Auto Bailout Czar: We Did It All for the Unions

Ron Bloom photoThe Detroit Free Press reports that the House committee holding hearings on the auto bailout process wants clarification from former head of President Obama’s Auto Task Force, Ron Bloom, regarding testimony he gave about a statement he allegedly made at a 2009 celebratory dinner. According to a news article written at the time and fellow ex-car czar, Steve Rattner, Bloom stated that he “did this all for the unions.” Bloom denied making the statement while under oath. The congressional panel isn’t buying it and has written a letter to Bloom requesting that he amend his testimony.

Given Bloom’s union background and the UAW favoritism displayed throughout the General Motors and Chrysler bailout process, the admission that the bailouts were done to benefit the unions should not come as a surprise. For many of us, that has been obvious for quite some time. Bloom was once the special assistant to the president of the United Steelworkers Union where he negotiated on behalf of unions. The fact that Obama chose a car czar that had union loyalties is very telling. The so-called “sacrifices” made by the UAW during the auto bailout process pale in comparison to those made by other classes of creditors, including GM bondholders who were shut out of negotiations for the most part. Accident victims and asbestos victims had their claims subordinated to the politically powerful UAW as well, and taxpayers are footing the bill.

I have yet to see where the UAW has sacrificed much. Reduced wages for new UAW members only apply after laid off senior members with full pay are rehired. Another misrepresented “sacrifice” relates to a VEBA health care benefits deal that occurred prior to bankruptcy proceedings. In that deal, GM paid $30 billion into a VEBA fund in return for the UAW taking on future health care obligations. Essentially, money was borrowed from bondholders to help pay for this and was later defaulted on by GM. The UAW retained its pension benefits as salaried workers like the ones at GM’s parts arm, Delphi, lost theirs and now GM boasts about how UAW members are being rehired at full pay. The congressional oversight panel investigating the bailouts should question exactly what sacrifices were made by the UAW compared to other classes and determine why there was such blatant favoritism.

Another indicator that Auto Task Force representatives were on the side of the unions surfaced recently as one of the key architects of the bailout, Harry Wilson, was hired on by another union, the International Brotherhood of Teamsters. The Teamsters insisted that Wilson become involved in negotiations at YRC Worldwide, as reported in a NY Times piece. The unions must have been so satisfied with the work of the Auto Task Force that they wanted Wilson on their side again. It is naïve to think that actions like this would occur if the Task Force was truly unbiased.

Part of Bloom’s defense of comments like the one about him doing it all for the unions is that he made the statements jokingly. Bloom’s strange sense of humor may get some laughs from those that have benefited from the unprecedented government actions. Maybe the UAW, bankruptcy attorneys and investment bankers are yucking it up, but taxpayers and other classes that were discriminated against are not laughing. The American people deserve to know the truth about how the bailouts benefited cronies of the Obama administration like the UAW as others paid the price.

Mark Modica is an NLPC Associate Fellow