A new prescription for an old medicine

WE SHOULDN'T be surprised that when a bureaucrat reaches for a solution, the nail he hammers turns into another desk job.

The Affordable Care Act imposes an excise tax on employers who provide above-average health insurance. The United Auto Workers (UAW) solution to this "Cadillac health plan" crisis is to "grow the business" like any good business union should.

UAW President Dennis Williams said the union is talking with GM, Ford and Fiat-Chrysler about expanding the present VEBA managed by the UAW for retirees to include active hourly and salary workers.

The VEBA (Voluntary Employee Beneficiary Association) was never voluntary because retirees can't vote on contracts. It was never accountable to the members because retirees have no say in the management of the VEBA. And contrary to unsubstantiated allegations by Jay Greene in the Automotive News linked in the previous paragraph, VEBAs are not subject to provisions of ERISA (Employee Retirement Income Security Act), according to this IRS report:

The VEBA is promising a benefit that it may or may not be able to deliver for various reasons. However, there is no clear requirement that the employer properly fund the VEBA even if the "proper" level of funding could be ascertained. And the provisions of ERISA that require proper funding and vesting with respect to pension plans do not apply to VEBAs. Second, without actuarial standards, the fund could be exhausted by prior claims with no obligation on the employer or other members to meet the liability for future claims.

Expansion of the VEBA to include active UAW members and salary workers was not brought up at the UAW Bargaining Convention last March, but surely such a broad and complicated deal could not have been hatched over night.

The proposal to compost hourly and salary workers from GM, Ford and Fiat-Chrysler into one insurance bin with retirees has all the trappings of a capitalist "win-win." The discount of scale appears to benefit both seller and consumer.

Plus, there's enough smoke to smother the bubble-popping prick of contention that all the cost of "cost savings" will be transferred to the class whose seat at the table was confiscated by a gang of high hats with clean shirts and a strong yearning for easy, air-conditioned work--and fat salaries.

The VEBA is a boon for nepotism, and there's no doubt that when the music stops, not a single nepot will be left standing. Furthermore, UAW skeptics are right to say the plan stinks of a union with corporate shine on its nose. But there is a glimmer of hope if the rank and file rallies and rails for a return to historic union principles of shop-floor power.

AS AN elected delegate at the UAW's 33rd Constitutional Convention in 2002, I proposed a National Pattern Contract for all UAW members which would provide not only improved benefits for small independent parts suppliers, but motivate new workers to join the UAW:

If we allow the bosses to divide us, isolate us, and treat each local unit as a separate entity, they will continue to chew us up and spit us out. We can't confront a multinational corporation or a supplier to a multinational corporation with isolated confrontations. To that end I propose that we provide a practical solution to an urgent need by establishing:

(1) A National Pattern Contract.

(2) with a National Benefits Fund pooled industry wide and administered by a joint union and industry committee to cover pensions, health care, and sub pay for all Independent Parts Suppliers (IPS). Small auto parts suppliers lack the capital accumulation to provide adequate benefits like those enjoyed by workers in the Big Three. A National Benefits Fund would enable IPS plants to afford better benefits at reduced premiums.

(3) Furthermore, pension credits must be portable and cover all UAW members in separate IPS units under the National Pattern Agreement. Thereby ensuring security in a volatile industry.

(4) Furthermore, UAW members in IPS should have preferential hiring and transfer rights to other companies represented by the UAW. Thus meeting the needs of IPS workers for job security and providing a practical incentive to join the UAW.

The expansion of the VEBA to include active UAW members and salary workers may offer a discount of scale in regard to bargaining for better health care deals, but more importantly, it could open the door to include workers in parts plants. Hence, a more collective bargaining agreement.

I DIDN'T invent the ideas I presented at the UAW convention. I learned them from Erwin Baur, a UAW retiree who still attended UAW conventions at age 87. We talked long into the night about the roots of UAW history and how a return to rank-and-file control, not only of the union, but also work conditions and production processes could invigorate the labor movement.

I interviewed Erwin Baur over the phone this week. He is 100 years old. His story reveals our dilemma and our opportunity.

In 1937, Erwin was involved in the Little Steel Strike in Youngstown, Ohio. The steel strike was one of the most violent strikes of the times. Fourteen workers were murdered. The CIO lost the strike after five brutal months. With the support of Democratic governors elected by the CIO and enforcement by the National Guard, the gates of steel were opened to scabs.

"Roosevelt had begun dominating the CIO and breaking it away from John L. Lewis's more independent, militant stance," Baur said. "It began the process of the CIO's dependence on the Democrats to win their battles for them instead of relying on the rank and file."

Erwin lost his job at Youngstown Sheet and Tube as a result of his strike activity. He wasn't alone. About 200 workers were fired. Subsequently, he moved to Detroit. In 1938, he got a job with the Budd Company, which supplied parts to major automakers.

In less than a year, he was elected committeeman. Baur worked at the Budd plant and served as an elected union official and convention delegate at UAW Local 306 for 35 years. He recalls getting along with Walter Reuther, but not seeing eye-to-eye on many issues: "Walter was very domineering, particularly against the Communists. But I was in the Socialist Workers Party (SWP) at that time." Back then, the Reuther brothers were also socialists.

Before the war, the SWP in Detroit attracted many African Americans because they saw it as an organization that would fight for their grievances. After the war, Erwin said:

unions got fat and staff jobs for Blacks opened up. The rank and file drifted away from the SWP because who the hell needs a revolutionary party that is suddenly looked upon as a terrible minority when they needed the support of the majority to win? The UAW looked like a door to the help they needed--help they could only get before from socialists.

That's the main explanation for the loss of both white and Black workers in the socialist movement. Working people are realistic and very loyal. Once they join an organization, it takes a great deal for them to leave. The revolutionary language that prevailed in the prewar era didn't become reality.

And leave they did when the choice came down to keeping their jobs or being hounded out by Reuther's enforcers. Baur asserts that Walter Reuther would have been re-elected without red-baiting, but chose to help Sen. Joseph McCarthy, despite the fact that communists and socialists were instrumental in organizing the UAW. It was at this point that the UAW bureaucracy--what we know today as the Administrative Caucus--solidified and presumed the role of enforcer.

Originally, Reuther and his people were against a cost-of-living clause for, as Baur stated, "the same reasons as the communists." If cost-of-living solved the issue of raises, they feared workers wouldn't have any motivation to fight for anything else. Early on, the Reuther gang revealed a lack of faith in the rank and file. Their argument proved wrong. Ernie Mazey and Erwin Baur debated the Reuther team, arguing that cost-of-living would whet the workers' appetite for more.

In the end, it was the president of General Motors, Charles Wilson, who formulated the cost-of-living clause for GM and the UAW. Wilson had been hospitalized in Sweden and consequently had time to observe the benefits of labor peace in a socialist country.

"Wilson shoved the cost-of-living clause across the table, and Reuther couldn't resist," Baur said. "Strange that the president of the largest corporation in the world should be the one to initiate cost-of-living." Which leads us to presume that it is the lack of union militancy, and hence labor peace, that allowed the Detroit Three to take away cost-of-living raises, bit by bit, without a squeak.

IN THE early days of the UAW there were elections and conventions every year. Likewise, contracts were only one year long. Gradually, Reuther's Administrative Caucus changed it to two years, then three years. In 1998, the Administrative Caucus altered the UAW Constitution to hold elections for International officers every four years, which they reasoned would better coincide with contracts that had stretched to four years.

Baur feels that shorter contracts and more frequent elections instigated "greater involvement of the rank and file, more debate, more discussion, more direct say. Who cares about a grievance that is settled four years after the fact?"

Also in those early days of the union, there was a steward for every work group, multiple stewards in every department, a committee person for every department and, on top of that, a bargaining committee. The grievance procedure was a last resort. Workers attempted to resolve grievances at the point of conflict. Slow downs and sit-downs were more common.

"The whole grievance procedure," Baur said, "seemed to be a defer-and-delay tactic. When a grievance lingers too long, it loses merit. But that requires a more militant attitude. Sometimes, the rank and file isn't willing to get involved in the bargaining process."

Less involvement has proved disastrous for UAW members. But hesitation indicates a sense of danger, not nonchalance. The dominant reason for less involvement by the rank and file is the power grab by an increasingly aggressive Administrative Caucus, backed by management.

Corporate management is rarely mentioned as a factor in McCarthyism, but it was significant. Bosses prefer the "lesser evil" of union bureaucrats with corporate worldviews to socialist-organized caucuses. Hence, automatic dues deduction collected by the company. Those who didn't want to give up shop-floor power were gradually beaten down and ridden out. Too many workers did not understand what was at stake in this battle, and so they stood aside.

The proposal for an expanded VEBA is a corporate egg fried over easy in the brainpan of Dennis Williams and ready to be served on a hot platter with a side order of bonuses in lieu of COLA and equal wages. You can bet the new deal is a plan to pass the buck for escalating insurance costs onto the backs of workers.

But the crisis could be an opportunity for UAW members to break out of their parochial isolation and unite with workers across company lines. All we need is a new prescription for an old medicine: more democracy and rank-and-file militancy.