From CentralMassDad, BMG’s resident barometer of all things moderate. Wherein he explains (a) what was really at stake in the LTV Steel/Coal Act business, and (b) why Scott Brown lost his vote over it.
Bankruptcy is built to handle “old” claims. The asbestos case we already talked about “old” that aren’t known at the time: people who were exposed but have not yet become sick.
LTV was a little different. The Coal Act was a special fund to pay health benefits to retired mine workers, won by the workers through a series of difficult strikes. The problem was that there were a great many workers, and the healthcare got expensive. The original plan was that companies handle their own ex-employees, and the government would handle the former employees of defunct companies.
In the 80s, a lot of mining and steel companies crashed. A series of companies went bankrupt; some tried to reorganize, which meant that there would continue to be an operating steel company. LTV was one that tried to reorganize.
In 1992, the government tried to address the huge health benefit shortfall by making all operating companies liable for a share of the total bill, even though the total included former employees of other companies. LTV said, wait, we dealt with these old claims for health benefits in the bankruptcy, through which it made some payments, but less than it owed. This was the position taken, I would imagine, by EW in the cert petition.
The cert petition was an appeal from an order that said “nope, this isn’t an old claim, but a new one– that must be paid in full by the reorganized company.” The UMW supported this decision because they wanted as much as possible paid into the fund.
The imposition of old claims against the reorganized company was a factor in the failure of the reorganized company, which shut down all plants and folded completely in 2000.
In the end, the health benefit fund was not paid in full, will not ever be paid in full, and there are 10 to 20 thousand fewer people working in the steel industry.
In my view, that is not a very good outcome, which is why her position was the correct one, even though not successful.
The difficult policy question is how to deal with the pension and benefit obligations of a formerly profitable industry with hundreds of thousands of employees once that industry ceases to exist.
The manner in which Brown, personally, refers to this in today’s paper is grossly misleading. At this point he has driven me completely off the fence–from where I was leaning Brown less than a week ago– to the other side.