Obama Misrepresents Auto Bailout– GM DID Go Bankrupt
We have heard the claims over and over again from the Obama campaign; the President "saved" General Motors and Mitt Romney said "let Detroit go bankrupt." The clear implication is that GM never went through the bankruptcy process that Romney suggested. Here's news for voters who didn't pay attention to how, exactly, Obama "saved" GM; $50 billion dollars of taxpayer money was given to GM to get them through a manipulated bankruptcy process. Replacing the word bankrupted with saved does not change the facts. And the fact is, GM DID go bankrupt.
The media has not questioned the clearest example of misrepresentation of facts by one of the presidential candidates. This one is not debatable, the court dockets exist. Not only did GM go bankrupt, but the Obama Administration used taxpayer money to manipulate the bankruptcy process and assure that political friends in the UAW received favorable treatment compared to non-union claims.
The evidence that union friends of Obama received favorable treatment is also irrefutable. In a normal bankruptcy, liabilities and creditors would be ranked with unsecured claims being treated equally (which wasn't done under the Obama manipulated bankruptcy) and negotiated through a "managed" process. THAT is what Mitt Romney suggested be done. And for the record, he never used the words "let Detroit go bankrupt," that was a title a paper that published a Romney op-ed piece gave it. President Obama was the one who carried out a plan that saw a GM bankruptcy process that became anything but normal as he appointed his Auto Task Force to assure that the UAW was well taken care of.
While GM bondholders who were supposed to have equal rights as unsecured creditors were thrown under the bus and given pennies on the dollar, the UAW had its jobs, pensions and benefits protected by Team Obama. In fact, GM still had over $100 billion of pension obligations on its books, of which about $20 billion were underfunded, when it exited bankruptcy. And Obama's Auto Task Force insisted that thousands of jobs at non-union dealerships be cut while using taxpayer money to preserve UAW jobs. So when you hear about jobs being saved, remember that it was only union jobs that were deemed important by Obama. And when you see how poorly GM stock has performed since its IPO (down about 35%) resulting in continued losses to taxpayers, remember that the reason is because the bankruptcy process was not carried out in a way to make GM as profitable as possible. It was done to protect political allies.
Nowhere is the evidence clearer that the UAW was favored over non-union parties as in the Delphi (GM's parts supplier) retiree case. It has recently come to light that the Obama Administration influenced GM when UAW retirees at Delphi had their pension benefits "topped off" with GM's taxpayer funds as nonunion retirees lost their benefits. Members of the Administration apparently lied under oath when they testified that Team Obama had nothing to do with the inequitable treatment of non-union retirees. Emails have been produced that show that was not the case. Congress is rightfully still investigating the blatant payoff to political friends.
Of course, the UAW has done its part to reciprocate by coming out to strongly support President Obama in his reelection bid. It is understandable that those parties that benefit from Obama's actions come out in support. The problem is, the rest of us non-favored, non-unionized taxpaying citizens are not so richly rewarded.
The bottom line is that the claims of saving millions of jobs in the auto industry in a noble quest to "save" GM are just false. The process could have been carried out in a much fairer way and GM could have now been in a much better position right now if over $100 billion dollars of UAW benefits were not deemed untouchable by the Obama Administration. And, for the record, GM employs about 77,000 people in America. The claims that the industry would have collapsed and millions of jobs lost if taxpayers didn't ante up to save the UAW are just more campaign deception.
I expect that the GM bankruptcy process will continue to be discussed, particularly at the presidential debates. The defense for the trampling of contract law that occurred during the process will be that there were no other bidders available to fund a managed, fairer bankruptcy. Bull. The reason no other bidders came forward was that once Obama's team took over the process, no bidder would be able qualify to make an offer for GM unless UAW assets were protected. A bidder would have had to top the Administration's taxpayer funded "purchase" price. No private entity could compete with the bottomless pockets of the government.
It is a shame that Mainstream Media allows the GM bankruptcy deception to proceed unquestioned. My hope is that the debates will help bring to light just how corrupt the GM bankruptcy was. The manner in which GM was "saved" is nothing to brag about, much less to run a presidential campaign upon. Unless you believe that bankrupting a major American corporation under a process that favors political friends using billions of taxpayer dollars is a worthy accomplishment.
Mark Modica is an NLPC Associate Fellow.