Remember when Democrats lamented the growing budget deficit and spoke of the burden our children and grandchildren would face if we didn't put our fiscal house in order? That was when Republicans ran the federal government and Democrats opposed tax cuts. Now that Democrats are about to be in charge, concern about the deficit has disappeared and spending plans proliferate, even though the national debt passed $10 trillion in September and we added another $500 billion last month.
The latest, but by no means the last supplicant at the public trough, is the auto industry, which wants a bailout to save jobs because its cars are not selling. There is a reason for that and it can be summed up in five words: The United Auto Workers Union (UAW).
Half of the $50 billion the auto industry wants is for health care for its current and retired employees. This is the result of increasing UAW demands, strikes and threats of strikes unless health care and pension benefits were regularly increased. While in the past UAW settled for some benefit decreases while bargaining with the Big Three U.S. automakers, according to the Wall Street Journal in September of 2006, "on average, GM pays $81.18 an hour in wages and benefits to its U.S. hourly workers." Those increased costs, including the cost of health care, were passed along to consumers, adding $1,600 to the price of every vehicle GM produced. In February 2008, after General Motors offered buyouts to 74,000 employees, the Center for Automotive Research estimated the average wage, including benefits, for current GM workers had dropped to $78.21 an hour. New hires pulled down a paltry $26.65. GM, now facing a head-on collision with reality, has taken an important first step tow ard fiscal responsibility by announcing the elimination of lifetime health care benefits for about 100,000 of its white-collar retirees at the end of this year.
Contrast this with non-union Toyota, whose total hourly U.S. labor costs, with benefits, are $48 per hour. Those lower labor costs mean Toyota enjoys a cost advantage over U.S. automakers of about $1,000 per vehicle. Is it any wonder that Toyota is outselling American automakers and from plants that have been built on U.S. soil? According to James Sherk of The Heritage Foundation, Japanese car companies provide their employees with good jobs at good wages: "The typical hourly employee at a Toyota, Honda or Nissan plant in America makes almost $100,000 a year in wages and benefits, before overtime."