Megan McArdle takes a close look at the new Government Accountability Office report on unfunded pension liabilities of GM and Chrysler. It’s not pretty:
There are a lot of scary big numbers floating around about the potential unfunded liabilities of the Pension Benefit Guarantee Corp., which guarantees private sector pensions. They are indeed huge, and I think it more likely than not that the PBGC will eventually need a bailout. But not for the total amount of its potential unfunded liabilities; many of those companies will keep operating.
So the important question is, will GM be among the problem children who actually dumps its pension obligations on the taxpayer? As luck would have it, GM’s numbers are just out, and . . . um . . . they’re losing a lot less money than they used to!!! Only $4.3 billion since they emerged from bankruptcy. And the CEO says they might even make a profit in the near future, maybe.
Read the whole thing, but note McArdle’s conclusion (emphasis mine):
Make no mistake, these companies are still on life support. The CBO expects that the lion’s share of the government’s losses on TARP will come, not from anything the Bush administration did, but from the Obama administration’s decision to bail out the automakers and to a lesser extent, its bailout of homeowners. It seems that a big chunk of our cost may come from picking up the gold plated pensions . . . “Cadillac Plans”, if you will . . . of the automakers. And lest you think I’m picking on unions over management, it was management that used the UAW as a prop to extract these gargantuan sums from the pockets of innocent taxpayers.