GM Paying $400 Million in Bonuses While Owing Taxpayers Billions

When I came across this story on WHDH's website I hoped it was another case of the media getting hoaxed like the Sarah Palin disses Christina Aguilera nonsense. Unfortunately that doesn't appear to be the case. The lowlights:

Less than two years after entering bankruptcy, General Motors will extend millions of dollars in bonuses to most of its 48,000 hourly workers as a reward for the company's rapid turnaround after it was rescued by the government.

The payments, disclosed Monday in company documents, are similar to bonuses announced last week for white-collar employees. The bonuses to 76,000 American workers will probably total more than $400 million -- an amount that suggests executives have increasing confidence in the automaker's comeback.

Most of GM's hourly workers will get a record payment of more than $4,000 -- more than double the previous record in 1999, at the height of the boom in sport utility vehicles and pickup trucks. Nearly all 28,000 white-collar workers such as engineers and managers will get 4 to 16 percent of their base pay. A few -- less than 1 percent -- will get 50 percent or more.

First Wall St, now Detroit, the TARP bailouts to bonuses saga continues. Showing that the rules only apply to the little people that can't make six figure campaign contributions. How is the American taxpayers involuntary investment in GM and Chrysler going anyhow?

"Since the taxpayers helped these companies out of bankruptcy, the taxpayers should be repaid before bonuses go out," said Republican Sen. Charles Grassley of Iowa. "It sends a message that those in charge take shareholders, in this case the taxpayers, for a sucker."

The government has been repaid $23 billion but needs $26.4 billion more to recoup its whole investment. The government still owns 500 million shares of GM common stock, which would have to sell for roughly $53 per share to get all the money back.

GM closed at $36 today, our payback is a long time away, if ever. The UAW is getting a sweet bonus and we're getting the shaft. Our Congressional delegation was justifiably outraged and mugged for the cameras when Wall St. announced their bonuses but they seem eerily silent now.

The Ground We Should Fight 2010 On

From the inestimable Michael Barone:

Public-sector unions bleed taxpayers
By: Michael Barone
Senior Political Analyst
February 7, 2010
(AP File)

Growing up in Michigan in the heyday of the United Auto Workers, I long assumed that labor unions were part of the natural order of things.

That's no longer clear. Last month the Labor Department reported that private-sector unions lost 834,000 members last year and now represent only 7.2 percent of private-sector employees. That's down from the all-time peak of 36 percent in 1953 and '54.

But union membership is still growing in the public sector. Last year 37.4 percent of public-sector employees were union members. That percentage was down near zero in the 1950s. For the first time in history, a majority of union members are government employees.

In my view, the outlook for both private- and public-sector unionism is problematic.

Private-sector unionism is adversarial. Economic studies show that such unions do extract premium wages and benefits from employers. But that puts employers at a competitive disadvantage. Back in the 1950s, the Big Three auto companies dominated the industry and were at the top of the Fortune 500. Last year General Motors and Chrysler went bankrupt and are now owned by the government and the UAW. Ford only barely escaped.

Adversarial unionism tends to produce rigid work rules that retard adaptation and innovation. We have had a three-decade experiment pitting UAW work rules against the flexible management of Japanese- and European-owned nonunion auto firms.

The results are in. Yes, clueless management at the Detroit firms for years ignored problems with product quality and made boneheaded investment mistakes. But adversarial unionism made it much, much harder for Detroit to produce high-quality vehicles than it was for nonunionized companies.

As economist Barry Hirsch points out, nonunion manufacturing employment rose from 12 million to 14 million between 1973 and 2006. In those years, union manufacturing employment dropped from 8 million to 2 million. "Unionism," Hirsch writes, "is a poor fit in a dynamic, competitive economy."

Moreover, federal laws passed since the 1950s now protect workers from racial and sex discrimination, safety hazards and pension failure. They don't need unions to do this anymore.

Public-sector unionism is a very different animal from private-sector unionism. It is not adversarial but collusive. Public-sector unions strive to elect their management, which in turn can extract money from taxpayers to increase wages and benefits -- and can promise pensions that future taxpayers will have to fund.

The results are plain to see. States such as New York, New Jersey and California, where public-sector unions are strong, now face enormous budget deficits and pension liabilities. In such states, the public sector has become a parasite sucking the life out of the private-sector economy. Not surprisingly, Americans have been steadily migrating out of such states and into states like Texas, where public-sector unions are weak and taxes are much lower.

Barack Obama is probably the most union-friendly president since Lyndon Johnson. He has obviously been unable to stop the decline of private-sector unionism. But he is doing his best to increase the power -- and dues income -- of public-sector unions.

One-third of last year's $787 billion stimulus package was aid to state and local governments -- an obvious attempt to bolster public-sector unions. And a successful one: While the private sector has lost 7 million jobs, the number of public-sector jobs has risen. The number of federal government jobs has been increasing by 10,000 a month, and the percentage of federal employees earning over $100,000 has jumped to 19 percent during the recession.

Obama and his party are acting in collusion with unions that contributed something like $400,000,000 to Democrats in the 2008 campaign cycle. Public-sector unionism tends to be a self-perpetuating machine that extracts money from taxpayers and then puts it on a conveyor belt to the Democratic party.

But it may not turn out to be a perpetual motion machine. Public-sector employees are still heavily outnumbered by those who depend on the private sector for their livelihoods. The next Congress may not be as willing as this one has been to bail out state governments dominated by public-sector unions. Voters may bridle at the higher taxes needed to pay for $100,000-plus pensions for public employees who retire in their 50s. Or they may move, as so many have already done, to states like Texas.

Obama's Democrats have used the financial crisis to expand the public sector and the public-sector unions. But voters seem to be saying, "Enough."

A quick primer:

President Obama used TARP money to bail out GM and Chrysler to benefit the UAW. These companies acknowledge that the taxpayer will likely never be repaid. Instead the president is proposing a fee on banks' to recoup these losses.

The stimulus, as admitted by the administration was designed to bail out spendthrift state governments and protect public employees from layoffs.

There is no reason why public workers should be allowed to unionize and then use memeber dues to advocate for ever bigger government.

Tone Deaf Populism

Attempting to get his mojo back after Scott Brown's victory in Massachusetts, President Obama is testing his populist chops:


“We want our money back,” Barack Obama has told US banks, announcing a levy on large financial institutions to help repay the notorious bailout he imposed last year."

Some backround:

"The Treasury estimated net losses on its $700 billion bailout program at $68.5 billion for the fiscal year ended September 30, 2009."


How much of this loss is from banks?

"A senior Treasury official said the bank investments will ultimately produce a positive return for taxpayers."


So, the president is taxing banks to recoup losses incurred by other TARP recipients. To make matters worse, those taxes will be passed on to average Americans in the form of higher bank fees. Nice job Mr. President, you aim for fatcats and hit the middle and working classes. As populism goes this is pretty close to being termed an epic fail. Fear not though, the American public is angry and wants its money back. You just have to pick a better target for their ire. As it happens, I have a few suggestions to get you started.


First up, Secretary of the Treasury Tim Geithner:


"The Federal Reserve Bank of New York, while led by Geithner, pressured AIG not to disclose payments it made to such banks as Goldman Sachs Group and Deutsche Bank, to settle swap contracts at the height of the financial crisis, according to a Bloomberg report this morning."

"Emails between Geithner’s Fed and AIG lawyers show that the embattled insurer originally included the information about the swaps in a draft securities filing. But under review by the Fed, AIG was told to cross out references to the swap payments, which were made at 100 cents on the dollar.
The Fed and AIG have taken heat for months about the secrecy surrounding the swap payments, which totaled $62 billion and have been criticized as a “back door bail out” of banks. When asked about the lack of disclosure during a congressional hearing last year, a New York Fed official said that releasing such information at the height of the financial crisis would have hurt AIG’s ability to operate."


There you go Mr. President. Here's a guy who made sure that Wall St. and European fatcats took the American taxpayers for a cool $62 billion. Can't you just feel the populist juices flowing? The best part is that he works for your administration, so firing him will be a snap. You have the added bonus that he's a tax cheat and Americans can't stand the idea that taxes are only something the little people have to pay. With Timmy you get a populist two-fer, but I understand he's your buddy and you'd hate to fire him in the current job market.

Next up, the architects of that $787 billion taxpayer swindle of a "stimulus" bill.

You had three administration officials give three different numbers for jobs "saved or created" this past weekend. The only number that really matters though, is that unemployment is at 10% nationally. You claimed that without the stimulus unemployment would reach 8%. It's time to kill this boondoggle before it wastes even more money.

"Absolutely amazing poll results from CNN today about the $787 stimulus package: nearly three out of four Americans think the money has been wasted."

On second thought, I see that you brought David Plouffe back to right the ship and he intends to campaign this fall on the stimulus being the signature achievement of year One of Obama.

Okay, so far I'm 0-2, but this last one's gold. Go after Fannie Mae and Freddie Mac and their former head honcho, Jim Johnson. Now that your administration has decided to remove the previous $2oo billion (each) caps for these two entities the American taxpayer is now liable for their $5 trillion of sub-prime mortgage holdings.


"New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A. [Emphasis added] "

You can explain how community activist groups like ACORN pushed for the Community Re-Investment Act (CRA) that required banks to make risky loans in the name of fairness. You can then explain how noted fixers and prominent Democrats Jim Johnson and Frank Raines made tens of millions while defrauding banks into thinking they were making safe investments, the infamous credit default swaps. Don't forget to mention how Bernake kept interest rates nice and low, allowing a great big housing bubble to form and why you think this qualifies him to another term. Then, BOOM the housing bubble bursts, wiping out jobs and 401K's in one fell swoop.

The American public would cheer as you had Johnson frog-marched out of whatever corporate boardroom he's currently ensconced in. Every media market would cover you as their local ACORN offices were padlocked.

On second thought Mr. President, populism may not be for you after all. The thing of it is, the American people are angry at policies your administration enacted or you supported personally. Your best bet may be to try humility. You see, the American people just don't cling to their guns and their faith. The American people are pretty partial to Freedom and don't look kindly on those who want to take it away. Believe it or not sir, a huge majority of Americans are proud of their country and don't believe our elected leader should be apologizing to every two-bit dictator with a grudge.

Extreme arrogance

As if the residents of MA needed another example of what one party rule means, Rep. Barney Frank is happy to provide one. Being a statist of the first rank, the good congressman has found TARP to be a useful tool to transform America to fit his ideology. His latest scheme to spend the taxpayers' hard earned money is his "TARP for Main Street Act of 2009".

Looking back, TARP has been the biggest mistake of the Bush presidency. It has enabled the Democrats to take over Chrysler and GM to benefit their allies, the United Auto Workers union and now it is being used as a piggy bank for pet causes. As designed, the U.S. government bought preferred stock in troubled banks to keep them afloat. In return, those banks would pay the U.S. Treasury dividends and eventually repay principle. These dividend payments, according to the act " shall be paid into the general fund of the Treasury for the reduction of the public debt". At this point, the U.S. treasury has received $6.2 billion in dividend payments. Enter Barney Frank. Instead of using the money, as designed, he wants to spend it on pet projects:
1 billion for a low income rental housing trust fund
1.5 billion for a neighborhood stabilization fund
Both of these projects will most likely benefit ACORN, the Democratic allied pressure group being investigated for vote fraud by several states. The U.S. Congress was going to look into these allegations, but John Conyers (D, MI) said the "powers that be" pressured him to drop his investigation.
2 billion to subsidize those with delinquent mortgages.
2 billion for muti-family properties in default or foreclosure.

The first priority of anyone in government should be to get the country's fiscal crisis in order. The government is swamped with debt, and any money it receives from the troubled institutions it bailed out should be used as promised, to help pay down the debt.