IBM Employee Highlights | November 19, 2011

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Highlights—November 19, 2011

Retirement Heist:

Throughout the IBM Pension heist, Ellen E. Schultz, a Pulitzer Prize winning investigative reporter with the Wall Street Journal, exposed IBM's and other companies shenanigans that have cost retirees millions and millions of dollars, while enriching corporate executives.

Ms. Schultz has just published a book that every IBMer should read: Retirement Heist: How Companies Plunder and Profit From the Nest Eggs of American Workers. Many IBMers are aware of the "cash balance heist" of 1999. However, IBM has been stealing money from the pension plan dating back to 1991, well before the Gerstner era.

An Amazon.com customer review:

Eye-opening. This book is a must read for all in a pension plan. I thought that any retirement money was sacrosanct, and as Ellen Schlutz points out, it really isn't. Also, there is very little in the way of oversight and regulation that safeguard the pensioner from the accounting devices that are still legal under present laws.

Forbes, courtesy of MSN Money: Has your retirement been stolen? If you're expecting a pension, it could end up being a lot smaller than you've been counting on. Plus: Some ways to check on your employer's pension plan. By Emily Lambert. Excerpts: If you're looking for a scary story to read, try "Retirement Heist." In it, Ellen Schultz, a Pulitzer Prize-winning reporter for The Wall Street Journal, describes how executives and accountants legally looted pension plans of billions of dollars. (See "Who killed private pensions?" for more from her book.)
To be sure, the Employee Retirement Income Safety Act of 1974 made clear that pension assets are to be managed solely for the benefit of participants. But Schultz describes how companies still managed to use the money to pay for severance packages and parachute payments to executives, among other things. Some companies simply sold pension assets for cash. Now pensions are collectively 20% underfunded. ...

Forbes: First, what are some companies that have cut employees' pensions and benefits?

Schultz: The companies I looked at included IBM, Verizon, AT&T, and I could keep going. Cooper Tire. General Motors. It's safe to say that most of the companies in the S&P 500 have done some version of this.

Forbes: And what did they do?

Schultz: Companies began cutting benefits because doing that enabled them to keep the money themselves, and it also boosted their earnings. Cutting harmed employees and retirees, but it boosted the pay and pensions of top executives.

During the '90s when accounting rules changed, this coincided with the trend toward awarding executives' pay that was based on performance. Let's say you reduce pensions by $100 million, that's essentially $100 million that gets added to profit. It's paper profit, but it affects earnings the same way as earnings you get from selling trucks. So executives were rewarded.

Forbes: Don't pension payments for thousands of workers dwarf the amount paid to executives?

Schultz: Not necessarily. Look at Massey Energy (Editors note: now part of Alpha Natural Resources). Last year, they had a huge Big Branch mining disaster. Dozens of miners were killed. The CEO was pushed out. He was given a retirement package that was worth $55 million. And the total payout for the coal miners, for black lung, traumatic workers' compensation (which means severe injury) and pensions and health care, that all came to $37 million, and that's for thousands of people. True, their costs will be ongoing, but it does put the magnitude into perspective. ...

Forbes: If someone has a question about their pension, who can they call?

Schultz: The Pension Rights Center in Washington can refer people to a lot of resources. There really aren't too many others that a person could go to. If they're in a union, their union really ought to be on the ball and be able to tell them how healthy their plan is and explain the benefits. There are also some nascent groups including the National Retiree Legislative Network, a fairly new group of people who are mostly retired salaried managers and employees who banded together to compare notes, share concerns and lobby their congressmen to tighten some of these rules and protect them better.
Wall Street Journal, courtesy of MSN Money: Who killed private pensions? Corporations often blame pension shortfalls on out-of-control factors such as the large number of retirees and anemic investment returns. But a new book suggests other possible causes. Excerpts: Gary Skarka had a rewarding middle-management career at AT&T, along with some of the best retirement benefits in the country. But instead of enjoying a comfortable retirement, he is working as a security guard. "I know I will have to work at menial jobs until I die," he says.
Skarka's financial predicament isn't the result of investment losses or runaway spending. He is among millions of Americans who encountered an unexpected risk to their retirement: their employers. Over the past two decades, companies have cut pensions, slashed retiree health coverage and killed other benefits. Many have reduced their contributions to 401k's as well. ...

Cutting benefits provided employers with an additional windfall: income. Because the benefits are recorded as debts on a company's books, reducing the debt generates paper gains, which are added to operating income right along with income from selling hardware or trucks. Thanks to these accounting rules, which all companies adopted in the late 1980s, retiree plans have become cookie jars of potential earnings enhancements: Essentially every dollar owed to current and future retirees -- for pensions, health care, dental, death benefits or disability -- is a potential dollar of income to a company. ...

Many companies, including AT&T, converted their pensions to so-called cash-balance plans, which slowed the growth of benefits for older workers and, in many cases, froze them altogether for a period of years. Skarka, 64, who left the company in 2003, says his pension would have been $50,000 a year, but is only $18,000 because of the pension changes. His $1,500 monthly pension was further reduced by $500 a month to pay for his share of retiree health benefits, leaving the South Thomaston, Maine, resident a monthly pension of just $1,000. ...

Employers' ability to generate profits by cutting retiree benefits coincided with the trend of tying executive pay to performance. Intentionally or not, top officers who green-lighted massive retiree cuts were indirectly boosting their own compensation.

As their pay grew, executives deferred more of it. Supplemental executive pensions, which are based on pay, also ballooned. These executive liabilities account for much of the "spiraling" pension costs many companies complain about.
Financial Times: Buffett reveals $10.7bn stake in IBM. By Dan McCrum, Johanna Kassel and Richard Waters. Excerpt: Berkshire Hathaway has taken a stake in IBM worth more than $10bn, its first big investment in a sector historically shunned by Warren Buffett. In a CNBC interview on Monday, the 81-year-old billionaire disclosed that he had secretly amassed a 5.5 per cent stake worth $10.7bn in the US information technology company since March.
eWeek: Google, Intel, Cisco Among Top IT Companies to Work For. By Nathan Eddy. Excerpts: Although the nation’s jobless rate remains worryingly high, the IT sector has fared better than most over the past two years. According to the most recent report from Dice, an online IT jobs site, the unemployment rate for tech professionals is at 4.2 percent, half of the overall national jobless rate. The number of resumes viewed on Dice is at an all-time high and the job count on the site is up 12 percent over the same period in 2010. Taking a look into recruiting priorities, hiring managers' top requests in the Dice resume database in the third quarter were for Java/J2EE or Java developers, .NET or .NET developers, business analysts, Sharepoint or Sharepoint developers, and project managers. On the supply side, the desired positions of tech professionals posting their resume were for the positions of business analyst, project manager, software engineer or software developer, network engineer and systems administrator. But where to work? A recent study by CNN/Money evaluated the top 100 companies to work for, based on job growth, career opportunities and perks. We’ve taken a look at the IT-based firms on the list and pulled together this selection of promising places to work.
eWeek: IT Professionals Content, Expecting Raises: Modis Report. By Nathan Eddy. Excerpts: Amid fears of a “double-dip” recession, rising unemployment, and continued economic turbulence, a survey of IT professionals conducted by Modis, a provider of IT staffing solutions, paints a brighter picture of the current career outlook for the field. According to the survey, 89 percent of IT professionals are happy at their current jobs and 64 percent intend to stay where they are presently employed. In addition, 44 percent of all IT professionals expect a raise next year, while only 26 percent expect their salaries to remain the same.
This widespread career contentment may be the result of survey respondents feeling that the things they find most critical to their job satisfaction are being fulfilled. These factors include having a boss that does not micromanage (70 percent), having a good salary and benefits (62 percent) and having opportunities to receive training in new technical skills (61 percent).
LinkedIn's "The Greater IBM Connection: IBM's business and social network": If Offered Would You Go Back to IBM? Selected posts follow:
- I left IBM after they got rid of the defined-benefit pension. I joined a consulting group, and then moved to one of IBM's competitors. During my time away from IBM, I've worked with a number of managers from different companies. The experience only provided evidence to what I learned while at IBM: IBM managers are dumber than a bag of hammers. I mean bone-achingly stupid. I'd rather shove a screwdriver into my ear than work for the cretins at IBM.
- "Gerstner did a great job of keeping the ship from sinking." Personally I think John Akers' work with re architecting the mainframes on the Power PC sub-straight, work with micro electronics division, and Denny Welsh's consulting division had MUCH more to do with the resurgence of IBM.
  I remember when Lou Gerstner gave a rah rah speech saying that "we wanna be leaders", and that our friends were Mo and Mentum. The people in the feed from Japan were simply confounded by this neologism. People walked out of that conference saying "Oh my god, what kind of a loser did we get now?"
  
  So my take is that IBM had within it the seeds of recovery sown before Gerstner ever came, and that he contributed little to their fruition. He simply did not understand the computer business. He got a lot of money to leave, though. About 25 million was rumored to be his reward for not much of a contribution. Nice work if you can get it.
- I went back in '93 as a contractor and stayed for 11 years. It was strange at first what with all the empty space after the the "Big Downsizing" and seeing the remaining IBMers picking up the workload. Was let go during another downsizing in 2004, With the atmosphere the way it is now, I doubt if I would go back again. It's not the "Family" it once was.('70 thru '93)
- Not a chance. I would never again put myself into a position where billable hours trump all else. After leaving IBM, I've been in in higher ed where your contributions are real and tangible and also appreciated. Good luck to all of you still in the corporate rat race.
- Bob, the answer is maybe. IBM attempted to lay me off 4 times and succeeded twice. Each case was a time when they found my value to them less than what they wished. I was given no warning. I was given no alternative. I was given in each case, my performance bonus and an above average rating. So,, if they valued me enough to offer me a position either as a regular employee (yes, you can come out of retirement and become a 'reg' again) or a consultant, I would assess my opportunity to both contribute and learn new skills. I would extract a commitment from them to support my current certification and my quest for added skills before agreeing to join the team again. Simply getting a paycheck for work done is not mutually beneficial enough for me any longer.
- When I decided to leave IBM it was due to micro management and ever growing complex processes that slowed down sales sadly the role I was in wasnt rewarding enough to offset the negatives. Things can change but the offer would have to be attractive
- Interesting comment from Girish, I have tried during the last 12 months to get back into IBM. I left in 2010 after 39 years when IBM UK changes the T's and C's around Pension and early retirement. But the HR process is just a disaster, I applied for a number of jobs that were posted on the company Job site. I was fully qualified for them, maybe over qualified for some. I never even got a reply, and months later some of the roles still showed as "under review" and others changed to "not longer available". The HR folks are one of the reasons I have given up trying, and have found a great role with a Business Partner
Yahoo! IBM Employee Issues message board: Exercise Caution with new IBM Vision Plan. By "alwaysontheroad4bigblue". Full excerpt: IBM switched its vision plan from VSP to Anthem Blue View Vision for 2012. The annual premium for an employee and spouse for the Anthem plan is $213.60. DO NOT ASSUME that your existing eye doctor is in the Anthem plan. Mine is not. My wife's is. Since I've had the same eye doctor for over a decade, and she has a decade's worth of history including retinal scans, I do not want to switch to another doctor.
I called my doctor's office (in Boulder) and she said she's received dozens of calls from IBMers asking about coverage. She also had received a list of IBM patients from VSP that would no longer be covered.

She said that her office is trying to negotiate with IBM but that the reimbursement provided by Anthem is very, very low so she isn't confident that she'll make any progress.

I've decided to forego the coverage and up my HCRA allowance.
Yahoo! IBM Employee Issues message board: "Re: Exercise Caution with new IBM Vision Plan" by "fdaleflash". Full excerpt: IBM left me back in 06, my current employer has Anthem BCBS and vision. The medical is ok but I found the same problem with the vison insurance. VSP for myself & my spouse individually is about $350 yearly and well worth it due to lower copays and wider acceptance, better doctors, not just big chain opticians. More & more erosion at a once-great employer.
Glassdoor IBM reviews. Selected reviews follow:
- IBM Anonymous in Markham, ON (Canada): (Current Employee) “Relative ranking is absolutely past its time.” Pros: A diverse set of roles are available for those looking to move within the company. Significant opportunity to work with other Fortune 500 companies and clients. Cons: The relative ranking system is now causing solid workers to be flagged as poor performers; someone has to do the grunt work. Extremely difficult to move between software group brands or to different divisions. Advice to Senior Management: Scrap the current individual relative ranking system for now in favor of a team based performance system combined with a 360 performance feedback for individuals leading to a blended performance result. Significantly change the performance metric system every 5 years.
- IBM Anonymous: (Current Employee) “Transitional.” Pros: Fairly compensated, good benefits, good people. Cons: Measurements have become more important than people. The company has put the focus on Global resources to the point that they do not even report US employees anymore because they are dropping significantly. Advice to Senior Management: IBM use to be a pre-eminent company. It is still a good company. Put some focuse back on the employees if you want to generate loyalty.
- IBM Senior Managing Consultant in Atlanta, GA: (Current Employee) “IBM is unable to market the value of consulting talent. The focus is into operations.” Pros: There are few flexibility options regarding working from home etc. Cons: IBM is unable to market the value of consulting talent. The focus is into operations. Advice to Senior Management: Focus on people management, enhance the training for leadership. The appraisal process need to be transparent.
- IBM Anonymous in New York, NY: (Current Employee) “OK.” Pros: Brand name and global presence. Cons: Utter Incompetence is rewarded very well. Advice to Senior Management: Look at real business beyond just the numbers. Focus more than the accounting cash flow; pay attention to the real cash flow.
- IBM Executive in Raleigh, NC: (Current Employee) “Too much recent focus on profits only.” Pros: Lots of resources, ton of internal training available, great market creating and shaping role for IT industry Cons: 110% of focus is now on making quarterly profit targets only. Advice to Senior Management: Get back to balancing profit growth with valuing employees.
- IBM Project Manager in Morgantown, WV: (Past Employee - 2011) “It was OK if you want to be a global employee and have no family life.” Pros: There were a few benefits of working at IBM. Health Insurance, 401k, short term disability, and long term disability are what come to mind. Cons: I thought the benefit of working at IBM was job security. That could not be further front he truth. I was laid off after 18 months.
- IBM Data Consultant: (Current Employee) “Progressively getting worse.” Pros: Good people at the ground floor. Mostly supportive and helpful. Supportive of working from home. Plethora of information sources and online courses available internally. Cons: In 6 years the environment has grown poorer and less inspiring as IBM drive out everything that doesn't help the profits. Face to face training is nonexistent, which can be vital in learning a new technology. Management is generally weak, spineless and unsupportive. IBM procedures are the worst I've ever come across. There is a process, a mandatory test, a form, or a multi-level approval process for everything. A well-educated and (used to be) motivated team around me has been reduced to bunch of monkeys for whom IBM has little respect or trust. Our team has lost lots of good people recently out of sheer frustration. Advice to Senior Management: Start finding ways to feed the frustrations of your workforce back up the line rather than making sympathetic noises and saying your hands are tied.
- IBM Client Director in New York, NY: (Past Employee - 2009) “If you like governent bureauracy but want to be in private industry this is it.” Pros: Lots of jobs using almost every skill and background. High degree of independence. Pretty good communications. Cons: Work your butt off for sub standard rewards. Sales compenstation is quota based so incomes are managed. Not a place for real sellers. No clear line of sight on promotion opportunities. Advice to Senior Management: Look to the industry sales leaders and emulate them. Then maybe some top line growth will happen.
- IBM Managing Consultant: (Current Employee) “Fully committed yourself and being recognized by customer doesn't bring you any extra income in IBM.” Pros: Internal training resoueces seems unlimited. Cons: - Fully commit before IBM can optionally commit to your pay rise. - So called career path not only doesn't work, but also help boost staff turnover rate-expect less than average salary growth in the industry, even if u achieve high PBC ratings. - Thank-you doesn't mean you are on good recognition in money term - learn how to set lower PBC expectation to your manager is the key path to make your life sustained IBM in the longer term. Advice to Senior Management: Stop using PBC and limit money pool and process as the ransom, during reviewing the hardworking from your employee. Be a little more honest, just like talking to your parents when u were the child.
- IBM Program Manager in Gaithersburg, MD: (Current Employee) “Frustrating treatment of employees while financials continue to improve.” Pros: IBM is a large company with lots of different areas so if there is not an immediate fit, there are generally opportunities to find other areas to work in. Cons: IBM has over the last several years performed well financially but distributed very low bonus payouts to employees, at least in the US. Additionally, IBM has very aggressively moved as many jobs as possible out of the US to low cost centers, resulting in layoffs every year. Advice to Senior Management: Stop looking at the next 3-6 months as the time horizon to manage by. Take the long view and do what's right for the entire IBM community - to include the US population of employees.
The Register: Happy 40th birthday, Intel 4004! By Rik Myslewski. Excerpt: On November 15, 1971, 40 years ago this Tuesday, an advertisment appeared in Electronic News for a new kind of chip – one that could perform different operations by obeying instructions given to it. That first microprocessor was the Intel 4004, a 4-bit chip developed in 1970 by Intel engineers Federico Faggin, Ted Hoff, and Stanley Mazor in cooperation with the Japanese company Busicom (née the Nippon Calculating Machine Corporation) for that company's adding machines. ...
Busicom held the rights to the 4004 in 1970, but released them to Intel in 1971. Intel then offered the world's first processor for sale, and 40 years later that world is a very, very different place. ...

And so to review Intel's 40-year journey from the 4004 to today, The Reg contacted two Intel Senior Fellows who have been responsible for a good chunk of how their company's offerings have grown from the 2,300-transistor 4004 to the over-two-billion-transistor 2nd Generation Intel Core i7-3960X released Monday morning. We spoke with Steve Pawlowski, who has been intimately involved with a good portion of Intel's microarchitectural development since the early days, and Mark Bohr, who heads up Intel's process architecture and integration efforts.

New on the Alliance@IBM Site

Urgent action needed this week! Stop pay and band level cuts for IBM US service support workers! The Alliance@IBM CWA Local 1701 is asking for your urgent support in fighting the announced pay cut and band level reduction for SSR's and other support workers in the IBM Retail Services Division in the US. Last week IBM executives informed SSR's (service techs) and other support groups that band levels would be lowered and they would face pay cuts up to 10% starting January 1st 2012.
This attack on the standard of living of IBM's service employees is unacceptable and demeaning. In fact many support workers have received very little in pay increases over the years.

Last year IBM had record net income of $53 billion and free cash flow of $8 billion. IBM is not a company in distress.

There is no need to decrease the pay of hard working IBM employees.

Please send emails this week to the following list of IBM management asking them to reverse this decision to cut pay and band levels. An injury to one is an injury to all!

Please send letters to:
- Sam Palmisano sam@us.ibm.com
- Virginia Rometty grometty@us.ibm.com
- Michael Daniels medan@us.ibm.com
- Robert Zapfel zapfel@us.ibm.com
- Richard Rosso rrosso@us.ibm.com
- Larry Arrington arringto@us.ibm.com
- Phillip Cunningham cunningp@us.ibm.com
Job Cut Reports
- Comment 11/14/11: The following is Sammy's retirement package, He has a contract. We IBMUS employees have no contract. as more RAs continue, no rasies, cuts in band levels. This is a corrupt organzation starting with Three finger Lou, Sammy, and now Rometty. Sammy's retirement is worth more than $170 million, including: a $65.7 million cash payout for stock options and restricted stock units; $1.5 million for life from a retention plan; $4.9 million per year in cash for five years; and a big fat pension that was worth $29.8 million as of the end of last year. If ever IBMUS needed a union it is now. We as IBMUS employees need a union. Join the union -ANA-
- Comment 11/15/11: Slowly, ever so slowly IBMers begin to realize no one fights to save a job like a union. No one fights to save and improve benifits like a union. No one else will help you so why do you hesitate to join. Don't worry. If the pay cuts don't result in a mass exodus of talent they will get around to cutting your pay also. That you can count on. -Exodus2007-
- Comment 11/16/11: What is the Occupy Wall Street all about? The folks are angry about crooks like 3-Finger Lou, Sammy, and now Ginny. The folks are tired of fat cat CEO's taking millions and millions from public companies in salaries, stock options, and bonuses, while at the same time cutting jobs in America and shipping them overseas. Support the Occupy Wall Street cause and support a Union! -Occupy Wall Street-
- Comment 11/17/11: Take Action! Support SSR's! Wear black and blue on "black friday" November 25th! The day after Thanksgiving traditionally is known as "black friday" and a day for shopping. This year, IBM SSR's in the Retail Division are asking all SSR's and their co-workers in IBM to support their call for a reversal of the pay and band level cuts by wearing black and blue on black friday November 25th. The wearing of black and blue represents the "beating up" of SSR's standard of living. Keep the pressure on IBM executives to roll back the pay cuts and band level reductions for SSR's and other support workers! Remember, you could be next in line for a pay cut. SSR organizing committee is being formed! If you wish to join this committee and be an active volunteer in organizing SSR's please contact us at: ibmunionalliance@gmail.com -Alliance-
- Comment 11/17/11: In WWII Admiral William "BULL" Halsey had a saying. Hit the enemy hard, hit them fast and hit them often. IBM SSR's, let this also be your battle cry as you fight for your jobs and salary's and job security for your families and yourselves. The harder you hit management with organization, The faster you do so and how often across this great land of ours will be instrumental in protecting your pay and all your coworkers as well. No one should be fooled into thinking its just retail, they wont do systems. IBM always divides potential resistance groups before they strike out at them. Old vs New. Pension vs 401k and so forth. The SSR jobs cannot be offshored. You are the hands on people in the US. You cannot be offshored. All they can do is force your pay lower and lower if you let them. DO NOT LET them. Stop this attrition NOW. Exercise the power you have left. Your customer relations are critical to IBM's success. You have been the buffer that has shielded customers from IBM's callous disregard. You have covered more and more geography for less and less thanks. Put an end to it NOW. Do not quit in disgust. Organize. Put your anger and disenchantment to work for YOUR own good. Later is too late. Contact the union and fight back as if your life depends on it. Let IBM executives realize they have awakened a sleeping giant and filled it with a terrible resolve. -Exodus2007-
- Comment 11/18/11: Contractors are being forced to take 3 weeks off per year. Something called a furlough. Overheard it in a SARM meeting & later again by a toronto ibm tech. That represents 4 months of savings gone for most. -Shadowschild-

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform

New York Times: Whatever Court Rules, Major Changes in Health Care Likely to Last. By Reed Abelson, Gardiner Harris and Robert Pear. Excerpts: For the nation’s health care system, there may be no going back. No matter what the Supreme Court decides about the constitutionality of the federal law adopted last year, health care in America has changed in ways that will not be easily undone. Provisions already put in place, like tougher oversight of health insurers, the expansion of coverage to one million young adults and more protections for workers with pre-existing conditions are already well cemented and popular. ...
Despite opposition in some corners and lukewarm reception in others, a wholesale repeal of the law by Congress may be unlikely. Lawmakers may find it unpalatable to abandon the entire effort, given the fact that critics of the law have not agreed on one comprehensive proposal that would offer coverage to anywhere near the 50 million Americans who are still without coverage. Even if the law goes into effect, an estimated 20 million will still be without insurance. “It’s hard to completely reverse course,” said Drew E. Altman, the chief executive of the Kaiser Family Foundation.
truthOut: Justices Scalia, Thomas Honored at Fundraiser Sponsored by Health Care Reform Opponents. By Mike Ludwig. Excerpts: A few hours after the Supreme Court justices met last Thursday, November 10, to consider hearing challenges to the national health care overhaul, Justices Antonin Scalia and Clarence Thomas were the honored speakers at a fundraiser for a conservative legal group that was sponsored in part by health care reform opponents involved in the litigation.
The Supreme Court announced on Monday that it would review three challenges to the Affordable Care Act, the 2010 health care reform law championed by the Obama administration and opposed by conservative groups nationwide. The Supreme Court is expected to rule on the constitutionality of the law - and the controversial individual mandate that requires taxpayers to obtain heath insurance - in June, as the 2012 campaign season is in full swing. ...

Pharmaceutical company Pfizer, which has considerable stake in the outcome of the case, sponsored the fundraiser, along with lawyers and law firms involved in legal challenges to the health care reform law, according to the nonprofit advocacy organization Common Cause.

Paul Clement, a lead attorney who will argue before the Supreme Court in March on behalf of 26 states that challenged the law, sat between Scalia and Thomas during the fundraising dinner. Clement's firm, Bancroft PLLC, was listed as a "silver" sponsor of the dinner. ...

Democrats in Congress have asked Thomas to recuse himself from any cases involving the health care overhaul because his wife, "Ginni" Thomas, has worked for several high-profile conservative groups that oppose health care reform, and Thomas failed to report that his wife earned nearly $700,000 from the Heritage Foundation from 2003 to 2007.
Los Angeles Times: Scalia and Thomas dine with healthcare law challengers as court takes case. By James Oliphant. Excerpt: Nevertheless, the sheer proximity of Scalia and Thomas to two of the law firms in the case, as well as to a company with a massive financial interest, was enough to alarm ethics-in-government activists. “This stunning breach of ethics and indifference to the code belies claims by several justices that the court abides by the same rules that apply to all other federal judges,” said Bob Edgar, the president of Common Cause. “The justices were wining and dining at a black-tie fundraiser with attorneys who have pending cases before the court. Their appearance and assistance in fundraising for this event undercuts any claims of impartiality, and is unacceptable.”
Washington Post: Gingrich think tank collected millions from health-care industry. By Dan Eggen. Excerpts: A think tank founded by GOP presidential candidate Newt Gingrich collected at least $37 million over the past eight years from major health-care companies and industry groups, offering special access to the former House speaker and other perks, according to records and interviews. ...
Gingrich, who has been under fire recently for his lucrative consulting business, left the health-care think tank earlier this year to run for president. But his time there exemplifies the former Georgia congressman’s post-legislative career as a well-paid consultant and policy guru, a role that earned him and his companies tens of millions of dollars over the past decade. ...

Gingrich has been criticized in recent days after Bloomberg News reported that he earned as much as $1.8 million in consulting fees from Freddie Mac, a quasi-public corporation that many conservatives blame for the housing crisis. After first suggesting he was hired for a short time as a “historian,” Gingrich has since acknowledged acting as a consultant for the mortgage giant “over a long period of time.” ...

The center has listed scores of firms and industry groups as members over the years, amounting to a Who’s Who of the medical field, from GE Healthcare to the American Hospital Association to Wellpoint, the nation’s largest health insurer. The think tank also drew funding from employers with sizable health-care costs, such as Detroit’s Big Three automakers, records show.
Kaiser Health News: The Walmart Opportunity: Can Retailers Revamp Primary Care? By Julie Appleby. Excerpts: In-store medical clinics like those at Walmart – having established a beachhead with relatively healthy patients looking for convenient, low-cost care for simple problems – are eyeing a bigger prize, the millions of Americans with costly illnesses such as diabetes and heart disease.
Just as Walmart and other retailers shook up the prescription drug business by offering $4 generic drugs, the industry now aims to apply its negotiating and marketing clout to tackle problems that vex consumers and the health sector: unpredictable costs, a lack of primary care doctors and inefficient management of chronic illnesses, whose costs drive the majority of health care spending. ...

Primary care doctors fear retail clinics will skim off the healthiest patients, leaving them with more complex or older patients, with no corresponding increase in reimbursement from insurers or the government. They also worry that the expansion of retail clinics into caring for patients with chronic illnesses will further fragment the care such patients receive. In a statement, the American Academy of Family Physicians says a better answer for such patients is "the development of a health care system based on strong, team-based … care."

News and Opinion Concerning the "War on the Middle Class"

"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.

New York Times: Middle-Class Areas Shrink as Income Gap Grows, New Report Finds. By Sabrina Tavernise. Excerpts: The portion of American families living in middle-income neighborhoods has declined significantly since 1970, according to a new study, as rising income inequality left a growing share of families in neighborhoods that are mostly low-income or mostly affluent. ...
In 2007, the last year captured by the data, 44 percent of families lived in neighborhoods the study defined as middle-income, down from 65 percent of families in 1970. At the same time, a third of American families lived in areas of either affluence or poverty, up from just 15 percent of families in 1970. ...

Much of the shift is the result of changing income structure in the United States. Part of the country’s middle class has slipped to the lower rungs of the income ladder as manufacturing and other middle-class jobs have dwindled, while the wealthy receive a bigger portion of the income pie. Put simply, there are fewer people in the middle. ...

Sean F. Reardon, an author of the study and a sociologist at Stanford, argued that the shifts had far-reaching implications for the next generation. Children in mostly poor neighborhoods tend to have less access to high-quality schools, child care and preschool, as well as to support networks or educated and economically stable neighbors who might serve as role models. ...

The isolation of the prosperous, he said, means less interaction with people from other income groups and a greater risk to their support for policies and investments that benefit the broader public — like schools, parks and public transportation systems. About 14 percent of families lived in affluent neighborhoods in 2007, up from 7 percent in 1970, the study found. ...

William Julius Wilson, a sociologist at Harvard who has seen the study, argues that “rising inequality is beginning to produce a two-tiered society in America in which the more affluent citizens live lives fundamentally different from the middle- and lower-income groups. This divide decreases a sense of community.”
Investment News: Guess who wins under Republican candidates' tax plans? Varied proposals mostly favor one group. Excerpts: The detailed tax plans from Republican presidential candidates would provide tax cuts for the highest earners with those from Rick Perry and Jon Huntsman offering the biggest benefits. Mitt Romney's proposal, which suggests fewer changes, would benefit middle-and lower-income families more than his rivals' would. ...
The findings stem from an analysis of the candidates' plans conducted by The Tax Institute, based on scenarios affecting four families at multiple income levels suggested by Bloomberg News. It examined the tax plans of President Barack Obama and four Republican candidates with the most detailed tax proposals: Cain, Perry, Romney and Huntsman.

Unlike the proposals of his potential Republican rivals, Obama's plan would raise taxes for the wealthy family in the study and would prevent tax increases for the other three households.
New York Times editorial: The Inside Man. Excerpts: For months, Newt Gingrich tried to ingratiate himself with the Republican Party’s right wing by tearing down the two government-sponsored mortgage companies, Fannie Mae and Freddie Mac. He joined the counterfactual conservative chorus that prefers to blame the companies for the housing crisis rather than the banks. He lamented their cozy relationship to Washington’s insiders. And he was rewarded with a swell of support from the anybody-but-Mitt-Romney crowd.
The self-styled reform candidate left out a small detail. He made a great deal of money from Freddie Mac for many years, and he was deeply tied to its power structure.

In his latest book, “To Save America,” Mr. Gingrich slams the companies as “so thoroughly politicized” and “irresponsible” that they should be replaced by smaller companies, without government backing, that “focus on making a profit, not manipulating politicians.” In an October debate of the Republican presidential candidates, he suggested that Representative Barney Frank be put in jail for being close to Freddie’s lobbyists.

In a debate earlier this month, however, he was asked what he did in exchange for $300,000 from Freddie in 2006. He said he advised the company, “as a historian,” not to make loans to people without a credit history. That’s a nice sum for fortune-cookie wisdom, but it turned out to be just a fraction of his inside deal. This week, Bloomberg News reported that Freddie Mac paid him between $1.6 million and $1.8 million in “consulting fees” over eight years beginning in 1999, ostensibly to help design a program to expand home ownership, among other policy matters.

The real reason he was hired, as company officials make clear, was to act as a liaison to conservatives on Capitol Hill. It wasn’t technically a lobbying job, but in 2006 Freddie needed help with rising Republican anger at the companies, and the former speaker of the House had the right credentials. That’s typical of the mortgage companies, which over the years have handed out large paychecks to many of the biggest names in Washington, from both parties, in hopes of staying on everyone’s good side.
New York Times: Vilifying Rival, Wall St. Rallies for Senate Ally. By Nicholas Confessore. Excerpts: “Senator Brown is a free-market advocate who believes that our strength as a nation comes from the ingenuity and hard work of its people,” read an invitation to a fund-raiser at a New Canaan, Conn., country club last week, that circulated among hedge fund and private equity executives. His Democratic opponent, the invitation noted, was all but certain to be the financial industry’s most prominent foe: “big government liberal Elizabeth Warren.” ...
Mr. Brown, a freshman who harnessed populist Tea Party anger to win the seat once held by Edward M. Kennedy, has taken more money from the financial industry than almost any other senator: all told, more than $1 million during the last two years, according to data from the Center for Responsive Politics.

Of the 20 companies that accounted for the most campaign donations to Mr. Brown, about half were prominent investment or securities firms like Morgan Stanley, Fidelity Investments and Bain Capital. His donors include such blue-chip names as Gary Cohn, the president of Goldman Sachs, and the hedge fund kings John Paulson and Kenneth Griffin. ...

Ms. Warren’s relentless manner and withering attacks on predatory lenders have won her enemies from Wall Street to Washington, where as a member of an oversight panel she helped usher in the largest expansion in decades of federal oversight of the financial industry. Now Mr. Brown’s support for the industry — and Ms. Warren’s battles with it — are becoming a defining issue in one of the most hotly contested Senate races and a magnet for special interest money.

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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