Zywicki: Auto Deal Really a Bailout for Unions
Taxpayers needlessly lost $26 billion in the auto bailout, says Professor Todd Zywicki in an op-ed in The Press of Atlantic City.
Three legal irregularities in the GM and Chrysler bankruptcy reorganizations cost American taxpayers $26.5 billion by transferring money to the United Auto Workers union (UAW), says Zywicki. Union members kept most of their above-market compensation, the UAW recovered a greater portion of its debt than other creditors, and the government topped up the pensions of union employees at a bankrupt former parts subsidiary, with the net result that the expenditures account for the entire net cost of the bailout, Zywicki explains.
"The government should not use the taxes all Americans pay to prop up union compensation, June 26, 2012. By James Sherk and Todd Zywicki.
"In total these irregularities cost taxpayers $26.5 billion. These costs account for the entire net cost of the bailout. They also directly subsidized the UAW's above-market compensation. Taxpayers could have kept the automakers running, prevented layoffs, and broken even. That didn't happen, and only because the administration gave the union special treatment.
"UAW members are naturally glad they avoided larger sacrifices, but that doesn't justify their bailout. The typical UAW member at GM still makes twice what the average private-sector worker does. Few other Americans can retire at 56 or get retirement health benefits on top of Medicare."