Auto Workers Union Bosses Profit, Taxpayers Lose

White House Favoritism Towards UAW Brass Has Failed to Save Jobs

(click to download newsletter)

After years of obfuscation, Democrat President Barack Obama now admits that American taxpayers lost a total of $15 billion as a result of the 2008-2009 bailouts of union boss-controlled General Motors (GM) and Chrysler implemented by his administration and that of his GOP predecessor, George W. Bush.

NL-201401page3But Mr. Obama has yet to acknowledge two other important facts about the extraordinary federal interventions in the affairs of two struggling companies over the past five years: (1) Both companies clearly could have survived at no net cost to taxpayers. (2) The costly interventions saved no net jobs.

Many Unionized Workers’ Jobs Disappeared — But Union Bosses Fared Remarkably Well

More than four years ago, the Obama Administration orchestrated bankruptcy processes for GM and Chrysler that flagrantly violated the standard legal principle that all unsecured creditors of insolvent companies should recover their debts at the same rate.

Given that the wasteful work rules that United Auto Workers (UAW) union bosses, wielding government-granted monopoly-bargaining power over employees, insisted on for decades are largely what drove the companies into bankruptcy, they certainly didn’t deserve kid-gloves treatment. Yet that’s what they got.

As Heritage Foundation analyst James Sherk pointed out in a December 12 commentary for Bloomberg, while GM’s bondholders “recovered less than 30 cents on the dollar,” the UAW union hierarchy “recovered most of the money owed its retiree health trusts.”

At Chrysler, UAW bigwigs “recovered a greater proportion” of their unsecured debt “than even secured creditors did.”

According to a 2012 analysis coauthored by Mr. Sherk and George Mason University law professor Todd Zywicki, had the Obama Administration required the UAW elite to accept standard bankruptcy concessions, taxpayers would have lost no money at all.

Union-represented hourly employees have reaped little benefit from the White House’s taxpayer-funded largesse.

For example, as of last month GM’s total U.S. employment was still lower by 6500 jobs than it had been in late 2008, just before the bankruptcy.

In early 2009, GM had 47 plants in the U.S. Today it has just 34.

Forced-Dues Privileges Make UAW Union Officers Political Heavyweights

National Right to Work Committee Vice President Greg Mourad commented:

“Many Americans who are unfamiliar with the ways of Washington, D.C., might wonder why the White House rewarded UAW union bosses for helping bankrupt two once-giant auto firms.

“The ugly truth is that, because of their federally-granted privilege to force workers to pay union dues as a job condition, UAW officials have been and remain a political juggernaut.

“That’s why President Obama and other politicians were eager to fork over to the UAW union and its subsidiaries roughly $30 billion more than the amount to which they would have been entitled in a standard bankruptcy.

“And this huge handout provided, as James Sherk correctly observed, ‘virtually no public good.’”

Americans Aren’t So Easily Bamboozled

“The fact is,” Mr. Mourad continued, “you don’t need tens of billions of dollars in subsidies from taxpayers to produce in America cars and trucks that can be sold profitably. Hundreds of thousands of Americans working together in nonunion factories, located mostly in Right to Work states, prove it every day.

“They are able to do it largely because they aren’t hamstrung by productivity-quashing union work rules. And they would still be able to do it today even if the bailouts of UAW-dominated companies had never happened.

“Fortunately, Americans are not as easily fooled as President Obama and his cohorts in the UAW hierarchy think they are. The President’s fork-tongued reassurances that the UAW bailout was a dazzling success are unlikely to persuade most Americans they were wrong to oppose it in the first place.

“Instead, if Mr. Obama keeps it up, ordinary citizens are likely to get angrier.

Click here to download January 2014 Newsletter