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.Last month, Robert Samuelson made a similar comparison between the U.S. automakers and the legacy costs of the Baby Boomers.
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.