Retirees Are Road Kill in Rush to Sell GM

New York – A three-day hearing on the sale of General Motors assets to the U.S. government, conclusively demonstrated that the U.S. Treasury Department decided to strip more than 50,000 GM retirees of their right to health care.

Harry Wilson, a member of the Treasury's auto task force, repeatedly stated that there was no "commercial necessity" in picking up the liability for retiree health care for members of non-UAW unions since they had very few active members.

In IUE-CWA's case that scenario was achieved by the abrupt closure of its Moraine facility in December 2008, two years ahead of schedule.

As the purchaser, Treasury determined which liabilities – and assets – would be transferred to the new GM, and which would stay behind in the broke old GM.

Wilson testified that Treasury decided to give some of its shares in the new GM to the UAW VEBA in order to secure a revised contract and a skilled workforce, but the other unions weren't needed to run the plants so no deal had to be made to fulfill GM's obligation for their retirees' health care.

But GM was not blameless in the shame department.

Documents obtained during discovery showed that GM purposefully decided to cut retiree health care by 87 percent so it could leave executive pension and salaried health care largely intact with only 32 percent and 25 percent reductions, respectively.  In most bankruptcy cases those benefits are eliminated entirely.

Even more appalling was the testimony of GM CEO Fritz Henderson who stated that in January 2009, GM decided to give salaried retirees a $300 a month increase in their pensions to offset what it would cost them to purchase Medigap insurance when the company eliminated their medical insurance.

GM is proposing to cancel coverage for post-65 hourly retirees – but with no pension boost, of course.

IUE-CWA attorney Tom Kennedy forcefully argued that GM was subverting protections in the bankruptcy code by selling assets before it had engaged in what is known as an 1114 process over GM's right to cut retiree health care.

GM lead attorney Harvey Miller dismissed the union's arguments as mere "envy" of the UAW benefits.