WASHINGTON (AP) — Dave Muffley thought he had it all figured out when it came to a solid retirement. The Indiana man spent roughly 30 years as a salaried maintenance technician for Delphi Corp., a subsidiary of General Motors Corp., and was expected to retire with a nice income when he turned 62.
But when GM fell into the largest manufacturing bankruptcy in history in 2009 and the federal government negotiated its restructuring, Muffley’s expected retirement package was slashed and his life’s trajectory would spiral.
The Russiaville resident, now 68, lost 30 percent of his retirement savings, his promised health insurance and his faith in government.
Muffley is one of about 20,000 Delphi workers affected by GM’s bankruptcy, many of whom have spent the past 13 years fighting to get back what they lost. After taking the matter all the way to the US Supreme Court, which declined to hear their case this year, the retirees were cut off from their last legal recourse.
Now they expect Congress to do for them what the courts would not do. Legislation to restore workers’ retirement savings has received support from both the left and the right in Congress. It passed the House on Wednesday, and supporters hope the Senate will follow suit.
It’s called Susan Muffley’s Law after Dave’s wife, who got sick and died while they were fighting the hit to his pension fund.
The retirees claim they were discriminated against as salaried employees compared to unionized workers whose pensions were preserved through the bankruptcy. Salaried workers were the engineers, technicians, and middle-level employees who stood between the well-paid executives and the unionized workers in the company.
After he bought out of Delphi at age 55 to avoid a potential layoff, Muffley says, he took one job after another to tide him over until he could retire at 62. It was around this time that his wife was diagnosed with pancreatic cancer and died within three years.
“Things fell apart, and things fell apart in a big way,” Muffley says. He estimated he’s lost at least $130,000 in savings due to pension cuts over the years, and he’s not the only one.
Despite bipartisan support, there is some resistance in Congress to spending tax dollars to bail out pension funds.
For retirees, the fight to get the legislation into law is the latest and perhaps final battle in an ordeal that began when workers were swept away by the recession’s macroeconomic headwinds.
Muffley and others in 2009 created the Delphi Salaried Retirees Association, a kind of support group for workers at the auto parts company who had to deal not only with job losses but also retirement cuts and the loss of health plans.
Retirees tell stories of loss, severe depression, divorce and life changes. Some retirees’ children are putting off going to college, other workers are facing health problems from the stress of layoffs.
Salary retirees have received support from every corner of local government, state legislatures, attorneys general and even sympathetic words from this and the last president.
Presidential candidate Joe Biden in September 2020 said he would work with senators to help restore the retirement savings of Delphi workers. The following month, President Donald Trump issued a memorandum urging the Treasury Department and other agencies to take action on the issue.
But these words did not translate into actions. Nothing came of Trump’s memo. Nothing happened in the first 18 months of Biden’s administration.
A number of legislative proposals to help Delphi workers have come and gone over the years without becoming law. The latest bill, which passed the House by a 254-175 vote, would restore workers’ compensation benefits and retroactively make up what they have lost since 2009.
Members of Congress from both parties, mostly from Michigan, Indiana and Ohio, sponsored the legislation. Reps. Dan Kildee, D-Mich., and Mike Turner, R-Ohio, and Ohio Sens. Sherrod Brown, Democrat, and Rob Portman, Republican, are among those supporting it.
Co-sponsors run the gamut from Congressman Moe Brooks of Alabama, founder of the conservative House Freedom Caucus, to Congressman Andy Levin of Michigan, a member of the Progressive Caucus.
On Friday, the White House issued its own statement in support of the bill, saying the administration “supports a secure retirement for affected workers.”
Muffley points to other legislative savings for pension plans, such as the bipartisan Butch Lewis law that was included in the US bailout. This provision halted the insolvency of approximately 200 multiemployer pension plans for 30 years, saving the benefits of approximately 3 million workers. Biden highlighted the measure during a recent visit to Ohio.
But there are also skeptics. During a House debate Wednesday, Rep. Bob Goode, R-Va., called the measure another “Democratic bailout bill from the nanny state sponsors.”
“Why should the voters of my 5th Virginia district pay for someone else’s pension plan?” he said.
HOW DID IT GET HERE
When GM went bankrupt in June 2009 due to massive losses during the Great Recession, the company said it would not assume pension obligations for the Delphi division’s salaried workers – largely because it did not have an agreement with them as it had negotiated with unions at hourly workers.
Then the government’s Pension Benefit Guaranty Corp. assumed responsibility for the pension plan of 20,000 employed workers and reduced workers’ and retirees’ monthly benefits if they were greater than the statutory maximum benefit the agency was guaranteed to pay. As a result, the pensions of some pensioners were reduced by as much as 70%. But GM stepped in to cover union workers’ pension losses.
Those who lost benefits were 4,044 workers in Indiana, 5,181 in Ohio, 5,859 in Michigan and thousands more across the country.
While layoffs in bankruptcies are not uncommon, the Delphi workers argued that it was unfair for union workers’ pensions to be protected by GM while employed workers were left with permanent cuts to their pension fund as well as permanent cuts to their health benefits.
The settlement played out in conjunction with a deal negotiated by then-Treasury Secretary Tim Geithner and then-National Economic Council Director Larry Summers, who led a task force that poured millions of dollars into bailing out GM.
Part of the rationale at the time was the need to keep union workers from striking, while salaried workers were seen as more expendable.
A 2013 inspector general report said that while union workers had the influence “to prolong Delphi’s bankruptcy or strike, which GM believed would significantly affect its ability to survive, Delphi’s retirees had no influence other than what they hoped would be political influence.’
The report estimates that retirees lost $440 million in retirement benefits. In today’s dollars, retirees would need $900 million to be made whole.
In a 2011 op-ed in The Washington Post, Geithner said bankruptcy “means casualties on all sides — from managers, unions, shareholders, creditors and dealers.” But the intent was to “stop the American auto industry from collapsing” and causing a deeper recession that could cost tens of thousands of additional jobs.
Geithner declined to comment for this story. Summers did not respond to a request for comment.
In January, the Supreme Court rejected Delphi retirees’ efforts to have their case reviewed. The court effectively upheld a federal court ruling that the law allows distressed pension plans to be closed without court approval.
Kildee, one of the bill’s sponsors, told The Associated Press that the case was “particularly impressive because the federal government engineered the bankruptcy.”
Turner said during the House debate that the legislation is needed because “nobody else has had the White House pick winners and losers and take away their pensions. It is our responsibility as members of Congress to address this injustice.
WHAT THE WORKERS SAY
“The reality is that wage workers were elected and the government caused this,” said Bruce Gump, who lost 40 percent of his pension and serves as chairman of the Delphi Retirees Association.
“I was 57 when it happened to me and it was a tough time for it to happen at the bottom of the recession,” he said. “The fact that we’re finally getting the attention of the Treasury Secretary and Congress gives us some hope.”
Julie Naylor, a 68-year-old former nurse who lives in suburban Greenville, South Carolina, says restoring her husband’s pension and health care would mean she could afford essentials for her family. Her husband, Bruce Naylor, suffered a stroke after routine outpatient surgery caused by an undetected brain tumor. With her husband now paralyzed on his right side and with limited speech, Julie Naylor says without the health care he was promised, the medical bills have piled up.
Bruce Naylor is 6 feet 6 inches and too tall for his wheelchair. Julie Naylor says that if her family had the money owed to them through his pension, “I wouldn’t have had to wait on Medicare” to be approved for a chair that fits. “We could have just bought it with what was owed to us,” she said.
“We live a very strict life and a very insecure life,” she said. “I never thought he could lose half his pension and half his savings.”
WHAT NEXT
The legislation would require the government to “top up” Delphi workers’ pensions, as GM did for union workers.
Bill Kadereit, president of the National Retirees Legislative Network, said the workers’ fight in Delphi highlights the archaic nature of corporate bankruptcy law and how it can harm workers.
“In many ways, the federal government basically…
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