EDITORIAL: Unions and the Big Three

The AFL-CIO is actively lobbying members of Congress to support an additional $25 billion bailout for the Big Three automakers. What choice does it have? There is no other option for unions in this bailout-happy season because there are no guarantees where collective-bargaining agreements would stand if the Big Three filed for bankruptcy.

High health-insurance costs for retirees on top of high pensions have left General Motors and Chrysler headed for insolvency, and Ford with no capital to reorganize and innovate. The American automotive industry accepted these terms during collective bargaining, which AFL-CIO legislative director William Samuel pointed out yesterday in a meeting at The Washington Times when asked if there had been any overreach by the unions. It is undeniable that health-insurance costs and employee pensions helped to cripple the industry. “By 2011 the unions’ retired (workers) will have to pay for their own health insurance,” said Thea Lee, the union’s policy director. That will account for future workers, not the hundreds of thousands who currently receive both pension and health-care benefits.

Republican Sens. Bob Corker of Tennessee and Richard Shelby of Alabama say bankruptcies, prepackaged or not, may be the only way to save the automakers. “I don’t think they have immediate plans to change their model, which is a model of failure,” Mr. Shelby said opposing the bailout. The auto executives, who begged this week for aid on Capitol Hill, said that bankruptcy would result in an estimated 80 percent reduction in sales. “If any of us think we can survive an 80 percent reduction in sales, that’s pure fantasy,” said GM Chairman Rick Wagoner.

Democrats acknowledge that taxpayers’ money should be protected. House Finance Committee Chairman Barney Frank, a Democrat, said the bailout could be four times higher - that’s $100 billion - but support the bailout anyway. “Not because their leaders necessarily deserve the taxpayers’ help,” said Senate Banking Committee Chairman Chris Dodd. The Bush administration has said it would accept the proposal if the funds were taken out of the Department of Energy’s loan program for fuel efficiency cars. “We have legislation that’s already on the books, where money has already been appropriated to help automakers,” said White House Press Secretary Dana Perino.

The hard reality is the manufacturing, assembly-line era of the American industrial economy has lasted for more than 100 years largely through the innovations of the corporate owners and laws that protect workers from exploitation and abuse. But unions and mandatory collective-bargaining are part of the reason why the Big Three and their supporters have returned to Washington with hat in hand. Congress should not offer another bailout. If the U.S. automakers survive - and we hope they do - it should be because they applied the same “Made in America” spirit of innovation that led to its nonunion competition being here.