Taxpayers’ Auto Bailout Losses Mounting

U.S. taxpayers are now expected to cover an even larger bill for the auto bailout than previously disclosed. The U.S. Treasury now puts the cost in the $25 billion range.

Heritage Foundation labor expert James Sherk and co-author Todd Zywicki have found all of the taxpayer losses occurred because of the manipulated bankruptcy law to shelter the United Auto Workers’ (UAW) compensation. None of the losses were necessary to preserve jobs, and taxpayers spent billions to prop up the compensation of some of the most highly paid workers in America.

The pair estimate that the UAW received $26.5 billion more than it would have received had it been treated as it usually would in bankruptcy proceeding.

Heritage found that union workers, who were making more than $70 an hour in wages and benefits, received preferential treatment when their companies had to restructure. GM and Chrysler owed billions to a trust fund they had created to provide UAW members with gold-plated retiree health benefits and taxpayers ended up paying right into that fund. That doesn’t happen in a normal bankruptcy.