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Highlights—November 27, 2010

  • EE Times: Is IBM moving to fab-lite, research heavy? By Peter Clarke. Excerpts: IBM appears set to gradually back away from semiconductor manufacturing and to rely for its leading-edge silicon on Samsung and GlobalFoundries as foundry suppliers. Both Samsung and GlobalFoundries are set to have wafer fabs for foundry operations in the United States, which could help cement relations.

    IBM, GlobalFoundries and Samsung are set to co-host the Common Platform Alliance Technology Forum at the Santa Clara Convention Center in California on January 18, 2011, but whereas GlobalFoundries and Samsung are set to spend $12 billion in 2011, IBM's spending is likely to be less than $500 million according to data from an analyst at market research firm Gartner.

    For years IBM has been a beacon of research in semiconductor technology and had carried that work into manufacturing with its own processes and wafer fabs. As well as including aggressive process miniaturization its pioneering work has included high-frequency RF on CMOS and silicon-on-insulator. Such was its leading position in research that it was able to drive the Common Platform Alliance as a means of sharing semiconductor process research costs.

    But an analysis of the capital expenditure plans show that IBM is gradually allowing itself to exit from leading-edge manufacturing at high volume. IBM appears to have joined the broad class of semiconductor companies that will never build a major wafer fab again.

    An examination of capital expenditure data from Gartner reveals that the last time IBM spent more than $1 billion on semiconductor capital expenditure in one year was 2004, when it was the 11th biggest spender. IBM is not in the top 20 of semiconductor capital expenditure in 2010 and nor is it expected to be in the top 20 in 2011, according to Bob Johnson, research vice president with Gartner.

  • Associated Press, courtesy of Yahoo! News: Jobless benefits to expire as Congress debates tax. By Andrew Taylor. Excerpts: Jobless benefits will run out for 2 million people during the holiday season unless they are renewed by a Congress that's focusing more attention on a quarrel over preserving tax cuts for people making more than $200,000 a year. ...

    The most recent effort to renew jobless benefits occupied weeks of the notoriously balky Senate's time and barely advanced with the required 60 votes. Now, even if there were time, GOP Leader Mitch McConnell of Kentucky would appear to command the votes to block any benefits extension that is not "paid for" with cuts to other programs. Sen.-elect Mark Kirk of Illinois will soon join the chamber, replacing Democrat Roland Burris, which appears to now leave Democrats short of the votes to defeat a filibuster.

    Still, the looming expiration of unemployment benefits could put Republicans on the defensive since they'll expire just as debate peaks in the lame-duck session over whether to extend Bush-era tax cuts on individuals with income exceeding $200,000 or for couples making more than $250,000. The tax cuts expire Dec. 31, and Democrats oppose permanently extending the upper-bracket tax cuts, which would cost about $700 billion over 10 years.

    "I don't think we want to leave here having fought for tax cuts for millionaires and against unemployment insurance for those that have lost their jobs," spokesman Robert Gibbs said. "Republicans in Congress are eager to spend lavishly on tax breaks for the fortunate few, but stingy when it comes to helping the middle class make ends meet," said Rep. Ed Markey, D-Mass. ...

    But allowing benefits to expire in the holiday season may draw negative attention to Republicans, especially when measured against their insistence on renewing tax cuts for upper-income taxpayers. "It's just inconceivable that in the last gasp of this Congress you would turn all your attention to the top 2 percent of wage earners in the country at the same time that middle class families are struggling to hold their families together because of prolonged unemployment," said House Education and Labor Committee Chairman George Miller, D-Calif.

  • eWeek: Offshoring Will Drain Another 450K Tech Jobs by 2014: Report. By Don E. Sears. Excerpts: Programmers, data center operators and application developers: Take heed. The facts are hard to ignore. When it comes to where business and job growth are happening in the world, it’s not in the United States, according to a report from the Hackett Group—a strategic advisory company that benchmarks global business trends and tracks the offshore job market.

    The title of its November 15 report says it all: “Offshoring Driving a Jobless Recovery,” and the headline that reads across the opening page is like loud, clanking hammer on a signpost: “2.8 Million Business-Support Jobs Eliminated Since 2000; One Million More to Disappear by 2014.” ...

    “This is not exactly new, but it is a continuation of a trend that has been ongoing and is now reaching beyond IT,” said Janssen, who authored the report based on benchmarked data from 3,800 U.S. and European companies with an annual revenue of $1 billion or more. “Commodity programmers, maintenance positions in the data center and some higher-level application development jobs are at risk. There were 4 million back-office jobs in IT in 2000; there are now 2.4 million, and that number drops to 2 million by 2014.”

    Yet, the recent offshoring trends show big changes afoot for finance professionals, said Janssen. Accounts payable clerks and transactional people are losing work to overseas hiring, as are workers in more skilled analytics jobs . Offshoring is moving up the value chain and into the process group levels.

  • Wall Street Journal MarketWatch: Cash cow. Commentary: Congress must keep its hands off Social Security. By Irwin Kellner. Excerpts: Social Security is not responsible for today’s humongous budget deficit, so why go after seniors’ benefits? The simple explanation is that the Social Security system is a cash cow, with tons of money there for the taking. How much, you ask? Well, at the end of last year Social Security had assets totaling a thumping $2.3 trillion — more than three times the amount needed to cover this year’s payments to beneficiaries. ...

    It’s time to look at the facts. First of all, Social Security has been around for 75 years; Medicare for 45. Budget deficits of today’s magnitude are only a few years old.

    Clearly, today’s deficits were caused by too much spending (two wars, massive bailouts and the huge stimulus package) combined with too little revenues (tax cuts and the Great Recession). ...

    A recent poll showed that maintaining the integrity of Social Security is important to seniors of all political persuasions — even Tea Party members. The losses suffered by numerous incumbents in this month’s elections are a good example. The message to deficit cutters: Look elsewhere for money to reduce the budget deficit. Social Security is off-limits.

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Senior Managing Consultant in Dallas, TX: (Past Employee - 2009) “Type A Personalities Work Well In IBM.” Pros: IBM was a great place to work. The Strategic Change group was very willing to share information and work as a team to assist one another and the client. Overall, the management and team members were supportive of one another. Cons: The changes to the organization in 2009 drastically changed the consulting organization. Where Org and Change would cross all types of organizational change, technology implementation to organizational transition, the business perspective was changed to consultants specializing in only in one area; for example implementation of SAP. This narrowed the consultant's scope and siloed the consulting organization. Advice to Senior Management: The consulting management was excellent.
    • IBM Anonymous in Bangalore (India): (Current Employee) “IBM Bangalore, India Review.” Pros: Good place to work and learn how a huge organization works. Lot of scope for learning new things. Lot of opportunities within the organization. Work from home and other benefits. No Time tracking. Cons: Tough competition among peers as projects are often huge. For newly joined person if you do not have access to PC initially, it is confusing as almost everything is automated and there is chance that you will not be able to keep track of the process. Salary not as per other organization of same level, especially in service division. Advice to Senior Management: Provide system to new employee at the time of their induction program
    • IBM Sales Representative: (Current Employee) “IBM too big to fail.” Pros: Benefits. Work at home. Travel. Working with smart people. Cons: Poor management. Outsourcing has lowered the value delivered to clients. Senior management is out of touch. Sales plan. Advice to Senior Management: Please get more input from your employees. Hire more competent managers. Pay your sales people. We are losing to competition
    • IBM Anonymous in Somers, NY: (Current Employee) “Globalization - What's In It for the Employee.” Pros: Excellent exposure to global culture, business issues and challenges. Flexibility of work location. Interesting and challenging work. Smart, dedicated staff that really want to get the job done right and are willing to go all out to do it. Cons: Way too many metrics and measurements - need to focus on core issues. Labor arbitrage is all it's about today, with the belief that you can get someone for the 1/2 the price to deliver the same business value. There is veiled attempt to hide the arbitrage as 'globalization', but the execution of that globalization is terrible. Processes are broken, turn-over of staff in growth markets causes inordinate amounts of issues and costs the business money. Staff in mature markets don't buy into the globalization effort as the case for their careers and growth is non-existent. There are lots of words from the executive team, but no tangible action. Even the growth market employees leave because they don't see what's in it for them as the arbitrage regularly chases the next cheapest source of labor. Advice to Senior Management: Middle & senior management (Directors & VPs) need to "lead" and not "manage" - they are so busy checking, reviewing and questioning every tiny detail and creating additional layers of review and control that they don't spend any time leading the organization.
    • IBM Senior Consultant: (Past Employee - 2010) “Like any other consulting company.” Pros: Benefits, breadth of personalities and contacts to draw from. Cons: Has become a job shop. loyalty/performance is not rewarded. Advice to Senior Management: Reward your employees that deserve it the most
  • Washington Post: How Germany got it right on the economy. By Harold Meyerson. Excerpts: It may be turkey week in America, but it's goose month in Germany. In many restaurants, you can get goose in your salad and goose in your soup to go with your goose entrée. Diners fairly honk their way through November. But then, Germans have something to honk about. Germany's economy is the strongest in the world. Its trade balance - the value of its exports over its imports - is second only to China's, which is all the more remarkable since Germany is home to just 82 million people. Its 7.5 percent unemployment rate - two percentage points below ours - is lower than at any time since right after reunification. Growth is robust, and real wages are rising.

    It's quite a turnabout for an economy that American and British bankers and economists derided for years as the sick man of Europe. German banks, they insisted, were too cautious and locally focused, while the German economy needed to slim down its manufacturing sector and beef up finance.

    Wisely, the Germans declined the advice. Manufacturing still accounts for nearly a quarter of the German economy; it is just 11 percent of the British and U.S. economies (one reason the United States and Britain are struggling to boost their exports). Nor have German firms been slashing wages and off-shoring - the American way of keeping competitive - to maintain profits. ...

    Mixing social democratic values with Jimmy Stewart localism, Germany's economy is running rings around America's. "What we have here is stakeholder capitalism, not shareholder capitalism," says Hubner. And like most mittelstand owners, he adds: "I live where my company is located. I want a good image in the town I live in." They know how to goose an economy, those Germans. Ours, by contrast, seems more and more a turkey.

  • AlterNet: Alan Simpson Calls Seniors "Greediest Generation". Excerpts: I almost spit up my coffee. Per TPM:
    "We had the greatest generation," Simpson said. "I think this is the greediest generation."

    Where to begin. Simpson doesn't apparently understand the program that it has been his life's mission to destroy. Collecting Social Security isn't a gift. You pay into it all your life, and then when you get old, you get your turn to collect. But his perspective indicates something even more vile: a belief that people's sole source of income, their very livelihood, is some sort of mass generosity. It isn't. Social Security is a deal. A new sort of deal that didn't exist before FDR created it. Instead of working all your life and then spending your elder years destitute, why not take care of the old people now and then when you get old, you'll get yours. It's a deal, not a handout.

New on the Alliance@IBM Site
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  • To Alliance@IBM supporters: The Alliance is the only organization that advocates and supports IBM employees and ex-employees. In fact, there are few like it in the Information Technology field. It is always difficult to keep an organization like this alive, but as a supporter you know how important it is that we exist. We are calling on you today to help keep us alive another year by joining as a member or associate member. See our online forms below. As our membership has dropped, it is imperative that we gain new members or this organization and web site will cease to exist. Help us keep our organizing and advocacy work alive!
  • General Visitor Comments: Due to a lack of membership growth the comment sections will be closed until we see sufficient growth in full membership, associate membership or donations. Many of you that visit our site have not yet joined, but seem to value its existence. The only comment section that will remain open will be Job Cuts Reports. If you have information that you want the Alliance to know about please send to ibmunionalliance@gmail.com. Information of importance will be put on the front page of this web site. To join go here: Join The Alliance! or here: Join The Alliance!
  • Job Cut Reports
    • Comment 11/22/10: THANKS to all those that voted Republican this election day. It's clear the new Congress cares less about job cuts in companies like IBM. This Congress is more concerned in extending tax cuts for IBM middle and upper and executive management. I was RAed in 2009 and still can't get another IT gig and not even a part-time or contract work one. Now my unemployment benefits of $275 a week run out just after I eat the last of turkey leftovers. It makes me more dismayed that those still in IBM sit by and do nothing or for that matter offer any real support for those that were selected for RA. We used to be your brothers and sisters in IBM. Now we have been cut off and cast aside by all at large. Please unite and stop further RAs and do it for yourself and fellow IBMers or you might soon be just like me now with nowhere to go or to turn to in this over outsourced economy. -I'veBeenMarooned-
    • Comment 11/23/10: Oh please! Don't start in on the Republicans being to blame for this outsourcing. I was RA'd 7 months ago, WELL ONTO OBAMA'S WATCH.....a while after he entertained Sammy at the White House! -Oh please!- Alliance reply: There is plenty of blame to go around for both parties. If you lose your job to offshoring/outsourcing contact your congressional representative. That way they can't claim they didn't know what IBM was doing.
    • Comment 11/23/10: To "I'veBeenMarooned", you are correct, the GOP does not give a crap about anyone who cannot lobby millions a year. IBM plays the politics well, and they hire attorneys to play against unionizing as they are well aware of the potential we would have as a union. One of the diversity factors to hire people from different generations plays towards their benefit immensely. People who are in their 20's versus people in their 30's versus's people in their 40's, etc, etc all have different interests in what they define as important in a job. If we were to unite we would all benefit though. -Alli-Member-
    • Comment 11/23/10: Look, BOTH parties are to blame for taking money and corporate favors for their campaigns. BOTH parties have corporate-interest leaning representatives that shill for Big Business, instead of the majority of the voters they are supposed to represent. BOTH parties are corrupt to a certain level. BOTH parties have dragged their feet when it came to passing bills that would benefit the many working people. The bottom line is money....lots of it. Working Americans have only one advantage over those who are out of a job: They have a job. Beyond that, ALL working class people (working to pay for basic needs to survive) have the advantage to vote for candidates that represent the working people's interests.

      The problem is, that nearly ALL of the representatives will find ways to take money from Corporation and Wealthy donors. Working people cannot not afford to donate millions of dollars every election cycle to out-match the corporate money being poured into elections. All this continues to cycle through, year after election year and working people today still think that there will be change to the system. There will not.

      Yes, countries like China, India, Pakistan, Vietnam, etc., ALL have internal problems; but their economies are BOOMING. Global Corporations have a much longer timeline built into their plan, than every election cycle here in the US. Big Corporations such as IBM, control the world economy. So instead of complaining here on this board, who is to blame, get busy organizing and build a union movement within what's left of IBM here in the US. Don't sit back and wait for someone else, like the Government or the Tea-Party to do it for you.

      Get off your podium, stop making speeches and start contacting your co-workers. Develop simple goals...like print out some flyers and put them in your break areas. Work from home? Find out the phone numbers of the people in your dept., that work in the US. Call them and start a conversation about forming a union. Little steps. Simple goals. That's how you start. We have to start from somewhere. It's not called a "Labor Movement" for nothing -Act now!-

    • Comment 11/23/10: With all the continuous job cuts in IBM I found this to be very interesting. I PERSONALLY know two employees in BVT manufacturing who were each given a $10K retention bonus. This occurred in the past month. Should they decide to leave the company within 2 years of receiving the bonus it must be paid back. I was NOT privy to the number of employees who were given this bonus but management has not mentioned this to the general IBM public Not sure if IBM BVT is trying to prevent a mass exodus to the new GLOBAL FOUNDRIES FAB in Upstate NY or if there is some other reason. Anyone else heard about this? Is this happening at other sites? -Tom Watson III-
    • Comment 11/25/10: : retention bonus' are not new and are used to keep specific skills/people in the business. The most I have given was 20K but there were also various stock option packages.This has been going on for years. have a Happy Thanksgiving -was1stlinenowra'd-
    • Comment 11/25/10: -Tom Watson III- I have heard of people with top secret government clearances being given a 10K retention bonus as it is so costly and time consuming to pass someone through the clearance process. Maybe this is the case. -Exodus2007-
    • Comment 11/25/10: UK Employees should consider joining UNITE. I've joined the union as a protection against IBM. Sadly this has been the first time in my career that I've thought I've needed some backup because I have no trust in my employer!! -UK Employees-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
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  • Washington Post: Sen. Bernie Sanders: 'Vermont stands a chance to be the first state in the nation to pass single-payer'. By Ezra Klein. Excerpt: Sen. Bernie Sanders (I-Vt.) has long supported state waivers in the health-care bill, and for a very specific reason: He'd like to see Vermont create the first single-payer system in the nation, as he believes it'll demonstrate enough cost and quality advantages that other states will want to follow suit. We spoke by phone last night, and a lightly edited transcript of our conversation follows.
  • The Commonwealth Fund: Medical Loss Ratio Regulations Good for Consumers. By Sara R. Collins, Ph.D. Excerpts: The Affordable Care Act's medical loss ratio (MLR) requirements for health insurance plans are an important way that the law improves the value consumers receive for their health insurance payments and will place downward pressure on premiums over time. Commonwealth Fund analysis has found that, for some small employers, as much as 30 percent of premium payments go to administration, and some individuals see 40 percent of their payments spent on administration. High marketing expenses, underwriting, churning on and off coverage, benefit complexity, and brokers’ fees explain the bulk of the problem. Our country now leads all other industrialized nations in the share of health care expenditures devoted to administration. ...

    Too many Americans have struggled under the weight of administrative expenses and double-digit premium increases for too long. The new reform law and these new interim final regulations encourage insurers to do their part to increase efficiency and lower costs in a way that should increase value and return real savings to families, businesses, and the economy.

  • ThinkProgress: Poll: Republicans Who Want To Repeal Health Care Law Should Opt Out Of Gov’t-Sponsored Health Plans. Excerpt: Last week, responding to Rep.-elect Andy Harris’ (R-MD) hypocritical demand for government-sponsored benefits, Rep. Joe Crowley (D-NY) began circulating a letter among his Democratic colleagues calling on Harris and other members of Congress who want to repeal the new health care law to forgo their own government health care plans. So far just two incoming Republican freshmen — Rep.-elect Mike Kelly (PA) and Rep.-elect Bobby Schilling (IL) — have agreed. But a new Public Policy Polling survey has found that most Americans “think incoming Congressmen who campaigned against the health care bill should put their money where their mouth is and decline government provided health care now that they’re in office”:
News and Opinion Concerning the "War on the Middle Class"
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.

  • AlterNet: How Corporate America Is Pushing Us All Off a Cliff. We can't turn our backs on the big corporations' next big scheme to screw up society. We can be sure the next crash will be much bigger. By Michael Moore. Excerpts: When someone talks about pushing you off a cliff, it's just human nature to be curious about them. Who are these people, you wonder, and why would they want to do such a thing? That's what I was thinking when corporate whistleblower Wendell Potter revealed that, when "Sicko" was being released in 2007, the health insurance industry's PR firm, APCO Worldwide, discussed their Plan B: "Pushing Michael Moore off a cliff."

    But after looking into it, it turns out it's nothing personal! APCO wants to push everyone off a cliff.

    APCO was hatched in 1984 as a subsidiary of the Washington, D.C. law firm Arnold & Porter -- best known for its years of representing the giant tobacco conglomerate Philip Morris. APCO set up fake "grassroots" organizations around the country to do the bidding of Big Tobacco. All of a sudden, "normal, everyday, in-no-way-employed-by-Philip Morris Americans" were popping up everywhere. And it turned out they were outraged -- outraged! -- by exactly the things APCO's clients hated (such as, the government telling tobacco companies what to do). In particular, they were "furious" that regular people had the right to sue big corporations...you know, like Philip Morris. (For details, see the 2000 report "The CALA Files" (PDF) by my friends and colleagues Carl Deal and Joanne Doroshow.) ...

    With this track record, you can see why, when the health insurance industry wanted to come after "Sicko," they went straight to APCO. The "worst case," as their leaked documents say, was that "Sicko evolves into a sustained populist movement." That simply could not be allowed to happen. Something obviously had to be done.

    As Wendell Potter explains, APCO ran their standard playbook, setting up something called "Health Care America." Health Care America, according to Potter, "was received by mainstream reporters, including the New York Times, as a legitimate organization when it was nothing but a front group set up by APCO Worldwide. It was not anything approaching what it was reporting to be: a 'grassroots organization.' It was a sham group." ...

    And here we are in 2010. A lesser PR firm might be resting on its laurels at this point, content to sit back and watch hundreds of thousands of people continue to be pushed off the various cliffs they've built. But not APCO! Right now they've taken on their biggest challenge yet: leading a giant, multi-million dollar effort to help Wall Street "earn back the trust of the American people."

  • New York Times editorial: What the Secret Donors Want. Excerpts: According to tax records unearthed by Bloomberg News, the health insurance lobby secretly gave $86.2 million to the U.S. Chamber of Commerce in 2009 to try to prevent the health care bill from becoming law. The huge contribution — 40 percent of the chamber’s spending for that year — allowed the group to run ads against the bill without tainting the insurance industry, which was negotiating with Democrats on the bill at the same time. ...

    Several news reports, including one by NBC News, have asserted that a substantial portion of the $16 million in undisclosed donations to Crossroads GPS came from Wall Street, specifically a small and very wealthy group of hedge fund and private-equity fund operators. Those stock traders, along with many others in real estate partnerships, were furious in May when the House passed a bill that would tax their compensation at ordinary income levels as high as 39 percent, rather than the much lower capital gains rate.

    The Senate never voted on the matter, and the new crop of Republicans marching into the next Congress will not be inclined to raise taxes on some of America’s richest people, no matter how much they talk about reducing the deficit. But the issue will probably come up again in some form when taxes are discussed, and in light of the tide of contributions, it will be interesting to see which lawmakers speak the loudest against it. ...

    Those who set up and financed this secret system don’t want voters to know that information. And many of them are still blocking the legislation that could end it — the Disclose Act, which would prohibit secret political contributions. It will also be interesting to see which of the new lawmakers vote against that bill.

  • InvestmentNews: Buffett: Trickle-down theory is bunk. Oracle of Omaha says rich folks should pay more in taxes; 'we have it better than we've ever had it'. Excerpts: Billionaire Warren Buffett said that rich people should pay more in taxes and that Bush-era tax cuts for top earners should be allowed to expire at the end of December. “If anything, taxes for the lower and middle class and maybe even the upper middle class should even probably be cut further,” Buffett said in an interview with ABC's “This Week With Christiane Amanpour” that is scheduled to air on Nov. 28. “But I think that people at the high end -- people like myself -- should be paying a lot more in taxes. We have it better than we've ever had it.” ...

    (According to Buffett) “The rich are always going to say that, you know, just give us more money and we'll go out and spend more and then it will all trickle down to the rest of you,” Buffett, chief executive officer of Berkshire Hathaway Inc., said in the interview. “But that has not worked the last 10 years, and I hope the American public is catching on.”

  • Huffington Post: Economic History Shows Clearly That Tax Cuts for Rich Hurt the Economy. By Robert Creamer. Excerpts: In fact, there is a body of empirical, historical evidence that proves clearly that tax cuts for the rich not only do nothing to spur economic growth -- they actually do substantial damage to the prospects for economic growth.

    First let's look at the proposition that high taxes on the wealthy stifle economic growth. In the last century, marginal tax rates on the rich were their highest during World War II -- when the wealthy were called upon to help finance the war effort. During World War II, the tax bite on wealthy Americans was close to punitive (the highest bracket was 91 percent). But that didn't hurt the economy; far from it. By war's end, Americans were rolling in cash. The average weekly pay rose 83 percent between 1940 and 1945. Many families had their first discretionary income. In fact, this period -- and the expansionary fiscal policy that helped finance the war -- led to the longest sustained period of growth in American history and created the American middle class.

    Or we can turn to the tax policy of the Clinton administration. In 1993, President Bill Clinton proposed a budget that raised taxes on the rich. Republicans predicted that its passage would lead to economic doom. They argued that the Clinton tax increase on the rich would lead to economic stagnation and unemployment. Instead, of course, the Clinton administration created 22.5 million jobs, of which 20.7 million -- or 92 percent -- were in the private sector. His economic policy eliminated the federal deficit and left his successor -- George Bush -- with budget surpluses projected as far as the eye could see. ...

    For eight years, George Bush and the Republicans lowered taxes for the wealthy and cut back the regulation of big corporations and Wall Street -- all based on the premise that these two policies would benefit the economy. The results are there for everyone to see.

    The New York Times reported last year that, "For the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period. The total number of jobs has grown a bit, but that is only because of government hiring." In fact, in the eight years when George Bush and the Republicans in Congress passed two massive tax cuts, we saw a massive, secular decline in the creation of private sector jobs. ...

    And just in case you hear someone say that a dollar spent on tax cuts to the rich is a good way to stimulate the economy, here's a fact from Mark Zandi, chief economist for Moody's.com, who was also an economic adviser to John McCain:

    For every dollar spent on making the Bush tax cuts permanent, you get $.29 of increase in the GDP. For every dollar spent to extend unemployment benefits you get $1.64 increase in the GDP. In other words, a dollar spent on unemployment compensation gets 5.6 times more boost to the GDP than a tax cut for the rich.
  • truthOut: Roll Back the Reagan Tax Cuts. By Thom Hartmann. Excerpts: When I was in Denmark in 2008 doing my radio show for a week from the Danish Radio studios and interviewing many of that nation’s leading politicians, economists, energy experts, and newspaper publishers, one of my guests made a comment that dropped the scales from my eyes.

    We’d been discussing taxes on the air and the fact that Denmark has an average 52 percent income-tax rate. I asked him why people didn’t revolt at such high taxes, and he smiled and pointed out to me that the average Dane is very well paid, with a minimum wage that equals roughly $18 per hour. Moreover, what Danes get for their taxes (that we don’t) is a free college education and free health care, not to mention four weeks of paid vacation each year and notoriety as the happiest nation on earth, according to a major study done by the University of Leicester in the United Kingdom.

    But it was once we were off the air that he made the comment that I found so enlightening.

    “You Americans are such suckers,” he said. “You think that the rules for taxes that apply to rich people also apply to working people, but they don’t. When working peoples’ taxes go up, their pay goes up. When their taxes go down, their pay goes down. It may take a year or two or three to all even out, but it always works this way—look at any country in Europe. And that rule on taxes is the opposite of how it works for rich people!” ...

    If a wealthy person earns so much money that he doesn’t or can’t spend it all each year, when his taxes go down his income after taxes goes up. This is largely because there’s little or no relationship between what he “needs to live on” and what he’s “earning.” Somebody living on $1 million per year but earning $5 million after taxes can sock away $4 million in a Swiss bank. If his taxes go up enough to drop his after-tax income to only $3 million per year, he’s still living on $1 million per year and socks away only $2 million in the Swiss bank. Although his lifestyle doesn’t change, his discretionary income—some call it “disposable” income—goes down when his taxes go up and vice versa.

    Most working Americans believe that their taxes and income work in the same way—something the right-wing think tanks and media want everyone to believe. So average Americans tend to support tax cuts because they think they’ll have more money in the bank as a result, but if their taxes go up, they’ll have less money in the bank. It’s pretty intuitive, and over the short term, it’s true.

    But it never plays out that way. Our own experience—and the experience of the Danes and other Europeans—shows a completely different trend. ... (Editor's note: See the full article for an explanation of why this happens)

    Consider all the “tax cuts” working people have gotten over the past 30 years, from Reagan, Clinton, and Bush Jr. In each case, within a year or two working people’s wages were the same or lower. On the other hand, when working-class people’s taxes went up, during the Truman, Eisenhower, Johnson, and Nixon administrations, their wages went up in the following years, too. We’ve seen both happen over the past 80 years, over and over again. ...

    Beyond fairness, holding back the landed gentry that the Founders worried about—America had no billionaires in today’s money until after the Civil War, with John D. Rockefeller being our first—in and of itself is an important reason to increase the top marginal tax rate and to do so now. Novelist Larry Beinhart was the first to bring this to my attention. He looked over the history of tax cuts and economic bubbles and found a clear relationship between the two. High top marginal tax rates—generally well above 60 percent—on rich people actually stabilize the economy, prevent economic bubbles from forming, prevent the subsequent economic crashes, and lead to steady and sustained economic growth as well as steady and sustained wage growth for working people. ...

    So why is it that Americans have come to believe that tax cuts are good for everyone? The answer is that for decades now the überrich have relentlessly spent money to make Americans believe that lower taxes are the answer to all of America’s problems. They’ve done this partly through the media they own and partly through funding “think tanks” that legitimize their Great Tax Con.

  • truthOut: Revolt Against the Body Scanners. By Matthew Harwood. Excerpts: In March, the Government Accountability Office (GAO) called into question whether full-body scanners could have detected the underwear bomber. "While TSA officials stated that the laboratory and operational testing of the AIT included placing explosive material in different locations on the body, it remains unclear whether the AIT would have been able to detect the weapon Mr. Abdulmutallab used in his attempted attack based on the preliminary TSA information we have received," the GAO's Steve Lord, director of homeland security and justice issues, told a House subcommittee. ...

    A month later, the former chief security officer of the Israel Airport Authority told Canadian lawmakers that full-body scanners were a waste of money and were not deployed at Tel Aviv's Ben Gurion International Airport. "I don't know why everybody is running to buy these expensive and useless machines," Rafi Sela said. "I can overcome the body scanners with enough explosives to bring down a Boeing 747." ...

    Well-Connected Players Profit. As the conservative Washington Examiner's Timothy P. Carney wrote last week, full-body scanner manufacturers have some well-connected players lobbying on their behalf. L3 Communications, which makes one type of machine, active millimeter wave, hired lobbying firm Park Strategies to represent their interests. There, former Sen. Al D'Amato (R-New York) and former Appropriations staffer Kraig Siracuse work to convince lawmakers that full-body scanners are necessary for the security of air travelers. Four days after the botched Christmas Day account, the TSA announced L3 would receive a $165 million contract for its full-body scanners. ...

    The other large, full-body scanner manufacturer, Rapiscan, which makes backscatter X-ray machines, had the biggest name lobbying for them: former Secretary of Homeland Security Michael Chertoff. Days after Abdulmutallab's failed attack, Chertoff touted full-body scanners to The New York Times and even wrote an op-ed for The Washington Post, arguing that a bill to make full-body scanners only for use during secondary screening should be defeated and decried "privacy ideologues" for their objections to the screening technology. ...

    Chertoff, however, never let either newspaper know that he was being paid by Rapiscan to endorse their products. According to Carney, Rapiscan also hired Susan Carr, a former senior legislative aide to Rep. David Price (D-North Carolina), chairman of the Homeland Security Subcommittee, another proponent of full-body scanners. Chertoff and Carr's efforts worked. The TSA handed Rapiscan a $173 million contract. ...

    Even the travel industry is upset over the effects full-body scanners could have on business. "You can't talk on the one hand about creating jobs in this country and getting this economy back on track and on the other hand discourage millions of Americans from flying, which is the gateway to commerce," Geoff Freeman, an executive vice president of the U.S. Travel Association, told Reuters last week.

  • USA Today: Body scanner makers doubled lobbying cash over 5 years. By Fredreka Schouten. Excerpts: The companies with multimillion-dollar contracts to supply American airports with body-scanning machines more than doubled their spending on lobbying in the past five years and hired several high-profile former government officials to advance their causes in Washington, government records show. ...

    Rapiscan Systems, meanwhile, has spent $271,500 on lobbying so far this year, compared with $80,000 five years earlier. It has faced criticism for hiring Michael Chertoff, the former Homeland Security secretary, last year. Chertoff has been a prominent proponent of using scanners to foil terrorism. The government has spent $41.2 million with Rapiscan. "The revolving door provides corporations like these with a short cut to lawmakers" and other decision-makers, said Sheila Krumholz, of the Center for Responsive Politics.

  • Crooks and Liars: Profits Over Airport Security? Excerpt: Unlike Chris Matthews who wants to pretend this is not what goes on daily in D.C., Cenk Uygur goes through what is pretty much standard operating procedure in Washington; lobbyists influencing legislation, the revolving door between holding office and working for corporate America and the influence campaign donations have on our politicians. And the end result, we have the TSA using useless scanners that violate our privacy and don't detect explosives or putting up with overly intrusive pat-downs.
  • AlterNet: A Different Legal System for the Rich: Imagine Getting Off Easy for Hit-and-Run Because You Run a Hedge Fund. It's not just the recession that's killing the middle class -- it's how the legal system is being used to establish a two-tiered society. By Joshua Holland. Excerpts: Recently, a modest crime that made big headlines provided an eye-opening anecdote. In July, Dr. Steven Milo, a surgeon, was riding his bicycle on a Colorado road when he was struck from behind by a Mercedes. According to the Vail Daily, Milo “suffered spinal cord injuries, bleeding from his brain and damage to his knee and scapula,” causing “disabling spinal headaches” and requiring “multiple surgeries for a herniated disc and plastic surgery to fix the scars he suffered in the accident.” His attorney said Milo “will have lifetime pain.”

    The driver of the Mercedes took off, stopping later not to call for help for Milo, left bleeding at the scene, but for service for his damaged luxury sedan. In Milo’s words, the man “fled and left me for dead on the highway,” a serious felony.

    Or it would be if you or I had committed the offense. But the driver that day was 52-year-old Martin Joel Erzinger, a Morgan Stanley Smith Barney money manager who oversees more than a billion in assets for “ultra high net worth individuals, their families and foundations.” District Attorney Mark Hurlbert was apparently concerned with Erzinger’s future -- SEC rules would have required him to disclose the felony within 30 days of being convicted, which might have cost him his job -- and decided to accept a misdemeanor plea, over the objections of Milo and his attorneys. “Felony convictions have some pretty serious job implications for someone in Mr. Erzinger's profession,” Hurlbert said, “and that entered into [the decision].” ...

    The scandal was just a local Colorado story, but it’s emblematic of broader trends in America's criminal justice system. Compare, for example, the zeal with which we punish nonviolent drug offenders with the attention -- and resources -- we devote to locking up corporate criminals who are no more violent but create many more victims. ...

    The enforcement trend has looked very different when it comes to white-collar crime. As I noted last week, during the savings and loan scandal of the Reagan era, 1,100 bankers went to jail for fraud, but so far the current financial crisis -- rooted in a mortgage-based securities scam that may prove to be the greatest Ponzi scheme in history -- has yielded no high-level prosecutions to date (only a few low-level loan officers have faced criminal sanctions). There are a number of reasons for that, but one of the biggest is a simple matter of resources. While the financial sector has grown significantly since the 1980s, and the securities Wall Street peddles have gotten far more complex, David Heath reported that the FBI had just 240 agents working on mortgage fraud cases last year, compared to 1,000 white-collar investigators it employed at the height of the S&L crisis.

  • Wall Street Journal: Corporate Profits Rise to Record Annual Rate. By Luca Di Leo and Jefrey Sparshott. Excerpt: U.S. companies' profits rose in the third quarter to an annual rate of $1.66 trillion, the highest on record, reflecting the divergence between the recovery for the corporate sector and American households.

    Selected reader comments follow:

    • Manufacturing - outsourced. R&D - outsourcing in progress. Consumer - to be outsourced soon.
    • It's time for private business to start helping with employment recovery. How can they say they need MORE tax incentive and de-regulation to grow hiring when their profits are growing by double digits? They're exploiting their employees' fears of layoff and wringing them dry with overtime and overload. Profits are growing and companies are still laying off. It seems to be very easy for them to disconnect themselves doing anything for the good of America.
    • Jim, these "US companies" are not truly US per se, they are mainly multinational corporations that are wholly outsourced claiming to be US companies. If a company has 1% of its workforce in the US, while 99% of its employees are in China, can they really be considered an "American Company" when it comes to posting profits? The profits go to the 1% while the payroll goes to their overseas workers...
    • Gee only if Obama weren't so anti-business...oh wait.
    • I find it interesting that the WSJ publishes a column saying "Corporate Profits at Record Levels" and two more that say "Housing Purchases down 2.2%" and "The Fed Lowers Jobs and Growth Forecasts" all within eye reach of each other. The disconnect between our economy and corporate profits couldn't be more clearly displayed. The US is global, except it decided to exclude the US from the global equation. I guess that makes US corporations a foreign entity, in reality.
  • truthOut: Fail and Grow Rich on Wall Street. By Robert Scheer. Excerpts: Welcome to the brave new world of post-bailout capitalism. The Commerce Department announced Tuesday that corporate profits are at their highest level in U.S. history, and the Fed released minutes of an early November meeting in which officials predicted a stagnant economy and continued high unemployment.

    The lead on the New York Times story read like a line from a Dickens novel: “The nation’s workers may be struggling, but American companies just had their best quarter ever.” What the Times story neglected to mention is that the bulk of the increase in corporate profits was nabbed by the financial industry rather than manufacturing and other productive sectors. A whopping $33.3 billion out of the total corporate profits increase of $44.4 billion went to the banks and investment houses that those same workers had bailed out with their tax dollars. ...

    What has occurred is what former International Monetary Fund chief economist Simon Johnson referred in The Atlantic back in May of 2009 as “The Quiet Coup,” in which the financial industry is fully in charge of the government’s response to our economic problems. The result, he noted, is “the reemergence of an American financial oligarchy” that had been broken by the banking regulations imposed during the New Deal in response to the Great Depression. Franklin Delano Roosevelt’s sensible regulations were gutted by Bill Clinton and George W. Bush, and tragically Obama has failed to restore them. The Wall Street lobbyists got their way and unfettered greed prevails. How else to explain last quarter’s outrageous profit figures?

  • New York Times op-ed: Winning the Class War. By Bob Herbert. Excerpts: The class war that no one wants to talk about continues unabated. Even as millions of out-of-work and otherwise struggling Americans are tightening their belts for the holidays, the nation’s elite are lacing up their dancing shoes and partying like royalty as the millions and billions keep rolling in.

    Recessions are for the little people, not for the corporate chiefs and the titans of Wall Street who are at the heart of the American aristocracy. They have waged economic warfare against everybody else and are winning big time.

    The ranks of the poor may be swelling and families forced out of their foreclosed homes may be enduring a nightmarish holiday season, but American companies have just experienced their most profitable quarter ever. As The Times reported this week, U.S. firms earned profits at an annual rate of $1.659 trillion in the third quarter — the highest total since the government began keeping track more than six decades ago. ...

    There is no way to bring America’s consumer economy back to robust health if unemployment is chronically high, wages remain stagnant and the jobs that are created are poor ones. Without ordinary Americans spending their earnings from good jobs, any hope of a meaningful, long-term recovery is doomed. ...

    Aristocrats were supposed to be anathema to Americans. Now, while much of the rest of the nation is suffering, they are the only ones who can afford to smile.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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