Democratic Congressional Leaders Express Doubts About Passage Of Financial Assistance Proposal For Automakers

Main Category: Health Insurance / Medical Insurance
Also Included In: Seniors / Aging
Article Date: 08 Dec 2008 - 0:00 PDT

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Democratic congressional leaders on Thursday expressed doubts about the chances for approval of requests made by the Big Three automakers for financial assistance to help prevent bankruptcy, the Washington Post reports (Montgomery/Marr, Washington Post, 12/5).

On Tuesday, officials for the automakers presented to Congress individual proposals that included requests for as much as $34 billion in financial assistance, as well as revisions to their obligations to a fund that will provide health benefits to United Auto Workers retirees. Under contracts negotiated last year, the automakers agreed to contribute about $56.5 billion to a voluntary employees' beneficiary association, which UAW will manage. The VEBA, which will take effect in 2010 and remain operational for 80 years, will reduce retiree health benefit liabilities for the automakers by about $100 billion.

In one proposal, General Motors asked Congress for $18 billion in loans and $6 billion in credit, as well as a delay in company obligations to the VEBA, among other measures. GM has agreed to contribute $7.5 billion to the VEBA in early 2010. Chrysler in a second proposal asked Congress for $7 billion in loans by the end of the year and $6 billion from a Department of Energy program designed to promote the development of fuel-efficient vehicles. Among other measures, the proposal included a plan to reduce Chrysler contributions for health benefits for salaried employees. In a third proposal, Ford asked for $9 billion in credit and $5 billion from the DOE program (Kaiser Daily Health Policy Report, 12/3).

In addition, UAW on Wednesday agreed to allow the automakers to delay their contributions to the VEBA and make other concessions to help the companies obtain financial assistance from the federal government (Lochhead, San Francisco Chronicle, 12/5).

Prospects
However, lawmakers questioned whether they had the votes needed to pass a proposal to provide financial assistance to the automakers. Senate Majority Leader Harry Reid (D-Nev.) said, "I just don't think we have the votes" to pass such a proposal (Louisville Courier-Journal, 12/4). Senate Banking Committee Chair Chris Dodd (D-Conn.), whose committee on Thursday heard testimony from officials for the automakers, said he would develop such a proposal but called passage of the plan "a tall order." Officials for the automakers on Friday will testify before a House committee about their request for financial assistance. Next week, lawmakers will return to Washington, D.C., for a potential vote on a proposal to provide financial assistance to the automakers (Washington Post, 12/5).

Opinion Piece
UAW has "been working with management for years to streamline operations" at the automakers -- such as the establishment of the VEBA, which will allow GM to "clear a $50 billion liability from its books" -- and as a result, the companies should not seek to take health and other benefits from union retirees to reduce their costs, Rep. Robert Brady (D-Pa.) writes in a Philadelphia Inquirer opinion piece. In addition, UAW on Wednesday "made further concessions, allowing the companies to delay retiree health care payments due next year and immediately canceling its hard-won jobs bank," Brady writes. According to Brady, as "management flew around in a fleet of corporate jets and took millions of dollars in annual salaries and bonuses, every cost-saving measure ... has come out of labor's hide," but UAW members "are still standing up and working to save their companies." He concludes, "Let's work with them, not against them" (Brady, Philadelphia Inquirer, 12/5).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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