Obama robs John Q. Public to pay auto union work­ers

The Washington Times Daily - - Opinion - By Trey Ko­vacs and F. Vin­cent Ver­nuc­cio

Pres­i­dent Obama and United Auto Work­ers (UAW) Pres­i­dent Bob King are tout­ing the “achieve­ment” of the auto bailouts while slam­ming Repub­li­cans who op­posed them. Over the week­end, UAW mem­bers chanted, “Thank you, Pres­i­dent Obama!” at a rally. Now the UAW is at­tack­ing for­mer Mas­sachusetts gov­er­nor and pres­i­den­tial can­di­date Mitt Rom­ney for call­ing Mr. Obama on putting the union ahead of tax­pay­ers and in­vestors. In­stead of let­ting Gen­eral Mo­tors (GM) and Chrysler go through the nor­mal bank­ruptcy process, Mr. Rom­ney pointed out, the pres­i­dent gave “these com­pa­nies to the UAW.”

The fact is that the UAW has ben­e­fited from bil­lions of tax­payer dol­lars, not just through the di­rect bailout of Gen­eral Mo­tors and Chrysler, but also through var­i­ous pro­grams that gave gov­ern­ment dol­lars to the union’s health care plan. Yet even with the tax­pay­ers sup­port­ing it at seem­ingly ev­ery turn, the UAW’S health in­sur­ance fund is bil­lions in the red.

Five short years ago, the UAW, with help from the Big Three Detroit au­tomak­ers, set up its Vol­un­tary Em­ployee Ben­e­fit As­so­ci­a­tion (UAW VEBA), a trust in­tended to curb es­ca­lat­ing health care costs. The UAW VEBA re­moved health care li­a­bil­i­ties from the Big Three’s bal­ance sheets. More than 820,000 Big Three re­tirees thought their health care was se­cure. For­mer UAW Pres­i­dent Ron Get­telfin­ger pre­dicted at the time that the fund would last 80 years. Mr. Get­telfin­ger’s con­fi­dence not­with­stand­ing, the UAW VEBA is un­der­funded by $20 bil­lion, ac­cord­ing to Depart­ment of La­bor records.

The UAW VEBA’S li­a­bil­i­ties stem from im­pru­dent man­age­ment. The union neg­li­gently mis­cal­cu­lated in­creases in health costs and as­sumed an un­re­al­is­tic 9 per­cent an­nual re­turn on in­vest­ment. De­spite the gov­ern­ment pour­ing funds and sub­si­dies into the UAW VEBA since its cre­ation in 2007, un­der­fund­ing has re­mained a prob­lem through­out its short his­tory.

Be­fore the bailout, the Big Three com­mit­ted $57 bil­lion to the UAW VEBA ($33 bil­lion from GM, $9 bil­lion from Chrysler and $15 bil­lion from Ford, the com­pany that did not ask for a bailout). Then, as part of the bailout, the UAW re­ceived sig­nif­i­cant stakes in Gen­eral Mo­tors (17.5 per­cent) and Chrysler (55.5 per­cent).

In ad­di­tion to the di­rect hand­outs, Obama ad­min­is­tra­tion poli­cies have sub­stan­tially in­creased health care sub­si­dies to unions. The Amer­i­can Re­cov­ery and Rein­vest­ment Act stim­u­lus ex­panded the Health Cov­er­age Tax Credit (HCTC) to VEBAS. For el­i­gi­ble em­ploy­ees, the HCTC re­moves the re­spon­si­bil­ity of pay­ing for health care from em­ploy­ers and unions, plac­ing the bur­den squarely on tax­pay­ers’ shoul­ders in­stead.

The HCTC sub­sidy in­crease ex­pired in 2011, bring­ing the sub­sidy down to 65 per­cent. How­ever, the Trade Ad­just­ment As­sis­tance Ex­ten­sion Act of 2011, which Mr. Obama signed on Oct. 21, once again in­creased the sub­sidy to 72.5 per­cent. The HCTC pro­gram amounts to a $10 bil­lion tax­payer sub­sidy for health care, to which any UAW VEBA par­tic­i­pant can now ap­ply.

The Early Re­tiree Rein­sur­ance Pro­gram (ERRP) is an­other Obama ad­min­is­tra­tion pol­icy that di­rectly funds pre­ferred spe­cial in­ter­ests at the ex­pense of the tax­payer. The Af­ford­able Care Act (Oba­macare) cre­ated the ERRP to off­set ris­ing costs of early re­tirees’ health care. The fed­eral gov­ern­ment al­lot­ted $5 bil­lion to the ERRP, of which the UAW VEBA re­ceived $208.8 mil­lion, mak­ing it the top re­cip­i­ent of ERRP funds.

In mid-fe­bru­ary, Gen­eral Mo­tors, in light of record prof­its, is­sued prof­it­shar­ing checks to 47,500 UAW mem­bers. Pay­ing UAW mem­bers bonuses be­fore re­pay­ing tax­pay­ers — the fed­eral gov­ern­ment owns a 27 per­cent stake in GM — in­di­cates that the car com­pany has learned lit­tle from the bank­ruptcy and would not hes­i­tate to seek an­other tax­payer bailout.

This all leads to the ques­tions: How can the UAW VEBA have any li­a­bil­i­ties? Why does the fed­eral gov­ern­ment con­tinue to sub­si­dize unions? With more than $1 bil­lion in as­sets and more than 500 of­fi­cers and em­ploy­ees earn­ing six fig­ures, the UAW can well af­ford to pay for the ben­e­fits it has promised its mem­bers be­fore ask­ing for more tax­payer hand­outs.

Pres­i­dent Obama has shown no will­ing­ness to stop re­dis­tribut­ing the wealth from tax­pay­ers to union bosses. Congress needs to end the flow of tax­payer funds to Big La­bor’s cof­fers.


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