James Parks of our AFL-CIO Now blog staff brings to light below an issue the traditional media is ignoring: How the Treasury Department is breaking the promise of retiree health coverage for tens of thousands of workers at GM.

Workers and retirees have suspected for years that companies often use bankruptcy as an excuse to cheat retirees out of their promised benefits. Now, three unions say that’s exactly what the U.S. Treasury Department is doing to tens of thousands of General Motors (GM) retirees.

The IUE-CWA, United Steelworkers (USW) and the Operating Engineers (IUOE) plan to appeal a bankruptcy judge’s approval late last week of a plan to allow the new GM, which now is owned primarily by the taxpayers, to take away health coverage from 55,000 retirees at some GM and GM Delphi plants.

In a series of newspaper ads, the unions urge workers to call the White House at 202-456-1212 or send an e-mail to and ask President Obama to restore the GM retirees’ health care benefits. Click here to learn more about IUE-CWA’s campaign to save the retirees’ benefits.

The ads feature retirees like Debra Turner (see ad above), a GM retiree who suffers from multiple sclerosis and rheumatoid arthritis. At 51, she’s not eligible for Medicare. Until now, her GM health care paid for most of the $3,400 a month in medicines she has to take.

trans.gifTurner says:

It’s not right for our government to sacrifice people’s health while it’s pouring out billions to save giant corporations like the banks and auto companies.

But the U.S. Treasury decision to wipe out health care benefits for retirees like her could mean that she will end up in a wheelchair because the cost of insurance—$8,000 a year—is out of reach.

The UAW, whose retirees at GM were able to keep their health care, is strongly backing the other unions’ efforts. An e-mail to UAW activists says:

The UAW stands in solidarity with our brothers and sisters from these other unions in their efforts to get justice for all GM retirees. Please take the time to contact President Obama on this issue. Tell the President that it is wrong for the U.S. Treasury Department to be sacrificing the health care of these retirees. Urge the President to take whatever action is necessary to ensure that these retirees receive the same treatment as UAW-represented retirees.

The GM retirees also picked up bipartisan support from 13 members of Congress from Ohio, where two of the affected plants are located. In a letter to Treasury Secretary Timothy Geithner, the representatives call on him to reverse the decision in order to "spare a disaster." The Ohio congressional members’ letter emphatically stated to the Treasury secretary: "In short, it is your representatives who have decided that these retirees will not have an opportunity for a decent retirement."

IUE-CWA President Jim Clark puts it bluntly:

It is a sad day in America when a formerly blue chip company joins hands with the government to rob those who built the company of the health care that was promised to them.

Our message is simple: Spending taxpayer dollars…[to strip] 50,000 retirees of their health care is not the change we voted for last November. The White House must direct the U.S. Treasury to reach a fair and equitable solution.

As the purchaser of GM, the Treasury Department determined which liabilities and assets would be transferred to the new company and which would stay behind in the bankrupt company. According to the union, a member of the administration’s auto taskforce told the bankruptcy hearing there was no "commercial necessity" for the new company to pick up the liability for these retirees.

Court documents obtained during discovery also show that GM decided to cut retiree health care by 87 percent so it could leave executive pension and salaried health care largely intact with only 32 percent and 25 percent reductions, respectively, the unions claim.

To add insult to injury, according to the unions, GM chief executive Fritz Henderson testified in January that the company decided to give salaried retirees a $300 a month increase in their pensions to offset what it would cost them to purchase insurance when the company eliminated their medical insurance.

USW President Leo Gerard says:

[The unions] hope our federal government will come to its senses on fairness for the former GM workers who contributed nothing less than the autoworkers to the fortunes of the company.

IUE-CWA represents 41,000 GM Delphi retirees and surviving spouses, whose benefits are valued at $2.87 billion. USW represents 6,200 retirees and surviving spouses, saying the present value of the lost benefits is at least $424 million. Other Delphi retirees are represented by the IUOE.

Tula Connell

Tula Connell