The Unwinding

by George Packer

  The new corporation was independent in name only—Delphi’s fate remained tied to its biggest customer, GM. Over time, it became clear that the spin-off was a tactic to break up what remained of the company’s American workforce. From the outset, Delphi claimed to be profitable. But the profits turned out to be bogus—for three years, top management had engaged in accounting fraud. The company was investigated by the SEC and sued by two pension funds, and its senior executives quit. When GM went into a deep slump in the early 2000s, Delphi took billions of dollars in losses, before filing for bankruptcy under Chapter 11 in 2005.

  But the bankruptcy was also tactical. It applied only to the company’s North American operations. Delphi argued that reorganization under Chapter 11 should allow it to tear up contracts with its workers, and to oversee the winding down, the board hired a new CEO, Robert S. “Steve” Miller, who specialized in taking troubled companies and slashing them to pieces in order to make them profitable for new investors. He had done it before at Bethlehem Steel, and in 2008 he published an autobiography called The Turnaround Kid. Delphi’s board gave Miller a compensation package that was worth as much as $35 million, while a group of senior executives got $87 million in bonuses, and stock options that were ultimately valued at half a billion. Two Wall Street banks, JPMorgan Chase and Citigroup, lent Delphi $4.5 billion and positioned themselves to stand first in line to be paid back, with interest and fees, when the company emerged from bankruptcy. Miller, his senior executives, and the banks would be the winners. The losers would be Delphi’s American workers. No one was telling them what was going to happen, but Delphi had a confidential written plan, code-named NorthStar, to pursue “aggressive cost reduction via product exits, site consolidation, and legacy cost reduction.” The plan was leaked to The Detroit News and published a month after the bankruptcy.

  Still, Tammy didn’t see it coming. She was making close to twenty-five dollars an hour, bringing home fifty-five thousand a year with overtime before taxes. She had her ten years in, so they couldn’t lay her off for more than six months, and when she was off they had to pay her 80 percent of her wages. Her younger daughter was going to graduate from high school, and after that Tammy could focus on herself, maybe even travel. She was about to turn forty, and her last twenty or so years on earth were going to be smooth sailing. She was thirteen years away from early retirement, and when she got there she could finally grow up and decide what she wanted to be—something that fulfilled her and made her feel good, and it wouldn’t matter how much it paid. She had given up the wedding business and was taking some classes at Youngstown State, thinking of going into counseling. By the time she retired she could have a Ph.D. Or go live in some third world country on her pension.

  Tammy had seen jobs leave, seen the work getting condensed—you went from working one machine to two—and she could imagine Warren becoming a smaller plant. But the whole plant closing? “No. I never imagined that. Even seeing what happened to the mills. As long as GM was doing okay, we would probably be okay. We worked so much overtime, we literally could not keep up with orders. No one could have ever told me my job would go away.” Three decades earlier, the workers at Sheet and Tube had never imagined it, either.

  In March 2006, Delphi announced that it would close or sell twenty-one of its twenty-nine American plants and get rid of twenty thousand hourly jobs, two-thirds of the total. Warren would remain open but with a drastically reduced workforce, and the survivors would take a 40 percent pay cut. Tammy’s wage would drop to $13.50 an hour. Workers were encouraged to accept a buyout with a lump sum of pay, because Delphi intended to retain fewer than six hundred fifty of Warren’s three thousand remaining hourly employees. The buyout meant that they would lose most of their pension. The message was delivered via PowerPoint in a large conference room to groups of a hundred workers at a time. Everyone received a packet of information and was given until August to sign up for the buyout. People walked out of the room crying. Tammy was stunned.

  But then something changed in her. She felt a calming spirit, like she knew it was going to be okay. This feeling had come over her at other hard moments in her life, when she had to live in a closet at age ten, when she became a mother at sixteen, when she lost her fiancé at twenty-nine. Her coworkers were in a panic, asking one another, “What are you going to do?” Tammy told them, “You know what? There is a whole wide world outside of Packard.” She was actually a little excited. With the buyout money she could go to college full-time and become the second person in her family to get a degree—because her older daughter was already the first. After that, Tammy didn’t know what she was going to do, but for the first time since she was a girl, she could dream.

  Her friend Miss Sybil had always seen something of herself in Tammy: east side girls, single mothers, factory workers, women with ambition who had stuck it out in Youngstown. In a way, Sybil had it harder because she started working at GE in 1971, when black women were the lowest of the low in a factory. On the other hand, when Tammy came up a generation later, everything was falling apart. Sybil had stayed at GE until she retired in her sixties, but Tammy was making a great change at forty. Sybil knew exactly what she was risking. “Tammy had to make her own way and to be determined,” she said. “I’m sure those three mouths looking at her were a great incentive. Packard was a darned good job. When she left Packard by the wayside she was taking an awful chance. She had that determination and drive. Most people I know who left Packard lost their luster. You step out on that limb and you can’t fail.”

  Tammy took the buyout on the last day of 2006. She thought of the saying that God closes one door and opens another. “No. God is going to open patio doors for me.”

  2003

  CITIES JAMMED IN WORLDWIDE PROTEST OF WAR IN IRAQ … A brutal dictator, with a history of reckless aggression, with ties to terrorism, with great potential wealth, will not be permitted to dominate a vital region … I lift my lamp beside the golden door to pee, / And make a vow to make men free, and we will find their WMD.… BUSH ORDERS START OF WAR ON IRAQ … If the end is near, the Green and Miller family, who are spread out across the country, want their relatives close by. So they’ve hatched an emergency plan in case the phones are knocked out: Meet in Wichita, Kan., at the confluence of the Big and Little Arkansas Rivers, under the outstretched arms of the Keeper of the Plains, a 44-foot steel sculpture of an Indian warrior.… MOUNTING ANGER WITH FRENCH NOT ENOUGH TO STEM THE FLOW OF BORDEAUX … These bastards who run our country are a bunch of conniving, thieving, smug pricks who need to be brought down and removed and replaced with a whole new system that we control.… LATINOS NOW LARGEST MINORITY GROUP IN U.S.… POPE TO GAYS: YOUR WAYS ARE EVIL Slams Homosexual Marriage, Adoption … In an emotional press conference at L.A.’s Staples Center, Bryant, 24, clutched his wife Vanessa’s hand and apologized for his betrayal six months after the birth of … THE “BUSH DOCTRINE” EXPERIENCES SHINING MOMENTS … The laughs come from finding out just how isolated the overprivileged can be from the rest of the country. So much so that the 22-year-old Hilton, a fixture in society columns, doesn’t quite know what a well is and has never heard of Wal-Mart.… WALL STREET GIANTS PROSPER AMID DOWNTURN … He displays other Master of the Universe attributes, including a fabulous art collection, a power wardrobe, and an attractive, blond second wife several inches taller than he is.… HOUSING HOLDS AS SAFEST HAVEN FOR INVESTORS … be glad that you own a house in Florida … But because I signed the contract and fulfilled my obligation to fight one of America’s wars, I am entitled to speak, to say, I belong to a fucked situation.… U.S. COPTER IS DOWNED IN IRAQ, KILLING 16 … “It was a tough week, but we made progress toward a sovereign and free Iraq,” he said.… Sir, I supported the war. / I believe in who we are. / I dedicate red wine to that today. / At Montrachet, near the Franklin Street stop, on West Broadway.

  INSTITUTION MAN (1): COLIN POWELL

  Once upon a time in America

  there was a family of light-skinned immigran
ts from the islands who lived in the city of immigrants, the New York of La Guardia, DiMaggio, and Coney Island, where mothers served oxtail soup for Sunday dinner or challah by candlelight on Friday night and fathers yelled at the newspaper in Sicilian or Polish while boys with condoms in their wallets and girls snapping gum became American in the streets.

  On the third floor of 952 Kelly Street in the South Bronx, President Roosevelt’s portrait hung on the living room wall, the flag and the Capitol behind him. Outside their tenement, the parents and two children were absorbed into the vast and generalizing wash of American institutions.

  The mother was a proud member of Dubinsky’s ILGWU (three hundred thousand strong), sewing buttons and trim on women’s suits at Ginsburg’s in the Garment District, where the father was the shipping room foreman and there was always work, even in the Depression. On Sundays they sat in the family pew at St. Margaret’s Episcopal Church, where their younger child, a boy, was an acolyte in love with pageantry and incense. The boy went from PS 39 to PS 52 to Morris High School, and by virtue of his diploma, his New York City residence, and ten dollars, in spite of being a mediocre student he was admitted to the City College of New York, founded in 1847 on a hill overlooking Harlem as the Free Academy, whose first president, Horace Webster, said, “The experiment is to be tried, whether the children of the people, the children of the whole people, can be educated; and whether an institution of the highest grade, can be successfully controlled by the popular will, not by the privileged few.”

  And beyond the lights of the city, across the republic, stood the structures that held up the postwar order of middle-class democracy:

  General Motors, the AFL-CIO, the National Labor Relations Board, the urban boss, the farm bloc, the public school, the research university, the county party, the Ford Foundation, the Rotary Club, the League of Women Voters, CBS News, the Committee on Economic Development, Social Security, the Bureau of Reclamation, the Federal Housing Administration, the Federal-Aid Highway Act, the Marshall Plan, NATO, the Council on Foreign Relations, the GI Bill, the U.S. Army.

  The last of these became the boy’s American home. He joined ROTC his first year at City College (he was going to be drafted anyway) and pledged the Pershing Rifles. A uniform and discipline gave the new pledge a sense of belonging. He needed structure to thrive. “I became a leader almost immediately,” he later wrote. “I found a selflessness within our ranks that reminded me of the caring atmosphere within my family. Race, color, background, income meant nothing.”

  In 1958 he received his commission as a second lieutenant. The army had been integrated for just ten years, but the most hierarchical institution in America was also the most democratic: “Less discrimination, a truer merit system, and leveler playing fields existed inside the gates of our military posts than in any Southern city hall or Northern corporation.” Hard work, honesty, courage, sacrifice: the young officer practiced the Boy Scout virtues in the sure belief that they would bring equal opportunity.

  His American journey took him to South Vietnam in 1962, Birmingham in 1963, Vietnam again in 1968.

  The captain stepped on a punji stick and escaped a mortar round in the A Shau Valley. Stateside a few months later, he was refused service at a drive-in burger joint near Fort Benning, Georgia. The major survived a helo crash near Quang Ngai and rescued several men. None of it upset his carefully calibrated balance.

  He collected a chestful of medals and the admiration of his superiors. He refused to be undermined by the humiliations of racism or the folly of a war in which the fighting was done by America’s have-nots. Both offended his democratic values. “Of the many tragedies of Vietnam, this raw class discrimination strikes me as the most damaging to the ideal that all Americans are created equal and owe equal allegiance to their country.” But he was building his life on that ideal, so he remained practical, and his self-control became almost inhuman. The institutions showed their health by lifting up a man of his qualities, and even when they went off course, their ultimate power lay in self-correction.

  And he would show anyone who doubted him.

  Promoted to lieutenant colonel. Made a White House Fellow, just in time for Watergate—but even the worst political scandal in American history proved the institutional strength of democracy: Congress, the courts, the press, and the popular will cut out the cancer.

  Battalion commander in South Korea, where he began restoring good order and discipline to the army after Vietnam. Brigade commander at Fort Campbell. Carter administration Pentagon. First star in 1979, age forty-two, the youngest general in the army. Fort Carson, Fort Leavenworth. Reagan administration Pentagon, where “the military services had been restored to a place of honor.”

  In 1986, the major general sat at his desk outside the office of the secretary of defense and placed a reluctant call on orders from the White House to transfer four thousand antitank missiles from the army to the CIA. They were destined for Tehran: arms, a Bible, and a cake for hostages. Iran-contra was the first blot on his résumé, but it sent him to the Reagan White House as deputy national security adviser, detailed to clean up the mess. “If it hadn’t been for Iran-contra, I’d still be an obscure general somewhere. Retired, never heard of.”

  Restoring the National Security Council to good order and discipline was the perfect job for the lieutenant general. He loved to fix up old Volvos and Saabs. He was efficient, inspiring, a master of bureaucracy, the world’s greatest staff officer. The institutions were at the peak of power. After all, they were about to win the Cold War.

  In 1988, in the Hall of St. Catherine at the Kremlin, Gorbachev looked straight at him with a glimmer in his eye and said, “What are you going to do now that you’ve lost your best enemy?”

  The next year the general got his fourth star the day before his fifty-second birthday. Chairman of the Joint Chiefs of Staff a few months later, the youngest ever. Without its best enemy America could fight wars again, and he ran the first since Vietnam—Panama (a drug dealer with a face like a pineapple), then the big one, Desert Storm. The ground campaign took four days to drive Saddam out of Kuwait. America was back, and the chairman did it by turning the agony of Vietnam into a doctrine: clear goals, national interest, political support, overwhelming force, early exit. (The Kurds and Shia were on their own; the Bosnians would be, too.)

  By the time the general retired after thirty-five years in uniform, he was the most admired man in America. No one knew his political party—he had voted for JFK, LBJ, and Carter once, then he started voting Republican. Both sides trusted him because he embodied the bipartisan center. (A few people distrusted him for the same reason.) He was an Eisenhower internationalist, cautious to the core. As long as the center held, his prestige kept rising. History performed jujitsu and turned race and Vietnam in his favor, giving him an authority no one else in Washington had.

  He made everyone feel that America still worked.

  In 1995 he declared himself a Republican. His friend Rich Armitage, a known party member, had warned him not to: it was no longer the party of Eisenhower—it was no longer even the party of Reagan. Something had been set loose, a spirit of ugliness and unreason, even in foreign policy. (The Cold War had been clarifying and moderating—maybe Gorbachev was right.) The establishment still held the reins, but the horses were Know-Nothings. But he said that he wanted to broaden the party’s appeal.

  He could have been the first black president. Instead, he took himself out of the running and volunteered his time for poor kids in poor schools. His message was always the same: hard work, honesty, courage, sacrifice.

  When he was called back to service, the new secretary of state took the stage and towered over the barely elected, bewildered-looking president. No one was more experienced, more able, more popular. He would open the hood, fix Russia and China, tinker with the Balkans, lubricate the Middle East, tighten up Iraq, and restore a demoralized department to good order and discipline. But his friend Armitage, who became his number tw
o, thought Bush had picked his secretary of state for his approval ratings, not his views.

  For two years the secretary represented the best face of America to the world.

  When the planes hit the buildings he was at a meeting of Latin American leaders in Lima, and he had the presence of mind to linger long enough to vote for the Democratic Charter and reaffirm the values behind it. “They can destroy buildings, they can kill people, and we will be saddened by this tragedy. But they will never be allowed to kill the spirit of democracy. They cannot destroy our society. They cannot destroy our belief in the democratic way.”

  He assembled a coalition against the Taliban, bringing Pakistan into the fold. He let the world know that America was not going rogue—its friends still mattered. He didn’t have to say that a country that had made the son of black immigrants in the South Bronx its emissary to the world was worth supporting.

  And when the president turned his sights on Iraq, the secretary was the voice of caution. He didn’t say no, but he tried to steer the car while stepping on the brake. His department was skeptical of the intelligence. He articulated a new doctrine: you break it, you own it. He wanted the UN involved. He didn’t want to lose the center.

  He was holding together the foreign policy establishment without knowing that it was gone. He needed structure to thrive, but the structures that held up the postwar order had eroded. The Council on Foreign Relations and the Ford Foundation no longer mattered. The statesmen and generals had become consultants and pundits. The army was composed of professionals, not citizens. The public schools were leaving the children of the whole people semiliterate. The parties were locked in a war of attrition.

  He was trying to function inside institutional failure, but that was incomprehensible to the stellar product of great American institutions. The administration was rotten with ideologues and operatives who showed contempt for the institutions. He didn’t see that they had him isolated and defeated.