Talk about pirates. General Motors will probably be forced to walk the plank.
Obama wants bankruptcy courts to sell off GM's "profitable parts" to private investors (natch) and have it liquidate its "undesirable assets" - like healthcare and pension obligations - keeping all of the profits and none of the promises, also known as contracts with auto workers. (Hmmmmm... What would a big Wall Street bank do?)
This will further trash GM's stock prices, which were tanking at $1.71 a share on Monday, April 13, making bankruptcy almost a sure thing.
GM would be split into two "companies", one would include Chevrolet, Cadillac and Buick - the profits. This "company" would go through bankruptcy in about two weeks, using five to seven billion of our taxpayer dollars to do it. The other "company" would be stuck with the "undesirable assets", like some brands, factories and healthcare obligations. This part of the company, GM's corpse, would be picked apart and liquidated over the course of several years, while the part hovering above it, already through bankruptcy, would be producing a tidy profit for those private investors.
The bankruptcy Sword of Damocles is being dangled over the heads of GM's 60, 000 hourly workers and 800,000 retirees and their dependents in order to extort unprecedented givebacks from the United Auto Workers, who have to carry out this death sentence by May 31, or a bankruptcy judge will do it for them. Some choice. Kill yourself or commit suicide. (Hmmmmm... What would a big Wall Street bank do?)
In March, GM submitted a plan to the Obama Administration that would have eliminated 47,000 jobs - 21,000 in the US - and closed 14 plants in North America and Europe, PLUS making a reduction in wages and benefits to equal those of non-union workers in Japanese-owned plants in the US.
But that wasn't good (bad?) enough for the president, who insists on more "painful concessions" from auto workers, since the company will only be deemed "viable" if it assures an "adequate return on capital" to Wall Street. Well, lah-dee-fuckin'-dah.
Jared Bernstein, Obama auto task force member, says non-union wages, a reduction in benefits, 47,000 axed jobs and 14 closed plants just isn't going to cut it. There's got to be more pain, because most of the past UAW concessions applied to "new workers" and "there are still lots of workers who are older, more experienced and still benefit from contracts that were signed long ago," apparently indicating that these, still, good jobs will have to go and be replaced with wages slightly above poverty level and preferably without healthcare or pension benefits. This is still a capitalist economy after all.
Meantime, co-opted UAW officials maintain silence behind Oz's curtain while intensely negotiating not to protect jobs or the living standards of the rank and file workers, but to scavenge what they can for themselves from this auto wreck. In fact, the UAW, and so these officials, could be one of the biggest shareholders in the desirable, profitable part of GM. That would give them a direct stake in boosting profits, and thus the share value of the company by driving a stake through the heart of rank and file members' jobs, wages and benefits. And if GM is forced into bankruptcy, UAW officials won't have to bring back more concessions to membership, who would defeat such a contract with a rank and file vote. The UAW "leadership" probably also believes it could dodge the bullet for these concessions by laying them at the feet of the bankruptcy judge.
In 2007, UAW agreed to a pay cut of one-half for new hires, and to free GM, Ford and Chrysler from tens of billions of retiree healthcare obligations in exchange for VEBA, a union-controlled trust fund, the Voluntary Employees' Beneficiary Association. GM owes VEBA $20 billion, but last month asked UAW to take $10 billion in preferred (to what) stock at 9% interest and $10 billion in cash - over 20 years. But GM will probably try to drive an even harder bargain because the Treasury Department wants more than half GM's UAW liabilities wiped out, so GM will push the UAW to take even more than half that $20 billion in remaining healthcare "liabilities" in stock. Now that's a deal - for GM. These "liabilities' are people's lives.
VEBA was supposed to be a source of investment income for UAW to offset losses from auto industry downsizing. Now it's just another broken promise. Can you say "contract"? How about "treaty"? "Welcome to the reservation, white man." (1)
And since VEBA is being financed with worthless (almost) stock, the trust fund UAW claimed would be good for 80 years is almost instantly as worthless as the stock it's based on. And when UAW takes over the provision of retiree benefits next January, they'll be slashing and burning medical coverage for thousands of retirees and their spouses.
Besides gutting auto workers' healthcare, the administration wants a sharper reduction in pensions. (Hmmmmm... What would a big Wall Street bank do?) And if GM goes into bankruptcy, a judge would probably let GM jettison pensions and hand off its obligations to - you guessed it - the taxpayers, via the Pension Benefit Guaranty Corporation, already into a multi-billion dollar deficit, leaving GM retirees with drastically reduced means of survival. How convenient.
The new administration works for the few, the financial elite, which is bent on destroying all the past gains made by US auto workers, and will use this as a template for a concerted attack on the living standards of the majority of Americans. Can you say "Ronald Reagan"? (One of Obama's heroes) How about "PATCO"? As the auto industry and its workers walk the plank, Wall Street will be awash in another bundle of booty, all part of the plan to continue funneling all of the wealth created by the working class to the tip of the economic pyramid, where those who consider themselves the elite ride, booted and spurred, on the rest of our backs.
Just like the New Deal, which was being retracted even as it was enacted, everything the American working class had gained is about to be snatched back by the profit center from which it was wrested. Or has it all been simply a temporary sop to stop any nasty thoughts of revolution or - "Let me hear that dirty word!" (2)- socialism?
(1) Russell Means (2) Warren Beatty as J. Billington Bulworth