Thanks for sending this article, Steve. (NY Times article copied below, discussing corporate bankruptcy as a strategy for cheating workers out of their pensions, and/or, transferring the contractual obligations of those pensions to taxpayers). This provides a good illustration of but one facet through which the 'conservative' Corporate Party considers that the only legitimate function of government is to act as a corporate welfare distribution system. This brazen, 'in your face', hypocrisy is overwhelming as we watch the Corporate Capitalists use the bankruptcy system to void union contracts, as well as transfer their pension obligations to us, (the US taxpayers), as they have, at the same time, slashed the bankruptcy protection available to ordinary citizens, ('ordinary' meaning real living people rather than 'corporate persons'). As a result of our brand new Personal Bankruptcy Law, brought to us by our good representatives (corporate lackies) in both the Democrat and the Republican Factions of the Corporate Party, if you are felled by a catastrophic illness, or your job is outsourced to India, (but two misfortunes that often befall real living people), and your bills and debts pile up as a result to a crushing and impossible burden, the government will no longer protect you. You will make payments on those debts, (and the government will assist the corporations in debt collection through garnishment), for the rest of your life, and the entire corporate system will heap shame on you at every turn, (every time you apply for credit, or try to rent an apartment, or try to buy an insurance policy, etc). But if 'you' are a corporation, all you have to do is 'declare bankruptcy', jettison your contractual obligations to your work force, dump billions of dollars in pension obligation on the US taxpayers, and 'presto', the value of your stock shoots up, your profits soar, you put truckloads of money in the bank, buy a new yacht, update your private jet, and build yet another private palace for yourself in some exotic location. If 'you' are a corporation, just 'declare bankruptcy', and you are off and running again in the so-called 'free market', free of your contractual encumbrances, but suffering no stigma of shame at all from the experience. Isn't this 'free market' wonderful?
[Just as an interesting aside as background, (I'm an old History buff), the basic tenets of the Bankruptcy Law that was just gutted by our vigilant Corporate Capitalist lackies in Congress, were written by Caesar in the first century B.C. Caesar, who was destined to be murdered by the aristocracy of course, was a great hero of the plebeians (i.e. the People). It's a complex story, as Caesar was also a ruthless conqueror, who captured and sold millions of Gauls (French) and Germans into slavery, but he also wrote Land Reform Laws that took land from 'latifundias', huge plantations run by slave labor, (and virtually all the slaves were Caucasians from northern and eastern Europe, btw), and gave it in small parcels to the unemployed plebeians (the People) of Rome and the peasants of the Italian countryside. He also was a great champion of the political rights of the Roman plebeians, (who were openly referred to as 'the mob' in the Senate), and of spreading the rights of citizenship to all the 'subjects' in the spreading Roman Empire, many of whom were, of course, Semitic Arabs and Jews, Persians, (although Persia itself was not conquered in his time), northern Africans, including the black Numidian tribes that controlled the areas both south and west of Egypt, which was itself still, back then, in the hands of Alexander's Macedonian descendents (Cleopatra was Macedonian). Caesar rose to power in a time that was, in many ways, very similar to our own. As naked and ruthless Imperialism became the accepted order, the excesses of Corporate Capitalism were losing all their bounds of shame, and were preying on the People with ever decreasing restraint.] One thing that I think this NY Times writer, Mary Williams Walsh, has wrong, is in reporting that, "And bankruptcy specialists say that it is almost certain to keep happening, because shedding pensions - and pensioners' health care obligations - is turning into an irresistible way to make a high-risk investment pay off." She mentions Carl Icahn, who many say provided the 'inspiration' for Oliver Stone's Gordon Gecko character in the classic film 'Wall Street'. Among many famous lines in this film, was one of the most hard-hitting, when Gecko tells his young protégé, Bud, "I don't take risks, pal. I bet on sure things." It is not through 'risk' that these 'vultures' make their money. It is through a web of inside information, influence in government, and corrupt cronyism in regulatory agencies, that these 'vulture investors', as Ms. Walsh calls them, rake in obscene truckloads of wealth, while adding nothing useful, constructive, or creative at all to the economy. This is the real 'story' here. It would be bad enough if they were actually making "high risk investments", but the reality is that this is a corrupt and crooked game of Three Card Monte, and they have all the winning cards up their sleeves. The Congress and the Courts are in their pockets, and their ole frat buddy, the 'Best Damn Liar in the Land', is in the White House. Mere citizens are nothing but 'marks' for them to fleece. The Left is failing to adequately construct its own message to counteract the power of the most basic bedrock of the 'conservative' message. 'Conservatism' has successfully convinced the citizenry that 'government is bad'. Katrina is giving us the opportunity now to 're-frame' and refine our message. The government is not the useless ogre that "needs to be drowned in the bathtub", that the Corporate Capitalists, (the bathtub quote is from Grover Norquist, a capitalist errand boy, not actually a Capitalist himself), paint it out to be. In the regard of the Basic Social Contract, the government is the only 'agent' capable of guarding the interests of the commonwealth, the interests of the Common People. Just as the government is the ONLY 'agent', the ONLY 'entity', that is capable of providing both protection and relief from disasters like Katrina, (which it has criminally failed to do, since it is in the unholy clutches of the Corporate Party that cares nothing about protecting the Common People), it is ALL that we 'the People' have to protect us from the unbridled predatory Greed of Corporate Capitalism. 'Conservatism' has been distressingly successful in 'selling' its message that 'government is bad'. And the progressive Left has done a very poor job of countering this with a basic and simple message that points out that when the protection of government is gutted by the 'free market' Capitalists, the Corporate Party immediately begins to steal the Common People, the US taxpayers, blind, in naked, abject, and blatant 'in your face' Greed. Bad government is bad, to be sure. And bad government is what we get when government is in the hands of the Corporate Party. But a Government, OF the People, BY the People, and FOR the People, is a government that will PROTECT the People, not only from foreign enemies and natural disasters, but also from the greater, and MUCH more immediate, threat of the ravages of unbridled Corporate Party Greed. They steal from us in broad daylight. They do it right out in front of everybody. The Savings and Loan Scandal. The Enron Scandal. This Bankruptcy Law travesty of Justice. They don't even have to hide what they do. They commit these crimes, then sit around their opulent tables and raise their glasses in laughter as they congratulate each other for their evil cleverness. And reporters at the NY Times write about it all in the newspaper, (this article Steve sent is from the NY Times), as if this is 'business', to be discussed over our coffee, after we check to see how our own stocks are doing. You can almost see their raised pinkies, as they lift their cups to their lips, and talk about this naked, blatant, brazen Corporate theft of our tax dollars, that comes out of every Friday's paycheck, in terms of 'business', rather than brazen criminal behavior. Of course the first thing this Corporate Party always attends to is gaining complete control of the Means of Communication. When you control the 'flow of information', when you own all the newspapers and TV stations, and especially when you have the citizenry tuned in intensely (hours each day) to the most powerful tools of propaganda and 'brainwashing' (cultural training) that has ever existed, you can get away with this shit. You don't hire reporters and writers who are going to call a spade a spade. You hire writers who are going to call using bankruptcy law to brazenly rob US taxpayers, to line already gilded Corporate coffers with yet more obscene wealth, a "powerful turnaround tool".(Chomsky explained this with consummate thoroughness in 'Manufacturing Consent') The 'Free Market'. LOL. (It's not really funny, of course, but JEEZ, how did we get this dumb?) We can all see, right out on broad daylight that this 'free market' is a crooked game. The irony that the People have been propagandized NOT to see, is that this 'free market' is the ENEMY of free enterprise. The 'free market is the ANTITHESIS of free enterprise. As we watch as Marx's theories are proven out before our very eyes, as we watch the natural and inevitable process as every 'free market' becomes dominated by oligopolies, if not outright monopolies, we also watch and see that not more than a miniscule percentage of the citizens understand what we are seeing. By their crooked game of Three Card Monte, supported by the smoke and mirrors of modern media, the Corporate Capitalists have the People believing that the 'free market' and 'free enterprise' mean the same thing. Even the poor folks who are actually victimized in the predatory 'free market', even all the Mom and Pop enterprises along Main Street in small town America that have been destroyed as WalMart has ascended the so-called 'free market', do not really understand what has happened to them. They do not really understand that in an unregulated 'free market', the behemoths always eat the small fry, and free enterprise is destroyed by oligopoly, if not outright monopoly. Anyway......I'm starting to 'rant and rave' here. Sorry. Thanks again for sending this, Steve. Good Government is the only friend the People have to protect our interests and position in the Basic Social Contract. This Basic Social Contract has not had a major review or revision since 1215 (the Magna Charta). Lenin and his buddies tried but failed. A lot of folks around the world are pressing for re-opening negotiations of this biggest and most basic 'Contract' of all. The Magna Charta grabbed the King by his throat and forced 'contractual concessions'. Time to put our own chokehold on the Corporate Capitalists. At least once every millennia or so, we ought to re-open 'negotiations'. It's been eight centuries now since 1215. That's long enough. Time to take government back from the clutches of the Capitalists, and make it the guarantor of the interests of the People in the Basic Social Contract. RZ PS: Brother Steve Zeltzer posted the NY Times article on the Labor Action Coalition list-serve. I am sending this reply (which includes the article being discussed below) to other trade union lists, as well as to many folks who attended the Take Back Our Unions Conference in Chicago this past July. Hopefully this might initiate discussions on other lists, and of course, the Labor Action Coalition is open for membership ( [EMAIL PROTECTED] ) if any want to make a reply or add comments here. ----- Original Message ----- From: steve zeltzer To: BALA1 Sent: Tuesday, September 20, 2005 8:39 AM Subject: [laborcoalition] Corporate Looters Making Billions Ripping Off Pension Plans http://www.nytimes.com/2005/09/18/business/18pensions.html ------------------------------------------------------------------------ September 18, 2005 Whoops! There Goes Another Pension Plan By MARY WILLIAMS WALSH ROBERT S. MILLER is a turnaround artist with a Dickensian twist. He unlocks hidden value in floundering Rust Belt companies by jettisoning their pension plans. His approach, copied by executives at airlines and other troubled companies, can make the people who rely on him very rich. But it may be creating a multibillion-dollar mess for taxpayers later. As chief executive of Bethlehem Steel in 2002, Mr. Miller shut down the pension plan, leaving a federal program to meet the company's $3.7 billion in unfunded obligations to retirees. That turned the moribund company into a prime acquisition target. Wilbur L. Ross, a so-called vulture investor, snapped it up, combined it with four other dying steel makers he bought at about the same time, and sold the resulting company for $4.5 billion - a return of more than 1,000 percent in just three years on the $400 million he paid for all five companies. Two years later, as the chief executive of Federal-Mogul an auto parts maker in Southfield, Mich., Mr. Miller worked on winding up a pension plan for some 37,000 employees in England. The British authorities balked at the idea, fearing that such a move would swamp the pension insurance fund that Britain was creating; it began operations only last April. But the investor Carl C. Icahn has placed a big bet that Federal-Mogul will pay off after the pension plan is gone; he has bought its bonds at less than 20 cents on the dollar and is offering money to help the insurance fund. He, too, stands to make millions. Now Mr. Miller is at Delphi the auto parts maker that was spun off by General Motors in 1999. If past is prologue, one of the most powerful turnaround tools at his disposal will be his ability to ditch Delphi's pension fund. He did not return numerous telephone calls seeking his views for this article, but in the past he has said that his first priority at Delphi was to "resolve" its "uncompetitive labor cost structure." That includes the roughly $5.1 billion gap between the pensions it has promised employees and the amount it has put aside to pay for them. If the obligation to make good on Delphi's pensions eventually lands, in whole or in part, at the door of a governmental guarantor, few should be surprised. The Pension Benefit Guaranty Corporation has become an increasingly popular option for private-capital funds and other investors who are seeking to spin investments in near-bankrupt industrial companies into gold. The key is to shift the responsibility for pensions, which weigh as heavily as bank loans on a company's balance sheet, to the pension corporation. The same financial alchemy has been performed at Polaroid and US Airways, at textile companies like Cone Mills and WestPoint Stevens, and at a host of smaller companies over the last four years. And bankruptcy specialists say that it is almost certain to keep happening, because shedding pensions - and pensioners' health care obligations - is turning into an irresistible way to make a high-risk investment pay off. "It's become a kind of system to bail out companies," Thomas Conway, vice president of the United Steel Workers of America, said of the pension corporation, which Congress created in 1974 to protect retirees if their employers went bust. "People have been able to use it tactically, as a business strategy, and I don't think that's what Congress meant." Over the long term, the rate of defaults is clearly rising, said Lynn M. LoPucki, a professor of law at the University of California, Los Angeles, who has tracked the large companies that have shed their pension plans while in bankruptcy since 1980. Less obvious is precisely how the trend will ultimately affect retirees, who sometimes have their pensions cut in the process. The cuts appear to be hitting more and more workers, but the government has not calculated how many since 1998. Nor is it certain how the trend will affect taxpayers, who may wind up on the hook if the rising tide of failed pension obligations overwhelms the resources of the pension corporation. A year ago, when the agency last reported its balance sheet, it had $39 billion in assets and $62.3 billion in liabilities, leaving a shortfall of $23 billion. The Congressional Budget Office on Friday estimated that the deficit will widen to $86.7 billion by 2015 and $141.9 billion by 2025. Mr. Ross, the investor who picked up the five dying steel companies, said he also thought that the current practice of sending failed pension plans to the federal guarantor "needs some reforming." But, he added, the private sector was not to blame. "If we're going to continue defined-benefit pension plans at all," he said, "I really think we need to look at who enforces the rules, what the rules should be, and why there isn't a meaningful, risk-based system." In a risk-based pension insurance system, companies that run failure-prone pension funds would pay higher premiums than the companies that manage their pension plans more conservatively. But instead of charging more, the government has been waiving the pension rules, he said. "When you start giving people waivers," he said, "you're creating a time bomb." Like defaulting on a loan, terminating a pension plan significantly lightens a company's balance sheet: the business instantly becomes more valuable because it does not have to use its cash flow to pay for past mistakes. But defaulting on a loan affects the lender, who presumably vetted the borrower and charged interest commensurate with the risk. Defaulting on a pension, on the other hand, affects the pension corporation, which is required by law to accept a low premium unrelated to the risks it takes. James A. Wooten, a pension-law historian who is a professor at the University at Buffalo Law School, said that Congress knew it was creating an imperfect system when it established the pension corporation in 1974, and that it expected to make improvements later. The bill was highly contentious, and Congressional leaders struggled mightily to achieve compromise in the last chaotic months of the Nixon presidency, with the Watergate scandal roaring around them. In the beginning, they set pension insurance premiums at a token $1 per employee. Today, the basic premium is up to $19 a head, but Congress has found it hard to raise the rates even remotely enough to cover growing claims. Some companies have warned that if they have to pay more for their pension insurance, they will stop offering pensions. "They took cautious steps, and those cautious steps weren't enough to prevent the abuse of the insurance program," Mr. Wooten said. "Once there's insurance, you have an incentive to run up liabilities to get more out of the insurance." MR. MILLER'S arrival at Delphi in July, and the intense labor negotiations that have followed, are signals that the auto parts industry may be in for a long cycle of bankruptcies and restructurings, like those that reshaped steelmakers and are beginning to transform airlines. "Something has to happen to all of these liabilities and cost structures," said Mr. Ross, who has said that he may invest in Delphi, the world's largest auto parts supplier, after those changes are made. "Delphi needs to sort out these complicated relationships before anybody will buy it. Something has to change." Delphi isn't the only troubled automotive company to catch Mr. Ross's eye. He has also expressed an interest in Collins & Aikman, a manufacturer of automotive interiors that is already in bankruptcy, and he recently invested $30 million in a French auto parts maker, Oxford Automotive. But because of Delphi's size and its relationship with G.M., its former parent, any big cuts in its so-called legacy costs - mainly pensions and retiree health care - would send reverberations through the auto industry. No one says it will be easy for Mr. Miller to cast off Delphi's pension plan - it never is - but he was dealt a good hand when he came to the company. Not only would the federal pension guarantor end up with at least part of Delphi's plan if the company went bankrupt, but the company could also rely on an unusual promise that G.M. made to the United Automobile Workers seven years ago - in far better times - that it would take over any part of the Delphi pension plan that the pension agency refused. Generally, the agency caps pension payouts at about $45,000 a year, to workers who are 65 when the plan fails. For younger workers, the limits are a good deal lower. G.M.'s involvement means that Delphi workers - unlike many unlucky employees of Bethlehem, United Airlines and Polaroid - might not lose any benefits if their plan were taken over by the government. (G.M. also promised to assume all medical costs for retirees if Delphi faltered, an obligation estimated at $9.6 billion. Securities analysts have been parsing the language of the promise, trying to determine if G.M. must really shoulder this entire amount, and the extent to which Delphi would have to pay G.M. if it rebounded later. G.M. has its own heavy obligations to retirees and can ill afford to take on more.) Savvy investors know that the existence of these two guarantees gives Mr. Miller great power - the right, if he needs it, to make someone else pay Delphi's large and growing debt to its work force. If he plays his hand skillfully, Delphi could end up shedding billions of dollars of debt without depriving unionized employees of any promised benefits. To unload the pension fund, however, Delphi would have to declare bankruptcy; a company cannot send an unwanted pension plan to the government without first persuading a bankruptcy judge that it cannot otherwise survive. And if Delphi is to file bankruptcy, it may have to decide quickly. New, stricter bankruptcy laws take effect on Oct. 17, and companies that declare bankruptcy after that date will face a range of restrictions on how much they can pay in executive bonuses and on how long they can take to work on their reorganization plans. Mr. Ross said that he was not privy to the negotiations at Delphi but that he thought it likely that Mr. Miller would declare bankruptcy before the law tightened. "Delphi's a big company," Mr. Ross said. "I think he'd be very concerned about his ability to retain a whole management team there" if he could not pay bonuses. And controlling the schedule for reorganization is an important tool for debtors negotiating with creditors. "I would be shocked if he would give up the leverage that that tool gives him," Mr. Ross said. But other analysts speculated that Mr. Miller might well delay a bankruptcy filing past Oct. 17 because he could win wage concessions from the union if he kept the pension plan going. "The carrot that he has to offer is, 'If you keep working for an extra year, you get more benefits, and those benefits are more valuable to you because those benefits are guaranteed not by us, but by G.M. and the P.B.G.C.,' " said Jeremy I. Bulow, a economics professor at Stanford. "That's something Delphi can use as a negotiating tool." While that may be good news for Delphi, its workers and its shareholders, it could be very bad news for G.M., the pension agency - and perhaps, ultimately, taxpayers. "The policy problem is that we let companies get this deeply in hock to the federal government," Professor Bulow said. "It's kind of a rolling the dice, a heads-I-win-tails-you-lose kind of thing." COMPARED with Delphi, Bethlehem Steel looked grim when Mr. Miller arrived in September 2001. Like other big integrated steel makers in the United States, Bethlehem had been fighting a losing 20-year battle with foreign competition and low-cost domestic mini-mills. "I came here to find a way not to file for Chapter 11," Mr. Miller said upon his arrival. But by mid-October, Bethlehem was in bankruptcy. The company was being killed by its legacy costs - the accumulated promises to retirees it had been making for decades. Bethlehem had whittled down its work force over the years in an effort to cut costs, but by doing so it simply created more retirees to whom it owed pensions and health benefits. By the time Mr. Miller took over, the company had some 95,000 retirees and just 12,000 active workers to generate enough revenue to pay their benefits - a hopeless proposition. Retiree health care alone was costing Bethlehem about $125 million a year. In the 1990's, the stock market boom made its pension fund look healthy, but when the boom ended and the pension funds' assets fell, the company had to make up the difference. By November 2002, Bethlehem faced liquidation. That is when Mr. Ross stepped in. A big concern then - as it is now at Delphi, the airlines and elsewhere - was the pension plan. When the time came to turn it over to the pension agency, officials there realized that Mr. Ross was poised to set off as much as $550 million in extra "shutdown" benefits - available only to workers idled by a plant closing - by briefly shutting some operations before taking over. The government would have to pay the workers' basic pensions in any case; federal officials thought that if the workers were to get any additional money, it should come from Mr. Ross. (Shutdown benefits are an option that is also available to Delphi.) Steelworkers applauded these arrangements, but the pension corporation seized Bethlehem's pension plan before Mr. Miller had the chance to shut down operations and activate the extra benefits. The union, Mr. Miller and Mr. Ross all complained, but Mr. Ross nonetheless found enough additional money to offer retiring employees $50,000 buyouts and to set up a trust fund to pay for LTV and Bethlehem retirees' health insurance. "We felt a moral obligation to those workers, even though we had no legal obligation," Mr. Ross said. In the end, what bothered Mr. Conway, the union leader, was not so much Mr. Ross's inability to wring more money out of the pension system or his remarkable profit on the deal. What troubled him, he said, was that the country seemed unable to take any lessons away from the demise of the steel companies and how it affected so many working people. "It just staggers us that America's not caught on to what's happening to it," he said. "Here's Ford and General Motors, now competing against a lot of U.S.-based transplant companies that have no obligations to any work force," Mr. Conway added, referring to the nonunion factories that Toyota BMW and other foreign-owned car companies have built in the United States. "That's a tremendous advantage. How does a mature American industry that has obligations to its work force compete with that?" Because global competition is driving the trend, Mr. Ross said the country should look for a new way - maybe a value-added tax on imports - to bolster the pension-insurance program or to provide health care to retirees. He said he had suggested this approach to some members of Congress, but in vain. "So far, they've really seemed more interested in lashing out at China," he said. For now, people approaching retirement are left to hang on and hope. "What happens is, typically, you've got a boat that holds 40 and you need seats for 50 and people are all trying to hold on till the end of their career and get their promise," Mr. Conway said. "We frankly don't know how to do it, if there's no other assistance out there to help you do it. The P.B.G.C. isn't the solution." SPONSORED LINKS Labor unions Union labor law Union labor life insurance American labor union History of labor unions Labor union poster ------------------------------------------------------------------------------ YAHOO! GROUPS LINKS a.. Visit your group "laborcoalition" on the web. b.. To unsubscribe from this group, send an email to: [EMAIL PROTECTED] c.. Your use of Yahoo! Groups is subject to the Yahoo! Terms of Service. ------------------------------------------------------------------------------ [Non-text portions of this message have been removed] ------------------------ Yahoo! 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