In 2009, the U.S. government bailed out the auto industry, ostensibly to save the livelihoods of thousands of Americans who work for automakers and their supporting companies.
Sounds nice, except that this federal largesse was not distributed equally. In fact, some employees who were also members of the powerful, politically influential United Auto Workers (UAW) union got far, far better treatment from Uncle Sam than their nonunion brethren.
That was exactly what happened to Delphi, a chief supplier of auto parts to General Motors Co. Government emails recently obtained and publicized by the Daily Caller show that the U.S. Treasury Department maneuvered in 2009 to shore up the pensions of union employees at Delphi while letting the pensions of nonunion workers at the same company — some 20,000 people — go under.
The government has claimed that it was the Pension Benefit Guaranty Corp. (PBGC), an independent insurer of pension funds, that made the decision to terminate the Delphi pensions. Former Treasury official Matthew Feldman testified July 11 that “As a result of the Delphi Corp. bankruptcy Delphi and the Pension Benefit Guaranty Corp. were forced to terminate Delphi’s pension plans, which means there are Delphi retirees who unfortunately will collect less than their full pension benefits.”
According to the Daily Caller, the newly examined emails show that “the Treasury Department, not the independent PBGC, was running the show,” in possible violation of 29 United States Code 1342, which specifies the PBGC as the only government entity with the power to terminate a pension or to even initiate the process of doing so.
Also in question is whether the nonunion Delphi workers had their constitutional rights violated: The Equal Protection Clause of the 14th Amendment of the U.S. Constitution guarantees every citizen “equal protection” under the laws.
Why were union workers treated so differently? Let us count the ways. According to OpenSecrets.org, during the 2008 election cycle the UAW political action committee spent $13,116,234. Almost $2 million went to help elect federal candidates, including $1,811,450 to candidates for the House and $171,000 for Senate candidates. About 99 percent of this money went to Democrats.
That’s just a drop in the bucket compared with total union political spending. A July 10 expose in the Wall Street Journal found that organized labor spends vastly more on political activity than is commonly thought. While labor spending on federal candidates through political action committees “totaled $1.1 billion from 2005 through 2011,” a Journal analysis of union financial reports shows “an additional $3.3 billion that unions spent over the same period on political activity.” The extra spending includes polling fees and funds dedicated to “persuading union members to vote a certain way.” This additional money “comes not from members’ contributions to a PAC but directly from unions’ dues-funded coffers.”
That kind of money buys you lots of favors, lots of benefits and lots of love from elected officials. Just ask the UAW.
True, political paybacks and cronyism have been around since the beginning of the republic. Every government is vulnerable to these ‘You pay for my election, I’ll give you special treatment’ types of arrangements. But the larger the government, the larger the problem; it’s one of the unintended consequences of bureaucratic growth that it leaves infinitely more opportunities for — and so much more to gain from — such shenanigans.
Was the Treasury Department’s favoritism toward unions during the auto bailout illegal? Maybe. Was it corrupt?
Matt Patterson is senior fellow for the Center for Economic Freedom at the Competitive Enterprise Institute.