PrintApril 23, 2009
Treasury's 'Pre-package,' Gift Wrapped for the Auto Unions
The New York Times is reporting that the Treasury Department is preparing a bankruptcy filing for Chrysler. The priorities of the filing tell quite a story about the Administration’s philosophy.
For the unions:
The U.A.W., Chrysler and Treasury have reached agreements in principle that would protect workers’ benefits, people with knowledge of the negotiations said, and a similar agreement is expected to be reached as soon as this weekend with the Canadian Auto Workers union.
For Crysler’s creditors:
Unresolved is what happens to Chrysler’s lenders, who hold $6.9 billion in company debt. The government’s most recent offer, presented Wednesday, would give the company’s lenders about 22 cents on the dollar, or $1.5 billion, and a 5 percent equity stake in a reorganized Chrysler.
The Obama Administration is asking for $5.4 billion in concessions from creditors while leaving $9.3 billion in unfunded union pensions untouched. This must be what Obama meant when he said everyone needed “skin in the game.” Or, more likely, it’s what he meant by “spread the wealth around.”
I don’t mean to suggest that creditors should get all their money at the expense of the union’s pension fund. All parties should share in the failure just as they would have shared in the success.
That fact that Obama is seeking to completely isolate the union from its share of the blame shows just how much a money-laden political alliance can buy in the “New Era of Responsibility.”
