• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Auto Bailout Success? For Union Workers, Maybe

    President Obama’s auto bailout is being touted as a great success of his Administration. Speaking in Detroit at a Labor Day rally, Vice President Joe Biden used it to explain how Americans were better off. “Osama bin Laden is dead and General Motors is alive,” Biden boasted.

    In Charlotte, former President Bill Clinton cited the bailout as a manufacturing success story, and former Michigan Governor Jennifer Granholm (D) sang its praises. But taxpayers lost $25 billion. Plants were closed, jobs were lost, and nearly three years later, the government still owns one-third of General Motors.

    There is a story that President Obama and these others are not telling—the story of the 20,000 workers who lost nearly all of their pensions because the Obama Administration chose not to protect them. Let Freedom Ring released a video highlighting this story.

    In 2008, candidate Obama said that pension protection was a “top priority.” But Heritage’s James Sherk, who wrote about the bailout in June with George Mason University law professor Todd Zywicki, explained how union workers benefited from the bailout while the non-union employees at Delphi, an auto parts manufacturer and former GM subsidiary, weren’t as fortunate.

    When Delphi filed for bankruptcy the maximum pension benefits were $54,000 a year for retirees aged 65 and above, with lower benefits for early retirees. About half of Delphi’s union and non-union workers faced reductions in their pension benefits [if the plan was terminated and transferred to the Pension Benefit Guarantee Corp.

    The termination would normally mean pension cuts for both Delphi’s union and non-union workers. However, the United Auto Workers’ members got special treatment. According to Heritage’s James Sherk:

    New GM no longer had an obligation to supplement the Delphi pensions. The bankruptcy filing eliminated its contractual obligation to do so. However, New GM’s management—while being overseen by the Obama Administration—nonetheless agreed to spend $1 billion to supplement the pensions of Delphi’s UAW retirees. The non-union employees were not so fortunate— GM did not supplement their pensions.

    The left, led by President Obama, is touting this as one of the biggest successes of the Obama Administration, but where is the success? It was successful for the United Auto Workers and their special interests, but not many others. Especially not for Delphi’s nonunion retirees.

    Posted in Featured [slideshow_deploy]

    19 Responses to Auto Bailout Success? For Union Workers, Maybe

    1. Ohio Joe says:

      I'm sure I'm oversimplifying this, but I have to ask why the federal government should be even the slightest bit concerned about the size or even the existence of retirement pensions.

      Between the corporate management and the labor unions they managed to set themselves on an unsustainable course.

      I, like millions of other citizens, had no voice in their negotiations and I resent being dragged into it and forced to assist in thier bail-out!

    2. Pingback: Saturday Shorts – 9-8-12 | Designs on the Truth

    3. Mommyk1 says:

      This is just one, in a series of thousands of stories of failure for the cost to America for this "Bailout" success. What about the 2000 dealerships, their employees and their ancillary businesses that were driven out of business, because they were forced to close? What about the drive to eliminate certain brands, while others were chosen by Fed decree and the parts dealers and communities that suffered? And lastly, the idea that a Fed agency would prefer union employees over private sector, when unions donate the highest campaign contribution than any other lobby arm, to Pres Obama's election in 2008, is a national disgrace.

    4. Blair Franconia, NH says:

      The union employees of Government Motors got the goldmine and the non-union employees got the shaft.

    5. Pingback: Morning Bell: 25,000 Chicago Teachers Go on Strike

    6. O_Henry says:

      The old GM health plan was a top purchaser of viagra for several years in a row previous to the restructuring. Does this still hold true for the new GM healthcare plan? Just curious, wondered if the GM retirees were “doing us all” through government subsidies or if the “benefit” was eliminated in the new contract with the union.

    7. What else was hidden at the DNC?

    8. Leon Lundquist says:

      I long for the good old days when it was unlawful for any government to make Private Payments. In effect, those Private Payments can also be the Withholding of Private Payments, Preference of Private Payments, indeed compare the Bond Holders of GM, cancellation of Lawful Payments for Unlawful ones. The Government favors Democrats and Democrat Party leaning people by demographics. Bond Holders are Republican leaning, and the Workers are Democrat leaning. So it was Teachers, Fire Fighters and Police Officers, those were the jobs Obama chose to 'save or create.' GM pays nothing, practically a Captive Corporation gets to pay nothing in taxes (they own ABC News!) No Private Payments! Not to anybody! Government should never make Private Payments to selected citizens. Well! Like taking General Motors from the Bond Holders and giving it to the Unions! This is a smoking gun!

    9. EvelynCorp says:

      I am a 90 yr. old widow,but I am smart enough to figure out that when the President gave all that money to General Motors,it wasn't to benefit the company, but to reward the union that elected him to the Presidency! At one time there was a great need for Unions, but they have now become more powerful than their employers and need to be reigned in! They are destroying our economy!E.C.

      • richard says:

        good girl evelyn they have out lived their good. now they are just bleeding manufacturing .basically thats why everything is made in other countries cheaper labor .where is our steel coming from our clothes etc. etc. made in USA is becoming extinct.

    10. Dick says:

      How sound is GM's business today? Are they making money? What % of their sales are non-competitive USA government sales?

    11. Steve Penn says:

      Talk about special interests! O'bama's "playing by the rules " quote obviously meant just his rules.

    12. Lewis Zimmerman says:

      Did anyone notice that the GM dealers that stayed in business were forced to spend tens of thousands of dollars to remodel their dealerships? Why? They were barely staying afloat but had to spend for facelifts. Where did that money come from? Please explain someone!

    13. Mike, Wichita Falls says:

      I keep hearing that in this GM bailout case the bankruptcy laws were violated, bypassed, etc. to the detriment of secured lenders, non-union workers, etc. If so, why didn't they file suit…or did an activist judge throw it out?

    14. Larry K White says:

      Oh My! "GM is back."
      Our Rule of Law was violated: 1. Bankruptcy law GM and Chrysler Bond Holders were "offered" 95% discount of their $28 billion senior debt. 2. Property law, More than 2000 Dealerships were "arbitrarily" closed with over 200,000 jobs lost. … and maybe the most dangerous of these moves; when government controlled business in Germany and Italy, it was called Fascism.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.