Rather than parroting union outrage over broken contracts, media should remind public of GM bail-out.

The Sanctity of Contracts? Seriously?

By Dan Kennedy Wednesday, February 23, 2011

The illegally striking union workers of Wisconsin and other states, along with the pundits siding with them, are making much of the fact that they negotiated and hold contracts specifying their benefits. They are contracts giving them expansive collective bargaining rights that facilitate the blackmail of local, county and state governments into agreeing to unsustainable financial commitments.

Those commitments are great deals for the unions: they get health insurance without paying a sliver of its cost and pensions without contributing a penny. We in the private sector pay for it, even as we pay for ours as well. In any case, union workers and bosses screaming about the sanctity of contracts is high comedy, isn’t it?

Perhaps it’s slipped their minds that General Motors shareholders had exchanged their money for contracts – called stock certificates – purportedly guaranteeing them the stated ownership in GM. That ownership was all wiped out as Obama swept GM past the established bankruptcy courts (the courts that establish ours as a nation of laws, not of men) in favor of saving jobs of union workers and even gifting ownership in the replacement General Motors to unions. What about the sanctity of those contracts?

The same thing happened with GM’s vendors. They were owed money per contracts called purchase orders. Legitimate bankruptcy would have compelled at least some restitution for these companies. But they were denied even nickels on the dollars they were owed, in favor of the union workers (with no financial stake in or money owed to them by GM; with no contracts guaranteeing them equity or future payments). What of the sanctity of those contracts?