O's $23 bln Gift to UAW

Auto Bailout? More Like a $23 Billion Gift to the UAW

 Posted 06/15/2012 07:11 PM ET

Bailouts: In speech after speech, President Obama credits himself for saving the Detroit auto industry. Turns out that what Obama really did was spend $23 billion in taxpayer money to pay off his union friends.

Obama's big point of pride these days is that he didn't "let Detroit go bankrupt" and that due to his efforts, "not only did we save the auto industry, but we're actually seeing better cars made" and Detroit carmakers are "on top of the world once again."

On the surface, it seems to be true. Obama did up the bailout ante that President Bush started in 2008. And Detroit carmakers are doing better these days. In May, GM announced a $1 billion profit in Q1 2012, and Chrysler announced bigger-than-expected profit for the first three months of the year.

But the reality is even without the bailouts, GM and Chrysler likely would have survived. They just would have gone through normal bankruptcy proceedings — which many still-existing large firms have done before.

In the case of GM, at least, "in all likelihood, this reorganization would have produced a company more competitive than the one that emerged from the bailout process," wrote Todd Zywicki, professor at George Mason University School of Law, in National Affairs. Instead, Obama put together "a bankruptcy combined with a bailout, incorporating the worst elements of both."
Even if you think the bailout was needed, the ultimate taxpayer cost was far higher than it should have been, according to a new report by Zywicki and James Sherk, published by the Heritage Foundation.

Worse, the entire $23 billion price tag — an estimate from Obama's own Treasury Dept. — went to subsidize the Democrat-friendly UAW, the authors found.

Among the union giveaways:
 
• $21 billion more for the UAW retiree benefit trust fund than it would have received had it been treated like other unsecured creditors.
• Another $1 billion to restore pensions for UAW retirees at GM's defunct Delphi subsidiary.
• And the UAW didn't have to make wage concessions that a normal bankruptcy proceeding would have required. Cost to taxpayers: $4 billion.

"Had the administration required the UAW to accept standard bankruptcy concessions," they concluded, "the government could have executed the bailout at no net cost to taxpayers."

Obama's former car czar, Ron Bloom, wasn't kidding when he said of the bailout: "I did this all for the unions."