While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis

by Roger Lowenstein

Overview

The retirement crisis facing America-and the road map for a way out-from The New York Times bestselling author of Origins of the Crash

In the last several decades, corporations and local governments made ruinous pension and healthcare promises to American workers. With these now coming due, they threaten to destroy twenty-first- century America's hopes for a comfortable retirement. With his trademark narrative panache, bestselling author Roger Lowenstein analyzes three fascinating case studies-General Motors, the New York City subway system, and the city of San Diego-each an object lesson and a compelling historical saga that illuminates how the pension crisis developed. Cumulative retirement deficits are approaching $1 trillion, and Lowenstein warns that these are only the first. Retirement pensions will continue to be a critical issue as the country ages, and While America Aged is the urgent call to action and prescription for reform.

Product Details

ISBN-13:	9781440639401
Publisher:	Temple Publications International, Inc.
Publication date:	05/01/2008
Sold by:	Penguin Group
Format:	eBook
Pages:	288
File size:	409 KB

About the Author

Roger Lowenstein, author of the bestselling Buffett: The Making of an American Capitalist and When Genius Failed: The Rise and Fall of Long-term Capital Management, reported for the Wall Street Journal for more than a decade and wrote the Journal’s stock market column “Heard on the Street” and also its “Intrinsic Value” column. He now contributes articles and reviews to the Journal and the New York Times Magazine and is a columnist for SmartMoney Magazine. He lives in Westfield, New Jersey.

Table of Contents

While America AgedIntroduction

Part One: Who Owns General Motors?

1. Walter Reuther and the Treaty of Detroit
2. The Anti-Reuther

Part Two: The Public Freight

3. An Entitled Class
4. On Strike!

Part Three: Debacle in San Diego

5. Finest City
6. Pension Plot
7. The Bill Comes Due

Conclusion: The Way Out
Acknowledgments
Notes
Index

Editorial Reviews

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.
—The New York Times

Jeff Madrick

Having 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

Phillip Longman

America'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.

Publishers Weekly

Lowenstein (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

Kirkus Reviews

" Financial journalist Roger Lowenstein uses the stories of three deeply encumbered institutions . . . as examples not only of the way most individual Americans conduct their personal finances, but also of how the country as a whole has long lived beyond its means. . . . Gripping."
Phillip Longman, The Washington Post

From the Publisher