Bailout for Bloated Union Contracts

by Hans Bader on December 10, 2008 · 8 comments

in Bailout Watch, Economy, Features, Legal, Personal Liberty

The auto bailout being fashioned by liberal lawmakers with Bush’s apparent acquiescence contains no meaningful limits on the bloated union contracts that have helped make American automakers uncompetitive by giving autoworkers compensation that exceeds $70 per hour, meaning that the billions of dollars spent on the bailout will simply be wasted.

The bailout is similar to the failed British auto bailout of the 1970s, which destroyed whatever chance the British auto industry had left to survive by diverting its focus from producing good cars at low cost to providing inflated wages for Big Labor and manufacturing vehicles that pleased government planners but not consumers (akin to liberal lawmakers’ demands that U.S. automakers produce “green” vehicles as part of the bailout).

The bailout fashioned by Congressional leaders also contains a provision that violates the First Amendment, by requiring automakers to drop their lawsuits challenging state fuel-economy laws enacted in the name of preventing global warming (which are probably preempted by federal law). In its 2001 Legal Services Corporation v. Velazquez decision, the Supreme Court ruled that federal funds generally cannot be conditioned on dropping lawsuits, because litigation is protected by the First Amendment’s freedom of petition unless it is meritless. (Even if a lawsuit fails, it is still protected if it fails for complicated or technical reasons, rather than because the plaintiff made false factual claims).

Paul December 10, 2008 at 7:17 am

How much money, from UAW union dues, has been spent directly and indirectly on political issues, since 1980? Since 2000? Since 2005? How much for liberal candidates and issues and how much for conservative candidates and issues? Does anybody know?Why would any conservative Republican spend their money on a product from a corporation whose union helps to smear conservatives?Why would anybody take on more debt under these conditions to buy a government-approved Green car from the UAW when a severe economic recesion is coming?The Big question is how much and when? (The next UAW bailout?)

WL Lloyd December 11, 2008 at 5:04 am

Crongress is spending our country into debt we will never get out of. Our representatives are obviously in over their heads and have not a clue in understanding what they are doing. The financial bailout wizzed through with no disscussions and was influenced by special interest financial supporters. Our congressional representatives have been elected by Americans that vote based on soundbites, a biased media, and groups that have their own aggenda. On top of this each representative has their personal aggenda that are for their own self interest. These government workers are idiots and Americans that voted for these representatives are ignorant. It is time to take our country back and throw the bums out!

J. Reif December 12, 2008 at 6:06 am

Yes. The problem is two-fold: the unions demanding more than the fair market value of their labor and excessive government regulation mandating the production of goods that consumers don't want or simply can't afford. I suppose you could also add the decades-long trend (which recently has seemed to change significantly) of producing vehicles of an inferior quality and bloated price. People didn't start buying Hondas and Toyotas because they were fashionable. People started buying Hondas and Toyotas because they were reliable and affordable. At any rate, what the Big 3 need is major restructuring, possibly under Chapter 11 bankruptcy. This would allow them to get out from under burdensome labor arrangements, streamline their operations, and emerge, hopefully, with an enhanced capacity to compete in today's market. But this has all been said before…

J. Reif December 12, 2008 at 7:17 am

Just read an article this morning that said UAW spent close to $2 million on Democratic candidates and approx. $12,000 on Republican candidates this election cycle alone…

The Intellectual Red December 13, 2008 at 1:45 am

Ever wonder what a UAW contract looks like? It is over 2200 pages and weighs 22 pounds. It no wonder the big three can not compete in the global market. Honda and Toyota don't have to deal with that kind of crap. It would take a team of lawyers just to understand this document. 2215 pages of inefficiency brought to you by the UAW

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