U.S. Automakers Seek Additional $25B in Federal Loans To Help Fund Future Retiree Health Care
Executives from United Auto Workers, General Motors, Chrysler and Ford on Thursday in a meeting with House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.) and other congressional leaders asked for $25 billion in additional federal loans for health care payments for retirees, the AP/Houston Chronicle reports. The money from the loans would help cover the companies' contributions to a health benefit trust, or a voluntary employees' beneficiary association, for union retirees (Thomas, AP/Houston Chronicle, 11/6).
Under contracts negotiated last year, the automakers agreed to contribute about $56.5 billion to the VEBA, which UAW will manage. The VEBA, which will take effect in 2010 and remain operational for 80 years, will reduce retiree health benefit liabilities for the automakers by about $100 billion (Kaiser Daily Health Policy Report, 4/4). The contracts stipulate that the companies in January 2010 must contribute $15 billion to the VEBA and an additional $15 billion by 2012.
Alan Reuther, legislative director for UAW, said the additional $25 billion in federal loans would provide the companies a better chance of immediately lining up other financing because their payments to the VEBA already would be covered. According to the AP/Chronicle, the executives also are seeking a share of the recent $700 billion bailout for Wall Street firms. Reuther said the meeting allowed the union and companies to make the case for additional federal assistance "to help the companies through this severe economic credit crisis" (AP/Houston Chronicle, 11/6).
