Detroit Doesn’t Understand Why The Automaker Bailout Must Not Happen

The bailout for the Big Three Automakers is still being dicussed in Congress even though the bill itself is on life-support. This isn’t because it’s a good idea (it isn’t), rather it is because the Democrats have to pay back the support they got from the United Auto Workers and they want Main Street America to pony up the money.

Running alongside this argument is a spotlight that illuminates what is going on in Detroit and why the Big Three Automakers are in trouble. Unfortunately for the UAW, these revelations don’t make them look good.

From Dan Calabrese of the North Star Writers Group:

To survive in business, you have to make a profit. Period. Nothing else matters. General Motors, Ford and Chrysler don’t do that, so they deserve to die. But if you want to understand why they don’t make a profit, all you need to do is look at two schemes concocted along with the United Auto Workers – the Voluntary Employee Beneficiary Association (VEBA) and the UAW Jobs Bank. The two entities work in different ways, but they have one devastating fact in common. Both require the automakers to pay billions to people who don’t do any work for them. The VEBA, which is actually being hailed by Detroit media and civic leadership as a positive measure, is in reality a way for the UAW to protect its retirees from losing their health benefits in the event of an automaker bankruptcy. Negotiated by GM in 2007, it requires the UAW to administer retiree health benefits beginning in January 2010. That’s the part the industry’s defenders keep pointing to – the notion that it offloads retiree benefits onto the union, as if the union was going to pay these benefits out of its own pocket. In fact, GM is required to continue spending $1.8 billion a year through the end of 2009 on retiree health benefits, while also bankrolling the VEBA to the tune of an astounding $24.1 billion so the funds are ready for the UAW to begin administering on January 1, 2010. And that’s not all. GM will be required to make up to 20 additional annual payments of $165 million apiece in order to guarantee that retiree health benefits for UAW members are not reduced at all for 25 years. This is what the Big Three would have us believe amounts to legacy cost relief. But even that is not as outrageous as the Jobs Bank. Established in 1984, the original purpose of the Jobs Bank was to keep workers available during temporary layoffs when the emerging technology of the time was causing short-term displacement of workers. A worker would receive 95 percent of his or her wage for up to two years – again, through a fund administered by the UAW but funded by the Big Three – until a new job opened up.

As long as the Big Three are throwing money away on these outrageous expenditures on the unions, they will not be able to make money and therefore will not be able to remain competitive in the market. The Big Three need to go into Chapter 11 to break these wasteful contracts.

But, what of the union leadership?

Read on:

UAW President Ron Gettelfinger, who is predictably coming under fire from all quarters for clinging to these perks, held an astounding news conference late last week in which he insisted that none of this has caused the problem. Again citing the struggling economy and the consumer credit crunch, Gettelfinger began howling, “It’s not our fault! It’s not our fault!” It was an eye-opening scene, and surely illustrative for anyone who is just now getting introduced to economic thinking, Detroit-style. If my eight-year-old talked like that, I would send him to his room. In Detroit, this passes for community leadership.

Gettelfinger knows where the groceries are coming from and he knows who is paying for them. As long as he and his union management cronies are making bank off of these deals, they want to keep them in place, even if it means having Joe and Jane Average American pay for it with higher taxes.

You can access the complete column on-line here:

No, Detroit, It’s You Who Doesn’t Understand
Dan Calabrese
North Star Writers Group
November 24, 2008

Environmental Groups Exposed: ‘Every Dollar Spent Has Been Aimed At Helping Democrats’

This is for those of you out there who still believe that radical environmental groups are actually non-partisan. An ongoing investigation into the finances of these groups reveal their true agendas.

On Setember 28, 2008, Greenwire reported how environmental groups are really nothing more than an advocacy arm of the Democrats.

Inhofe blog excerpts the Greenwire report:

With the 2008 campaign in the homestretch, major environmental groups are spending money and time on a half-dozen or so congressional candidates who figure to play prominent roles in future Capitol Hill energy and conservation debates. The charge is being led by the League of Conservation Voters, Defenders of Wildlife and the Sierra Club. While the three have endorsed dozens of congressional candidates, each has focused on just a couple of contests. The environmentalists have spent more than $3 million in congressional races on “independent expenditures” — essentially campaigns the groups are running to assist or attack a particular candidate, campaign finance records show. That amount does not include campaign contributions given directly to the candidates, though those dollars tend to represent only a small percentage of the amount the organizations actually spend in a typical election year. And while environmental groups have endorsed a number of Republican candidates, since the start of the fall campaign, every dollar spent by these organizations has been aimed at helping Democrats. … One other contest that has crept onto the radar of at least one environmental group is the Minnesota Senate race between Sen. Norm Coleman (R) and comedian and talk show host Al Franken (D). Environment America has in the last week spent roughly $200,000 on mailings there. The other contests in which environmentalists have spent money in recent weeks, though not in overwhelming amounts: the Oregon Senate race between Sen. Gordon Smith (R) and former state House Speaker Jeff Merkley (D), the North Carolina Senate race between Sen. Elizabeth Dole (R) and state Sen. Kay Hagan (D), the Alaska House race between Rep. Don Young (R) and former state Rep. Ethan Berkowitz (D), and the contest for the New Mexico 1st District seat currently held by Rep. Heather Wilson (R). In every instance, the environmental groups are backing the Democrat. According to Federal Election Commission records, the groups have spent just over $2 million on that contest. LCV leads the pack, with over $730,000 spent on the presidential race, with the Sierra Club and Defenders of Wildlife trailing — each having spent more than $500,000. Environment America has also spent about $140,000. The Sierra Club is the only one of those major environmental groups that has actually spent more money — in fact, the overwhelming majority of it — on the presidential race rather than congressional contests. And campaign finance records show that in many instances the environmentalists’ efforts in the White House contest overlap with their efforts in the congressional races, as much of their money has been spent in the states of Colorado, New Mexico and New Hampshire — all three have been considered battlegrounds. … Indeed, the only Republican to see any support this year in the form of independent expenditures is Rep. Wayne Gilchrest of Maryland, who lost his bid to fend off a primary challenge. Much of the environmentalists’ activity has been centered on Colorado and New Mexico, where the groups have spent heavily on both the Senate contests and one House race in each state. In fact, the two Colorado races are currently the top targets for environmentalists’ money, and they appear poised to stay that way through the election. The League of Conservation Voters has poured roughly $1 million into the Senate race between Rep. Mark Udall (D) and former Rep. Bob Schaffer (R), with more than a third of that money having been spent just since Labor Day. A couple of other groups have dropped a small amount of money into the contest, but their spending pales in comparison to LCV’s. The Colorado Senate race has been ground zero for outside group spending, as not only environmentalists but also business groups and other organizations have poured millions into the contest. … Oddly enough, the other race that has received the most money is not a high-profile Senate race or even one of the more closely watched House races. Defenders of Wildlife has poured roughly $1 million into their effort to topple Colorado Rep. Marilyn Musgrave (R), whose 4th District covers much of the eastern half of the state. The group had long ago announced that it would launch a campaign effort to beat Musgrave akin to the one it used two years ago topple former House Resources Chairman Richard Pombo (R-Calif.), a three-term incumbent (E&E Daily, July 9). Musgrave has not been particularly visible on environmental issues during her time in Congress, having focused much of her effort on social policy. But environmentalists have said that because of the nature of her district, it was important to replace what they view as a staunchly anti-conservationist vote with a pro-conservationist one. Indeed, the group appears to have backed up its promises with cash, spending heavily on both advertising and direct voter outreach methods. Musgrave was already viewed as exceedingly vulnerable heading into the election, having received the lowest vote percentage of any winning candidate in the 2006 campaign. And most recent polls show her trailing Betsy Markey, a former State Department employee and aide to Sen. Ken Salazar (D-Colo.). There are other races in which environmentalists have spent tens of thousands of dollars, though none reach the level of spending in the two Colorado contests. Since Labor Day, environmentalists have dropped roughly $80,000 into the New Mexico Senate race between Rep. Tom Udall (D) and Rep. Steve Pearce (R). The groups spent heavily there over the summer, but their spending has tailed off in recent weeks as Udall has moved out to a comfortable lead, with polls showing the Democrat holding a lead of 15 percent or more. Additionally, environmental groups — both LCV and the Sierra Club — have in recent weeks started spending significant amounts in New Hampshire’s Senate race on behalf of former Gov. Jeanne Shaheen (D), who is making a bid to topple Sen. John Sununu (R). In September and October, the groups have spent roughly $80,000 on various door-to-door efforts as well as phone banks and direct mail. Shaheen has consistently led in the polls in that contest, though recent polling has shown that the race has tightened slightly. … Presidential spending Though environmentalists have also remained active in the presidential contest between Democrat Barack Obama and Republican John McCain, as of this week, their overall spending in that race trails what they have spent in the congressional races.

Since these groups are being so partisan, they should lose any tax exempt status they hold.

You can access the complete areticle on-line here:

Environmental Groups Exposed: ‘Every Dollar Spent Has Been Aimed At Helping Democrats’
Marc Morano
Inhofe EPW Press Blog
October 22, 2008