THE UAW BITES THE BULLET

"I wouldn't mind dying -- it's that business of having to stay dead that scares the shit out of me," said somebody once, and it seems that the UAW finally figured out that if they kill GM the company will actually stay dead. The Golden Goose will finally become extinct. The dual instruments of the demise are unfunded pension liabilities (money that has to be paid in the future that you have no way of getting), and unfunded medical benefits that have to be paid when incurred.

Deals with unions "negotiated" during fat times are unworkable in the new world economy. The failure of the UAW to negotiate with Delphi has resulted in the bankruptcy of the largest auto parts company in the world; the result will be a non-union Delphi and a formerly employed work force with no pensions and no medical coverage. (Be sure to read Auto Extremist for a great post).

But the problems Detroit faces - the health care costs, the pension costs and the gross trade disadvantages - are problems America now must face as a nation. Don't believe it? Between one in seven and one in nine jobs in this country are still either directly or indirectly connected to the domestic automobile business. Quite simply, if the domestic auto industry goes down for the count it will affect every corner of this nation and impact the national economy far beyond the devastation caused by the two recent hurricanes. It would be a catastrophe of almost incalculable proportions.

It is a sign of the times that the UAW agreed to reduce both pension liability as well as medical coverage for both members and retirees at GM, but it ain't over til it's over. The company hating union members still have to ratify, and to those not familiar with UAW workers at the plant level, the agitation from the company hating faction of the union will be loud. There are the "red hots," the under educated bozos with communist ideas, who will try to agitate against the contract adjustment, calling it a "sell out to the fat cat capitalists in the board rooms." Those of us in SoCal remember the union refusing to negotiate with GM in Van Nuys even though anybody with a brain knew the company would close the plant unless they could reduce costs there. Knew it. But the "red hots" wouldn't give an inch, preferring instead to preen and demonstrate their manhood. So they "won," no jobs, no pensions, no medical coverage.

As we sit this AM, the city of San Diego is facing bankruptcy over unfunded pension liabilities and posh medical coverage, and because the unionized city employees won't back down, San Diego may become the 23rd city to go into Chapter Eleven. It will be the first large government bankruptcy since Orange County pulled a fast one and bailed on all their creditors five or so years ago.

Unfunded mandates from the Feds, the courts, and local governments may land all of us into the soup if we don't stop tossing loans and cash around like it was just another credit card we can max out til we get the next one.

"A billion here, a billion there, pretty soon you're talking about real money," as Everett Dirksen, the late GOP senator from Illinois once said. It won't be funny in a few years.