Obama Administration Subpoenaed in Delphi Retiree Scandal

DelphiThe House Oversight and Government Reform Committee has announced that it has served Treasury Secretary Jacob Lew a subpoena to obtain records relating to the Delphi retirees’ pension scandal. Up to this point, the Obama Administration has stonewalled attempts by Congress to get an explanation on why Treasury seemed to be involved in orchestrating preferential treatment for unionized retirees over non-union retirees at Delphi during General Motors’ bankruptcy process.

An article at Vindy.com reports that the Obama Administration’s lack of cooperation regarding the Delphi case for the past three and a half years has left the Oversight Committee no choice but to subpoena the documents from Treasury. Here is a full explanation from the piece:

“Congress has made repeated requests with the Treasury for what lawyers representing the salaried retirees estimate could be as many as 30,000 documents that could help determine why they saw their pensions slashed by more than half in some cases. Until now, though, no request has carried the weight of a congressional subpoena.

The move is yet another volley in a four-year struggle for about 20,000 retirees – including 1,500 in the Mahoning Valley – who saw their pensions cut anywhere from 30 percent to 70 percent after Delphi terminated their plans during bankruptcy in 2009. They also remain without health and life insurance.

Delphi was formed as a spinoff by General Motors Co. in 1999 as a parts supplier. After Delphi terminated the pension plans and left a $7.2 billion shortfall, the Pension Benefit Guaranty Corp. assumed the plans and billions in losses.

Issa is examining whether the Treasury played a larger role than the PBGC in marginalizing the salaried retirees benefits – as hourly workers, mostly represented by the United Auto Workers, saw no such cuts. The Treasury oversaw the president’s auto task force, which played a major part in the government’s $85 billion industry bailout.

‘Taxpayers deserve the full truth about how decisions were made to use their money in an administration effort that resulted in protecting generous pensions for unionized Delphi employees, while greatly diminishing benefits for nonunionized employees,’ Issa and other lawmakers wrote in the letter to Lew.”

In a nutshell, Delphi’s UAW retirees were clearly favored over non-unionized retirees as a result of GM contributing money, which was supplied by the US taxpayer, to protect UAW interests. Most disturbingly, it appears that the Obama Administration was orchestrating the whole process through Treasury and the Auto Task Force. Emails uncovering Treasury’s involvement were reported by The Daily Caller a full two years ago. The emails suggest that Treasury officials lied while under oath when they testified that the decisions to favor union retirees at Delphi were made solely by GM.

The GM bankruptcy process clearly favored political allies of President Obama. Having been a GM bondholder advocate, I saw firsthand the deceptive fashion in which the auto bailouts were presented as a great accomplishment of the Administration. The bailouts were, in fact, an unprecedented intrusion by the executive branch of government into private industry with the underlying goal of protecting cronies of the present regime. While the claims were made that the goal was to save jobs, Obama’s task force forced thousands of non-unionized dealerships to close. It is clear that what was important was saving UAW jobs, nonunion jobs were not deemed as important.

More precisely, the auto bailout was a wealth redistribution scheme which saw taxpayers, bondholders and non-unionized workers and retirees funding bankruptcy attorneys so that UAW interests could be protected. The Delphi retirees are now attempting to recover some of that which was lost. Representatives from the Delphi group have also made clear that they do not begrudge the UAW for receiving the favored treatment; they just want their fair share.

There are many groups which sacrificed (or more accurately, were sacrificed) so that the auto bailouts could be declared a “success.” Like the Delphi folks, I do not blame the UAW for receiving favored treatment. They were rewarded by the political party which they supported and later repaid the favor by helping to get President Obama reelected while less politically-connected groups paid the price. But unlike the Delphi group, GM bondholders, American taxpayers and others will never have a chance of recovering what they lost. Don’t they at least deserve to have the truth told about how unfair and politically motivated the auto bailouts were?

Mark Modica is an NLPC Associate Fellow.