washington wasn't a college guy. he's very impressed by webster, he said that's a very interesting idea. and he's a great delegator and he says i'll give it to madison and webster's pamphlet becomes instrumental in the constitution and in 1787, webster is at constitutional convention, again, these these moments are moving into move and shaker movements and he's at the conventional convention as soon as washington arrives the first thing he does is knock on webster's door. he's washington's policy wonk. he's not there as a journalist. and the so-called convention men realize his talents and right after the convention they ask him to draft a pamphlet in support of the constitution. he does that and historians have compared that pamphlet to the federalest papers and it may well have been more influential

because webster's pamphlet was circulated around the country. .. >> i don't know what your image of a retired meatpackers is, but i suspect most people think they are a pretty tough law. i went out to this family diner on the edge of town near a bowling alley where the guys and

their wives would get together every month or so over the meatloaf special, say their prayer, read off a list of people who died that month, if any, and there to do chitchatting, mostly social. one of the things that kept coming up with them was the struggle they were having because their health benefits had been cut. these were benefits they have been promised decades ago. to give you an example, one of the fellows there named clayton had started at hormel meatpacking plant right out of high school in the '30s. like a lot of the guys, he left to go to the second world war, survived and came back, and then he worked another 30 or 40 years there at the plan. retired to enjoy his remaining life. clayton was secure. he had attention he had earned. he had retiree health benefits. these guys, there were millions of these guys out there, and

women, who had earned maybe a trillion dollars in deferred pay, which is essentially what a pension is. it is deferred compensation. they earned pensions, health care, promised death benefits and life insurance. these were not gratuities. this was pay. they retired and then starting in the '90s mostly they started getting notices telling them we are really sorry but we can't afford to pay these benefits. it's just too expensive. and they pretty much accepted that the companies were struggling. who questions when companies say retirees are expensive? it's sort of something that seems, you just can't question it. about the time i was meeting with these guys in washington there was another meeting going on. there were pension experts getting together to talk about a terrible pension problem they were having. the big problem was, there was too much money and pension plans.

this might seem surprising now with all the talk about underfunded pensions, but at the time in the late 90s there was a quarter of a trillion dollars surplus assets in pension plans of $250 billion. what was the problem? from the company's point of view the problem was that it was just a shame this money was locked up, company couldn't use it for something. and while have been enacted back in 1974 that said you have to find your pension plans and you have to keep your hands off the money. congress enacted this law because through the '50s and '60s there have been many abuses. there were famous debacles like studebaker which went bankrupt and people lost a lot of attention. congress put this law in place that said if you offer pension which, of course, is voluntary you have to fund it, keep your hands off, let it grow. this law work so well that by the 1980s there were huge

supplies in many plants. companies like ge, which to this day has never put a set more into its pension plan, not since the 1980s. you had this growing amount of surplus, and then along came a bunch of pension raiders who saw these companies with fat pension plans and said let's kill, you know, the plan often take over the company and then we can take the surplus. that was going on. you probably heard about this at the time. lots of companies were being taken over. the pension plan was being killed and many retirees were losing some of their pension. congress stepped in and said you can't do that. we're going to put an excise tax on this. you can't take surplus. they put that in place. before the ink wasn't dry employers and their lawyers and consultants were working together to to work out how can you get around this inconvenience?

because they still wanted that surplus. what people didn't realize was that through the '90s employers had developed a number of ways to tap the surplus. one of the most common was during restructuring your they had hundreds of thousands if not millions of older of workers in their 50s, our 60s would've been at the company decades. they were expensive. they were interpeak pension earnings years, and this was the population you want to get rid of so they use billions of dollars of surplus to help finance restructuring. he didn't use it to pay cash severance because you're not allowed to do that. instead, they called it an incentive benefit of some kind here for example, used $3 billion to get 25,000 of its management employees to leave. and you have a companies doing this and billions of dollars were going out of the plants. this was saving the company cash

because they didn't have to come into the corporate coffers to pay for it. they just use pension assets. meanwhile, you at companies like dupont which have pioneered this technique of taking money out of the plans to pay for retiree health benefits. again, this saved the company's cash because they didn't have to reach into the coffers to pay for the health care. so you think -- you now have two things going out. money going out to pay for the restructuring and money to pay for the retiree health. that's a lot of money going out the door. to give you an example of how much, bell atlantic which took 3 billion been merged with gte and became verizon, and subsequent the company took 5 billion more out of the plan in the 2000s 18 to pay for restructuring. unfortunately, this tendency, this practice was very popular with companies that were in financial trouble. so take the airlines, united and delta, u.s. air. after september 11 disaster they

were going downhill and they tapped the pension plan a number of times to take billions out to pay, to layoff people. they were using it for that. gm, ford, delphi, the spinoff, again they were also taking a billions even as we were headed into disaster. so meanwhile, as this was happening there were yet other ways companies were pulling billions out. v. of the ways are even harder to find out about. what they were doing was selling pension assets because in this world of mergers and acquisitions, they realized you could actually monetize the assets in pension plans. the way to do it is let's say you're selling agent, they will send over 25,000 retirees and employees, you send over the pension to pay for it but you send extra, maybe 100 million. and a buyer pays you for that, patient may be 7 cents on the dollar so you will get 70 million.

you got 70 million free money for that. the buyer is happy because they get something worth 10 million, only paid -- he paid 70 million for something worth 100 million so they're happy. who is not happy? well, the pension plan is less well-funded now. so you take this strategy, and there are many, especially at the defense contractors, you do this any number of times, no one is watching it. it's not disclosed anywhere usually. and you have just buckets of money going out the door for this sort of thing. meanwhile, there was even another way they were taking money out. this was to pay for executive parachutes. in some cases it was a minor amount like royal sun alliance which was and ensure that decided to lay off a bunch of people, and by the way, we're going to give the h.r. folks and executives some extra money out of the regular plan. this wasn't really a legal thing

to do but thanks to a loophole that they develop they were taking money that was set aside for regular employees and putting it over on the executive side. so this was going on as well. you had all these things happening, drawing assets out of the plan, people were not paying attention though because the bull market was going on so a lot of money, the assets were rising. people were not aware. but employers realize this is a really good gimmick. to be able to use the pension plan like a piggy bank, so they wanted to actually continue to be able to do that but the way they were able to postpone the impact was to cut benefits. because if you cut benefits, that's what money that states in the plan that you can pull out and use later for other things like paying executives or selling it. so you had in the '90s these

waves of pension cuts countries like ibm and at&t, large companies where again the larger older workforces in their pension earning years. people didn't know their pensions were being cut because that employers use strategies that worked very hard for the regular person to proceed. to give you an idea, generally if anyone figured it out it was an engineer because engineers are very numbers oriented. to get hold of the plan, the document and said, how exactly, how is my pension changing? you would know from what the employers told you because they said we are improving the plan. we're going to get rid of this old-fashioned pension plan and give you a better one. it will look like a 401(k). instead of this mysterious formula that year's average pay, we are going to instead give you something that looks like an account and you can take it with you when you go. so this was going on for years

before finally, enough people figured out what was happening was this formula was away to hide the fact that their pensions were being cut. i as much as 20-50%, especially for older people. being cut in two ways. not only growing as fast but for a lot of older folks the pensions were frozen altogether, sometimes for years. and if you think it was, it's harsh to say the companies hid it, i would point you to cigna which found itself in federal court over this very issue when it's retirees sued. because as it turns out sega had a number of documents in which they detailed their efforts to keep these practices hidden. they didn't want to provoke an employee backlash so the idea was we just won't let them know the benefits are being cut. and they celebrated afterwards, congratulate themselves on how effective this was because employees didn't notice. so there was an element of

deception throughout this process. so what you are having been are all these companies cutting benefits so they can pull the money out and continuing to pull the money out. but there is another reason they were cutting benefits, even as they have these massive surpluses. they were doing it because of changes in accounting rules. this may sound incredibly dull and hard to grasp, but all you really need to know is this. in these accounting rules changed in the early '90s, it said companies, if you're going to promise pensions, we have this big liability, you have to put it on your books. of pension is a debt so it's like putting a great big debt on the books. so if companies did this and naturally they were sat at the time because who likes to have a big debt going on the books? but secretly i think they were thrilled because what happens when you take away some of the debt?

got a debt, generate games. these games go into profit just like profits selling trucks or software. so what happened was that suddenly you had this trillion dollars owed to retirees both for pensions, retiree health care, also for life insurance and other things. and the plans became cookie jars for companies. they realize if you can cut the benefits, even if they're not costing you anything, even if you're not really planning to pay them out anyway, if you cut them you get not only to keep the money, which is wonderful, but you you'll be able to generate profit to boost earnings. so what was going on in the '90s and into the 2000s is billions of dollars were being converted into profit for companies. it was going straight into income. at some companies at some quarters it was the only income they had. so as this was going on you

could see that the plans were morphing into profit centers so there were a source of cash, a source of earnings. unfortunately, for retirees and employees, there was yet another thing going on at the time. this coincided with a shift in executive pay. instead of just giving executives great big salaries, companies were changing to more performance-based for tax reasons. so a lot of executive compensation now is being tied to earnings, you know, if the stock went up so will your bonus. suddenly executives pay had a direct connection to earnings. and, of course, executives that were green lighting these moves to cut benefits whether deliberate or not were boosting their own pay. and we've heard plenty about how pay for executives has gone up so dramatically over the past 15, 20 years, but what was also happening was that as the day

grew, companies -- executives were differing it. so companies were essentially putting their executive pay on ebay credit card. it's no different from a pension liability. so as companies cut pensions for lots of people, the pensions for executives were growing. not just the pensions, but their pay. their pay was a liability and their pensions were a liability. i've seen some companies where the executive liabilities are here and the regular liabilities are here. this constant change. it's not going the other way. it's going this way. and people didn't notice that a large chunk of pension obligation is for executives. because companies can put all these numbers together. even if you look at the 10-k which few people do for this, you will see a big number and you will assume pensions are costly. you at companies like gm and

ibm, everyone sink our pensions are costly. but at some companies that they cost was for the executives. and it still is because it's growing. so with these two trends you had this almost unstoppable machine with the pensions and health care were just waiting to be trimmed, and companies could control when they were taking money out and control when they were cutting. and this process enables them to use the plans essentially cannot manage earnings. if you need to h.r. and target of 2 cents a share, you knew exactly you need to cut on the retiree site to get that 2 cents a share. and companies have great control over it because they can change discount rate, a number of other assumptions to make the debt to up or down. so this has been going on and it explains a lot of what was happening the retiree plans. and where it became really

tragic is with retiree populations because we've seen how retirees are often very helpless. in this process companies of course were moving retirees around, if they sold the unit or bought a unit. so the retirees, like a resource for companies. they were like a portfolio. you have the debt which is what is owed to them, and you have the assets which is the money in the pension plan, and sometimes in these retiree health care trust. debts and assets, and with this combination portfolio, if you're the buyer, now the justice portfolio of retirees, your incentive now is to try and monetize that in some way. if you want to cut the benefits, you going to get some profit out of it. so perhaps a company that impressed me with the most aggressive ability to do this was loosened which was at&t

spinoff. at&t spun off all of its western electric, bell labs and a lot of at&t retirees into this and back in the late '90s. so loose and start out with this 103,000 retirees. but it also started out with more than enough money to pay for every single one, the health care and the pensions. if they got that, too. but over the years, they started to continue to cut retiree benefits. they cut bit by bit here and there, union, salaried, everyone was getting hit. and by doing that they're keeping a hold of the money which was boosting their earnings. and that was one company where in many quarters the only income was from retiree benefit cuts. this wasn't sort of equal paying situation. to give you an example, one of

the more obvious cuts that lucent did was to cut the death benefit. it told the retirees you know, we've promise you or your predecessor companies have promised you this benefit. maybe they promised to you back in 1950 or 60 or 70, whenever, and it's going to be the equivalent of your final year salary. a lot of people counted on this. they were expecting they would have 30,000, 40,000, whatever their final salary had been. so what lucent did was to tell people we can't afford to pay that. i know that your prior employer promised that you. we just can't afford it. so they cut the death benefit. and people sort of accepted it. they were unhappy. they figured of course, lucent is struggling. we need to just bite the bullet. but the very same year they also paid out 400 million in bonuses. so 400 million being cut from retirees, 400 million going into

bonuses. so this process of cutting retiree benefits and increasing executive benefits what sort of a parallel process. what might surprise people also is the lengths to which companies have gone to try and finance those executive benefits. one of the things they were doing was using loopholes to tap the regular pension plan to take money out of it, to pay for executives. and this has been going on at many of the major companies, and it's still going on. it's contrary to the intent of concrete which says if you have a regular -- intent of congress. you have to treat everyone the same. you can have a special deal where so it can come in and get another 100,000 out of the. so this continues to go on. meanwhile, another more colorful effort to finance executive pay, what i was surprised to find was that the companies were taking

out billions of dollars in life insurance on their workers here and using the policies as like giant iras, like tax shelters. they could put a lot of money in. it would grow tax-deferred, and then ultimately win the retirees or employees were ex-employees died, the death benefit goes to the company. now, some people heard about this back in the '90s, because it was going on then, and many had assumed it stop. but actually it didn't. it actually increased. companies have continued to buy billions of dollars in life insurance on the employees. and the biggest buyers were banks were buying billions during the subprime crisis because bank executive pay of course is bigger than anything else out there. so there are these portfolios of life insurance on workers that would boggle the mind, and if you may wonder how your employer

or former employer keeps track of when you die, it's simple. they will just look at the social security death index that comes out every month, due a run, hit all the social security numbers and figures -- figure out who died and put a claim in with the insurer. so this is just to give you an idea of the kind of things companies have been doing with the plants. and the effort, the affect of it of course, constantly put pressure on the retirees. it's to create an impression that the plaintiff gets really expensive, and so that explains to retirees why they don't want to continue to pay the benefits. but the plans to continue to be very profitable. a lot of pensions now are frozen, like verizon, dupont, many of these companies, ibm. they have frozen the plants. so they are not going for anyone anymore. they have sort of reached a

point where once the markets went down, there wasn't enough surplus, not enough asset anymore to protect the plan so they become underfunded. so this was not an accident. it wasn't something that had to happen. the planes have big surpluses, now they are underfunded. and companies continue to lobby for the ability to take more money out of the plans for these various purposes. usually explain that it is good for retirement security, that they have this flexibility, but it continues to have an effect on retirees and employees. to continue to protect their inability to take these assets out, companies have been very aggressive in the court system with finding ways to fight the retirees but try to fight back.

so you've seen many cases end up in the court, both over pension cuts which have been challenged by many retirees, and retiree health care cuts. companies have been extraordinarily aggressive with techniques such as suing retirees, especially if they aren't union retirees because they have a contract. and if you have a contract, it's a little tougher for the company to just say we're going to discontinue your coverage. so what they have done is they will sue a retiree come get them into court before a judge that his head some pro-business rulings in the past, and try to argue to the judge that you really need to cut the benefits because they are very expensive and the company can't survive without it. and in some cases they had used arguments like yes, we promised lifetime benefits, we didn't mean your lifetime. we met the life of the contract.

so this actually worked with some judges and people lost their benefits. so if you feel somewhat beleaguered, this gives you a backdrop as to what's been going on, and with that i invite your questions because i suspect you might have some thoughts about some of this. anybody? yes. >> i am wondering if, you know, you mentioned this is contrary to the intent of congress. this is not what they meant when they passed erisa and had this move forward. they're trying to protect the plan participants. why, do you have any sense as to why congress hasn't acted to clarify if there is a law or close loopholes that would prevent this, these kinds of practices?

>> i think there's been such a strong argument made to congress by employers and the retirement industry that these loopholes need to exist. and mind you, they don't call them the polls. but these practices need to exist in order for the companies to maintain flexible the. this always seems to resonate if you go to congress and say look, don't tie our hands with this, don't have burdensome regulations because if you don't let us pull money out when we need it, or put more money into we need to when we want to, we just would have these plans at all. and that usually is a very effective argument to congress, even though it's not actually true. i hope that helps. >> it doesn't feel good. i understand what you're saying but it doesn't feel good. >> can you tell us a little bit about what kind of research went into your book, as far as what documents did you look at? are the same documents available

to retiree groups to dig into? >> yes. the only way you can dig into this is through documents because it's not something employers are going to be discussing if you call them up on the phone. and i was initially stymied myself because i couldn't understand why companies were cutting benefits when they billions of dollars in surplus. it just didn't make sense. what led me down the path, sort of trying to figure it out though was when ibm cut its planned and was telling people it's a better plan now. we have a better plan for you. but they were telling shareholders it's going to save us 200 million. and i didn't understand what they meant by that because like most people, i assumed they were talking about cash savings, which they weren't. they were talking about this accounting effect. they were reducing their liability by 200 billion, and that's 200 that will go into your profits either immediately or overtime.

so the only way to see this happening is if you go into the annual reports, attend? which of these pension footnotes which include a lot of these numbers that show the size of the library and the different assumptions they're using to calculate it. so that can give you some idea. that's really the only place you can go for this. >> i am from a tnt, and we just had our case get to the appeal court in philadelphia and we lost it is just like you describe. unit, the engineers, i was an engineer and they said this is the greatest thing from sliced bread. you have more choice -- >> what company? >> at&t. it was just like that. you know, i was complaining are voicing my distress at a company

meeting. and a couple years later or three years later, somebody came back to me and said, you know, i've got to apologize, joyce. back when you talk that that town meeting and said, you know, don't do this, it's bad, i was looking at my mom some and i thought it was a lot of money. and he's like, it hasn't grown. and i guess, do you have become it on, among all the other things, the judge dismissed in our case, they said that, they let at&t off because they said well, you didn't need to tell them there was a cat in benefit, which they clearly didn't tell us because that would have been confusing your that's what the judge said. >> i've seen a lot of examples of this where companies have

resisted making clear disclosures on the ground that it would confuse people i if you gave him too much provision. there is a law. there is a section under pension law 200 4-h which says that a significant cut in benefits must be disclosed. but as we've seen with companies like cigna, there are ways around that like just ignoring it, for example, or giving people a piece of paper that says your plan is changing these ways, by the way, 204(h) applies. the company said, complies with requirements of disclosure. but it actually doesn't. it in my book i talk about sessions were actuaries would discuss how you can avoid providing disclosure. they said well, you can say things are changing, and you can refer to a 204(h), but you don't have to use the magic words your benefits are being cut.

so just don't use those magic words. so the disclosure issue was clearly a play into pension conversions, and yet another when you race as well is the lump-sum payouts. because a lot of companies at this time begin offering lump sums to people saying well, with these new plans we can give you a lump sum. it's nor -- its more modern, that's why these are more affordable. the problem with that, of course, is the workforce was a more mobile. the population they were trying to get rid of definitely not mobile. it was people in the '50s try to get to the point where the pension was building to an adequate level. so one of the techniques to get people to agree to leave would say, you know what, if you leave during this retirement window we will give you a little extra pension and we will give it to you and he loves him so you can take it with you, invest it, by a taco bell franchise, whatever. some people very often were dazzled by what look like a

large sum of money. the problem though was that if you give out a lump sum, you can give people less pension than they have erred. normally it's against the law. it's pretty clear under pension law that if you give someone less pension than they have earned you have violated the cutback will. that's clear. but here is where lump sums make it possible. if you give someone a lump sum, say 300,000, and the person hazard a benefit worth 400,000, well, if they have -- if they choose to take that lump sum not they should have been given 400,000, and they are essentially cutting their own benefit. they are choosing to cut their benefits. legally that's the sort that works. so you have a lot of people seem big lump sum dollars. not the engineers to the usually figured it out, but they would see that big pot of money and they would take it and run.

not realizing that they were cutting 20%, or as much as another 30% off of their pension. that also was a little disclosure issue. as to the case you are referring to, that's happen with a lot of the suits over the pension changes, brought under alleged age discrimination be and usually there were two reasons for that. one was under pension law you cannot have a declining rate of a cruel. that's a complicated phrase. nobody understands it. but in a nutshell it says that you can't have a pension get smaller over time by a certain way. and these changes actually did that. when this got to federal court, some judges said this is cleared of violation of that. other judges said well, you know, why should the pension law apply to these plans? they look like 401(k)s, so why should pension law apply?

and actually that succeeded in some circuits. the other element though that always has bothered me more than that even is this practice of freezing older workers pensions also in a deceptive way because people didn't know the pensions were being frozen, and the way that work is when you converted the plan, let's say in a traditional pension it takes your years of service, multiplies it by your average pay, and let's say that is worth in present dollars i've hundred thousand dollars xo that 500,000 represents your 20,000 a month for life, starting at age 55. so that's a finite amount, 500. what they did for some people, a lot of people actually, is instead of giving them 500,000 pounds their opening balance, they would lowball it.

they would give him 8,400,000. now, since the person getting that balance didn't know the difference, they did know that the pension was actually worth five, would see their opening balance be 400 they would say okay, that's what my pension is worth. but the trick is this. because you're starting out underwater your pension is not going to grow until you have enough years of these new pay credits going in to bring it back up to the level it was when they changed the plan. in companies like at&t as you know, for some people that would take 15 years. and i talk to a woman he was at cigna. she actually was in the pension area so this made it a little more ironic. and her pension was cut like that, and she had no idea until she ran into a fellow executive at a going away party for someone who said janice, if you

knew how much her pension had been cut you would be sick. she said frankly i was sick when i figured it out. because for her it would have meant a pension cut for the rest of her career. so people didn't pick up on that, definitely. they didn't understand that just the older people were being frozen. you may ask yourself, how can it be legal but you can have only older people be affected by a cut and that younger people. well, that's the magic of pension law. this whole concept called where a way has been banned now under congress. so it can't happen anymore going forward. but everything it took place up until the time the law changed two years ago it seemed legal. so congress are caught up with as it were not going to you do that. sorry for you at&t folks and say difficult, it's too late. >> the thing that also really

got me when they first did this that didn't get much publicity, and i think it's legal, but it's morally wrong, when we had our traditional pension, you multiplied a percent times your use of service, for anybody, someone making 40,000, someone making 100,000, someone making 200,000, when at&t changed it they put a knee in a curve. they said okay, you're going to get half the rate up to the social security range base, and double the rate. same amount of money in the pot, didn't put more money in there, and i just wanted to say that. unit, it's doing what you are saying. they got a pot of money and they are skewing it. >> i think you are saying many

people didn't know they were unaware of this change, and you know, i think that says something in terms of retirees of the past were more trusting, et cetera. and i think it's the message going forth, you know, i don't think we could have trust anymore with companies. and i think as retirees we've got to be very proactive in this area to protect our earned benefits. your comment. >> i think that when you're looking at a trillion dollars, there's always going to be a number of people and groups that are interested in participating in that trillion dollars. so for people to just assume that they don't have to pay attention to what's happening to their benefits is naïve. there are so many forces at work that would like to manage that money, take a bit of that money. i forgot to mention the other way assets were paid out of the plane is they could use the

assets also to pay for the actuaries and the lawyers who helped him cut the benefits. no way to measure that but it's probably fairly significant. >> two things. number one, i read recently a survey of employers done by one of the major compensation and benefits consulting firms to show the transit companies dropping health care from retirees. i've also seen data about the dramatic drop in the number of defined benefit plans that exist anymore. given those two scenarios in which he found, what are the implications going forward for baby boomers and their pensions and their health care and their postretirement life? >> well, you say about the retiree health, and the companies dropping it, you will see that's not completely true. you will find that companies are dropping it for salary

employees, that it's a little tougher to drop before collective bargained employees. there are contracts that are a little tougher to get a rented you have to use of the strategies like something and a pro-business jurisdiction. so the pattern we have seen is that the first people to go were salaried, like this happen with unicef employees, any number number of other employees where the salaried folks were first pushed out the door with promises of health care and lo and behold a year or so later they are told we can't afford that, sorry. so what has happened now is the retirees have seen their premiums have been going up steeply, incredibly steeply. and at some companies, actually one reason they are going up so steep is because the actual costs are going up. that's the other thing companies are not really clear about. their costs are not spiraling. years ago, most of the companies

put caps on what they would spend your venue that they would never spend more than x. dollars for a population. so people can get as old and sick as hostile but as they can end the company is protected from the. what happens is once the cap is reached all the costs get passed on. so in the salaried root -- salaried groups, people hit that and the cost go up. people who can't afford it or who have a spouse with coverage if they drop out of the plan because they can't spend $1000 a month. so what remains are older, sicker people who have no other options. so this creates a classic death spiral where you have increasingly costly group. and this benefits companies because the more people who drop out, well, that's people they don't have to pay for. another way i have seen another factor increasing these costs is that companies can charge the salaried people more, and some

of them do, to subsidize what they have to pay for to be collectively bargained. don't blame the unions for this. this is the company saying we can't get out a paint the union guys, we're going to charge the salaried guys more and we'll use that excess about today so we don't have to pay. and, of course, they will all start to drop out. but enjoy it while it lasts. so that's a trend i've seen with retiree health care. so the answer to your question is, it is unlikely that we are going to see the same kind of programs exist for people now. >> i retired from kodak and none of us are in a union so we're all getting treated the same way. i think what we are starting to see, especially we are at the risk of losing our health care because there's nothing like erisa to protect retirees from losses of health care. so we know just the whim of the company. they can decide to drop or cut itself the cause, which it has

done. we will no longer have survivor, excuse me, spouse covered, any covered. but we will have 100% of the cost. and secondly, the company's contribution is captain for the retiree themselves. so we're starting to see some of that already. >> you mentioned something that is actually quite important. initially, pension law was supposed to cover retiree benefits. including health care, but in the course, employers had succeeded in making the argument that health coverage wasn't a vested benefit like pensions. so they are allowed to change it. and even if they had promised it, as many did in writing, they prevailed in court because they put a little sentence in tiny print somewhere in the document called a reservation of rights clause that says we reserve the right to change her mind some day. so people have no idea this

existed, and they did know that was all that mattered was whether there was this little clause in a document that they were very unlikely to ever see. they believe the handouts the company gave him. they believe the h.r. people who said you will have this. and not realizing how flimsy that promise was. >> i appreciate your comments, and even though it does raise my blood pressure listening to you. my group was included in your latter example there. the company promised us a 170 years, and then lo and behold, a little clause buried about 300 pages in the tiniest print of the whole booklet is what the federal judge speed what company are you with? >> john deere. >> oh, yes. >> and as far as organized labor they have a larger voice speaking for them than any

salary group except for salaried unions which are a rarity. >> they do, but what's been interesting is seeing how believe they are as well. whether it's steelworkers group, any number of them, manufacturing, are constantly fighting with the companies because companies use a variety of tactics which i make him a book, ways to try to get around this contracts they made with unions. the strongest example i saw was a midwestern company that made tractors and so forth. back in the early '90s, actually, all back together really think hard about how they could get out of paying these benefits. so they came up with a variety of tactics. one was to exaggerate the cost and tell people it was really, really costly, and maybe the union would agree to give them some concessions. the other way was to create a unit and spin it off, and have

it go bankrupt. and then, of course, the retiree health care would be wiped out. the other was what they called reaping takeaways. and it works like this. you make a little tiny cat one year. maybe you raised dental by $5 a month, something like that. you do a couple of these and a few years later you cut everything or you make a big cut, and if they fight back in court even said look, there's a precedent here. you obvious the affected -- accepted these cuts we made so passively you have agreed to this. and i worked in a number of venues. and this particular company it did all of these things, every single tactic over the years. and the retirees lost it by bit. although because of the steelworkers union trying to fight to protect it, many of them were able to hold on. but other companies, the retirees lost in many cases.

>> for the loyalty that people felt towards their company, at the companies took advantage of it by doing it bit by bit, and then using it in the long run against the retiree group when they try to fight it. >> also one of the tactics i failed to mention was dry got the litigation as long as possible, because they will give up or die. and, in fact, they do. in the book i mentioned a group of retirees with the gencorp which was the predecessor was general tire, and this group of retirees saw their pension, retiree health care cut, and they got together and hired a lawyer and sued. but it took so long, you know, they had to go to court and an of you would pass, they would go to court again. that judge would say get a broader group of people. one by one they were just

dropping off until there was just a few of the original group left. so that has been a successful technique. >> i know that over the years we've all seen problems with our pensions, and especially liked year, for the nrln, we lobbied heavily. which kind of nullified many of the other issues that went on. shortly after that the following year there was a ruling that was done that more or less said well, you know, a law wasn't necessarily, i mean, it made it very gray so that again the corporations have that leeway. also, so now that, and we know what to look for and we can become aware of it, we've also tried to face it through litigation. it's very difficult for the average retiree to do anything about all the things you are talking about. so, is your sql plan on telling

us how to speak you're right. people are pretty helpless. the only way have any leverage at all, really come is to come together with an issue. as i have seen your group do with the bankruptcy issue. the horrible situations we have seen where companies stopped contributing to their pension plans, airlines for example, usair, and the players become less and less well-funded, and then companies only too thrilled in bankruptcy to dump it on the pbgc which is the federal pension insurer. the problem with that, of course, is when the plan is very underfunded and there are not enough assets to pay out full benefits. and people can list some of the benefits, especially ironically people in higher income ranges like the pilots. pilots were just devastated. they would lose up to 80% in some cases other pension because of some rather odd quirks in the law. they would also lose their supplemental savings.

i saw pilots, i mentioned pilots in the book away from having retirement income of around 8000 a month now living on like $95 a month. that's bertie perverse. and this temptation continues to exist with private equity firms buying companies. it's no different than the raiders of the '80s. it's just a different way of to do it. you go in, by a company, the plan is overfunded. great, you kill it and, or meanwhile, no good, use the surplus, and then later you can kill it. or if it's really unhealthy, you just are contributing to it, let it sink, go to bankruptcy court and say, ashok, judge, we can't possibly emerge from bankruptcy with his horrible liability. and judges are easily swayed by this argument, and tragically for retirees, they are not first in line to their creditors, other creditors are in front of him. they get paid before the

retirees. so the tension gets dumped, retirees are left with a fraction of their pension. and the shareholders are better off. the executives of creditors are better off. to get a flavor of that, last year the gao came out with a report in which they looked out 10 of the largest company bankruptcies in the past five years. and they found that of these companies, which include airlines, polaroid and some others, that companies spent 350 million paying their executives in the run up to the bankruptcy. so just in the few short years before bankruptcy when they're not putting money into pension plan, 350 million was going out to their executives at these companies. so it would be probably a good idea if there was something that halted the process or made it tougher for companies to dump the pensions. [inaudible]

why don't you come if you have other questions, catcher. >> i just wanted to ask. it's very inflammatory what you're saying. what do you think the next step is going to be? are you hiring personal protection? last night and you know, what are you expecting in terms of company and retiree response? >> one last question. >> okay. none of this is a surprise to employers. i've been reporting on aspects of this over the past decade, and everything i've reported on has been, we will have opportunity to correct me, or to challenge. there have been no corrections and they can't challenge it. the numbers are out of the fighting spirit it's a fact. it's not like this will come as a big shock to them. so i think it might do more as a shock to the general public that hasn't followed this issue, and they would be surprised to hear some of it. >> we will stop here.

let's give ellen schultz and. [applause] >> is there a nonfiction author a book you would like to see featured on booktv? send us an e-mail at booktv@c-span.org or tweet us at twitter.com/booktv. >> you have written several books on the topic of the civil war. what interested you in this topic? >> well, my interest in the civil war is somewhat mysterious to me. if you had told me many years ago when i was a girl that this was what i was going to study i would've said i hate you. i grew up in the vietnam era. i don't like any of this. i don't like this topic at all. but when i was a graduate student in american history i happen to take a class on the civil war and something forgot -- something about it clicked with me in that class, particularly decided that the complete absence, got women in

the class. women didn't have any do with the civil war and the determined it would be my life's work. but, of course, i have branched out and have done many other things beside but that is where i started. >> who is joseph hold? >> joseph holt was lincoln's judge advocate general. and if people remember him today, they declared to him as the judge advocate general who was after lincoln's assassination responsible for prosecuting the conspirators who had worked with john wilkes booth. however, he is a much larger figure than that. he had a very, he was 57 years old by the time he got to washington. and by the time he became lincoln's judge advocate general. at a very long life and his libido 1894 so he is a much bigger figure than that. but the way we know invest its for his years as lincoln's judge advocate general. >> you titled this "lincoln's forgotten ally."

why did you choose this title? >> because of his importance to lincoln. because of his deep devotion to lincoln and his policies and, therefore, he is lincoln's ally. but he is someone who we simply don't remember in the historical record except in terms of that tiny slice of what role he played over the course of his life. as a professional. so he was, to me, one of the most important members of lincoln's administration and yet he has dropped off the historical map except for certain tiny parts of his life. and that's what i find one of the most fascinating things about him. >> why do you think he is overlooked in history? >> one of the reasons why i think is overlooked because we like our historical figures to be very simple. and he is an immensely complicated person to understand. so he takes a lot of work to think about. and i think that's one reason.

he also was involved in ways at the end of the civil war with competent issues and took stances that a lot of people feel were vindictive and hateful towards the south, when really the nation should just be peacefully reconcile. so i think he's been not just forgotten but also dismissed. another thing i would say is that he was a kentucky. he was a southern slaveholder who spent the first type -- first half of his life in kentucky, and because kentucky remained a union state throughout the war, but after the war it was sort of a postwar confederate state. because of his strong union stance, kentucky itself had no reason to remember him. one of the most fascinating experience is a doing research on him is to go, was to go to kentucky a couple years ago and asked people if they had ever heard of them. and the number who heard him could be counted on one hand, maybe to.

>> you just touch on that briefly, and used it in your book that popular opinion of joe semple is misrepresented by americans in collective memory. to explain what you mean by this and how it you portray him different from that in your book. >> i think the way history memory is misrepresented is because when he isn't at all comfortable his mostly not recovered, and he's a very important figure through the civil war era by up to 1894. so he is forgotten. that's the misrepresentation. when he is remember history member at this purely indicative figure wanted to punish the south, and in particular, the holt character is out to get married to rot, the one woman who was involved in the lincoln assassination conspiracy. he is out to get her, he has no scruples. is completely amoral and so on.

so this image is also a misrepresentation. it treats them as if he is a corrupt judge and he wasn't. what i try to do in his book is first of all get him out of the darkness. so it's a different representation because it is the representation and it's a big representation. a very long biography of his entire life but also tries to put the things that people do remember about him and the ways they seem in a larger context of the work that he did, what he believed, why he believes what he did and why he made the choices that he made as a professional and as lincoln's judge advocate general. >> what was holt's role? >> he was basically the overseer of all the military justice. so he had to supervise all of the other judge advocates across the field. he was in charge of overseeing capital cases. he had to make sure that your of military justice was running properly. he was ahead o