Strings Attached

Jesse Walker | January 9, 2009

Industrial policy, Democratic-style: The goverment will spend billions to help your company if you make yourself more green. Industrial policy, Republican-style: The government will spend billions to help your company if you do something about those damn unions.

Provisions of General Motors' and Chrysler's $17.4 billion in federal loans automatically places them in default if union workers go on strike.

A General Motors Corp. filing this week with the Securities and Exchange Commission detailed the provision as part of its $13.4 billion in federal loans.

A person briefed on Chrysler LLC's $4 billion loan, who didn't want to be identified because the company is in talks with the United Auto Workers union about concessions, confirmed Thursday that the Chrysler deal also has a similar provision.

The UAW isn't a party to the deal and hasn't threatened a strike, its most potent weapon against the Detroit automakers.

[Hat tip: quasibill.]

Update: Down in the comments, R.C. Dean writes:

I don't see that as anti-union, I see it as giving the union even more leverage in the upcoming negotiations.

Under different circumstances I would agree. But right now the UAW is as desperate for that money as the companies are -- maybe more so, since it has more to lose in the event of a bankruptcy.