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Nuts and Bolts of the ‘Big Three’ Bailout

November 25, 2008

Tin Cup – Tin Ear

The word “security” has taken on a powerful meaning since 9-11, and it is seldom questioned as the motivation for anything. But when the big-3 automakers insist that their CEO’s must travel to Washington by private jet for reasons pertaining to their “security” — that becomes a bit of a tough sell.

Security concerns? Riiiight. Translation: Lifestyle as they have become accustomed to.

Especially when you consider that their trip to Washington is to ask for money.

Down to the nitty-gritty…

Should taxpayers be expected to bailout the UAW? Because folks that is exactly what it all boils down to.

Competitive Disadvantage

These gold-plated health care benefits put the Big Three, and especially GM, at a competitive disadvantage. For example, GM has three times as many retirees as active workers, and health care costs for both groups cost the company $4.6 billion in 2007. The UAW’s lavish health benefits added $1,200 to the cost of each vehicle produced in the United States.

The Japanese automakers, by contrast, provide standard health benefits to their American employees. Consequently, health care for active workers cost Toyota $215 per vehicle in 2006.

Every American buying an auto made in Detroit pays an extra $700 to $1,000 to support health benefits far more generous than most Americans receive.

uaw-bailout-081123-uaw0-doug-ross.jpg

By seeking a bailout, the UAW, along with the Detroit automakers, are asking taxpayers to help keep UAW earnings at $75 an hour when the typical American takes home a third that much. The Big Three also want Congress to use taxpayers’ money to pay billions of dollars into the new health care VEBA, thereby funding health care benefits for UAW retirees that are far more generous than those provided by an already under-funded Medicare system.

UAW workers understandably want to preserve the standard of living to which they have become accustomed, but that standard is not sustainable in a competitive economy. Congress should not tax all Americans in order to maintain UAW workers’ affluent lifestyles.

H/t Doug Ross via Larwyn

Back to square one….

The point of the Democratic bailout is to protect the unions by preventing this kind of restructuring. Which will guarantee the continued failure of these companies, but now they will burn tens of billions of taxpayer dollars. It’s the ultimate in lemon socialism.

Democrats are suggesting, however, an even more ambitious reason to nationalize. Once the government owns Detroit, it can remake it. The euphemism here is “retool” Detroit to make cars for the coming green economy.

Liberals have always wanted the auto companies to produce the kind of cars they insist everyone should drive: small, light, green and cute. Now they will have the power to do it.

In World War II, government had the auto companies turning out tanks. Now they would be made to turn out hybrids. The difference is that, in the middle of a world war, tanks have a buyer. Will hybrids?

One of the reasons Detroit is in such difficulty is that consumers have been resisting the smaller, less-powerful, less-safe cars forced on the industry by fuel-efficiency mandates. Now Detroit would be forced to make even more of them.

The “bums rush” to protect their ass(ets)

Mr. Gettelfinger (United Auto Workers President) called on Congress to act quickly on a bailout for the industry, saying action is necessary before President-elect Barack Obama takes office in January.

He said if one automaker were to file for bankruptcy, the others could follow. The union chief said the automakers would then find it difficult to restructure under bankruptcy laws and instead could end up out of business. “Would you buy a car from a bankrupt automaker?” he asked.

Well, did American commuters buy tickets on the famously “bankrupt New Haven Railroad,” or more recently on airlines which were reorganizing under bankruptcy protection? Yes they did.

Same Old, Same Old

Yeah, well, here’s the lead headline on Yahoo Finance as I write this: “UAW leader says blame economy for Detroit 3 woes”. And of course GM’s CEO just got a 64% raise this year, presumably for the excellent performance.

UAW & Big Three-Big wigs
Equally to blame..

All emphasis mine

I’ll leave you all with a taste of SNL’s trademark satirical humor..
Embedded video

Link @YouTube

They say humor is the best medicine, but the Big Three Bailout is a bitter to swallow…

Stumble It!

Great Black Friday Deals. No Black Friday Blues. @Amazon.com

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