"This Treasury-imposed restructuring is not a GM bailout; it is a UAW bailout with far-reaching ramifications. GM’s common stockholders are getting wiped out and public bondholders are getting hammered. Taxpayers and consumers get to pay billions of dollars for GM products that they never received or even wanted in the first place. All of this is to reward the UAW for bringing to its knees what was once an American icon."
Yet, in spite of all the help and money we, the taxpayers unwillingly shoveled into the coffers of the big union, it looks like they are about to go broke, anyway. As reported in Reuters.com,
"Two years after the wrenching restructuring of the U.S. auto industry and the bankruptcies that remade General Motors and Chrysler, the UAW is facing its own financial reckoning. America's richest union has been living beyond its means and running down its savings, an analysis of its financial records shows. Unless King and other officials succeed with a turnaround plan still taking shape, the next financial crisis in Detroit may not be at one of the automakers but at the UAW itself."
This is a story about the collision of greed and good intentions. The union leveraged their power and greed against a President who owed his election to Big Labor and the good intentions of a Congress that was hornswoggled into believing they had to act to save hundreds of thousands of jobs by bailing out the largest industrial corporation in history.
They could have allowed the car companies to use the process that was put in place in American law many years ago. It's called bankruptcy protection. The bills would have been paid, the company would have had ample time and opportunity to restructure itself and GM could well have come out in as good or better shape than it has so far without billions of taxpayer dollars being spent - dollars that will never be returned.
In October of 2008, as a candidate for the US Senate, I was asked about the bailouts that were being considered at that time. My response was recorded in the Detroit News:
"Hoogendyk stated that there has been many other American carmakers that began, tried, and failed in the auto industry and America still survived. This was part of his opposition to the $25 billion federal loan package for auto companies that Congress recently passed, Hoogendyk said he believes it's not government's business to make loans to individual companies."
I was roundly criticized for saying that back in 2008. Ironically, the "$25 billion federal loan package" has turned into a nearly $25 billion loss for taxpayers as reported in the Detroit News last month. Hmmm...
As bad as the free market may seem, it is still the best way for individuals and corporations to sink or swim.