While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis
While America Aged illuminates the scope of the problem we’re facing, and warns that the worst is yet to come. With the narrative flair and talent for decoding financial ambiguities that readers have come to rely on, Lowenstein brilliantly chronicles three fascinating pension cases: the collapse of the over-obligated General Motors, the pension strike that halted New York City’s subways and effectively shut down the city, and the scandalous bankrupting of the affluent corner of Southern...
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From the bestselling author of Buffett, When Genius Failed, and Origins of the Crash, a wake-up call to the pension and retirement crisis facing America and the road map for a way out In While America Aged, bestselling author Roger Lowenstein explains how corporations and governments ran up ruinous pension and health-care promises to workers—promises that are now coming due and that will hit America like a tsunami if nothing is done.Negotiating high benefits means gambling with future finances—and when the farm gets sold out from underneath major corporations or public institutions, it affects all of us, and in ways we might not imagine. With his trademark narrative panache, Lowenstein unravels the truth about how pensions work in America and illuminates the impending crisis. While America Aged is comprised of three fascinating case studies— each an object lesson and a compelling historical saga. The first goes back to the early days of the United Auto Workers and its crusading leader, Walter Reuther, to tell the story of how pensions and health-care obligations destroyed the American auto industry, in particular General Motors.Lowenstein then shifts the scene to New York City to tell the story of the rise of public pensions and public sector unions through the vehicle of the Communist-led Transport Workers Union. Once again, justifiable benefits were followed by outrageous ones, such as the right to retire at age fifty. The saga reached a dramatic climax in 2005, when workers responded to proposed pension cutbacks with a massive strike that brought New York's subways and buses to a screeching halt days before Christmas.In the concluding episode, Lowenstein visits a metropolis even more reckless in doling out benefits—San Diego. Desperate not to impose higher taxes, city officials in this highly conservative enclave cut a series of deals with unions to short-change the retirement system and use pension funds to run the city. A massive scandal ensued—two mayors resigned, officials were indicted, and San Diego lost its bond rating. Lowenstein warns that the pension wars that erupted in Detroit, New York City, and San Diego are only the first. But he also recognizes that workers are entitled to decent security in their retirement—a critical problem as the country ages. While America Aged explains how we came to this crisis, and it also proposes a way out. Arming readers with knowledge of the consequences of doing nothing, While America Aged, first and foremost, a call to action. The New York Times - Jeff Madrick as Roger Lowenstein nicely illustrates in While America Aged, the country "is sitting on a retirement time bomb." He is not talking about Social Security, which, he writes, is among the more manageable of future concerns. He is addressing the large-scale failure of America's once-enviable private pension system. Lowenstein is one of the nation's most talented business writers, with a particular ability to make obscure financial issues clear as the morning light.
Pt. 1 Who Owns General Motors? 71 Walter Reuther and the Treaty of Detroit 92 The Anti-Reuther 39Pt. 2 The Public Freight 813 An Entitled Class 834 On Strike! 117Pt. 3 Debacle in San Diego 1535 Finest City 1556 Pension Plot 1757 The Bill Comes Due 195Conclusion: The Way Out 221Acknowledgments 233Notes 235Index 267
\ Jeff Madrickas Roger Lowenstein nicely illustrates in While America Aged, the country "is sitting on a retirement time bomb." He is not talking about Social Security, which, he writes, is among the more manageable of future concerns. He is addressing the large-scale failure of America's once-enviable private pension system. Lowenstein is one of the nation's most talented business writers, with a particular ability to make obscure financial issues clear as the morning light.\ —The New York Times\ \ \ \ \ Phillip LongmanHaving struggled for years to make my own writing on pension issues interesting enough for anyone to want to read, I particularly appreciate Lowenstein's use of real people to illustrate the deeper financial issues involved. Even if they sometimes contain too much detail, there is a kind of gripping, slow-motion train wreck quality to the long, sad stories Lowenstein tells about people and institutions in deep denial. And those stories certainly have a clear moral. Boiling it down to its essence on the book's final page, he concludes, "The most effective remedy—in pensions, health care, and even in Social Security—is to banish the credit card. Benefits should not be charged to a future generation; they should be paid for now." Sadly, though, even if we can refrain from borrowing more from our children, we will still bear the dead weight of past borrowing that now falls to us.\ —The Washington Post\ \ \ Publishers WeeklyAmerica's impending pension problem is brutally simple: private companies and governments have pledged to provide retirement income and health care for workers, but have not set aside the money to make good on their promises. Typical accounts of the crisis tend to obfuscate the issue and fixate on laying blame, but Lowenstein (Origins of the Crash) has a refreshing perspective-he tells three fascinating stories in American economic history and situates the current pension problems in the struggle for dignity for workers. Lowenstein regards fixing pensions as a worthy culmination to a century's struggle for justice rather than a painful chore unfairly foisted on the present by the past. Unfortunately, after this incisive and inspiring history lesson, the 10 pages at the end devoted to solutions are too abstract and unoriginal. The book gives the reader lively stories and historical insight, but may disappoint those looking for policy recommendations. (May 5)\ Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.\ \ \ \ \ Kirkus ReviewsLowenstein (Origins of the Crash: The Great Bubble and Its Undoing, 2004, etc.) probes a dangerous miscalculation made by American private and public enterprise: laying off responsibility for workers' pensions and retirement health benefits on some unspecified future. As baby boomers move into the retirement mainstream, the former Wall Street Journal columnist warns, the worst is yet to come. Examining how such situations evolved at General Motors, one of capitalism's former crown jewels, and in two of the nation's largest cities, he argues that confrontation-averse executives and pension trustees allowed hardball labor unions threatening crippling strikes to leverage benefit packages that were unsustainable from the beginning. Competitive pressures on the GM side and electoral politics in New York and San Diego also played their part in getting the unions attractive early retirement deals that, when workers began opting for them, brought crushing "future costs" closer than anyone had imagined. The GM story is perhaps the most tragic. In the late '90s, the company found itself with some 180,000 hourly employees on its payroll-and 400,000 retirees. Unable competitively to raise prices, GM cuts its dividend; stockholders, the company's nominal owners, begin to pick up the bill for retirees. In the cases of New York's Transit System workers and San Diego city employees, the same syndrome was made more sordid by political infighting and backroom deals. Others simply buried their heads in the sand. Former New Jersey Governor Christine Whitman, for example, bet that pension-fund investments in a booming stock market would cover unfunded liabilities-then the market went down. Some form of paidnational healthcare is inevitable for the future, says Lowenstein: "Business is global, and U.S. companies compete against foreign-based firms whose home-countries do pick up the tab." Fixing pensions, he notes, will be even tougher, but at minimum Congress needs to regulate 401(k)s, which were "essentially developed in a social and legislative vacuum."A chilling anatomy of one bad decision followed by another-and another. Agent: Melanie Jackson/Melanie Jackson Agency\ \
