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VEBAs wobble, and they DO fall down

By Owen Paine on Monday September 17, 2007 08:25 AM

Here's my 70's-era prole-left tale for today:

Called a “single payer health solution” for America's big three auto families, the proposed grand health VEBA is really just one big corporate rip dip and shift -- a massive Enron-scale financial fraud that will end up sticking it to workers one way or other, either through direct charges to workers or in a bailout by corporate field-dog, Uncle "Fetch and Carry" Sam.


What's a VEBA, comrades? Stands for Voluntary Employees Beneficiary Association. It takes some solemnly-promised stream of benefit payments off the books of corporate America -- in this case, the future wage-employee health payment obligations of Chrysler, Ford and GM -- for a one-time, good-faith, duly-diligent, fairly and squarely discounted lump-sum pay-in to a very specially chartered nonprofit -- in this case union-administered – fund. And what happens then? Well, it's all in the numbers really.

Looking with gimlet eye at this auto VEBA, I'd say it's likely to become the absolutely biggest bust yet. Despite the union's heroic efforts to "responsibly" offload as much as possible of the upcoming payment stream back on the retired workers themselves, the time will come when the fund goes bump in the night. Enter Uncle Sap.

By that point the workers will, by honest accounts, have paid for it all at least twice already -- first up front, in corporate promises in lieu of wages, and at the back end, in passthrough charges in lieu of funds. And the “health” industry will no doubt manage to extract a third payment from the man in the striped suit. What remains unpaid out of the bills overcharged, will prolly in a burst of state generosity -- after a union leadership heartswelling sturm-und-drang worthy of Rock Hudson -- end up on Uncle's famous riskless tax-backed people's credit card.


My favorite mild underlining in the labor notes story linked above: "Business analysts claim... under-funding is one of the key advantages of a Big-3 VEBA solution." Care to give a better working definition of a corporate welfare state?

Comments (2)


They're getting the same treatment on pensions too. And the Big 2.6 still struggle to make a decent car. There's rarely more than one in the top ten for consumer satisfaction. The investors would be much better off if they got their act together, fired all the senior managers and let votes on the shop floor determine engineering and design.


ahh scruggs thanx for the comment

but the cio as hero farm is long gone
can't start a fire that way here
not over the woes of our red white and blue
kulack wagery's plight...nope ...
not even at this site cause this site
like the web itself
at best draws progs not geefs

this pond
----and by god its a fine pond indeed ----
croaks only for our tortured poisoned and spied apon
lady of green gable
not six pack bob stevens
with his
" fuck u weirdo
hell i'd haul plutonium across country
and with my youngest kid in the back seat
next to it ...if it paid right "

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