|Report: Obama’s UAW Bailout Swindle Confirmed|
By Ashton Ellis
Thursday, June 14 2012
A new report by the Heritage Foundation shows that President Barack Obama’s bailout of the auto industry was really a $26.5 billion wealth transfer to the United Auto Workers union.
But economic facts haven’t stopped the president’s campaign surrogates from trying to shift voter anger toward Mitt Romney.
During a conference call with reporters organized by the Obama campaign, U.S. Senator Carl Levin (D-MI) blasted presumptive Republican presidential nominee Mitt Romney for opposing the federal bailout of the auto industry in 2008. “When the (auto) crisis was at its height,” Levin said, “(Romney) wanted ‘em to go under…”
Levin’s remark was an implied reference to an op-ed Romney wrote for the New York Times four years ago titled, “Let Detroit Go Bankrupt.” In it, Romney did not, as Levin said, want Ford, Chrysler and General Motors to “go under.” Instead, Romney argued that a “managed bankruptcy… would permit the companies to shed excess labor, pension and real estate costs.”
Romney’s focus was on getting the Big Three auto makers’ fiscal houses in order. He also wanted to shield taxpayers from propping up failure by requiring those financially tied to failing companies – including members of the United Autoworkers Union – to bear responsibility by adapting to reduced compensation packages as allowed by federal bankruptcy law.
In other words, Romney argued to let the Big Three go through the normal bankruptcy process in order to flush out the unworkable parts of the system so that the auto industry could rebound for the long haul.
Romney’s underlying concern was that the Obama Administration’s involvement in “managing” the auto bailouts would lead to crony capitalism on an enormous scale. According to a new report by the Heritage Foundation, that concern was not only justified, but spot on.
In “Auto Bailout or UAW Bailout? Taxpayer Losses Came from Subsidizing Union Compensation,” labor economists James Sherk and Todd Zywicki show how three decisions by the Obama Administration transferred $26.5 billion in taxpayer money to the UAW – money the union never would have received in an ordinary bankruptcy proceeding.
The first decision by the Obama Administration was to allow the UAW to receive unfunded pension liabilities ahead of secured creditors. The second decision was slashing the compensation for Tier II – i.e. future entry level – UAW workers, a concession that purposefully did not affect any current workers’ pay or benefits. And finally, the third decision was the Obama Administration agreeing to finance a deficit-laden pension from a GM-spinoff with UAW-aligned union members.
All three of those decisions – which cost $21.4 billion, $4.1 billion and $1 billion respectively – violated the purpose and the letter of federal bankruptcy law, meaning that none of the costs incurred by taxpayers would have been paid had the Obama Administration let the Big Three go through the normal bankruptcy process.
Of the roughly $80 billion the Obama Administration spent in total bailing out GM and Chrysler, the Congressional Budget Office estimates that $20 billion will never be recovered by taxpayers. The Treasury Department puts the loss at $23 billion. That means all of the expected losses to taxpayers are attributable to the extra-legal wealth transfer to the UAW perpetuated by the Obama Administration.
In his op-ed, Romney suggested that if the auto industry wanted the federal government to help, the companies needed to come up with a “win-win proposition.” Right now, it looks like the only winners from the auto bailouts were the UAW and an Obama campaign counting on its union friends to deliver votes on Election Day.
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