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Highlights—March 5 , 2005
- New York Times: New
Tug of War Over Excess Pension Cash.
By Mary Williams Walsh. Excerpts: These are lean times for pension funds, and few companies report
having more pension money than they need. But some business advocates have nevertheless begun
urging Congress to let companies tap any surplus that appears in their pension funds, if and
when the good times return. "We think there needs to be access to the surplus," said
Steven Kerstein, managing director of the global retirement practice for Towers Perrin, a large
consulting firm. [...] The question of who actually owns the excess money in a pension fund
has fueled big battles over the years. Workers usually assume that any pension surplus must
be theirs, because the money that employers put into the pension funds is their deferred compensation.
But companies tend to think that any surplus is theirs - that they are entitled to the investment
returns because they, not the workers, bear the investment risk in a defined-benefit pension
- Janet Krueger: Below
is a letter from the Pension Rights Center in Washington, DC,
in response to today's "New Tug of War Over Excess Pension Cash"
article in the New York Times. Excerpt: We knew pension issues were heating up -- but the New
article really took us by surprise. As you may know, the
Administration's pension funding proposals would allow companies to
put more money into their defined benefit plans in good times. Now
it turns out, companies are gearing up to ask Congress to let them
take any so-called "surplus" assets out of their plans without
paying the penalty taxes that were imposed in 1990.
Many of you on this listserv were part of the 1980s fight to
curb "pension raiding". Put simply, companies were siphoning
billions of dollars out of their pension funds for corporate
purposes. This practice fueled takeovers and leveraged buyouts,
effectively ended all hope of cost of living adjustments for
retirees, and, as the article points out, resulted in some plans
becoming underfunded. Although no legislative proposals have put
forward so far, they are likely to surface very soon.
- CFO.com: IBM Eyes $8 Billion Repatriation.
If it goes through with the plan, Big Blue could be the latest U.S.-based global company to benefit
from a potentially whopping tax break provided under the American Jobs Creation Act. By
Lisa Yoon. Excerpts: If it goes through with the plan, IBM would be the latest multinational
to reap benefits of President Bush’s American Jobs Creation Act of 2004, which offers tax
breaks to U.S.-based companies. For one year, multinationals can repatriate overseas earnings
at 5.25 percent – a significant cut from the normal rate of up to 35 percent. [...] AP cited "private
estimates" as suggesting that total repatriations will top $300 billion. Few companies have
said how they would use the money once it starts to stream back into domestic operations. Though
the purpose of the tax holiday is to enable multinationals to use the tax savings to create
jobs back home, some experts are skeptical about how many jobs will actually be created., without
specific language in the legislation earmarking the tax savings for jobs creation, the repatriated
amounts may be used by firms (to pay down debt or buy back stock , according to a recent story
in CFO. In other words, jobs might be created only as a side effect of strengthening companies’ financial
- Jim Hightower: What's
Behind the "Jobs
Creation" Act? Excerpts: Just when you think you've bottomed out on the level of cynicism
it's possible to have toward Washington's constant kowtowing to the monied interests – along
comes the "American Jobs Creation Act." These days, whenever the White House and congress
put a positive-sounding title on a piece of legislation, you can bet that the law itself does
the exact opposite of what the title so gloriously proclaims. The American Jobs Creation Act,
pushed by George W and enacted last fall, does not create a single job. Instead, it's a massive
multibillion-dollar tax giveaway to global corporations. Through this law's "homeland investment" loophole,
corporations operating abroad are allowed to have some $400 billion in foreign profits taxed
at the bargain-basement rate of only 5.25 percent, rather than the normal rate of 35 percent.
To pass this gargantuan boondoggle for some of the richest
corporations in the world, Bush and his congressional cohorts had to cloak it as
an economic development program, promising that it would prompt a surge of new investments
all across our land and create hundreds-of-thousands of new jobs for U.S. workers.
They lied. Instead of building new factories or producing new products, thus creating
new jobs, such corporations as Hewlett Packard, Proctor & Gamble, Pfizer, GE,
and ExxonMobil are using the billions they get from this tax windfall to buy out
their competitors, shore up their bottom lines, or simply finance their existing
- Poughkeepsie Journal: IBM
paid $130 million after tax audit. Report: Pension fund loses value.
By Craig Wolf. Excerpts: IBM Corp. paid an extra $130 million to the Internal Revenue Service
after an audit on tax issues, the company disclosed in a recent filing. That is one nugget
a dedicated investor can find by reading the fine print in the non-glossy version of the annual
report. It's called a 10-K by the Securities and Exchange Commission. IBM filed its annual
tome last week with the agency. The glossy, printed version comes out in mid-March, a staffer
at the corporate office in Armonk said. The more formal and boring-looking report contains
- CNET News: Big
Blue to sales staff: Go far and small. By Martin LaMonica. Excerpt: IBM will dedicate 1,000
salespeople to its partners in an effort to boost international sales and sales to medium-size
businesses. The company said the sales personnel will work directly with partners to generate
leads and close deals through regional systems integrators and independent software vendors,
which build applications targeted at small and midsize companies. IBM announced the staff changes
at its PartnerWorld Conference here Monday.
- This Is Money (United Kingdom): Labour
hit by 'honours for software' row. By
Jonathan Oliver. Excerpts: THE American boss of IBM was granted a knighthood by Tony Blair shortly
after his computer company gave Labour high-tech software for 'next to nothing'. Louis Gerstner
Jr received what is a rare award for a foreigner - and given access to Downing Street - following
the deal for a system to keep party members 'on message'. The row is the latest controversy
over honours for businessmen who have helped the Prime Minister, and Tory MPs last night demanded
an explanation for the new revelations. IBM provided a network via its Lotus subsidiary to
let Labour bosses give orders to grass-roots activists in time for the 2001 Election campaign.
At the same time, the Government named Mr Gerstner as an honorary Knight of the British Empire
'for services to education and e-commerce'. [...]
Written by Labour's IT adviser Lord Mitchell, it said: 'I persuaded [Lotus]
to do a lot of work for next to nothing - work which will come into its own in the Election.'
Mr Blair met Mr Gerstner in private on December 2, 1999, while the system was being installed
- a meeting only admitted by Downing Street last week in a Commons written answer. But officials
are still refusing to disclose what what was discussed. The KBE is one of the highest honours
given to foreigners. Its very few recipients include Bob Geldof. Conservative MP James Gray
said: 'I am puzzled by the odd coincidence of an IBM subsidiary offering a low-cost system,
and a private meeting between the boss of the company and the Prime Minister. Then the American
businessman receives an honorary knighthood. It is certainly strange.' [...] Mr Gerstner,
62, has since left IBM and is now chairman of the Carlyle Group, a Washington-based venture
capitalist which employs several former political leaders, including John Major. Mr Blair
has been tipped to join when he quits as Prime Minister. Yesterday Mr Gerstner declined to comment,
but IBM insisted it had never offered Labour any favours. 'This was a commercial transaction,'
said a spokesman. 'IBM has a policy not to make political contributions.'
- New York Times: How
to Save Medicare? Die Sooner. By Daniel Altman. Excerpts: THOUGH Social Security's
fiscal direction has taken center stage in Washington of late, Medicare's future financing problems
are likely to be much worse. President Bush has asserted that the Medicare Modernization Act,
which he signed in 2003, would solve some of those problems - "the logic is irrefutable," he
said two months ago. Yet the Congressional Budget Office expects the law to create just $28 billion
in savings during the decade after its passage, while its prescription drug benefit will add
more than $400 billion in costs. So, how can Medicare's ballooning costs be contained? One idea
is to let people die earlier.
- ComputerWorld: IT
skills bonus pay finally heading upward, study finds. Bonus pay for skilled IT workers dropped
in the past three years. Excerpt: After three years
of declines in the bonuses paid to specially trained IT workers, skilled employees are likely
to see bonus pay rebound this year, according to a new study by Foote Partners LLC, a New Canaan,
Conn.-based IT research consultancy. The Hot Technical Skills and Certifications Pay Index, compiled
quarterly by Foote Partners, was released Sunday. According to the survey of 46,000 U.S. and
Canadian IT workers, the bonus pay for certain IT skills spiked late in 2004.
- Wall Street Journal: Retirees
Face More Benefit Cuts As Health-Care Costs Rise,
Some Big Employers Move
To Cut Dependents' Coverage. By Jennifer Saranow. Excerpts: More companies are joining the wave
of employers who are cutting health-care costs by reducing the benefits they offer to their workers'
dependents. A growing number of big employers are excluding new dependents -- such as spouses
and children -- from their retirees' health-care plans, while others are cutting coverage amounts
for retirees' current dependents. These moves come after many employers already have raised premiums
for the dependents of active employees and imposed surcharges to encourage spouses to seek coverage
from their own employer. Others are dropping current employees' future retirement benefits. Employees
of International Business Machines Corp. who retire on or after Jan. 1 won't be able to enroll
new dependents in the company's health plan beyond the dependents covered on their retirement
date. Similarly, Boeing Co. has told its nonunion employees who retire on or after Jan. 1 that
they won't be able to seek medical coverage for new dependents after their retirement date.
John DeCastro estimates he paid about $60 a month for medical coverage
for himself, his wife and now 20-year-old daughter when he retired from his job as a director
of manufacturing and planning at Lucent four years ago.
Now, the 56-year-old San Francisco resident pays about $600 a month. "It's a major hit
on the retiree, and that's part of the reason I decided to go back to work," says Mr. DeCastro,
now a salesman for a software company. [...] Lucent estimates its most recent change will
affect 5,400 management retirees with about 7,400 dependents. The company currently provides
retiree health-care benefits for about 48,000 management retirees and 71,000 formerly union
retirees. Boeing estimates its changes will impact about half of its work force. A spokeswoman
for IBM declined to comment on the impact of IBM's changes.
- Macleans (Canada): The
toxic workplace. A poisoned work environment can wreak
havoc on a company's culture and its employees. By Katherine Macklem. Excerpts: When Steve Jones
was just two years from retirement, he quit his job as vice-president of human resources at one
of Canada's largest banks, walking away not only from a high salary but also from a fat pension.
He'd spent his entire career in banking, and had no idea what to do next. A change of management
two years earlier had replaced a people-friendly way of doing business with one more cutthroat
and focused on the bottom line -- an approach diametrically opposed to what Jones believed in.
The new leaders systematically dismantled programs he'd put in place. The level of pressure he
experienced at work went through the roof. [...]
"There's a lust for unreasonable profits," Kelly says. That lust
creates a culture inside an organization where the pursuit of short-term profits towers above
all else, including the company's own long-term health. Often, the CEO's remuneration -- and
ego -- is closely linked to those quarterly profits, and boosting all three replaces what's
best to sustain the company's growth and survival. McInerney points out that with the average
tenure of today's CEOs shrinking, they have only a small window in which to make a mark. Often,
the result is an absence of humanity in the workplace, Kelly says. [...]
Relentless demands, extreme pressure and brutal ruthlessness are all trademarks
of a toxic company, as is a twisted disconnect between what a firm says it does for employees
and what it actually is doing. People are looked at as costs, rather than assets. On its books,
a company might have progressive policies regarding work-life issues, but in fact employs no part-time
workers, a key option for those who are struggling to balance career and family. Fear and paranoia,
and anxiety to the point of panic, are other characteristics of a toxic workplace.
- Macleans: The
symptoms of a polluted company. Deadly combinations. It's not
a single thing that creates a toxic company, but a combination of elements. Full excerpt:
- Mediocrity over merit: promotions based on favouritism; mediocrity is rewarded
- Management by fear: disagreement is a career-ending move; new ideas dry up.
- Leaders lose
it: executives always operate at high stress levels.
- Age and gender ghettoes: leaders hire
in their own image, resist new perspectives.
- Personal agendas prevail: egos outweigh company
business agenda and values.
- Revolving leadership door: new leaders come and go; long-tenured
run the show.
- Poor public persona: negative comments rampant in surveys, blogs and chat
- What human assets? Financial assets are "valued" more, people are "costs."
- Déjà vu
all over again: no clear vision of the future, and as a result the company can't move forward.
- Hartford Courant: Report
Slams Benefit Policies. Health Insurance At Big Companies Often Left To State. By By Christopher Kearing, Ritu Kalra
And Kenneth R. Gosselin. Excerpts: The state is paying an estimated $43 million annually for
health care insurance to cover workers at the top 25 major employers, led by Wal-Mart, officials
said Thursday. Nearly half of the estimated total covers the top five employers, including highly
profitable, well-known companies that operate franchises in Connecticut, including Stop & Shop,
Dunkin' Donuts and McDonald's. The Laidlaw transportation company, which operates buses and ambulances,
ranked fifth among the top employers with workers on the popular HUSKY health insurance program,
according to a report by the legislature's nonpartisan research office. Some legislators were
outraged that the state is helping to provide health insurance for profitable companies, particularly
Wal-Mart. "Here is the richest retail company in the world, and we, the taxpayers, are subsidizing
their coverage," said House Majority Leader Christopher Donovan, a Meriden Democrat. "I
think people aren't aware of the extent that we're subsidizing the biggest, richest, most powerful
companies. Wal-Mart shoppers need to know there's an extra cost of doing business."
- Technology Review: Carly's
Way. Excerpts: An electronic engineer who worked
as a Research Scientist at the Hewlett-Packard Imaging Systems Laboratory starting in 1975 until
he resigned in 2003, G.S. thought HP represented the very best of American character -- "a
spirit of adventure and a belief in unlimited possibilities." He charges, though, that starting
in 2000 the can-do attitude was killed by management choices intended to placate nervous investors
and board members rather than benefit the company and its workers over the long-term. He warns
that sustained cut-backs to R&D budgets over the past half-decade may have irreversibly damaged
H-P and the entire U.S. technology industry.
|Vault Message Board Posts
penetrating insights..." by "deep_eye". Full excerpt: I'm misting up
now that I left IBM. Who knew such blisteringly insightful talent lay festering in the
research ranks? Let me bring you up to speed, Merv. I, nor none of my contemporaries in
BCS were losers (this also includes the 2 out of 42 who are still there). What could possibly
drive some of the brightest people I ever encountered (includes Ivy league education and
a solid decade in R&D at a notoriously famous eastern technological university)? Ummmmm....
how about an environment that craps all over people and then suggests somehow, it's their
How about no bonuses for 3 solid years and raises that only served to antagonize, not
motivate personnel? How about utilization targets well north of 92%, with the concomitant
demand that you also write white papers, develop business, mentor junior staff, present
at conferences, interview potential "piglets" etc., etc.
Ahhh by the way, with your attitude, IBM will be a ghost town for real talent, real
soon. Somehow, there's a karmic balance there that I find quieting and just.
am a loser - getting a life" by "ancientblueconsultant". Excerpts: My
price for listening to folks like Opel, Cary, Akers and early Gerstner was I lost a lifetime
of opportunities outside of the pig. Many of my colleagues today are CEO's, CTO's and CFO's
and I was until Friday still stuck as a Band D in the blue pig. Friday, I turned in my
badge and became free of the blue pig. I requested no messages, no kudos, no announcements.
Hopefully our inept HR might just do what I asked of them, although I'm not very optimistic.
I've been told by a good friend it takes about a year to rid yourself of the blue crud
in your veins. Afterwards, you'll see business how it should be seen and done...ethically
and with respect to others.
What did I get for my 34+ years at the pig? Well I almost lost my marriage (saved it
when my wife met some of my friends in the CPR team and realized what I really wanted
was her support to get me out), had one child in drug rehab and 2 other mediocre graduates
of the Blue Pig family day crowd. Fortunately, my youngest fourth swore to never work
for the Fortune 500 and is doing well as an entrepreneur. She's the one who never wanted
to mingle with the kids of other blue piglets and always thought the blue pig was a loser
company. She gave me the Blue Pig and the Holocaust book for Christmas and then proclaimed
her status as the first millionaire child of her generation.
Yes, I was a loser at the
pig. I left at around 240K of annual compensation including pitiful bonuses. My retirement
will be around 108K including the EDCP and other little perks like options (underwater).
The one replacing me is panting for a salary of 108K and no retirement.
But the big disappointment was finding out what I missed. After a month of vacation,
I start in a small boutique as a CEO at around 460K, 125K starting bonus, and a 4% share
of the business. I am handed this responsibility from an old friend who worked for me
in 1999, who left and now recruited me into the business. He of course retires with 11
million in his bank account.
a collective clue" by "jaywalk". Full excerpt:
First of all, if you are a "research guy" you're not in BCS and
don't know what you're talking about. Second, The "purpose" of the board is largely a
starting point for folks on the way out. If you read the posts you would find that much
of the advice is on what to expect on leaving the company.
If you really believe the ex-PwC folk are uniformly happy here, you might want to talk to a couple BCS
managers about the enormous retention problems they're having. When I started my current project, there
were six people at this site with the firm. Four have left. With any luck, it will be five before the
project is over.
meant to tell you that" by "Dose of reality". Full excerpt: I'm just
a Johnny-come-lately with an outside point of view. ABC is the original, and obviously
a class act. To your point about the big brands, I would add a more philosophical slant
- corporate careers are not the end to it all. They serve a purpose - to enable you to
pay your bills, not to consume your life and spirit. If you continuously chase the next
grail" in theoretical proximity, you are destined to become a one-dimensional
un-grounded person. If you work for a poorly managed company, you can find a nice niche
if you are personally balanced. If you chase a holy grail at a poorly managed company,
you have the worst of all worlds.
was the bonus range for Band 7s and 8s" by "pwc-ibm". Full excerpt:
Had my bonus call last Friday and was told that I recvd a high bonus of 3% (whoopdydeedo!!).
I'm S&C Band 7 and had a 2+ rating and was expecting at least 5-6%, but no, that would
mean, they give a damn about what I want....no, NO! I was also told that the difference
b/w a 1-rating and 2+-rating was very minor... and I believed it!!! Then I spoke to a friend
who is a B8 and he had a 1-rating and a 10% bonus!!!! Anyone else here who is willing to
share their bonus info... it'll benefit all of us who're trying to identify if its just
groupthink, or is IBM really screwing us!!!!
|Coverage on H1-B and L1 Visa and Off-Shoring Issues
- India Daily: GE, IBM shifts
focus from India to Hungary – a new
trend or just isolated cases? By
Babu Ghanta. Excerpt: IBM has decided to create 700 jobs in Hungary for service outsourcing
activities. GE recently sold its outsourcing hub in India while operating service outsourcing
hub in Hungary. East Europe is providing one interesting scenario for these companies.
When IBM takes jobs to Hungary instead of India, not many start complaining. The reason
behind this may be India’s NASSCOM the industry association for IT and BPO companies.
These industry associations have created a perception among US people and political leaders
that India is stealing all the jobs from US. US Corporations are weary about that scenario.
For example, pension funds holding billions of GE or IBM stocks do not like the idea
that IBM or GE takes jobs to India or China. When these countries decide to expand in
countries that do not boast as “job stealers”, nor one really takes notice.
Computer giant IBM will create 700 service center jobs in Hungary in a 6.5-billion forint
($35.54 million) investment, the Ministry of Economic Affairs said on Thursday. IBM will
create mostly financial services, human resources, procurement, and call center positions
in Hungary, the ministry said in a press release. Luring IBM, which already operates a
major services center in Hungary, is a victory for the Hungarian Government, which has
been working to bring high skill, added value jobs to the country at a time when many low
skill-manufacturing jobs are moving east.
|Coverage on Social Security Privatization
- Houston Chronicle: GOP
Hits Wall Selling Social Security Plan. Lawmakers press on though pitches at home often
encounter a chilly reception. By Samantha Levine. Excerpts: The red paper Valentine's Day
cupids still were taped to the walls of the community room at the Copperwood senior housing
center in The Woodlands, but it was hardly a lovefest when U.S. Rep Kevin Brady dropped by
last week to discuss Social Security reform. Brady, a Republican from The Woodlands who sits
on the House Social Security subcommittee, expected a friendly crowd at Copperwood, a stop
he chose because the 90-year-old mother of one of his aides lives there. But between riled
seniors and a couple of Democratic activists, Brady did not get a free pass. Instead, he faced
the concerns of people like Social Security beneficiary Mary Kosmitis. "Everything (the
Bush administration) has done is just not exactly what they said they were doing," she
said after the gathering. Last week's congressional recess was intended to be a big chance
for GOP lawmakers to push the president's plan in their home districts. Instead, it found
Brady and his compatriots here and across the country often encountering chilly skepticism
to President Bush's ideas on remodeling the strained benefit program for elders. They found
that the opposition was often surprisingly organized and hoped-for support did not always
- Los Angeles Times: Attack
on AARP, Like 'Religious War,' Built on Either/Or Fallacy. By Ronald
Brownstein. Excerpt: As synonyms for the word "vile," my thesaurus offers some of
the following: offensive, objectionable, odious, repulsive, repellent, repugnant, revolting,
disgusting, sickening, loathsome, foul, nasty, contemptible, despicable and noxious.
Any of those words would aptly describe the advertising attack launched last week against AARP,
the largest advocacy group for seniors, by the conservative interest group USA Next. But there's
one word that unfortunately can't be applied: surprising. The salvo against AARP crystallizes
trends developing both in the debate over Social Security and more broadly in the competition
between the parties in Washington. On both fronts, the news isn't good. Last week, USA
Next announced it would spend $10 million on an ad campaign attacking AARP over its opposition
to Bush's proposal to create private investment accounts funded by the Social Security payroll
tax. USA Next opened the campaign with an Internet-only ad that uses logic so contorted
it verges on parody to accuse AARP of opposing the military and supporting gay marriage. Charlie
Jarvis, USA Next's chairman and a former aide to President Reagan and religious conservative
powerhouse James Dobson, promised that was just the start for AARP. "They are the boulder
in the middle of the highway to personal savings accounts," Jarvis told the New York Times. "We
will be the dynamite that removes them."
- New York Times: For
Bush, a Long Embrace of Social Security Plan.
By Richard W. Stevenson. Excerpts: Mr. Bush had long been intrigued by the idea of allowing
workers to put part of their Social Security taxes into stocks and bonds. One Tuesday
in the summer of 1978, in the heat of his unsuccessful race for a House seat from West
Texas, Mr. Bush went to Midland Country Club to give a campaign speech to local real
estate agents and discussed the issue in terms not much different from those he uses
now. Social Security "will
be bust in 10 years unless there are some changes," he said,
according to an account published the next day in The Midland Reporter-Telegram. "The
ideal solution would be for Social Security to be made sound and people given the chance
to invest the money the way they feel." [...]
Two decades later, Mr. Bush's desire to change Social Security intersected
with the promotion of private accounts by well-financed interest groups and conservative research
organizations, which viewed the concept as innovative if ideologically explosive. What was once
a fringe proposal has been propelled to the forefront of the national agenda in one of the biggest
gambles of Mr. Bush's political career, and in one of the most concerted challenges since the
New Deal to liberal assumptions about the relationship of individuals, the government and the
- New York Times: Deficits
and Deceit. By Paul Krugman. Excerpts: Four years ago, Alan Greenspan urged Congress
to cut taxes, asserting that the federal government was in imminent danger of paying off
too much debt. On Wednesday the Fed chairman warned Congress of the opposite fiscal danger:
he asserted that there would be large budget deficits for the foreseeable future, leading
to an unsustainable rise in federal debt. But he counseled against reversing the tax cuts,
calling instead for cuts in Social Security, Medicare and Medicaid. Does anyone still take
Mr. Greenspan's pose as a nonpartisan font of wisdom seriously? When Mr. Greenspan made
his contorted argument for tax cuts back in 2001, his reputation made it hard for many
observers to admit the obvious: he was mainly looking for some way to do the Bush administration
a political favor. But there's no reason to be taken in by his equally weak, contorted
argument against reversing those cuts today. [...]
And Mr. Greenspan has once again tried to come to the president's aid,
insisting this week that we should deal with deficits "primarily, if not wholly," by
slashing Social Security and Medicare because tax increases would "pose significant risks
to economic growth." Really? America prospered for half a century under a level of federal
taxes higher than the one we face today. According to the administration's own estimates,
Mr. Bush's second term will see the lowest tax take as a percentage of G.D.P. since the Truman
administration. And don't forget that President Clinton's 1993 tax increase ushered
in an economic boom. Why, exactly, are tax increases out of the question?
- New York Times: New
Poll Finds Bush Priorities Are Out of Step With Americans.
By Adam Nagourney and Janet Elder. Excerpts: Four months after Mr. Bush won a solid re-election
over Senator John Kerry, 63 percent of respondents say the president has different
priorities on domestic issues than most Americans. Asked to choose among five domestic
issues facing the country, respondents rated Social Security third, behind jobs and
health care. And nearly 50 percent said Democrats were more likely to make the right
decisions about Social Security, compared with 31 percent who said the same thing about
Republicans. "There are so many other things that seem to me to be more critical
and immediate: I think the national debt is absolutely an immediate thing to address," said
Irv Packer, 66, a Missouri Republican. He added, "Another one that I'd really
like to see people working on is the environment."
If Americans are ambivalent about the need for Washington to grapple
with Social Security, the poll found abundant concern with the budget deficit, with
much of the blame attributed to Mr. Bush. Sixty percent of respondents - including
48 percent of self-described conservatives - said they disapproved of how Mr. Bush
was managing the deficit. And 90 percent of respondents described the deficit as a
very or somewhat serious problem. [...] The focus on Social Security has, if anything,
aggravated concern about the deficit. About 30 percent said that the cost of Mr. Bush's proposal
to create private accounts would increase the deficit. And on another question, about 40 percent
said that Mr. Bush's budget proposal, made last month, would also result in increasing the
deficit, notwithstanding the deep cuts Mr. Bush proposed to try to pull back the deficit.
- Los Angeles Times: When
3% May Be a Bum Number. By Tom Petruno. Excerpts: Three percent is
a big number in President Bush's plan for private Social Security investment accounts.
Too big, say some people on both sides of the privatization debate. The administration's
long-term assumption is that money paid into the Social Security trust fund will earn
an average of 3% a year, after inflation, on the Treasury bonds the fund owns. [...]
That return also is the "neutral" or "hurdle" rate — the return investors
would have to beat in their private accounts to end up better off than if they simply
stuck with regular Social Security benefits, according to the administration's proposal.
The problem is that the current after-inflation, or real, annualized return on Treasury
bonds is well below 3%. And some people who spend considerable time thinking about markets
say it would be more realistic to assume a return below 3% in the longer term as well. "Three
percent is way too high," said Jeremy Siegel, a finance professor at the
University of Pennsylvania and the author of "Stocks for the Long Run," the now-famous
1990s book on investment return expectations. [...]
So what if real Treasury returns continue to fall short of 3%? If that's
also the hurdle rate for private Social Security accounts, many Americans might be
unwilling to take a chance on them, because poor Treasury returns might raise doubts
about future returns on stocks and other assets as well. If you fear that good investment returns
in general will be harder to come by in the next decade or two, you might figure it's
best to just stick with traditional Social Security benefits, whatever they turn out to be.
- Fort Worth Star-Telegram: A
clear moral choice. By Molly Ivins. Excerpts:
Among those still interested in fiscal sanity, and that includes quite a few Republicans,
I bring your attention to two tax cuts that should be repealed right now for the sound
reason that they are perfectly nuts. A whopping 54 percent of the two cuts go to the
0.2 percent of Americans who make more than $1 million a year. And 97 percent of the
cuts go to the 4 percent of the population with incomes over $200,000. (Figures on these
cuts, which would be phased in starting next year, are from the Center on Budget and
Policy Priorities and the Joint Committee on Taxation.) The two cuts were not part of
President Bush's original tax cut proposals. They were slipped in by Congress in 2001
and will be fully effective only in 2010. [...]
Also of note is what appears to be a new dimension in how monied special
interests buy legislation through Congress. We are all familiar with both corporate lobbyists
and the system of legalized bribery known as "campaign finance." But now comes an
unholy crush of corporate money aimed not at politicians but at ourselves. Millions and
millions will be spent to convince us that we should privatize Social Security. In other
words, they want to make us in favor of our own victimization by corporate special interests.
The Washington Post reports: "Corporate America, the financial services industry, conservative
think tanks, much of the Washington trade association community, the Republican Party
and GOP lobbyists and consultants are prepared to spend $200 million or more to influence
the outcome of two of the toughest legislative fights in recent memory." [...]
Bush's Social Security privatization plan is so bad (not to mention
that it doesn't fix Social Security, as even he now admits) that it is unclear if even
a massive public relations campaign can save it. But be prepared to watch them try.
Coming soon to a television station near you: ad after ad assuring you that Social
Security is going broke right now and that only private accounts can save it. The sponsors
of these ads (and Republican money can buy some mighty high-priced ad agencies) will all have
lovely names like "Committee to Save America" and "Society
to Save Old Folks." But it's pure political propaganda, and the more fool you if you buy
- Salon: Recycled
Bush's huge gamble on dismantling the cornerstone of the New Deal will fail. And if the
Democrats remain disciplined, his defeat will be profound.
By Sidney Blumenthal. Excerpts: Not since 1928, when Herbert Hoover was elected in a
landslide, have the Republicans held the White House and such majorities in both the
House of Representatives and the Senate. Bush acts with the urgency of a president for
whom this political advantage must be seized now or lost forever. So he has decided to
swing a sledgehammer at the cornerstone of the New Deal and the Democratic Party. The
gamble would pay off in closely tying to the Republican Party the Wall Street banks that
would finance the transition costs of privatization and the bond houses and stock firms that
would be flush with new investments. But, most important, it would unravel the fact
and idea of government insurance programs providing for the needs of the people as
a whole. [...]
Bush launched his initiative to privatize Social Security with a bang,
promoting it in his State of the Union address and stumping the country at rallies.
Rove has been put in charge of organizing the campaign as an extension of the 2004
effort. From the White House, Rove directs the lobbyists of K Street in Washington
and the U.S. Chamber of Commerce, the National Rifle Association and the religious
right. Suddenly, the Swift Boat Veterans for Truth have reappeared as warriors against
the pro-Social Security AARP, smearing the seniors organization as anti-military and
pro-gay marriage. And Tony Feather, a Republican consultant with longtime ties to Rove, has
reemerged with a war chest of millions to spend through a front group called Progress for America,
just as he did against Kerry. [...]
For Bush and the Republicans, the problem is salesmanship. If only
they hone the pitch, convince the wary customers that they really mean well, saving
them from a bad investment and delivering a bargain, they will clinch the deal. Frank
Luntz, a Republican consultant who has made a specialty out of wordplay, has advised
them on how to make friends and influence people. In a memo circulated among the Republican
leadership last month, he urged that Republicans appeal to emotions, not facts. The
public, Luntz writes, wants "empathy
rather than statistical declarations ... It is tempting to counter-attack using facts
and figures. Resist the temptation." He reemphasizes: Social Security "is a difficult
subject because there are many obscure facts and figures. Stay away from them!!!" No fewer
than three exclamation points!!! [...]
When all else fails, Republicans should simply resort to the fear factor: "September
11th changed everything. So start with September 11th. This is the context that explains
and justifies why we have $500 billion deficits, why the stock market tanked, why unemployment
climbed to 6 percent ... Without the context of September 11th you will be blamed for the
deficit ... Link the war on terror to the economy." [...]
But Luntz's rhetorical twists and turns, adopted by Bush and the Republicans,
are hardly innovative. They are as ancient as the earliest arguments made by Republicans
against Social Security when it was first introduced. Social Security is in crisis, Social
Security will not be there, only the Republicans can save the system by privatizing it -- all
these themes were advanced in the 1936 Republican Party platform. This yellowing document reads
like the most recent Republican declaration: "Society has an obligation to promote the
security of the people, by affording some measure of protection against involuntary unemployment
and dependency in old age. The New Deal policies, while purporting to provide social security,
have, in fact, endangered it." The
1936 Republican platform claims that the federal government will not be able to meet
its financial obligations to pay retirement benefits and two-thirds of the people will be deprived.
It also insists that "the fund will contain nothing but the government's promise to
pay" and is "unworkable."
- New York Times: The
Crisis Last Time.
By Paul C. Light. Excerpts: The $168 billion package eased the program through a turbulent
period, and 1983 marks the last time Congress cut Social Security benefits, raised taxes
and lived to tell about it. Before drawing too much inspiration from this history, however,
we should recognize that this rescue was anything but assured when Mr. Conable and the
other members of the bipartisan National Commission on Social Security Reform began work
under the leadership of Alan Greenspan in February 1982. Then as now, a president was
ready to invest his political capital in Social Security reform. Despite his best efforts
to convince the public that Social Security was going broke, Ronald Reagan got exactly
nowhere. In May 1981 his budget director, David Stockman, proposed a deep cut in the
early-retirement benefit available at age 62; in July there was the suggested elimination
of the $122-a-month minimum benefit for the poorest beneficiaries; and in September word
leaked out that Mr. Reagan was considering a three-month freeze in the annual cost-of-living
increase. With his public approval sagging under opposition to all these proposals, Mr.
Reagan did what any beleaguered president would do: he pulled his foot off the third
rail of the political subway and proposed a bipartisan national commission to study the
issue. Scheduled to report by January 1983, after the midterm elections, the 15-member
commission would, with luck, give the president time to recover before the 1984 campaign.
- Media Matters: USA
Next is a Republican front group, but you wouldn't know it from watching the news.
Excerpts: Charles W. Jarvis, president and CEO of the right-wing lobbying organization
USA Next, has been ubiquitous on TV news in recent days attacking the AARP and lobbying
for President Bush's plan to partially privatize Social Security. These appearances have
generally left the impression that USA Next is a grassroots, issue-based advocacy organization
representing seniors. In fact, USA Next is something quite different: a Republican front
group. Since its founding in 1991, the only common thread discernable in the group's diverse
lobbying activities is aggressive, unconditional support for the Republican Party. The
group has supported Republicans and attacked Democrats on issues as varied and seemingly
distant from traditional seniors' issues as conservative judicial nominees, drilling for
oil in the Arctic National Wildlife Refuge, and abortion. Moreover, much of the group's
funding comes from pharmaceutical companies, not individual seniors. ABC's World News Tonight
reported on USA Next's attacks against the AARP on February 28. While the report noted
that the group had recently hired media consultants who orchestrated the Swift Boat Veterans
for Truth smear campaign against Sen. John Kerry, it did not mention that this is only
the most recent event in the group's history of pro-Republican activism.
CNN identified USA Next as a "conservative lobbying group," and
MSNBC introduced it as "a lobbying group that supports President Bush's Social Security
plan," but Fox News, which has featured several interviews with representatives of the
group, has consistently failed to identify USA Next as conservative, let alone partisan.
USA Next's recently launched $10 million advertising campaign against AARP follows the
group's $4 million ad campaign in support of the Bush administration's prescription drug
bill in 2002 and its $2 million ad campaign in support of President Bush's tax cuts in 2001
under its former name, the United Seniors Association (USA). Beyond Social Security, USA Next
has supported a range of initiatives with no apparent connection to seniors and little connection
to one another beyond their place on a list of GOP priorities.
- Jim Hightower: The
Newspeak of Social Security. Excerpts: Following
last year's presidential campaign, Bush began touting his plan to create "private
accounts" that would siphon money out of our public pension system and let some
workers put this privatized money into the stock market. But George's pollsters and propagandists
have learned that the term "private" stinks as a sales term. The public distrusts
any plan that attaches this word to the widely-popular retirement program. So, in January,
the Bushites' language suddenly shifted from "private accounts" to a softer,
more poll-friendly phrase: "personal accounts." Bully for them... but then
they began to bully the media, demanding that reporters also adopt the new, officially-sanctioned,
government language when discussing Social Security. Republican officials actually began
calling journalists to complain if the word "private" was used in stories.
George himself recently snapped at a reporter who used the verboten term, accusing him
of "editorializing," then
curtly correctly him by saying: "You mean the personal accounts?" One of
Bush's congressional henchmen, Rep. Bill Thomas, also joined the newspeak campaign,
chiding a reporter who used the banned phrase: "They're personal accounts, not
private accounts," he barked. Then in classic doublespeak, Thomas added: "No
one is advocating privatizing Social Security."
- Washington Post: Frist
Revises Social Security Remarks, Urges Prompt Action. By Charles Babington and Mike Allen. Excerpts: Senate Majority Leader Bill Frist,
who angered some fellow Republicans this week by suggesting President Bush's proposed
Social Security revisions might have to wait a year, said yesterday that the legislation
needs to pass this year. "We need to do it this year -- not next year, but this
(R-Tenn.) said on the Senate floor, moments after the day's session began. He also restated
his support for private accounts that would allow a portion of a younger worker's Social
Security contributions to be invested in stocks and to follow the worker into retirement.
Frist had ruffled feathers at the White House and elsewhere by telling
reporters Tuesday that it was unclear whether Congress would tackle Social Security revisions
in "a week, a month, six months or a year." Acknowledging strong Democratic opposition
to private accounts, he had added, "I wouldn't take that off the table yet."
on the Alliance@IBM Site:
- Forbes: IBM
Plans Nearly 600 Job Cuts in Germany.
- ZDNet Australia: Lenovo
offers to hit IBM employees mid-March.
By Renai LeMay. Excerpt: Around 10,000 workers in IBM's PC division can expect to get letters
of offer from Lenovo in the next two weeks, with remuneration and benefits comparable
to what they're currently on. [...] Jones also said that the company had conducted internal
surveys regarding the big move, and "something like 98 percent of employees are
excited about their future at Lenovo". A spokesperson for IBM told ZDNet Australia
back in December that there were around 180 employees in Australia and 10 in New Zealand
that were expected to make the transition to the Chinese company.