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Union Bailout

The Washington Post makes clear just how gingerly the UAW was treated in the GM nationalization plan:

At a time when some American workers are facing stiff pay cuts, UAW workers gave up their customary paid holiday on Easter Monday and their right to overtime pay after less than 40 hours per week. They still get health benefits that are far better than those received by many American families upon whose tax money GM jobs now depend. Ditto for UAW hourly wages, though according to the task force, GM’s labor costs are now within “shooting distance” of those at nonunion plants run by Honda, Toyota and other foreign firms. Cumbersome UAW work rules have only been tweaked.

Also worrisome was the strong-arming of the company’s bondholders, who got far less equity in return for their money than the UAW, the president’s political ally. The administration wants to spin GM back to the private sector as soon as possible. But private investors may have been durably scared by the union’s display of clout. Indeed, the UAW boasted to its members that it blocked a plan to build GM cars in China and “negotiated new opportunities for UAW involvement in future business decisions.”

So when the president says he will be a hands-off manager, think again. One can’t believe that a bankruptcy court or a truly independent management team would have preserved the UAW’s standing to the degree to which the Obama administration did. This will, of course, make it that much more difficult for GM to regain its competitiveness. And it will once again leave the shareholders — that would be all of us taxpayers — holding the bag and likely to be hit up for still more subsidies.

We are led to believe that all of this is about saving jobs. But let’s get real. It hasn’t saved the car dealership jobs. And for $50B we could have sent all of GM’s workers back to school and set them up in training programs at companies with a future. No, this is about certain types of jobs — UAW jobs — and about rescuing a stalwart political ally.

Big Labor has gotten its money’s worth (hundreds of millions in campaign donations was able to snare billions from the federal government to keep the UAW afloat). The taxpayers? Not so much.



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