Imagine if GM wasn't also in the health care business?
UPDATE: Spoke too soon. Here's Allan Sloan writing in the Washington Post on Monday,
Then there was the financial elephant in the room. No, it's not the GM and Chrysler pension funds. Those funds are in good shape -- or at least were before the October market meltdown.
The problem is the cash GM and Chrysler need -- and soon -- under terms of the grand bargain the Detroit Three made last year with the United Auto Workers about health care for retirees. GM, Ford, Chrysler and the UAW agreed to have health-care trusts assume responsibility for retiree health care. In return, the companies promised to turn over billions of dollars to the trusts. The amount, while huge, was way less than the cost at which those benefits were carried on the companies' books. Capping the retiree-health liability seemed to promise the companies long-term salvation.
But, boy, is there a near-term problem. By my math, GM and Chrysler have promised to give the trusts a total of $12.5 billion to $18.1 billion in cash -- maybe more -- by early 2010. That's above the $16.8 billion currently in the trusts. Good luck coming up with that money, guys. Or getting more givebacks from the UAW.
GM and Chrysler would almost certainly stop paying retiree health care if they go into bankruptcy before the end of next year. That would be devastating to retirees not old enough for Medicare -- and it is a major reason I don't think that bankruptcy would be a good thing.