$17 million vs. $89 billion

Matt Yglesias thinks that conservative opponents of the Big 3 Bailout are more worried about the liability of pensions on the car companies than executive pay. And he’s probably right. Because the pension costs of GM and the rest are crushing those companies. Let’s look at GM.

GM has a CEO who, in 2007, made $15.7 million. I noted previously that GM’s pension liability in 2004 was $89 billion, and that the health benefits for those same retirees was $64 billion. When broken down by year, these numbers add up to a $1,600 legacy cost per car. What is the cost of the CEO’s salary, per car? Well, they expect to sell 11.7 million cars in 2009, which would put the CEO liability at right around $1.50 per car. So yeah, I’d say the cumulative effect of those legacy costs is a bigger deal than the (ridiculously overpaid) CEO.

Leaving all that aside, though, I defy Matt to provide one example of a bailout opponent who says that the Big 3’s management deserves to keep their jobs. For example, here’s Mitt Romney calling for a restructuring in which legacy costs are pared down and management gets the boot. I don’t think there’s a single serious person who says “Yeah, get rid of the pensions for those middle class shlubs, but give the executives raises!” That’s asinine. Nobody thinks that. But simple math states that the pension costs are a far, far bigger problem for GM and the rest than what one idiot CEO makes.