“Dems refused to lower UAW wages to Nissan, Toyota, Honda pay levels”
That’s really not quite accurate.
The whole difference in labor costs between the Japanese and the Big 3 are pension and medical costs for retired workers. And if the Big 3 go bankrupt, the Federal government will get stuck for most of those pension and medical costs.
This is a tough problem to solve.
it is what they reported:
The focus of talks was on seeking commitments to restructure the industry’s debt load and bring labor costs in line with wages paid by Toyota Motor Corp. and Nissan Motor Co. in the U.S., among other things.
You are right, it’s a tough problem. Unfortunately, I think that this, and the insurance-related problems of the millions soon to be out of work, is why we will end up with national health.
Not entirely true, but very hard to tell from the shallow coverage this issue has been receiving.
The Pension Benefits Guaranty Corporation PBGC has been collecting premiums form GM, Ford and Chrysler for the pension benefits of their employees under traditional pension plans. GM, Ford and Chrysler have been making payments into a pension fund to cover those liabilities, though, no doubt the pension allocations underfund the contractual liabilities by a lot.
If the Big 3 go bankrupt the PBGC will enter the bankruptcy case and get the Court to transfer assets (the assets already set aside for pension coverage) to the PBGC. Again, that will not cover the total liability - however the liability may not be that huge - since the coverage is capped at about ~50,000/year. If all 3 go, PBGC becomes insolvent quickly. If Chrysler and GM go, maybe not, but then the taxpayer bailout goes to PBGC and not to Chrysler and GM. And the magnitude of it is not clear. I wouldn't trust most of the numbers and assumptions floating around out there right now - they come typically from CAR (Center for automotive Research) - hardly an objective source.
It may well be that the least costly avenue for taxpayers is bankruptcy.
How will the federal government get stuck with this unless you are referring to medicaid, etc??
To quote Nancy Reagan, "Just say no."
“The whole difference in labor costs between the Japanese and the Big 3 are pension and medical costs for retired workers. And if the Big 3 go bankrupt, the Federal government will get stuck for most of those pension and medical costs.”
It is difficult, but not that difficult. Medical costs for retired workers are already paid by social security. These workers paid into SocSec for years. They deserve something back from it.
Workers paid into their pension funds for years. That is GM’s and their investment bankers issue to solve.
What should happen is the following. Michigan needs to change to a right to work state. The workers toss out the union. Whoever was receiving post retirement medical benefits from GM moves over to SocSec. All union funds will be put into an escrow account, to be used for retired workers pensions. GM will work with banks and investment companies on funding the pensions.
Maybe this is where the bridge loan comes into play.