Oct 8, 2007
"Street Salivates Over VEBA Cash Pile" – this was the headline in the September 28th Wall Street Journal. The same high finance that helped create the "mortgage crisis' mess is looking for new money to pounce on.
The new GM VEBA may be it. In the words of one Wall Street analyst quoted by the Journal, the GM VEBA gives money managers the potential for "new, large pools of money."
In theory, the VEBA health care trust is to be used to pay for medical care for retirees – for the next 80 years, according to Ron Gettelfinger, UAW president.
In reality, the money will go into a large fund, which will be managed by people whose principal goal is to make more money for themselves, for their brokerage house or investment bank – and for those who invest in the brokerages and the banks. And how do they make that money? According to the Journal, "consultants and money managers usually get apercentage of assets and, in some cases, of profits." Notice – "of assets," meaning right up front, off the top, they take some of the money in the VEBA.
It wasn't so long ago that these same "money managers' were speculating in houses, condominiums and real estate. They drove up prices so rapidly that ordinary working people were being priced out of the market. So, clever "money managers' devised new types of mortgages and financial instruments based on those mortgages – so housing could be sold at inflated prices.
A few years down the road, when these slick new mortgages suddenly produced astronomically higher payments, default followed default. That produced a glut of houses on the market, pushing down prices and owner equity, and that only produced more defaults, etc.
Some of these very clever "money managers' got caught in the middle of their own scam. Brokerages and investments houses have been declaring one loss after another.
These are the people whose "expertise" will now be used to protect retiree medical care for the "next 80 years"!
Protection? NO, it's only one more slick financial deal, the main importance of which is that NOTHING is guaranteed. No medical insurance, no medical coverage. NOTHING. It can all disappear in another one of the financial crises that Wall Street has regularly been producing every few years or so over the last 35 years.
This VEBA, if it were to pass, would be the end of the line for guaranteed retiree benefits – not just in auto, but in every industry, every job. Over the years, one industry after another has already suppressed those benefits – sometimes for new hires, sometimes for current workers too. By 2003, only one company in five offered such benefits – only half as many as ten years earlier. And in the years since, the situation has only gotten worse.
Workers at the Big 3 auto companies were among those who still kept guaranteed benefits. If their benefits collapse into this VEBA which guarantees nothing, it will mark the end of a whole era. For more than half a century, the unionized parts of the working class were relatively protected in retirement. And those protections were extended much more broadly to other parts of the working class, in the bosses' attempt to maintain labor peace.
If this new contract is finally imposed not only at GM, but also at Chrysler and Ford, it will really mark the beginning of the end. Whoever else retains protections will face a new attack almost immediately.
Those benefits were never given to workers. They were won through fights – bitter, tough, ferocious fights. Those benefits will be protected or won back in the very same way – at GM, or at Chrysler, or at Ford, or at any other workplace.
Workers who want the benefits their labor entitles them to won't get them by begging, only by fighting for them.