My New Hero

What I love about Mayor Bernaro's comments, aside from the fact that they are true, is that he managed to get a genuinely populist message on Fox. Not faux, Rush Limbaugh populism. Genuine concern for the working man, who has been watching his quality of life decline for years, while the rich got richer and Wall Street had its seemingly endless, drunken orgy.

The Huffington Post has more.

Big Three: Meet the Free Market

Michigan Republicans are said to be in a tizzy that their Republican president won't give any face time to Detroit automakers. The Big Three are facing "declining fortunes." Though the LA Times doesn't state it very directly, automakers are hungry and need a snack from the government trough. And they are increasingly disheartened that Bush wants to let market forces work their magic. I love the way Republicans worship at the altar of the free market when it means not raising the minimum wage or laying people off to keep stockholders happy. But when it means shutting off the corporate welfare tap, they're not so enamoured. When they need an infusion of capital, they rediscover the need for big government to meddle in their affairs.

Republican gubernatorial candidate Dick DeVos lashed out at the White House this week for not having set up a long-promised meeting with executives of the Big Three automakers, which are being squeezed by high healthcare costs and shrinking market share.

"We're being ignored here in Michigan by the White House, and it has got to stop," DeVos, who is challenging Democratic Gov. Jennifer Granholm, told reporters.

"It is wrong, and the behavior is inexcusable," DeVos said in a written statement Thursday. "The president needs to meet with the Big Three, and it must happen soon. Jobs are at stake."

Yes, the President must "meet" with the Big Three because otherwise jobs will be lost. Let's rewind a bit and recall that it was less than two months ago that GM announced it was laying off a quarter of its work force. Well, let's be more specific: their blue collar work force. And let us also recall that a Wall Street Journal report at that time demonstrated amply and painfully that for all their whining about pension costs, the pension programs of their rank and file workers were in the black. It is, in fact, the pay packages to top-tier executives that are breaking the bank. But GM's solution wasn't laying off the executive millionaires who are draining their coffers. It was to fire the little guys whose pension plans were not only paying for themselves, but for the company's other losses. And now they want to go hat-in-hand to the federal government for more money so that they can continue to hand giant pay packages to top tier executives who make genius decisions like continuing to make gas guzzling behemoths that a public in full-blown gas pump sticker shock doesn't want and continue kicking their labor force to the curb when they inevitably face continuing short-falls.

Bush himself made clear in January that he was not inclined to bail out troubled U.S. auto companies.

For once I agree with him.

Modern Day Serfdom

I was running errands last evening listening to that rapidly deteriorating news source NPR and caught a few minutes of a segmant on GM's woes. GM, which announced earlier this week that it will eliminate a quarter of its work force, attributes much of its falling fortunes to the ballooning costs of its pension plans. Much of what I heard, while weaving in and out of traffic, was a sober discussion of the bite pension plans are taking out of the big three. But what my NPR affiliate did not mention -- at least in the time it took me to drive home from my neighborhood Lowe's -- is that the pensions that are bleeding these corporations dry are not those of the unionized, "blue-collar" employees who will be displaced by GM's early retirement and buy-out deal. It's the massive pensions that are going to top tier executives.

As discussed in my most recent entry and in the ensuing comment thread, the United States is degenerating into a system of serfdom; a fact which is not lost on Madman in the Marketplace. His excellent diary on Liberal Street Fighter, "Providing for the Lords," is must reading. Drawing primarily from a Wall Street Journal report on this gauling pension disparity, he brings us to the inevitable conclusion; that working men and women in this country are devolving into a Medieval style peasantry in desperate need of torches and pitchforks.

Here are a few tidbits from Wall Street Journal's fine reporting.

To help explain its deep slump, General Motors Corp. often cites "legacy costs," including pensions for its giant U.S. work force. In its latest annual report, GM wrote: "Our extensive pension and [post-employment] obligations to retirees are a competitive disadvantage for us." Early this year, GM announced it was ending pensions for 42,000 workers.

But there's a twist to the auto maker's pension situation: The pension plans for its rank-and-file U.S. workers are overstuffed with cash, containing about $9 billion more than is needed to meet their obligations for years to come.

Another of GM's pension programs, however, saddles the company with a liability of $1.4 billion. These pensions are for its executives.

This is the pension squeeze companies aren't talking about: Even as many reduce, freeze or eliminate pensions for workers -- complaining of the costs -- their executives are building up ever-bigger pensions, causing the companies' financial obligations for them to balloon.

Thanks to WSJ's reportage we now know that it is the executive salary and pension costs that are tearing through these companies like pathogenic viruses, displacing America's workforce and imperiling the health of the companies themselves -- a fact buried in many corporate financials by lumping executive and low level employee pension figures together. Not only are the pension plans of average employees not a threat to corporate solvency, the earmarked dollars have been providing investment revenue. Just not enough to compensate for the massive bite taken by the pensions promised to chief executives.

When General Motors cites retiree costs, the giant auto maker has a point: It owed nearly 700,000 U.S. workers and retirees pensions that totaled $87.8 billion at the end of last year.

But $95.3 billion had already been set aside to pay those benefits when due.

All of these assets are earning investment returns, which offset the pensions' expense. GM lost $10.6 billion in 2005. But deep as its losses have been, they would have been far worse without the more than $10 billion per year in investment income that the GM pension plan for the rank and file generates.

The pension plan for GM executives is another matter. Unfunded to the tune of $1.4 billion, it detracts from GM's bottom line each year.

Just how much is a mystery, because GM doesn't break out the figure. It said executive pensions are "a very small portion of our overall expense" but declined to give the figure.

There is much more in both Madman's diary and the WSJ piece, including a sobering explanation of how both parties have enabled this disaster, guaranteed to raise the blood pressure. Highly recommended.