As he campaigns for reelection, President Obama can claim few major successes during his presidency, but one he will be claiming, over and over again, is the rescue of General Motors and Chrysler.
The claim is of course double-the-fun for the president and his aides, because it allows them to not only portray Obama as the champion of the working man, but to blast Republicans as misers who would have preferred to see all those autoworkers out on the street, dodging the very cars they produced.
The truth is that no one wanted to see these workers harmed, but many Republicans believed the companies could come out of a normal bankruptcy process in far stronger shape for the future – with less in the way of obligations to the unions – while saving taxpayers lots of money.
Writing in the Wall Street Journal today, James Sherk and Todd Zywicki detail how the Obama bailout amounted to a $26.5 billion gift to his union allies, the United Autoworkers.
Among their findings:
GM and Chrysler owed billions of dollars to the union’s Voluntary Employee Beneficiary Association (VEBA) when they went bankrupt.
A bedrock principle of bankruptcy law is that creditors with similar claims priority receive equal treatment . . . In the auto bankruptcies, however, the administration gave the unsecured claims of VEBA much higher priority than those of other unsecured creditors, such as suppliers and unsecured bondholders.
Based on GM’s current stock price, VEBA collected assets worth $17.8 billion—$12.2 billion more than if the administration had treated it like the other unsecured creditors.
The same thing happened at Chrysler, only to a greater degree. Chrysler’s junior creditors recovered none of their $7 billion in claims. In normal bankruptcy proceedings, the UAW would have also collected nothing. Instead it walked away owning almost half of new Chrysler and a $4.6 billion promissory note earning 9% interest. Had the stock and note gone to the Treasury instead, the bailout would have cost taxpayers $9.2 billion less.
Let’s discuss another “bedrock principle”: When you give money that is not yours to someone else, you are taking money from a third party.
The government has no money of its own. It has your money. It took it from you and gave it to a union.
We’ll see if the Romney campaign has the courage to call this what it is, a sleazy deal masquerading as a noble offer of a helping hand to workers.
13 thoughts on “Obama’s Autoworker Handout”
Just one reason among many why Obama and his party cannot be trusted at all. Think what another four years under this rat bastard would do for us.
Absolutely everything Obama touched has turned to crap, even his so-called “successes”. His other success, the killing of bin-Laden, Obama needed to be pulled off the golf course to the situation room, plus he’s leaked information and spiked the football so many times it might even be a safer world if OBL were still alive.
I think the Delphi salaried (non-union) workers would strongly disagree with Obama’s approach on the auto bailout, as would the bondholders. He screwed everyone except the unions..
While I still don’t like Romney (but will pinch nostrils and vote for him) I AM developing a fondness for Romney’s handlers quick responses. With lightening speed, like they have pre planned for EVERY scenario, they pounce and in so doing change Obama’s dialog. It really is quite masterful and I trust the Romney campaign will do the same about the auto bailouts and Dear Leader’s usurping of Bankruptcy law to his OWN ends.
I honestly wonder if the Dems want to go “there.”. Wisconsin was a clear example of how PUBLIC EMPLOYEE Unioms have basically LAUNDERED funds (dues) for the Democratics’ campaign coffers. Same difference with the deal given the UAW by Obama….next question would be “how much did the UAW donate to the DNC and Obama?”. Once those bright (head)lights are some at the GM/Chrysller bailouts, it becomes an easy segway to same modus operandi (but w/o unions) to the MONEY LAUNDERING that was the “Green Initiatives” given to Obama CAMPAIGN DONORS Solyndra, LightSquared…
I may I pinch my nose Election Day IF Mitt will go “there.”
Your reluctance to vote for someone who wasn’t your first choice is understandable. MrRomney is this, he isn’t that, but what is most important is his impeccable background, his political and business experience, and his stated intentions to right some of the worst of the Obama agenda.
I’m OK with the Repub’s selection of MrRomney and will cross party lines to vote for him. My first choice would be a moderate Dem as President, but I don’t know if there are any of them left in the modern Dem party.
The choice is simple; progressive liberalism vs moderate conservatism.
I am not an economist, (I actually practice medicine), and when I heard about this as it was happening in late 2009, it sounded S-L-E-A-Z-Y then and still does now. Calling out the Repubs, as Obama is doing, for saying what they would have done in 2008-2009 is dangerously playing with the truth. The Repubs were not in any position to decide or even influence, the structure of the bailouts for these two automoile companies at that time.
Romney should go to town on this one.
Union overreach has certainly killed a lot of States’ based companies who have moved overseas or to Mexico. It doesn’t seem like Obama plans to do anything about that. No incentives to keep them here.
Also, doesn’t seem that the unions give a wit about their members, just buying politicians to keep their power. i.e. Obama and the Dems.
Remember all those dealerships that were shut down, some which were very profitable ? I still wonder if that was political ? Punish GOP donors?
Gallup just released a poll that was taken earlier this month that says most Americans still blame Bush for the economic crisis this country is in (http://www.gallup.com/poll/155177/Americans-Blame-Bush-Obama-Bad-Economy.aspx).
The RNC and Romney need to hammer and hammer the fact that we have spent billions on special interests, such as the UAW, and had this country gone on a diet (not the Michelle kind either) we would have been much further along than we are now in any type of recovery.
The “Great Recession” is only being prolonged just as the “Great Depression” was prolonged due to a total lack of understanding on how markets and free economies work. IF the US can get its fiscal house in order, the rest of the world will be saved from disaster because we are and have been for generations the true engine of prosperity for the world.
I have been a bankruptcy secretary and ultimately a bankruptcy paralegal for almost 40 years. I understand how reorganizations work (Chapter 11 and 7 liquidations as well). Mr. Romney is right – they should have gone through the normal Chapter 11 process – it would have been painful, but at the end taxpayers, bond holders and creditors would have been better off. I read an article recently where Ford Motors talked about how close to bankruptcy they had actually gotten. They cut expenses so much they weren’t watering plants. One thing they didn’t do – is cut back on their innovation. The unions, vendors and all involved worked with them. Isn’t that a far better success story – and everyone had skin in the game. That’s the problem these days – too many people have no skin in the game.
In my humble opinion, what obama did with the bailout money for GM and Chrysler was and is criminal. Do we have any attorney’s out there who agree or set me straight?
This wasn’t a GM bailout – it was the UAW bailout. The only consolation at this point is the Scott Walker victory in WI and the fact that more states are beginning to smell the coffee.
What is seldom heard is that GM partnered with Peugeot earlier this year.
“The facts are beyond dispute: Peugeot is partnered with Iran’s Khodro Group, a subsidiary of an entity — IDRO — controlled by the Iranian regime and associated with Iran’s brutal Islamic Revolutionary Guard Corps. Over half a million Peugeot vehicles were sold in Iran in 2010 alone, making Peugeot the leading foreign auto manufacturer produced and sold there. Peugeot has more expatriate employees working in Iran than any other western company.” courtesy of :
And they still filed bankruptcy. Obama saw his administration repaid; however, it was set up so that money that came from Bush’s administration lost billions. So much for caring about America and American taxpayers.
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