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Obama Motors Pensions Underfunded $17B

From a context-free New York Times:

Automaker Pensions Underfunded by $17 Billion

By NICK BUNKLEY

April 6, 2010

DETROIT — The pension plans at General Motors and Chrysler are underfunded by a total of $17 billion and could fail if the automakers do not return to profitability, according to a government report released Tuesday.

Both companies need to make large payments into the plans within the next five years — $12.3 billion by G.M. and $2.6 billion by Chrysler — to reach minimum funding levels, according to the report, prepared by the Government Accountability Office. Whether the companies will be able to make the payments is uncertain, the report concluded, though Treasury officials expect the automakers will become profitable enough to do so.

If either company’s plan must be terminated, the government would become liable for paying benefits to hundreds of thousands of retirees. The effect on the government’s pension insurer, the Pension Benefit Guaranty Corporation, would be “unprecedented,” the report said. The agency manages plans with assets totaling $68.7 billion, less than the $84.5 billion in G.M.’s plan alone

The Treasury Department owns 61 percent of G.M. and 10 percent of Chrysler as a result of the emergency loans the carmakers received last year. The government spent $81 billion bailing out the companies and others in the auto industry.

The report issued Tuesday said Treasury officials were confident that G.M. and Chrysler would earn enough to allow the government to gradually sell its stakes. But the report warned that the government could push the companies out of business, consequently terminating their pension plans, if their recovery efforts failed.

“In the event that the companies do not return to profitability in a reasonable time frame, Treasury officials said that they will consider all commercial options for disposing of Treasury’s equity, including forcing the companies into liquidation,” the report said

G.M. is scheduled to release its financial results for 2009 on Wednesday. Chrysler plans to provide an update on April 21.

As we have noted numerous times, saving the UAW’s pension fund was the real raison d’être for the automakers bailout in the first place.

And, as we have also mentioned, the just enacted ‘healthcare reform’ legislation includes a discreet injection of $10 billion into the UAW’s pension fund.

And still they want more.

Lest we forget, Mr. Obama drove these car companies into bankruptcy. And he personally oversaw their restructuring. And yet GM and Chrysler are in the same position they were before, or even worse.

Oh, except that now the US taxpayer is on the hook for the UAW’s pension fund.

This article was posted by Steve Gilbert on Wednesday, April 7th, 2010. Comments are currently closed.

5 Responses to “Obama Motors Pensions Underfunded $17B”

  1. BillK

    Just a reminder of what the next bailout will be, from their supporters at the New York Times:

    Automaker Pensions Underfunded by $17 Billion

    By Nick Bunkley

    DETROIT — The pension plans at General Motors and Chrysler are underfunded by a total of $17 billion and could fail if the automakers do not return to profitability, according to a government report released Tuesday.

    Both companies need to make large payments into the plans within the next five years — $12.3 billion by G.M. and $2.6 billion by Chrysler — to reach minimum funding levels, according to the report, prepared by the Government Accountability Office. Whether the companies will be able to make the payments is uncertain, the report concluded, though Treasury officials expect the automakers will become profitable enough to do so.

    If either company’s plan must be terminated, the government would become liable for paying benefits to hundreds of thousands of retirees. The effect on the government’s pension insurer, the Pension Benefit Guaranty Corporation, would be “unprecedented,” the report said. The agency manages plans with assets totaling $68.7 billion, less than the $84.5 billion in G.M.’s plan alone.

    The carmakers’ pension plans were jolted by the downturn, increased liabilities and other factors. G.M.’s plan was overfunded by $18.8 billion in 2008, and was then underfunded by $13.6 billion last year, the report said. Chrysler’s plan was overfunded by $2.9 billion in 2008 but underfunded by $3.4 billion last year.

    The plans cover about 650,000 people at G.M. and 250,000 at Chrysler.

    The Treasury Department owns 61 percent of G.M. and 10 percent of Chrysler as a result of the emergency loans the carmakers received last year. The government spent $81 billion bailing out the companies and others in the auto industry.

    The report issued Tuesday said Treasury officials were confident that G.M. and Chrysler would earn enough to allow the government to gradually sell its stakes. But the report warned that the government could push the companies out of business, consequently terminating their pension plans, if their recovery efforts failed.

    http://www.nytimes.com/2010/04.....7cars.html

    I’m sure the Government would “push” GM and Chrysler out of business.

    About the same time Satan purchases new skis.

  2. Rusty Shackleford

    …and could fail if the automakers do not return to profitability, “

    Now that’s what I would call “social justice”. (Can I get an “amen” buthas and sistas?)

  3. proreason

    Add $17B to the deficit…plus interest and admin costs.

  4. U NO HOO

    Do we still talk about penny ante 17 billion dollars?

    Can’t we look at the big picture?

    In the new world order?

    Spreading the wealth?

    Which way did they go?

    Hey ho hey ho they’re coming to take me away hi ho…

    I aint no fracking socialist…

    FORNAO

  5. Liberals Demise

    But…………he wasn’t taking over the company.
    HORSE SHIITE!!


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