Declaring that salaried retirees have lost houses, declared bankruptcy and seen families dissolve, local Delphi Corp. retiree Bruce Gump on Wednesday told a Congressional subcommittee that the group will continue to fight to reclaim benefits earned over decades with the auto parts supplier.
"We will stand on the side of right and will fight. We need your help to win," the retired Delphi Packard Electric engineer said in testimony before the House of Representatives' Subcommittee on Regulatory Affairs, Stimulus Oversight, and Government Spending in Washington about the government's impact in bailing out General Motors and Chrysler during Great Recession of 2008-09.
Gump called cuts by federal pension insurer Pension Benefit Guaranty Corp. of 30 percent to 70 percent in monthly pension checks for younger Delphi workers "political, illegal, unethical and immoral.
"Even though the government is charged with protecting all citizens, they did nothing for the salaried," he said. "They cared for the groups that were rich and large enough to retaliate."
The federal insurer terminated the salaried pension plan effective July 31, 2009, with the cuts starting in February 2010.
About 20,200 were covered in the plan - about 15,000 retired and the rest still working. Some 1,056 Delphi Packard retirees still living in the Warren area saw their pensions chopped. They also lost all of their company-sponsored health care, along with life insurance.
Salaried retirees say they were penalized because they didn't have as much political clout as the United Auto Workers, GM's largest union, and the International Union of Electrical Workers-Communications Workers of America, the second-largest union.
Retirees of both unions received "top-up" payments from GM that provide them with full pensions. IUE-CWA retirees from Delphi Packard, however, saw their health care sharply reduced compared to UAW retirees, who absorbed smaller cuts.
Much of the hearing entitled, "Lasting Implications of the General Motors Bailout," focused on Ron Bloom, who led President Obama's auto task force in 2009 in taking GM and Chrysler through prepackage bankruptcies.
Delphi, itself in bankruptcy at the time, was important because it was GM's key supplier of auto parts, including electrical wiring harnesses made by Delphi Packard.
Bloom declined to answer repeated questions on the salaried pension issue from subcommittee members - many of them from areas that included Delphi operations - due to a lawsuit the retirees are pursuing in federal court in Detroit.
He acknowledged that "it's terrible when any individual or business isn't able to receive the entire amount they were promised. Some got more than others. It was based on commercial consideration."
However, he defended the government's role in reorganizing GM and Chrysler, saying letting the auto companies fail would have meant "everyone would have lost their job and pension. You have to evaluate this against real-world alternatives."
Thomas Kochan, a management professor with the Massachusetts Institute of Technology, agreed, saying the collapse of GM and Chrysler would have triggered a chain reaction that would have cost more than a million jobs and created $8 billion to $25 billion in losses for state, local and federal government programs.
He noted the union pension top-offs were negotiated by unions and the companies as part of overall packages that included concessions by workers.
"To single out one provision - the top-offs - without considering the overall tradeoffs would be highly inappropriate," he said.
But analyst and columnist Shikha Dalmia said the Obama Administration "wrote its own bankruptcy law" by intervening, sending the signal that private lenders can't count on protection under the rule of law.
Dalmia said the government's action "opened the door for direct government role" in deciding who wins and loses in future bankruptcies.
"This might be the most damaging legacy of the bailout," she said.