UAW Bonuses Add Insult to Injury
Last night, NLPC President Peter Flaherty criticized GM's bonuses to United Auto Workers while the company is stil deep in the hole to taxpayers. He appeared on CNN's Situation Room. Here's a transcript:
Candy Crowley: New evidence that General Motors has made a big financial comeback after taxpayers bailed out the auto giant a few years ago. The company proudly announced it has posted record profits, but critics aren't happy about the way GM is spending that money. Here's our Lisa Sylvester.
Lisa Sylvester: Hi there, Candy. Well, all three U.S. automakers are back from the brink. GM had a very profitable year in 2011 with its North American operations. Now the question is, though, should those profits be shared with the workers, even though U.S. taxpayers are still on the hook for the company?
Lisa Sylvester (voice-over): November 2008, the CEOs of the big three auto companies came to Washington to ask taxpayers for a multibillion dollar bailout. They flew to the capital on private jets sparking the ire of some members of Congress who accuse them of being tone-deaf.
Congressman Gary Ackerman: It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo.
Lisa Sylvester: November 2008, the CEOs of the big three auto: GM eventually received $49.5 billion from the government. Chrysler $12.5 billion. That helped keep the car companies afloat. Fast forward to today GM has announced it has posted a record annual profit, $7.6 billion, last year. GM's 47,000 union workers will each get a $7,000 profit-sharing bonus check. But keep in mind GM hasn't fully paid back the taxpayers. The U.S. government still owns about a quarter of the company with 500 million shares. The National Legal Policy Center is a nonpartisan ethics watchdog group. Their director says it's a great deal for the United Autoworkers Union, lousy deal for taxpayers.
Peter Flaherty: I think these bonuses add insult to injury. The United Autoworkers have already received equity in the course of the bailout and structured bankruptcy. And now it's just gravy. It does nothing for taxpayers who are still in the hole on this deal.
Lisa Sylvester: General Motors justifies the bonuses saying they have replaced automatic pay increases. A spokeswoman for GM saying, quote, "What we're trying to do is align compensation with how the company performs, as the company improves and delivers on its goals, that's reflected in our compensation." The UAW also says workers should get a small cut of the profits.
Joe Ashton: We haven't had a pay increase since 2003. And there's no pay increases in this contract. No pay increases whatsoever. There was no pension increases and no pay increases. Everything that we will get will be based on profit sharing.
Lisa Sylvester: But GM is not out of the woods yet. GM's European and South American operations are still losing money. And its fourth quarter profits missed Wall Street's expectations.
Lisa Sylvester: And for taxpayers to recoup the government money from GM, shares of the company would have to double from about $26, $27 a share to about $52 or $53 a share. And Candy, that is not likely to happen anytime soon.
Candy Crowley: You know, this is one of those issues I think we'll be talking about for awhile. Because it's really interesting and you can kind of see both sides.
Lisa Sylvester: Well, I -- exactly. And I think we're going to own this company at least a quarter of a share of this company for a while as taxpayers so.
Candy Crowley: I feel better already, owning a share. Thanks, Lisa.