It would be impossible to blame Detroit’s decades-long decline on a single factor, but if one were to make a list, defined pension obligations to workers would be somewhere very near the top. Thanks in large part to the unionization of America’s auto industry, Detroit has groaned under the weight of crushing pension obligations since time immemorial. And, according to a new report by the Government Accountability Office, last year’s bailout of GM and Chrysler has not eliminated the existential threat that these obligations pose to the industry. In fact, the taxpayer’s “investment” in GM and Chrysler appears only to have exposed the public to even an greater risk of catastrophic pension plan failure.
The underlying problem is not even that GM and Chrysler continue to shoulder an unsustainable load of pension obligations, it’s that the bailout itself has created no guarantee that GM and Chrysler will become profitable enough to shoulder the obligations. As the report’s conclusion notes:
2010 New York Auto Show Photo Gallery
2011 Ford Mustang Photo Gallery
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