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Hidden $10B UAW Bailout Still Not Enough

From the Detroit Free Press:

Former Democrat Congressman David Bonior

$10B aimed at union retirees

Provision called welfare by some, not enough by others

BY JUSTIN HYDE and TODD SPANGLER
August 24, 2009

WASHINGTON – Anti-labor forces say it’s welfare for the UAW and Democrats’ union allies. Labor supporters say it falls short of what’s needed as tens of thousands of union members are pushed into early retirement as employers cut back health care coverage.

They’re both talking about a $10-billion provision tucked deep inside thousands of pages of health care overhaul bills that could help the UAW’s retiree health-care plan and other union-backed plans.

It would see the government — at least temporarily — pay 80 cents on the dollar to corporate and union insurance plans for claims between $15,000 and $90,000 for retirees age 55 to 64.

Big businesses with union workers are twice as likely to offer retiree benefits as nonunion ones.

Greg Mourad of the National Right to Work Committee called it "a shameless case of political payback," saying Democrats and President Barack Obama are trying "to force the rest of us to pay billions to cover those unions’ health care."

Labor advocates say even more funding may be needed.

"It is not enough money," said former U.S. Rep. David Bonior, a Mt. Clemens Democrat who chairs the board at Washington, D.C.-based American Rights at Work, a labor advocacy group. "That will have to be supplemented to fill the gap."

Without U.S. aid, union health plans could fail

The health care debate roiling the nation promises an even greater impact in Michigan: It could determine whether the UAW’s gamble that it can insure 850,000 retirees from Detroit’s automakers pays off or goes bust.

Thanks to Detroit’s twin auto bankruptcies and other concessions, the UAW’s voluntary employee benefit association, or VEBA, had to take stock of unknown value for $24 billion in claims, while adding thousands of early retirees to its rolls.

Outside experts estimate the funds have about 30 cents in cash for every dollar of future claims, with no guarantee of what its stock assets will be worth. Lance Wallach, a New York-based VEBA expert, says if the funds "don’t get something, they’re out of business in 12 years."

That something may be national health care reform.

Key provisions in House and Senate proposals set aside $10 billion to pay some claims for early retirees covered by employers and VEBAs, before other cost-saving measures kick in. Critics call it a union giveaway, but the union says the money would keep companies from further slashing coverage…

According to outside experts, the UAW’s VEBAs have only about 30% of the cash needed to cover retirement health benefits for about 850,000 people — making it the second biggest retiree insurance pool in the nation, with only California’s pension plan larger. Shares in Chrysler Group, Ford Motor Co. and General Motors Co. will add to the bottom line — but it’s impossible to say how much.

Were VEBAs a gamble?

The VEBAs will have the power to cut coverage and raise costs to make their money last, and have already warned retirees that cuts are likely next year. Wallach said the UAW VEBAs resemble the plans the UAW set up for workers at Detroit Diesel and Caterpillar in the 1990s — both of which later ran short of money.

"I really think" the UAW "were gambling there would be some health care nationalization," he said

$10 billion and owning stock in General Motors and Chrysler still might not be enough for these heroic UAW retirees.

And to think some people call them greedy.

This article was posted by Steve Gilbert on Tuesday, August 25th, 2009. Comments are currently closed.

7 Responses to “Hidden $10B UAW Bailout Still Not Enough”

  1. You would think that with the president of the New York AFL-CIO being the chairman of the New York Federal Reserve, they could get all the money they needed.

    Obama is basically putting the labor unions in charge of this country’s money, they should be able to get their hands on more than 10 billion if they need it. Maybe an “injection of cash” into GMAC or something.

    • MinnesotaRush

      Hmmmmmmm. Is this the downpayment maybe for the first branch of the civilian security forces that o-blah-blah said he wanted during his campaign???

      Listen to what our friend, Mark Levin, shares with us on that topic: http://www.youtube.com/watch?v=zqId8L8isJA

      Hmmmmmmmmmm. Black Panthers, ACORN and its’ web organizations, unions, … ??? Hmmmmm.

  2. GetBackJack

    I want someone in the Obama Administration to point me to that part of the Constitution of the United States under which ANY of this is allowable.

    • Liberals Demise

      Are you talking about the Constitution that is torn and shredded in the Oval Office trash can?

    • Right of the People

      Is anything Barry and his cronies doing part of the Constitution?

      That works out to about $11,750.00 per UAW leech using the 850K figure in the article. What stones this David Bonior has, I’m surprised he can even walk.

  3. pdsand

    Exactly, tell me how any of this is my problem. When corporations in the early 2000s failed to fully fund pension plans they were the villains of the century. When the unions fail to fully fund health care plans, where are the insane protestors? Oh yeah that’s right, they’re all paid to wreak their havoc by the unions. Plus it’s great that this isn’t being billed as a scandal, but as a clarion call for federal funding.

  4. Danola

    This is all about paying off Democrat party supporters and future strong arms to insure future victories for this facist administration. Just like the way Soros is being reimbursed for supporting healthcare and the 08 election by giving our money to Petrobras. Shameful!


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