The soaking continues

You keep thinking that, at some point along the way, people will say enough.

This morning, The New York Times reported that the $6.2 billion pension plan of Delphi Corporation, a bankrupt auto parts maker, would be taken over by the Pension Benefit Guaranty Corporation (PBGC), a government entity that is itself over $33 billion in the hole. The Delphi incident has become something of a hidden bailout to the auto industry as it becomes more and more likely that federal taxpayers will foot the bill on the long-term pension costs associated with Delphi.

According to the Times, PBGC had attempted over several years to compel Delphi’s healthy business units to pay for the pension benefits doled out to workers by placing liens on their assets, but this attempt has been more or less given up because of the adverse impact it would have on government-owned General Motors, Delphi’s main customer.

This is how the worm turns in this new era of government involvement in industry.

Worse still are the sordid little details pouring forth about the preferential treatment that Delphi’s union workers are getting in the deal. Here’s how the Times had it:

“The Delphi pension failure has another unusual twist. Normally, when a company pension fund is taken over by the government, workers may lose part of their benefits because pension insurance is limited. But it appears in Delphi’s case that one group of workers and retirees will be spared cuts — the ones represented by the U.A.W.”

And further:

“There is no precedent for a company making workers whole once their pension plan has failed and the government’s insurance limits apply, according to the federal insurer. Typically, the P.B.G.C. places a claim on any remaining assets in the affiliates of a bankrupt company to help cover its own costs.

“It was not clear whether G.M. would “top up” the retired U.A.W. members with corporate assets or money from its own pension fund. A spokesman declined to provide a cost estimate.

“But word that Delphi’s union retirees would get a special break provoked outrage from Delphi’s nonunion retirees.”

And these are the same folks begging to handle a $1 trillion health care insurance scheme. Politicians have chutzpah, I'll give them that.