- Sep 13, 2012
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They weren't entitled to it. Legally or ethically.
The government bailout of General Motors (GM) and Chrysler between 2008 and 2009 will cost taxpayers between $17 and $20 billion. The entirety of these losses occurred because the Administration gave the United Auto Workers (UAW) special treatment. The UAW recovered far more in the bankruptcy than it had a legal right to:
- Legally, the UAW’s claims had the same status as those of other unsecured creditors, but the UAW recovered a much greater proportion of the debts thatGeneral Motors and Chrysler owed the union.
- Bankruptcy typically brings uncompetitive wages down to competitive levels. However, existing UAW members did not take pay cuts at General Motors.
- The restructured General Motors used taxpayer funds to “top up” the pensions of unionized retirees at Delphi, its bankrupt former parts subsidiary. New GM had no legal obligation to do so and nonunion employees did not receive similar benefits.
- These subsidies to UAW compensation cost taxpayers $30.0 billion—more than the government spends each year on foreign aid or on extended unemployment insurance benefits. They account for the entire net taxpayer losses in the bailout.
Auto Bailout or UAW Bailout Taxpayer Losses Came from Subsidizing Union Compensation
