The Delphi Oracle

House GOP pressures Obama administration for info on shady pension deal

October 26, 2012

Republicans are stepping up the pressure on the Obama administration to explain why a federal pension insurer slashed the pensions of non-union employees as part of the General Motors (GM) bailout even though union benefits were preserved.

For the past three years, four House Committees—Oversight, Education & Workforce, Financial Services, and Ways and Means—have been digging into the Pension Benefit Guarantee Corporation (PBGC)’s decision to slash the pensions for 20,000 non-union Delphi employees by up to 70 percent. They have received little cooperation from the Obama administration, which championed the $50 billion GM bailout.

While the PBGC, an independent backstop for failing pension systems akin to the FDIC’s protection for bank customers, has released more than 60,000 documents relating to the bailout to the committees, the Treasury Department and White House counsel have stonewalled, according to Ways and Means Chairman Dave Camp (R., Mich.).

"The PBGC has been forthcoming, but their documents raise more questions than they answer," Camp told the Washington Free Beacon. "They show that the Treasury Department’s auto [bailout] task force was in constant communication with the PBGC, but we’re missing Treasury’s half of these email chains; they have not owned up to them."

The controversy dates back to 2005 when Delphi, a parts supplier to GM, entered bankruptcy after failing to renegotiate pension benefits. It was mired in Chapter 11 until 2009 when the Treasury recognized that GM could not emerge from bankruptcy without Delphi. In order to speed up the process, Delphi liquidated its $6.2 billion retirement funds into the PBGC. It then slashed non-union benefits by up to 70 percent, while spinning off the union plans to GM. The bailed out automaker pledged to kick in $1 billion to preserve the union benefits in full despite the fact that it had no legal obligations to do so.

Congress is now demanding communications between the PBGC and the Treasury Department to make sure political pressure played no role in Delphi’s handling.

On Wednesday, House Speaker John Boehner (R., Ohio) joined a growing chorus of House Republicans urging the administration to release Treasury and White House communications to the PBGC and documents relating to Delphi.

"The administration should stop stonewalling and start turning over all of the information requested by Congress at once," Boehner said. "If the White House is going to boast about its auto bailout, it has an obligation to explain its involvement in the pension scandal to Delphi workers, their families, and taxpayers."

Even some administration officials have acknowledged the possibility of scheming on the part of the United Auto Workers (UAW) and the administration. Phyllis Borzi, the Department of Labor Assistant Secretary of Employee Benefits Security Administration, entertained such a possibility when she appeared before the House Subcommittee on Health, Employment, Labor and Pensions last summer.

"If I wanted to give a glib answer, it would be that the UAW was smart enough to figure out that there might come a time that they needed this protection," she told Michigan Democratic Rep. Dale Kildee during a July 2011 hearing on the matter.

Boehner released his statement with less than two weeks remaining in the presidential race.

Asked whether politics played a role in the statement, Tom Crosson, spokesman for Ohio Rep. Mike Turner, told the Free Beacon, "the only thing political in nature in this process was the decision made by the administration, which was picking winners and losers in the bailout."

Turner's Dayton district is home to a shuttered Delphi factory, and he represents hundreds of laid-off autoworkers and desperate non-union retirees. Crosson said support for the non-union workers stretches across union and party lines.

"Even the UAW has been on record saying the salaried employees should be made whole," he said. "It’s a matter of fairness: these folks paid into these pensions, earned these pensions and looked forward to living with these pensions; the administration took them away."

The non-union employees have filed suit to block the pension slashing, but were dealt a setback during the discovery process, according to Den Black, who chairs the Delphi Salaried Retirees Association.

Crosson said the committee investigations are crucial to the retiree’s bid for a "fair outcome."

"The administration has gone to court to block them from receiving crucial documents to their case," he said. "Through Congress and our inquiries we are able to shed lights on materials that they have been denied."

Boehner’s call for increased cooperation attracted support from some of the non-union workers leading the charge against the pension slashing.

Black, who worked for GM and Delphi for more than 30 years only to see his pensions slashed in half, praised the speaker for raising awareness about the employees’ predicament.

"Those who say that the eve of the presidential election is the wrong time to talk about this are dead wrong; this has been going on for two years—it’s nothing new," Black said. "This represents the increased pressure on an administration that promised to be the most transparent in history and is waging a knockdown, drag out fight to hide what happened."

House Republicans say they are motivated by the hardship endured by the victims of the pension liquidation. Rep. Phil Roe (R., Tenn.), who serves on the Education and Workforce Committee, said he was compelled to take on the Delphi employee’s case because his father lost his United Railway Workers pension in 1973 after giving 30 years to the freight industry.

"These folks are fearful about paying their bills next month, while we’re talking horse race politics," he said. "They deserve answers and they’re going to get them."

Roe acknowledged that there is little chance of convincing the administration to release its cache of documents, but urged the administration to cooperate nonetheless.

"We’re not here for a witch hunt; it’s my job as a congressman to answer these questions and it’s the [White House’s] legal responsibility to respond to our inquiries," he said. "This being an election year, I don’t expect we’ll see that come to light for some time." 

The Treasury Department’s TARP Special Inspector General (SIGTARP), which oversees the bailout funds on behalf of Congress, is in the midst of preparing a report for the Oversight Committee.

A SIGTARP spokesman said its investigation is ongoing and will continue well into November when it is scheduled to hold interviews with Treasury officials.