Thursday, February 19, 2009

Detroit can't afford benefits and neither can the federal government

In "GM's plan: Subsidize our 48-year-old retirees", Opinion Journal notes that the big automakers were unwilling or unable to reform their generous benefit programs, and now they're in a mess of trouble. Sound familiar?

So why were these problems allowed to fester, when smart people recognized them all along? The answer is that the solutions were painful, requiring not just brains but considerable amounts of courage. UAW officials weren't brave enough to risk re-election defeat by agreeing to curtail the 30-and-out plan. Detroit executives weren't about to take on the union and risk a strike that could cost them billions. GM likewise felt hamstrung on Saturn and Saab by state dealer-franchise laws, especially after they spent $1.3 billion to shut down Oldsmobile a few years ago.

Perhaps the best analogy, and one that Washington will understand, is Social Security. Everybody in Congress and the White House has known for years that it's a ticking time bomb, thanks to actuarial trends and inadequate funding. But when President George W. Bush tried to reform the system early in his second term, he was handed a crippling defeat.
Last month, Robert Samuelson made a similar comparison between the U.S. automakers and the legacy costs of the Baby Boomers.

5 comments:

Anonymous said...

But when President George W. Bush tried to reform the system early in his second term, he was handed a crippling defeat.

Ah yes, if only we had followed Bush's wise 2005 Wall Street/FICA savings dump, just imagine how economically healthy our country would be today.

It's curious. What is it about Bush's half-assed, go-nowhere nod towards Social Security that makes it so much more praiseworthy than all the other half-assed, go-nowhere nods towards Social Security, past and present?

Anonymous said...

Nothing, Ass-foam. But at least he tried, unlike your simpering half-siblings in the DNC, who prefer to nothing and let social security completely tank in 20 years.

It's curious. What is it about Obama's obscene stimulus that makes it suddenly praiseworthy and deserving your nod of approval to 'stimulate' the economy with governemnt bailouts to Wall Street, where as the less-ruinous efforts in the past were so clearly wrong-headed?

Tell us, who do you think will suffer most when the dollar is devalued 70%? Perhaps the working poor? Remember, the ones you pretend to care so much about?

Steve Martin said...

Just take a look at most of our major cities run by Democrats for years.

They stink and are cesspools of corruption and waste.

Republicans are the stupid party (lousy PR and foresight)

but the Dems are the dangerous party. They will ruin this country and possibly get a lot of us killed.

Anonymous said...

Anonymous II is one of those creatures who thinks that SAYING some words is just as good as DOING something. "I will restore honor to the Oval Office." "I will be a compassionate conservative." "We do not torture." "I have a plan to reform Social Security."

Notice how Ass-phalt has no hand to play ("at least he tried" is his high card), so he goes straight to the Obama hate. As if the 2009 stimulus has any special relevance to Bush's dead-on-arrival scheme to consign Social Security to the tender mercies of the same people who've looted the rest of the economy.

News flash, dummy: Barack Obama has also made vaporous statements about the need to tackle problems in Social Security. There, now you can adore him too.

Jay1981 said...

Republicans really are losing their minds, aren't they?