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Shame on You CBS

Shame on CBS and Katie Couric for their report Behind the Sticker Price (5/14/07).

Piggybacking on Daimler's sale of Chrysler to Cerberus Capital Management, they went straight into the U.S. auto makers' lack of profitability due to so-called "legacy costs." Tied into the upcoming union negotiations this summer, the report cited the "excessive" burden of health and retirement plans for current and retired employees. The gist being that the UAW was going to have to "give back" to GM because it was in nobody's interest to see U.S. automaking go out of the country. LIES DAMN LIES!

I guess that CBS, and likely other "news" media, think that we have forgotten (or perhaps never saw) the Wall Street Journal article "Hidden Burden: As Workers' Pensions Wither, Those for Executives Flourish." The article exhaustively reports on corporations (including GM) who are claiming massive burdens and losses due to worker's (particularly union) health insurance and retirement costs. It is not these costs, but executive plans that are running the companies into the ground. Reneging on commitments to workers on the basis of costs is an outright lie

"To help explain its deep slump, General Motors Corp. often cites "legacy costs," including pensions for its giant U.S. work force. In its latest annual report, GM wrote: "Our extensive pension and [post-employment] obligations to retirees are a competitive disadvantage for us." Early this year, GM announced it was ending pensions for 42,000 workers.

But there's a twist to the auto maker's pension situation: The pension plans for its rank-and-file U.S. workers are overstuffed with cash, containing about $9 billion more than is needed to meet their obligations for years to come.

Another of GM's pension programs, however, saddles the company with a liability of $1.4 billion. These pensions are for its executives.

This is the pension squeeze companies aren't talking about: Even as many reduce, freeze or eliminate pensions for workers -- complaining of the costs -- their executives are building up ever-bigger pensions, causing the companies' financial obligations for them to balloon." WSJ article.

Such reporting is consistent with the continuous presentation of a corporate perspective of the world, and particularly of the work environment. What is stunning is that the corporate media will tell the same lies over and over again.

In CBS's run-up story to the greedy, over paid, union workers at GM (and other U.S. automakers), was the story of Chrysler's ongoing failure to be a profitable company. Lee Iacoca was introduced as having pulled Chrysler out of bankruptcy in the early 1980s. Yet another lie. Iacoca did not pull Chrysler out of bankruptcy - the U.S. tax payers did. Chrysler received a massive bailout of $1.5 billion in loan guarantees under the arguments that it was a primary defense contractor and could not be allowed to fail, and the impact of job losses (Carter administration). Now the albatross is back in U.S. hands via Cerberus - an investment firm run by none other than former Secretary of the Treasury John Snow. Snow served as Secretary of the Treasury in the current Bush administration from 2003-2006.

Lies like these are not simply bad reporting. They are outright propaganda.

Here is the email for CBS Evening News

[Of interest: Snow earned his Republican street cred by serving in the Nixon administration, and as an advisor to the Reagan campaign, and then on a series of Reagan commissions.]

Related Article: Schultz & Francis, 4/24/03, Wall Street Journal. Executives Get Pension Security While Plans for Workers Falter

Posted by Rowan Wolf at May 16, 2007 8:50 PM
Comments
Comment #220629

They are simply describing the reason someone might want to sell a firm and why someone else may not want to buy one. You may not agree with the reasons or you may even be offended by them, but that is simply they way the buyers and sellers are seeing the problem. Maybe your analysis will cause them to change their minds about the deal. They should probably cut both worker and management costs. But when you are dealing with transactions, what matters is what the parties think, not what you see as “right”.

I once owned a diesel engine car. It gave me no troubles and had very good gas mileage. When I was going to move to a different country, I tried to sell it. It was hard to find a buyer. People did not want to deal with diesel. I explained it to them, but they just didn’t get it. Now consider the news report of this. Should the reporters explain that (from my side) diesels are good and buyers are stupid, or should they report that many buyers will not want the car because it is a diesel?

There are plenty of reasons not to like Couric. Her more or less acurate reporting in this case is not one of them.

Posted by: Jack at May 17, 2007 8:22 AM
Comment #220632

Rowan,

I watched the first video. It didn’t seem so much as containing lies as it painted an incomplete picture. For example, why is Toyota’s legacy costs so much lower? One presumes that it’s because Toyota doesn’t provide pensions but rather relies upon 401K or similar plans. I agree that the report should have covered executive pay issues, but, here’s the rub — I don’t watch TV news much so I have no idea whether CBS has convered that and other issues not mentioned in this report. (I consider TV news a very poor source of information — TV news is good for big breaking news, but not for even remotely complicated issues. The form itself has severe limitations.) You point out that GM has a large pension fund, but of course that fund would quickly be gone if the automaker didn’t continually augment it from profits. As I said, I didn’t find the story so much incorrect as incomplete, but I don’t expect much more from TV news. Do you disagree with the basic premise of the story? That legacy costs increase car and company costs?

As far as media promulgating a corporate view of America — well, of course, that’s the dominant mindset in this country, political parties aside. One must go outside of big media for anything else.

Posted by: Gerrold at May 17, 2007 9:05 AM
Comment #220826

Back when American car manufacturers were selling “luxury” cars for less than $10,000 dollars these pension plans were only an issue when it was time to renegotiate the contract.

Henry Ford made cars that his employees could afford to buy.
Up until the “60s and ’70s Ford, GM, AMC, and Chrysler built cars like tanks.
Volkswagen, Datsun, Toyota, and Honda sold toy cars that were built cheaply, but were fuel efficient.

Thus began the downward slide of quality for American car manufacturers.

Lee Iaccoca bailed out Chrysler in the ’70s with the American taxpayers money. Does anybody remember the “K” car?
They were junk.

The Chevy “Suburban” was a work vehicle, not a fashion statement.
America continues to build inefficient, luxury, 4 wheel drive vehicles that will never see a dirt road, because nobody wants to scratch their fancy paint job, or wheels, or get dirt on their expensive interiors.

We, the American consumer are at fault here.
We have this bassackwards

America has a hard time competing because we have become only about style, and not about substance.

Posted by: Rocky at May 19, 2007 11:32 AM
Comment #220847

Jack,

Should the reporters explain that (from my side) diesels are good and buyers are stupid, or should they report that many buyers will not want the car because it is a diesel?

Good reporters should does both.
One-side-only is bad journalism. Always was, always will.
What doesn’t change is people still drinking it.

Posted by: Philippe Houdoin at May 19, 2007 6:19 PM
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