UAW continues to thwart auto deal

Jed Babbin:

In all but one circumstance, it’s almost unknown for an investment by government to return dividends quickly. That one circumstance is when the government invests in failure. When government invests in failure -- as it did with the automakers’ bailout last fall -- the investment creates more failure almost instantly.

It was less than three months ago that Congress and the Bush administration decided to subsidize the failure of General Motors and Chrysler by propping up their industry-killing deals with the United Auto Workers’ union. GM, which said it would file for bankruptcy and never recover, got the boar’s share of the money, about $13.5 billion. Chrysler, in as bad a situation, got about $4 billion. All of that money came out of the so-called “TARP” financial system bailout of $700 billion.

That December, money was made available on the condition that both companies came back with a plan this week to show how they would become commercially viable by extracting concessions from bond holders and from the UAW. But the UAW -- the real beneficiary of the bailout -- saw the government blink. It has refused to give up any significant pension or health benefits, which are the costs that make U.S, automakers uncompetitive even in the domestic market.

The UAW-GM talks broke off on February 14 on the issue of the health care fund (called VEBA), which is supposed to move the health care costs off the books of the companies and into private hands.

Now, the UAW -- with GM and Chrysler hugging its ankles -- is confident that the Obama administration will throw good money after bad. And that confidence is well-founded.

...

A more complete default to the union and abandonment of free market capitalism is hard to imagine. If the Obama White House and Speaker Pelosi’s Congress grant more bailout money to the automakers without compelling them to do the one thing that can actually save them -- a structured reorganization in bankruptcy -- these companies will become permanent wards of the state.

...

It is interesting that while Democrats are keen on limiting executive pay when they are loaning money, they show no such interest in limiting bloated labor agreements. Both groups contribute to Democrats, but the labor thugs really have the Dems in their pocket.