You may remember how, during the Obama-structured bankruptcies of General Motors and Chrysler, shareholders were shoved to the side by the UAW's retiree benefit trust (called a VEBA), which assumed partial ownership of GM and majority ownership of Chrysler. That was in addition to the American taxpayers pumping in billions to the American auto companies.
Well, as it turns out, the UAW's retiree benefit trust is, according to Crain's, still running in the red:
A nasty combination of rising health care costs and poor stock market performance has caused a drop in available funding for the UAWs Retiree Medical Benefits Trust, according to documents filed in October with the U.S. Department of Labor.
The trust pays for health care benefit costs for 840,000 retired autoworkers and their dependents that currently amount to $4.5 billion each year.
The fund has net assets of $58.8 billion and total benefit obligations of $79 billion, resulting in a $20.2 billion shortfall, said the UAW documents.
This shortfall is leading the UAW VEBA to begin cutting retiree benefits:
“I’ve already gotten letters saying they are raising premiums for dental and eye coverage,” said Lyle Roussey, a worker who retired from GM’s Saginaw Metal Casting plant in Michigan two years ago. “I never had faith when the UAW took over medical benefits. We don’t know what they are doing with all the money.
“From the beginning, the VEBA was underfunded by billions of dollars. Now all we are going to see is more letters, saying ‘we’ve got to cut this, we’ve got to make you pay for more this.’”
In 2007, in exchange for cutting entry-level wages, the UAW achieved its long-standing goal of getting the auto companies to fund the VEBA, a union benefit trust fund that the UAW would administer to its retirees. Then UAW-president Ron Gettlefinger pitched the agreement to both the media and his members, claiming that the VEBA would take care of the UAA retirees for 80 years.
"I am pleased to say we have a VEBA," Gettelfinger said, "and that it stretches out for the next 80 years. And that's all I'll say."
Gettelfinger and UAW Vice President Cal Rapson stressed that the VEBA should help GM become more competitive by relieving the automaker of direct health care costs. Instead, the company and the union will put money into the trust, which will be administered by a third party.
We know how that turned out, don't we? Now, with an additional $20 billion of under funding, will American taxpayers get asked to kick in more money?
“I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes.” Thomas Paine, December 23, 1776
Cross-posted on LaborUnionReport.com
Image source: LibertyWorks.com