With the doom-and-gloom of pension liability hanging over the auto industry like the
sword of Damocles, the last thing the automakers want is
to hear that someone will actually force them into fulfilling their promises to retirees. The pension bill that has
already passed through the Senate was thought to be on hold until after the holiday recess, but under the urging of
President Bush and
the head of
the Pension Benefit Guaranty Fund, it’s still possible that the House may vote to pass the bill before heading
home.
The importance to the auto industry is obvious – the bill would require underfunded plans to be shored-up, which
would further drain away cash from the domestic automakers. GM already issued the largest bond offering in corporate
history in ’02, adding something to the tune
of $10B to its pension fund, and just recently the General Accounting Office stated that it may still
be short by about $30B. Compared with the
company’s profits over the past five years, it’s clear that there is a problem, and it’s safe to say that GM is
certainly not the only company in similar trouble.