Pat Cleary.com

Here's a good, if depressing, piece from Barron's about the government's bailout not of GM but of the UAW. The title says it all: "Big Wheels Keep on Rolling…Over Bondholders":

"The politically powerful united Auto Workers emerged with an exceptionally sweet deal in the proposed reorganization of a bankrupt General Motors -- and the taxpayer essentially is footing the bill. The federal government may be lucky to get back half of the $50 billion owed by GM, consisting of nearly $20 billion of existing loans and about $30 billion that Uncle Sam plans to extend through so-called debtor-in-possession financing in bankruptcy... The government effectively is making a gift to the UAW, because it is converting about $40 billion of its GM loans that are senior to the UAW claims into a 61% equity stake in the new company, making its recovery highly dependent on the new GM's equity value.

Read the entire piece here. If you want to see it pretty plainly, just look at this chart - especially the right column - to see how the UAW made out on this deal.

Lest anyone believe that Congress does NOT operate in a bubble, consider the fact that the House Energy and Commerce Committee two weeks ago passed a sweeping climate change bill that for all its high-minded intentions will only drive up the cost of energy for manufacturers, businesses and consumers. And as the WaPo reports today, Obama and the Congress are full-speed ahead on a similarly sweeping health care proposal that now appears to have an employer mandate in there, and may end up eliminating the current tax exclusion for employers. Once again, the result will be greater cost on businesses and consumers.

This is all pretty standard Congressional fare until you stand back and realize that this is all taking place against a backdrop of what any Congressional leader (and the White House) will tell you is the greatest economic crisis since the Great Depression. Everything they are doing on the climate and health care fronts will only make it harder for us to recover as a nation, and will end all hope that the US might lead the globe out of this current slump.

Maybe it's time Congress took a step back and thought about the world outside their bubble and the dual death blows they seem poised to deal to it.

We were reading the transcript of UAW President' Ron Gettlefinger's interview on the News Hour last week, where he was questioned by Paul Soman about their new agreement with GM. In the interview, Gettlefinger talks about their last two rounds of bargaining, saying in relevant part:

"RON GETTELFINGER: Well, I'm certainly not here touting it. It's a lifeline, is really what it's boiled down to. We would not have been in these negotiations.

And let me just step back and say that a light bulb went on in somebody's head, like they came up with a new idea in Washington when we were in those hearings, saying, you know, these companies are leveraged on their balance sheet.

Well, guess what? We knew that. We knew that in '03, and we started making movement in that direction. We knew that in '05. We made additional movements, mid-contract.

PAUL SOLMAN: Movements meaning?

RON GETTELFINGER: Meaning concessions in the contract, mid-contract in '05. We've made concessions again in '07, and we were moving along. (Emphasis ours)

That's funny -- because when the deal got done in '07, this is what Gettlefinger said on his website:

"The tentative agreement, reached at 3:05 a.m. Sept. 26, delivers solid economic gains for active and retired members, despite repeated attempts by GM to impose harsh takeaways

The agreement will deliver more than $13,000 in economic gains for a typical UAW member, including a $3,000 signing bonus, two 3 percent lump sums and a 4 percent lump sum.

Active workers will see their comprehensive health care coverage continue, with dental, hearing and other benefits improved. Retired workers will have their health benefits secured by a Voluntary Employee Beneficiary Association (VEBA), prefunded by GM with $29.9 billion in cash and other assets. The fund can only be used to pay retiree health benefits, and will remain solvent for decades regardless of the financial condition of GM.

The proposed contract will also deliver benefits to current and future retirees, with four lump-sum payments for current retirees, and a raise in basic benefit rates, the 30-and-out supplement, temporary and interim benefits for future retirees.

The company came into these talks looking to shred our contract to pieces,” said UAW Vice President Cal Rapson, who directs the UAW GM Department.

“But you can’t tear apart a group that stands together the way UAW members do.”

Guess not.

Let their be no mistake - the '07 agreement was not a "concessionary" agreement by any stretch of the word. The fact is, Gettelfinger and the UAW bargained like there was no tomorrow - literally. And for their sins -- along with plenty from the management side -- many will pay with their jobs. But even still, Gettlefinger has boasted that his employees will have no cuts in pay, benefits or pensions.

All this talk of concessions now in hindsight looks more like a fib and less like the truth. Comparing his earlier boasts of gains with his current cries of concessions, we are forced to ask the prosecutor's question:

Was he lying then or is he lying now?

Bob Samuelson nails it again in an op-ed in today's Washington Post under the above title. He cites a Pew Research Center Study on the topic -- which of course, received scant coverage. Here's the opening paragraph:

"The Obama infatuation is a great unreported story of our time. Has any recent president basked in so much favorable media coverage? Well, maybe John Kennedy for a moment, but no president since. On the whole, this is not healthy for America.

In his column two weeks ago about Obama's astronomical deficits, Samuelson hinted at this same theme:

Imagine hypothetically that a President McCain had submitted a budget plan identical to Obama's. There would almost certainly have been a loud outcry: "McCain's Mortgaging Our Future." Obama should be held to no less exacting a standard.

At the end of the day, the lack of skeptical coverage by the press-- as Samuelson says -- is "not healthy for America."

There is so much more heat than light being shed on the controversial case decided by Supreme Court nominee Sonia Sotomayor, as is typically the case with Supremer Court nominees post-Robert Bork. The Obama Administration ash dispatched its "spinners" to the talk shows to beat back criticism from the right about the case.

And so we just moseyed over to the Google and found this helpful site that lays the facts out pretty well. Just take a look through this fairly sterile recitation of the facts and then draw your own conclusions. The case had to do with white firefighters in New Haven (CT) denied promotions by the city after garnering top scores on a promotion test. All who garnered top scores were white, hence the hullabaloo.

In some ways, this is a perfect case around which to have this debate in America. These issues should be aired, not obfuscated.

Just can't stop staring at this, from the Washington Post story on the GM bailout this morning:

"The union's cost-of-living increases, along with some holiday pay, were suspended. Yet UAW President Ronald A. Gettelfinger stressed that there would be no reduction in the membership's base hourly pay, health care and pensions...

Most of GM's hourly workers will receive another buyout and early retirement offer. Production workers will be offered $20,000, plus a $25,000 car voucher. Skilled employees will be offered $45,000 plus the vehicle voucher. The biggest buyout package, for employees with at least 20 years of service, includes $115,000 plus the car voucher." (Emphasis ours)blockquote>

Is this a group behaving like they work for a company that's about to go under....?

Tags:

• GM
• UAW