percent of GDP), mostly via privatizing Social Security and Medicare.

According to an analysis by Citizens for Tax Justice, the Roadmap would raise taxes on 90 percent of Americans, while dramatically lowering them for millionaires. In fact, a new analysis from the Economic Policy Institute found that Ryan’s plan would ultimately translate into middle-class tax rates being higher than those for millionaires:

– The Roadmap would lead to the wealthiest Americans paying a lower average tax rate than most Americans. Eliminating taxes on capital gains, dividends, and interest, as the Roadmap proposes, would overwhelmingly help taxpayers at the top of the income distribution, who receive most or all of their income from capital. For example, Wall Street financiers could shelter all of their income as tax-free stock options or carried interest.

– Middle-class families earning between $50,000 and $75,000 a year would see their average tax rate jump to 19.1% (from 17.7%) under this plan—an increase of $900 on average [...]

– Millionaires would see their average tax rate drop to 12.8%, less than half of what they would pay relative to current policy

As EPI’s Andrew Fieldhouse concluded, under the Roadmap, “a long tradition of progressive taxation would be abandoned; millionaires and Wall Street bankers would pay significantly lower tax rates than middle-class workers…Income inequality would soar.”

Next week, on the same day that Obama delivers his address and Ryan gives his response, House Republicans will vote to endow Ryan with “stunning and unprecedented” powers to set discretionary spending levels that are binding on the House. The levels that Ryan has laid out, if actually enacted, would result in significant reductions to vital and popular programs like Pell Grants, the FBI, and the National Institutes of Health. This week, House Majority Leader Eric Cantor (R-VA) also called for “elements” of the Roadmap to be in the first GOP budget.

Today, President Obama will name General Electric CEO Jeffrey Immelt head of the newly renamed President’s Council on Jobs and Competitiveness. The old iteration of the council — the President’s Economic Recovery Advisory Board — was led by former Federal Reserve Chairman Paul Volcker.

As Alex Seitz-Wald noted, Immelt has had some harsh words for Obama in the not-too-distant past — “Business did not like the US president, and the president did not like business,” Immelt reportedly said — but if he has had a change of heart, he could be a good messenger on economic issues.

In one regard, Immelt’s company already highlights a need for change: due to a corporate tax system that is loophole-ridden and full of giveaways, General Electric pays a pittance in corporate income tax. Though the statutory corporate income tax rate is 35 percent, GE last year paid a paltry 3.6 percent. In 2009, despite making $10.3 billion in pretax income, GE paid nothing in corporate income tax (and, in fact, received $1.1 billion in tax benefits).

Immelt isn’t to blame for this; it makes sense that a company would take advantage of a tax code that enables it to dramatically lower its tax rate. The problem is that it is far too easy for companies to take advantage of the corporate tax code by shifting and sheltering income. Martin Sullivan of Tax Analysts explained this to the House Ways and Means Committee yesterday:

While many corporations have effective tax rates approximately equal to the 35 percent statutory rate, other corporations have effective rates in the low twenties, the teens, and even the single digits. The major reason for these low effective tax rates is the ability of some corporations to shift a significant portion of their profits into low-tax jurisdictions. As the table shows, low effective tax rates are common in industries like pharmaceuticals and computer equipment where it is easy to shift technology and manufacturing to low-tax jurisdictions.

GE is far from alone in exploiting the ability to shift profits to dramatically lower its tax rate. Pfizer, Hewlett-Packard, Coca-Cola, and many other do the exact same thing. At the moment, corporate tax receipts account for just 7.2 percent of federal revenues, while fifty years ago, they made up 23 percent of the total.

Congress and the administration are toying with the idea of reforming the corporate tax code, and if they do, this is one of the big problems that has to be addressed. It’s all well and good to talk about lowering the corporate tax rate, but knocking the rate down to 25 percent from 35 percent doesn’t do much if companies can exploit the system to bring their rate all the way down to zero.