In frequently heated discussions here in Las Vegas this week, AFL-CIO president John Sweeney won the first big showdown over how the labor federation should respond to its declining strength. But his opponents, led by Service Employees International Union president Andy Stern, have sufficient strength and determination to carry the fight through the AFL-CIO convention this summer in Chicago.

The test came on dueling proposals about future federation budgets, especially the balance of emphasis between politics and organizing and the size and role of the federation itself. Union leaders on the federation’s Executive Committee voted 15 to 7 on Wednesday to reject a Teamster proposal for a 50 percent rebate of federation dues for unions that pass a threshold test of commitment of resources to organizing in their core industries.

But by a 14-to-8 vote they approved a Sweeney proposal to rebate $15 million, or roughly one-third the amount, to support organizing. Sweeney would also allocate half of the dues paid to the federation each year to politics, increasing grassroots political and legislative mobilization spending by 30 percent to $45 million a year. The official decision-making body, the larger, fifty-four-member Executive Council, is expected to act on this proposal later, perhaps in June, when Sweeney fleshes out the details.

The Teamster rebate proposal had the support of unions that claim to represent about 40 percent of AFL-CIO members–SEIU, UNITE HERE, United Food and Commercial Workers, the Laborers and the Auto Workers. Despite their loss, they were cheered by the rare formation of such a large opposition bloc within the federation and hoped to win other unions over to their side. Stern, who has threatened to leave the AFL-CIO if it isn’t transformed, said he was much “lonelier” when he laid out his proposals for change last November. And UNITE HERE hospitality industry president John Wilhelm said he would decide on whether to challenge Sweeney for the presidency only after the final decision was made on rebates, budgets and restructuring.

“We have to change the AFL-CIO,” said UNITE HERE president Bruce Raynor. “We have no desire to leave the AFL-CIO. Unity is important in the labor movement. Much more important is effectiveness.”

Both sides agreed that the AFL-CIO should concentrate on both politics and organizing, but supporters of the Sweeney proposal argued that political action was crucial to create a climate where it is possible to organize successfully. AFL-CIO secretary-treasurer Richard Trumka, for example, argued that bad trade deals, antiunion corporate and governmental policies, deregulation, privatization and other pressures on unions led to a rollback of union strength faster than organizing could overcome. For example, he said, more vigorous organizing alone could not compensate for the loss of 3 million manufacturing jobs in the last four years.

While that may be true for many manufacturing unions, the Stern camp rejoins, there are vast stretches of the American workforce that are growing and that no unions are trying to organize. They contend that much more organizing can be done even now under hostile conditions if unions consolidate into much bigger and financially stronger units that focus their organizing on a few key targets. The Stern group would also increase spending on politics, but by a smaller amount than Sweeney. At the same time, they would deeply cut staff and other programs at the federation, including, most likely, the existing organizing department. That’s ironic, since the AFL-CIO has played an important role in the Teamsters’ very recent effort to start building a new organizing program. Yet, Raynor argued, “It’s a myth we want a weaker federation. You don’t calibrate strength by budget but by effectiveness.”

Much of the contention focused on the 50 percent rebate, for which perhaps two-thirds or more of unions could qualify. Sweeney’s proposed smaller rebate would mainly reallocate in a different way the $12.5 million per year in an existing organizing fund that provides grants or technical assistance to unions, helping them to expand their ability to organize or aiding critical and large-scale campaigns. Sweeney’s criteria for rebates would be tougher, including a requirement that national unions devote 30 percent of their budgets to organizing, compared to the requirement set by the Teamster proposal of 10 percent or $2 million, whichever is higher.

One big question is how much difference such a rebate would make in organizing. It would not stimulate much new organizing among unions that are already committed, even if it would give them a bit more money. For example, UNITE HERE might get $1.5 million to $2 million a year under the Teamster plan, but it already spends $30 million a year. Also, assuming an average cost of $1,000 for every new union member organized, the $35 million or so rebated under the Teamster plan would only add 35,000 new members a year at a time when unions are organizing about 375,000 to 500,000 a year–a welcome increase but hardly a revolution. But in many ways the rebate is simply a way of forcing other changes, from streamlining the AFL-CIO to promoting more mergers, and it’s a rallying point for those who are deeply dissatisfied with Sweeney’s leadership in recent years and want widespread change.

“The rebate is only one issue,” Raynor said. “It’s symbolic. We need change. We need fewer unions. We need better rules in the AFL-CIO to stop unions from undercutting one another.” Among the rules needed, Raynor said, are protections of unions from competition when they commit to organizing in a particular industry and policies “somewhere between ordering mergers and just saying it’s a good thing.”

Although Sweeney’s proposal represents an attempt to respond to many of the criticisms and proposals made by SEIU, the Teamsters and others (“Stern lite,” one skeptic called them), the opposition group shows little interest in negotiating a compromise on, for example, the size of the rebate. The large rebate appears to be, among other things, a battering ram for forcing more dramatic changes in the federation and throughout the labor movement.

Running throughout the debate are undercurrents of personal recriminations and rivalries, narrow self-interests and financial worries, political ploys and power grabs, and varying degrees of optimism about the future of the labor movement. But there are also deeply held convictions about what can brighten that future fueling the ongoing battle that nearly everyone says is long overdue.