The UAW Bailout

A new study concludes … surprise! … that the automotive bailout was mainly a bailout of … well, you know:

President Obama touts the bailout of General Motors and Chrysler as one of the signature successes of his administration. He argues that the estimated $23 billion the taxpayers lost was worth paying to avoid massive job losses. However, our research finds that the president could have both kept the auto makers running and avoided losing money.

The preferential treatment given to the United Auto Workers accounts for the American taxpayers’ entire losses from the bailout. Had the UAW received normal treatment in standard bankruptcy proceedings, the Treasury would have recouped its entire investment. Three irregularities in the bankruptcy case resulted in a windfall to the UAW.

We’ve talked about this in general terms, but they break it down into specifics. Basically, pools of creditors that were supposed to be treated equally were split into two pools — the unions and everyone else. The unions got far more than the “everyone else”. They also avoided pay cuts and benefits cuts, which might have happened in a normal bankruptcy, as we’ve seen with the airlines. The net result is that our $26 billion loss is about what the UAW got out of this.

(I can’t find the reference, but I believe the pension funds would have gotten federal money anyway had they collapsed. But that’s only a portion of the payout to UAW. And at least that would have been honest.)

People see this as an anti-labor thing, but it really isn’t. I’m not fond of unions but I support the rights of private sector unions to exist, to negotiate, to strike, to organize and to get their contracts honored (public sector unions are a different matter). I think the union focus is drawing people away from the salient point: President Obama gave $26 billion to his political allies. That’s bigger than everything paid to, say, Halliburton. But because it’s Big Labor, no one seems to have noticed.

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  1. Mississippi Yankee

    President Obama gave $26 billion to his political allies. That’s bigger than everything paid to, say, Halliburton. But because it’s Big Labor,

    no one seems to have noticed

    .

    Your kidding me right?
    no one seems to have noticed

    Have you ever read the blog Right Thinking From The Left Coast?

    “Bueller”. … “Anyone, anyone”

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  2. salinger

    President Obama gave $26 billion to his political allies. That’s bigger than everything paid to, say, Halliburton. But because it’s Big Labor, no one seems to have noticed.

    Not according to the Pentagon’s auditor:

    Asked for comment, KBR spokeswoman Heather Browne said in an e-mail that KBR, then a subsidiary of Halliburton, was awarded the opportunity in 2001 to perform the Army’s war-zone logistics work “following a competitive bidding process.” The value of that work is now more than $31 billion.

    As for the union bailout – (aren’t unions as much people as corporations?) – it is my understanding that no private sector funding sources , including Bain Capital, were interested in underwriting a bankruptcy Seems like a pay to play scenario to me – the opportunity was there for the private sector to step up and grab the reins but none did. Kind of like the driver of the car gets to pick the radio station.

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  3. Seattle Outcast

    Quite honestly, some people involved in this deserve 25 years in a federal PMITA prison. I’d start with Obama and his entire staff.

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  4. Hal_10000 *

    e you ever read the blog Right Thinking From The Left Coast?

    :)

    Asked for comment, KBR spokeswoman Heather Browne said in an e-mail that KBR, then a subsidiary of Halliburton, was awarded the opportunity in 2001 to perform the Army’s war-zone logistics work “following a competitive bidding process.” The value of that work is now more than $31 billion.

    This is new information to me. I had the value of their contracts at $7 billion. So they’re comparable at least.

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  5. sahrab

    Salinger – The value of that work is now more than $31 billion.

    Hal – This is new information to me. I had the value of their contracts at $7 billion. So they’re comparable at least.

    Oh Boo-Fucking-Hoo, the Haliburton bullshit has been debunked so often, only a political hack would attempt to claim their is a comparison between that and the UAW.

    Plus Salingers playing his games a-friggin-gain, when KBR (boo his) was awarded their contract in 2001 it was $55 million, in 2008 it had grown to $5.7 billion (for proof its in Salingers own fucking link). By 2009, because of the work KBR had completed, they’ve built their business at a value, after 8 years of work (dipshits article is from 2009), to 31 billion. Heres a hint Salinger, just because contracts are renewed every year they do not have to go through the awarding process everytime. The Government will award a contract for 2-5-7-10 years, with renewals every year. This benefits the government because it doesnt have to go through the RFP every fucking year, which is a huge drain.

    And Haliburton growing its work to 31 billion, from 55 million, is ENTIRELY FUCKING DIFFERENT thant the UAW award of 26 Billion from go.

    Jesus that was to easy.

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  6. salinger

    Oh Boo-Fucking-Hoo, the Haliburton bullshit has been debunked so often, only a political hack would attempt to claim their is a comparison between that and the UAW

    I didn’t – Hal did. I simply responded so I then deduce you are calling Hal a political hack. Turning on your own now, huh Sarhab?

    The original article linked to by Hal compares the union bailout sum to NASA’s budget – so I assumed he chose to compare it instead to Halliburton for political effect. I also thought it was probably a low-ball estimate on the government contracts given to Halliburton so I decided to spend a few seconds looking into it.

    I simply googled the amount Halliburton has received in government contracts. The KBR link came up pretty quickly – I’m sure if I wanted to spend more time on it (which I really don’t) I could find a whole lot more than just that one subsidiary’s contract and come up with some really big numbers.

    But go ahead and parse it anyway that keeps your world lens squeaky clean and them evil liberals in their place. Remember – my only point is Halliburton has received more government money than the UAW did with this bailout. A simple clarification, which was graciously accepted by the OP. I am not going to mud-wrestle with you on this one. Have a peachy summery day.

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  7. salinger

    Didnt quite go the way you hoped eh?

    Real quick – let’s see here.

    A) Notice a dubious claim in a post – do a tiny bit of research – show claim is a bit off base.
    B) OP agrees that claim was mistaken.
    C) Third party jumps in to try and muddy the waters by ignoring the issue at hand and seasons their missive with condescension and name calling?
    D) Third party will not relent until getting in last word.

    Nope – pretty much went exactly as I expected.

    Thanks for playing sarhab.

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  8. FPrefect89

    Real quick – let’s see here.

    A) Notice a dubious claim in a post – do a tiny bit of research – show claim is a bit off base.

    Lets see here. Did a quick Google search myself, the first thing that turns up is “Halliburton Watch“. Of course that site was down.

    Second one is from CBS. Not sure how reliable that is, but it does support the 7 Billion, and the estimate was at 25 Billion for multiple different companies.

    End of my search on this topic. Both parties pay off the cronies that get them elected.

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  9. Hal_10000 *

    The Haliburton line was a careless trowaway to illustrate the more general point. It could just as easily have been Solyndra or someone else. The fact is that we are talking about a gigantic amount of money paid out to a political ally or no other reason than they’re being a political ally. Halliburton actually was a government contractor doing government work. Even Solyndra was (theoretically) doing something at government behest. We obssess over those. We obsess over the banks. And rightfully so. We should obsess over every dime the govt forks over to powerful interests. But this is a big fucking deal, bigger than just about any political scandal. This should be thrown out every time Obama starts yammering on about Bain.

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  10. Xetrov

    Holy Shit, we’re still debating Halliburton. First off, it was a lousy comparrison. Halliburton sells its services to the goverment (both parties). The UAW sells votes to Democrats. Second, Halliburton…aww, hell, forget it. Just read this and stop living in 2004.

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  11. Seattle Outcast

    Sweden – England in a couple of hours. We need this game!

    ?????????????????

    I’m pretty sure there any NFL teams in either of those places….

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