I'm curious to see whether the people advancing that argument can justify this:
The Pension Benefit Guaranty Corporation, which insures pension plans, caps the amount of benefits it will pay, using a formula based on age and the type of benefits an employee earned. But in a side arrangement, G.M. is agreeing to pay special supplements, called top-ups, so that Delphi's union retirees get everything they were promised.
The automaker is drawing the money from its own pension fund, according to a person familiar with the arrangement. In a sense, the G.M. pension fund is being weakened to help the Delphi union members.
Mr. Gump and others suspect the Treasury Department told G.M. to pay the supplements. The federal government is both the company's largest shareholder and the financier of its restructuring, through the Troubled Asset Relief Program. Obama administration officials confirmed that they brought the parties together to negotiate a resolution of Delphi's pension failure but said they did not dictate the outcome.
The difference between the haves and have-nots at Delphi is not between the highly paid and lower-wage earners. As a senior engineer, Mr. Gump simply did not belong to a union. Neither did Delphi's thousands of other engineers, bookkeepers, clerks, quality controllers, purchasing agents and other white-collar employees. They may have earned more in some cases, but they did not have the chance to earn paid overtime as union members did in good years. Records show the average pay for a nonunion worker just shy of 50 years old, with 20 to 24 years' service, was about $96,000.
The average base wage for a UAW worker is supposed to be about $60,000. So the white collar workers average quite a bit more--but the UAW distribution is fairly flat, while the white collar distribution is not, so a fair number of those white collar workers will be making roughly the same as a union member. Yet the UAW has had their gold-plated pensions made whole, while the white collar workers . . . well, the Times reports that one woman saw her pension fall from $3,000 a month to just under $400.
What possible logic is there for this, other than the fact that the UAW generously supports the Democratic party? If you prick a white collar worker, does he not bleed? And if their home gets foreclosed on, does it not further destroy Michigan's economy?
* I say "supposed" because I can't get a good figure including overtime, which for union workers can double their wages in good years. (Of course, they're not having good years now--but the retirees lived through quite a lot of them.)
What possible logic is there for this, other than the fact that the UAW generously supports the Democratic party?
Logic?
Your country is being run by a mafia, Megan.
The Mafia doesn't operate on logic. It operates on the principle that whatever it can steal - it steals.
And they are deep into the cookie jar my friend. Very, very deep.
"Shut up," they explained.
The NY Times frequently turns off their comments when pesky commenters reveal to their readers the side of the story they aren't getting from the reporters and editors at the Times.
Comments have been the NY Times' downfall.
Only political junkies care.
Everyone who still reads the NY Times is a political junkie.
Actually, a simple organized looting of the finances is very logical indeed, and can be analyzed quite simply.
It may even be semi-sensible government, as the looters don't want to either lose power or kill off their golden goose.
It's when half the government is looting, half the government is living out some ideological fantasy of rebuilding the world in the structure they worked out in late night dope smoking marathons at university, and half doesn't know what it's doing because it all turns out to be much more complicated then when they were making giant paper-mache heads for protest marches...
That's when things will go really wrong.
(I am aware that there are three halves to the government I describe. You can't trust them to get anything right.)
Actually that was a bit snarky.
I should have added that another half (the fourth) was trying to actually fix some real problems that they can see, and the fifth half is trying just to get things running smoothly.
All the extra halves come from substantial overlap between the different groups over individuals, across time and between different subjects.
Interesting the comments are not turned on for that article at the NYT site. Why is it that anytime news is critical of Democrats the comments are off and yet they are on for anything critical of Republicans. The echo chamber is nearly deafening there.
As much as I am a believer that this administration hands outs favors on a political basis: per the article -- the disparity in treatment appears to be a contractual artifice of the 1999 spin-off from GM.
What the article doesn't answer is that I would have thought that GM's obligation to top off the Delphi union pension would have been eliminated in bankruptcy.
Now -- if the government sponsored bankruptcy made a point to keep that obligation in there......now you are on to something Megan.
The article seems to say it did.
What possible logic is there for this, other than the fact that the UAW generously supports the Democratic party?
Heh. What more logic did you expect from this administration?
(Not that Bush was much better. This reminds me of when AIG was bailed out and someone I knew at one of their competitors bitterly denounced the rewarding of incompetence.)
Meanwhile, Ford made a profit.
Ford made a "profit" only because American taxpayers were forced to hand over in $4,500 per vehicle sold.
That's not a "profit." That is Obama corporate welfare.
Still, that subsidy went to GM and Chrysler too, and they're still burning cash like it's going out of style.
"... and they're still burning cash like it's going out of style."
So, sadly, is Ford. The government handout merely masks it.
All this contrived billion dollar "profit" thanks to the taxpayers has done is to harden the UAW's position against Ford.
It comes at the worst possible time for Ford.
CNN: United Auto Workers to Ford ... Drop Dead
http://money.cnn.com/2009/11/02/news/economy/UAW_Ford/
This should be an object lesson on why you can't trust Obama payoffs. There's always strings attached and unforeseen negative consequences.
"... and they're still burning cash like it's going out of style."
"Perhaps more importantly, for an automaker that’s mortgaged up to (and including) its logo, Ford’s cash pile grew by $2.8b (on $1.3b positive cashflow), to $23.8b."
Can you please try and know what the fu*k you're talking about.
Ford is cash flow negative without bailout money in the form of Cash For Clunkers. And since Cash For Clunkers was such an abysmal failure, Obama has admitted his failure by not bringing it back in Q4.
For its false profit, all Ford got was an intransigent union.
Smooth move, Ex Lax.
jmo, I meant that GM and Chrysler are burning cash. Obviously Ford isn't, judging by TallDave's claim that they made a profit. Thought I was clear in who "they" referred to, but I guess not.
Ford made a profit; GM and Chrysler did not. Period. It's a data point in a long, and hopefully ongoing trend.
Even so, there is no denying that the public largely rejects buying cars from Government Motors. We are seeing a very significant shift away from GM and towards Ford - and likely it's enough of a shift to keep Ford profitable in the long term, while GM will continue to be a sham company, 100% beholding to our tax dollars.
The real wildcard is the UAW. When Ford is the last man standing, how much leverage with the UAW still have? Ford has options that specifically preclude the UAW, and right around now a lot of Americans would be more than happy to see Ford get punitive with that gang of thugs.
The UAW card is... scary.
Obama's not going to let Ford push them around. More likely he'll help ensure they can't make a profit either.
Here's a simple guideline: If you're offered a white-collar employee at a firm where the blue-collar employees are unionized, don't take it.
The way things work is that the government gives unions all sorts of special privileges that artificially strengthen power of their employees to get pay and benefits greater than their market value. This is not recouped at the expense of the investors, who can after all sell their stock. It's not going to be recouped at the expense of senior executives; senior executives are highly mobile, as a rule, able to leap to better companies if their current one gives them below-prevailing wages. It is recouped in the short run at the expense of the non-union employees, who have racked up seniority and are worried about what they'll lose by switching to a new job. In the long run, the excess costs will doom the company, and the non-union white-collar employee is the person that's easiest to lay off and least protected in a bankruptcy.
See GM/Delphi. The government-favored employees and retirees got to keep the old gold-plated health benefits, while the benefits for the unfavored employees and retirees were slashed in the early 1990s. The government-favored employees and retirees got special consideration when Delphi was spun off; the non-favored employees got none. And the government-favored employees have a built-in political organization to lobby for even more favors, manipulating the bankruptcy system to protect them, while the non-favored employees are shafted.
Taking a non-union job at a unionized company is dropping your pants, leaning over, and painting a target on your ass.
Now, you might find some reason, under present conditions, to take such a job, because of extremity. Fine. As soon as the economy picks up, leave for a non-union company. You will be tempted to stay in a job that you're already used to. Reject that temptation. Send out resumes, contact headhunters, whatever. It's only harder to leave the more time you rack up, and conditions are only going to get worse with time. Get out fast!
If you prick a white collar worker, does he not bleed?
Our rulers like those who would borrow from Shylock face 'those in government come up each day with new ways to spend and tax—health care, cap and trade, etc, Why aren't they worried about the impact of what they're doing? Why do they think America is so strong it can take endless abuse?
I think I know part of the answer. It is that they've never seen things go dark. They came of age during the great abundance, circa 1980-2008 (or 1950-2008, take your pick), and they don't have the habit of worry. They talk about their "concerns"—they're big on that word. But they're not really concerned. They think America is the goose that lays the golden egg. Why not? She laid it in their laps,' says Peggy Noonan this last week.
Well, the Union owns the company now, more or less... so thats what is going to happen. In the world, fair doesn't matter, only power, choices and incentives matter.
Well, one "possible logic" this suggests is that it's a really good idea to join a union at your workplace. It's like being a senior creditor: you're likely to get a first cut at the available resources when not all obligations can be met. Us white-collar workers should maybe think about that.
Right?
That's the really interesting thing. It's as if Delphi unbeknownst to those who were 'bosses, managers' is a theatrical production and know that the lights have gone back on, they can put there street clothes back on and go out, well, to the streets. The cash flow is the unions.
Especially if your union excels at rent-seeking behavior.
Great for you... not so great for everyone else.
Megan,
You really can't imagine any other reason for this outcome other than some sort of backroom conspiracy to trade pension contributions for campaign funds? If they were really that corrupt, they could make much more efficient use of the TARP funding.
I've got a much simpler, Occam's razor style, hypothesis: Game Theory. Union workers, being represented in a collective bargaining agreement, had a motivated player at the table, whereas white collar workers, without collective bargaining, were left with no representative, or an unmotivated one.
The more organized and better represented group of workers got the better deal. No surprise there.
Once again the unions are operating in the best interests of the majority of their membership, the retirees, not the actual workers.
The best interests of the workers is that GM survives. As it is now, the only way that GM will survive is if it gets another politically unpopular bailout.