Automakers Return To Washington To Present New Case To Congress For Loans

Main Category: Health Insurance / Medical Insurance
Also Included In: Seniors / Aging
Article Date: 03 Dec 2008 - 3:00 PDT

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Officials from the Big Three automakers -- Ford, General Motors and Chrysler -- on Tuesday will submit to lawmakers their proposals to use requested federal money to ensure long-term viability of their companies, including money for upcoming payments for retirees' health care, the AP/Houston Chronicle reports (Thomas/Krisher, AP/Houston Chronicle, 12/2). The first such request, made last month by CEOs from the three companies, was rebuffed by lawmakers who ordered that the officials return with detailed business plans (Marr, Washington Post, 12/2). All three companies are filing separate plans. Congressional hearings are planned for Thursday and Friday.

GM plans to tell Congress it needs the loans to address its $45 billion debt and secure an upcoming payment of more than $7.5 billion early in 2010 to a voluntary employees' beneficiary association, created earlier this year with United Auto Workers to provide health coverage for retirees and their families (AP/Houston Chronicle, 12/2). Many people familiar with the issue "suspect the automaker cannot afford" such a payment, the Wall Street Journal reports (Spector et al., Wall Street Journal, 12/2). Ford does not plan to ask for federal funding immediately, AP/Chronicle reports (AP/Houston Chronicle, 12/2). If Democratic congressional leaders decide to move forward with the loans, lawmakers would be called back to Washington next week (Wall Street Journal, 12/2). According to The Politico, even if Congress decides to move forward with a bailout for the automakers, "it could become entwined" with other requests from states, including help with Medicaid funding (Rogers, The Politico, 12/2).

UAW Leaders To Meet
UAW leaders plan to meet Wednesday to discuss possible concessions the unions could make to help the automakers get the federal loans, the AP/Boston Globe reports. The AP/Globe reports that one such concession could be restructuring the VEBA so that the automakers can delay payments to the multi-billion dollar fund (Krisher, AP/Boston Globe, 12/2).

Opinion Piece
GM Chair and CEO Rick Wagoner, "this could be your moment," because "[y]ou ... know that among the greater threats to your industry are the overly generous health care promises made" by automakers to their workers and retirees, and that "these promises will not be kept, for the simple reason that there isn't enough money to fund them," Journal columnist William McGurn writes. Detroit "needs a restructuring that would allow autoworkers to own their own health [coverage] -- and take it with them if they leave," McGurn continues. He adds, "Thanks to reform pushed by [President Bush], Americans can now own health savings accounts they can use to build savings and cover day-to-day expenses."

In addition, if "[u]sed in combination with a catastrophic health plan, [workers] would also be protected from financial ruin," he writes. For companies, this arrangement "would help shift the responsibility for health care from employers to employees," and "also help restore some price-discipline to the market," according to the piece (McGurn, Wall Street Journal, 12/2).

Broadcast Coverage
NPR's "Morning Edition" on Tuesday reported on the return of the three auto executives to Washington, D.C. (Dwyer, "Morning Edition," NPR, 12/2).

NPR's "Morning Edition" also included a discussion with Sen. Carl Levin (D-Mich.) about a possible bailout for the auto industry (Montagne, "Morning Edition," NPR, 12/2).
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