Welfare for the rich

Read The War at Home and find out who's winning the class war. You won't be surprised

By Tom Gallagher

IN AMERICA YOU'VE pretty much got to be a billionaire to get away with using the phrase "class war." But a billionaire is exactly what Warren Buffet is, so no one called for his arrest when he recently wrote to his company's stockholders that "if class war is being waged in America, my class is clearly winning." So far as author Jack Rasmus is concerned, Buffet's is a fair assessment, even if "war" is a strong word to describe something as one-sided as the ongoing campaign to restructure the American economy to the benefit of the country's corporations and the detriment of its wage earners.

According to Rasmus's new self-published book, The War at Home: The Corporate Offensive from Reagan to George W. Bush, this sustained effort, beginning with the Reagan presidency, to export jobs, reduce wages, and roll back government benefits is the fourth such offensive of the past 100 years. In piecing together the strands of corporate policies, right-wing think-tank theories, and Republican (and sometimes Democratic) Party politics, Rasmus naturally must also deal with the history and legacy of the American labor movement, which constitutes his target audience. America's unions have traditionally held much more ambiguous attitudes toward government than their western European counterparts. Where the Europeans generally saw a need to have their own horse in the governmental race, in the form of a working-class political party, the Americans generally preferred to back one of the horses already in the race. The European labor movement, then, has generally been socialist – if not always explicitly, then at least in the sense of attempting to create society-wide benefits through government action – while American workers' organizations have tended to regard the private sector as their proper sphere. While social scientists sometimes characterize American labor's relatively hands-off approach to government as a form of syndicalism, not 1 American worker in a 100 would identify with the term. Most of them would just call it normal: In America, negotiating with large corporations for benefits that may trickle down to the employees of smaller companies is simply what unions do.

So when Rasmus describes the crisis of America's pension system in one of the book's strongest sections, he tells two parallel stories. First, there is the enduring campaign to privatize or otherwise weaken the Social Security system. How you will assess the system's chances for survival is largely a matter of attitude. Should we be appalled at the halfhearted efforts in its defense or heartened that it seemingly remains the third rail of American politics, which politicians still dare not touch? But whether we see the glass as half full or half empty, Rasmus is clear that we ought not mark Social Security down in the "Accomplished and Done" column. The problem, he writes, is that following the increase in Social Security taxes in the early 1980s, the system's resulting surplus "has been shifted from the Social Security Fund by administrations from Reagan to Clinton to George W. Bush with the full agreement of Congress," a cumulative $1.68 trillion in surplus funds that the federal government has spent for other purposes from the years 1984 to 2004.

The crunch, Rasmus explains, will arrive when surpluses stop and payback time arrives, although this will not happen before the system accumulates an additional $1 trillion to $1.5 trillion surplus over the next decade, money that he reasonably assumes will also go to other ongoing government expenditures. Weighing the options of either replacing the funds through the sale of government bonds or acknowledging an additional government deficit of that magnitude, he concludes that "for all practical purposes, the $1.68 trillion surplus is politically unavailable." Interestingly, he does not even consider the most logical way to restore the funds – by raising taxes in other areas. And given the small likelihood of that happening, he is probably right in not even raising it as a possibility.

All this, though, constitutes only the half of the nation's pension crisis. Most Americans have come to see Social Security as something to be supplemented for anyone hoping to avoid a retirement spent in poverty, and unions could count among their greatest accomplishments the private pension plans they negotiated with private employers, particularly in the post-World War II years – that is, until they started to be undone.

There are few subjects as snooze-inducing as a thorough discussion of pension-fund financing, yet Rasmus provides a cogent explanation of the funds' transformation since 1980, when 80 percent of workers with private pensions were in defined-benefit plans. On retirement, those employees could expect a monthly payment that would essentially be what their company's current retirees were getting, with adjustment for inflation. The plans were, in other words, just like Social Security. But by 2004, only 20 percent of privately covered employees were still in such systems. The rest were in defined-contribution plans to which a company contributes a certain specified amount, the most common being the 401(k). The amount of benefits these employees can actually expect to receive? Well, that will depend on the revenue generated by their fund's investment.

On top of this, we have the Reagan-era rules changes allowing corporations to emulate the federal government and dip into their pension funds for other purposes. As early as 1986, Rasmus writes, "Exxon, one of the most profitable companies in the U.S. and the world at the time, skimmed off $1.6 billion of the surplus in its pension fund ... and then used it to pay for refunds to customers ordered by a court case it lost." And, most famously, "employees at Enron Corporation alone lost more than $3 billion in their 401(k) retirement accounts when that company went bankrupt in 2002."

The War at Home stands as something of an example of both the pluses and minuses of self-publishing. A worthy but difficult topic such as this will not easily be picked up by most publishing houses looking for a catchy story, but if this book had managed to clear the hurdles with some mainstream publisher, it would likely have come out in much more seriously edited form. At more than 500 pages, with no index, it is a daunting read and could use a second, sleeker edition of perhaps half its current size. For now, though, it does provides a wealth of information on the current campaign to do more for those who have more.

Tom Gallagher is a writer who lives in San Francisco and a frequent contributor to Lit.

The War at Home: The Corporate Offensive from Reagan to George W. Bush

By Jack Rasmus. Kyklos Productions, 532 pages, $19.95 (paper).