Thursday, June 14, 2012

UAW and Government Motors ... Government OPM

If you want another good reason to always trust MOM spending over government OPM, I have a good one.

It involves the UAW bailout by the Obama administration disguised in the form of federal aid given to GM.

Obama's United Auto Workers Bailout  gets into detailed chapter and verse, but we'll just provide a short sample to give you a feel for the stench. Of course, please feel free to read the whole article if you're interested in the gory details. In any case, there's no doubt that the federal government's (aka taxpayer and Chinese funded) real auto bailout money largely went to the UAW:

"President Obama touts the bailout of General Motors and Chrysler as one of the signature successes of his administration. He argues that the estimated $23 billion the taxpayers lost was worth paying to avoid massive job losses. However, our research finds that the president could have both kept the auto makers running and avoided losing money.

The preferential treatment given to the United Auto Workers accounts for the American taxpayers' entire losses from the bailout. Had the UAW received normal treatment in standard bankruptcy proceedings, the Treasury would have recouped its entire investment. . . .

The administration also insulated the UAW from most of the sacrifices that unions usually make in bankruptcy—at taxpayer expense. Section 1113 of the Bankruptcy Code enables reorganizing companies to improve their post-bankruptcy competitiveness by renegotiating union contracts to competitive rates. . . . The administration decided not to do this at GM. . . .

As a result, GM still has higher labor costs ($56 an hour) than any of its competitors. Indeed, Steven Rattner, the Obama administration's former "car czar," told the Detroit Economic Club last December, "We should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay."

Had bankruptcy brought GM compensation in line with its competitors' (approximately $47 an hour), we estimate the resulting savings would have increased the value of the taxpayers' stake in GM by $4.1 billion. This would still leave UAW members making 40% more than the average American manufacturing worker. . . .

We estimate that these three irregularities increased the cost of the bailout by $26.5 billion. The Treasury expects the auto bailout to ultimately cost taxpayers $23 billion. The funds diverted to the UAW account for the taxpayers' entire net loss.

Avoiding these losses would have been straightforward. . . . Instead, President Obama gave over $26 billion to the UAW—more money than the U.S spent on foreign aid last year and 50% more than NASA's budget. None of that money kept factories running.

Instead it sustained the above-average compensation of members of an influential union, sparing them from most of the sacrifices typically made in bankruptcy. Such spending does not serve the common good. President Obama did not bail out the auto industry. He bailed out the United Auto Workers.""

Summing Up

And that's another example of government spending OPM used to grant favors to its union allies. In this case, it was President Obama's administration "helping" its friends in the UAW.

But it's not just something Democrats do with their union buddies. It's pretty much the same thing with ethanol (see Ethanol's Long Boom Stalls), sugar tariffs (see Sugar Users Want U.S. to Ease Import Curbs), bridges to nowhere and countless other wasteful OPM "favored" projects that are contrary to MOM rules and the fiduciary duties of our "public servants."

Because when it comes to OPM, vote getting and the political class, We the People, at least in total, don't much count. It's only the favored few.

That has to change. We simply don't have the money to waste.

Thanks. Bob.

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