The Ed Show | November 19, 2012
>>> thanks for staying with us. hostess brands went to bankruptcy court today. they want to fire more than 18,000 workers. some broke the news with a few laughs.
>> it's a sad day for america.
>> i'm just going to save mine for 12 years when it will still be good.
>> share the wealth there.
>> it makes you want to go buy all of the twinkies in the grocery store.
>> can we have a quick thoughts of twinkies in your life?
>> all these rich media people, it's easy to talk about twinkies in the gold old days. the real story , i don't think it's funny. it's about 18,000 workers who just found out that they are going to get fired just before the holidays. many have worked at hostess for more than a decade. their bosses asked for 8% pay cut and a 17% cut in benefits. some workers would have to give back at least $2,000 a year. this is the second time in three years hostess has asked its employees to cut their salaries and sacrifice benefits to keep the company going. now the union is getting blamed.
>> the union preferred killing the company to accepting what they thought was a bad deal.
>> . the brand has value. someone will guy bye it and manufacture in a right to work state where they don't have to operate under 372 collective bargaining agreements.
>> george will , i why don't you work for their wage and see how it it feels. hostess has been going broke for a long, long time under poor management. hostess is facing its second bankruptcy. at the same time, the ceos of the company, he gave himself a raise. he's making $2.25 million a year. other top executives got hefty pay raises too. while the company suffers, what happens to the fat cats on the top? they get paid more. the republicans are blaming the workers. hostess declared bankruptcy in 2004 with $450 million in debt. most companies pay off their debt in bankruptcy. they only got deeper. they laid off 20% of the workers. hostess stopped paying into the pension fund as well. now the company is $1 billion in debt and it's back to threatening employees and begging for bankruptcy. here's the most shocking part of it all. hostess attorneys said they want to fire 18,000 employees at the same time they want to pay out $1.75 million in incentives to 19 senior managers. that's because they did such a hell of a job. they did such a fantastic job they should get bonuses while the company goes under. the judge was not pleased. he ordered them into private mediation with the employees. apparently hostess completely skipped mediation before announcing it would close up shop. tonight analysts predict that hostess will sell its twinkie brand name to a better company. in the end, breaking up the union just because they think that's really good business. one investor wrote, shedding the supp supp complications of the union -- it's not just about jokes. it's about big bucks and union busts. it's about 18,000 workers who say they have give up some pay, work extra shifts and wish for better management.
>> they are taking all the money. they are gone. they want to get money and get out.
>> we took an 80% pay cut to keep the plant open to we were able to have a job and work. but as you see, that didn't help either.
>> they watched it ride into the ground. they took the concessions from the last go around and just squander that money away.
>> this company just wants to rip this union apart. they are not going to take it.
>> the twinkie brand name will probably survive. 18,000 workers are out of luck. at least it appears that way right now. joining me is matt taibbi . what's your moral compass here when management at the top is expecting bonuses, yet workers are supposed to go home with nothing.
>> this follows a familiar narrative that wean seen a lot in america e. in this case a private equity firm comes in and takes over after a bankruptcy. they borrow a ton of money. so now you have a company that in its first bankruptcy was $450 million in debt. now it's $1 billion in debt after it was taken over. so the company didn't wipe out its debt, it doubled its debt. but in the end, they are not blaming all that debt for the company's problems. they are blaming the workers and their pensions and benefits which remains static throughout this entire time. it's part of the mythology we have to blame the workers for wants benefits and a living wage .
>> could taxpayers wind up paying the unpaid pension fund ?
>> that's a possibility. one of the maneuvers that we have seen a lot from these financial companies, and this happened with friendly ice cream and eddie bahher, you have a bankruptcy and the pension gets peeled off and gets assumed by the pension benefit guarantee corporation , which is a federally-ensured insurance compa company. and they would assume part or all of the pension obligation and then once that happens, once you have peeled off the pension, then the asset becomes more attractive to new buyers and they take over the company.
>> these workers on fixed wages and fixed benefits, they are not in charge of sales, they are not in charge of product development . they are the workers that make the product and do all the things. yet in so many of these cases, they end up getting the blame. it's all their fault. they are the reason why. this is the bain model of capitalism.
>> absolutely. bain did a lot of deals like this. they peeled off the pension fund a couple times. there was a gas company, i believe, they were involved where they did the exact maneuver. but one thing that everybody agrees about with hostess and with these products like twinkies, everybody likes twinkies. there's nothing wrong with the product. they are suffering because of the health craze, but there's still a healthy market for the products. they are putting out a good product. it's that management has been incompetent and it's unfortunate that the narrative has shifted the blame to the workers.
>> appreciate you joining us.
>>> coming up shs the latest installment in john mccain 's quest to stay relevant. now he's demanding a television apology from susan rice .
>>> and later it's been two weeks since the election and alan west refuses to let democracy run its course. stay