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Highlights—November 26, 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.

Read more, including an excerpt that focuses on IBM's shenanigans...

An Amazon.com customer review:

A great book. Made me so mad I had to scream (November 20, 2011). Every few pages there was another revolting abuse of power that made me so mad I had to scream and put the book down for a while. The prolonged litany of mundane, banal evil where bureaucrats in big firms try to come up with small inventions that help the firm and invariably loot the pensions and jobs of normal Americans is so plainly described in this book, you know the author couldn't be making this up: this is reality at its small minded, self serving apple core. Read the most popular review for his excellent detailed description of the problems brought into stark focus by this book: what infuriated me most in this was the abusive power of CEOs who already get paid more than the rest of all Americans combined, who further distort inequality and create yet more inequity by squeezing their golden pensions into the same pools as the working poor and so rob their trusting, unsuspecting employees even of the promise of a pension in their retirement. These guys are so self centered they are sick. Sure they may be smarter and more hard working than the rest of us, but no way not a million times smarter or hard working. C'mon people: there are only 24 hours in a day and nobody has an IQ higher than 200. Their sickness may destroy this fabulous democracy. What a shame!

  • Yahoo! Finance's Daily Ticker: Living Large: October’s Executive Compensation Highlights. By Daniel Gross. Excerpts: Big send-offs at IBM and Gannett, a sweetheart jet deal at Clear Channel, and a penalty for talking at Icahn Enterprises headline October's top executive compensation goodies. As she does every month, Footnoted.com editor Michelle Leder stopped by to discuss some of the choice nuggets buried in Securities and Exchange Commission filings. In the accompanying video, we delve into the specifics.

    Into the Big Blue Yonder. After a successful nine-year run at the helm of the company, IBM CEO Samuel Palmisano stepped down. But the 60-year-old executive left with some great parting gifts. IBM has known as Big Blue, but given the generosity of Palmisano's package, perhaps it should be called Big Green. The total deal, Footnoted.com reports, 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.

    Selected reader comments follow:

    • Why would the American economy NOT collapse when the CEOs are stealing this much from public companies. Quite like 3rd world countries, except that here in the USA, it is not even illegal. To think that this carnage is going on amidst corporate layoffs and cut bags just exposes the indecency and ungodliness of American capitalism or is it thievery capitalism?
    • Let's see--I worked for them 32 years. I retired in 2000 and was paying $88. a month for health coverage for myself and my wife. In 2009, it was up to $1,100. a month and the coverage was much less. Now, even with Medicaid it's still costing us over $10,000. a year for less coverage. Thanks SAM for you leadership and perhaps my out of pocked medical cost savings for the company will help you in retirement!
    • They steal from the workers, raid pension plans, fire senior employees to make higher profits while stealing the Intellectual capital developed in the USA. Congress watches as they force more onto Medicare while stripping away a lifetime of health benefits and raiding the pensions using the same methods. All while paying senior executives’ major bonuses as they did SAM.
    • This is a great example of what is wrong with this country, and what is destroying it. I am not against some CEOs or anybody getting richly rewarded because they can be unique persons that steer a big ship like no one else can. But come on...170 million for the IBM CEO, just for retirement?. That doesn’t include what he has made during tenure. And the list goes on and on. The inequity that has built up in this country is sickening, and these "big boys better wake up because they are pushing the limits of what the general population will be willing to take. Things could get ugly fast, and all their greed and collection of the nation’s wealth will be meaningless when they and their families are targeted by folks with their backs to the wall with nothing to lose. In this country there is enough for everyone, why do the select few feel like they need it all.
    • Now do you see why large corporations could not afford pension plans for their employees? This is truly the winner take all sweepstakes.
    • Unbelievable package for a CEO that was unbelievably cheap to the employees of the company.
    • Bring back the 90% bracket for this kind of theft. Compensation committees are about as effective as the Congress. These same companies make sure the worker cannot move forward because they cannot afford healthcare and wage inflation. The transfer of wealth demands a revolution. Pigs get slaughtered and it is time.
    • Tell me again why we shouldn't raise taxes on the rich? Seems to me, they could take their tax money out of petty cash.
    • The royal farewell package for Palmisano that you read about here is just the culmination of what's been going on for well over a decade at IBM. It's a company that has outsourced tens of thousands of jobs in the US, eliminated pensions, cut health care benefits, and squeezed the rank-and-file with raises that don't keep up with inflation. Meanwhile, Palmisano and his senior execs have gotten filthy rich off their bloated salaries and equity packages. Wall St. has loved the story and IBM stock has been a great performer. But I find IBM's behavior repugnant and not in the best long-term interests of this country. Sadly, what was once a great company could now be the poster boy for what's wrong with corporate America today.
    • And we will not raise taxes on these people! It's hard to blame the CEOs,who would not do the same thing if there were no real downside? It,s a product of the good ol'boys club,you take care of me as a board member and when it's your turn I'll take care of you. I would bet that, in private they set around and laugh at the peons.
    • No doubt about it-all of this money will surely "trickle" down to all of the workers that allowed them to earn all that money, and these "job creators" will now get the unemployment rate down to 5%. Signed---The Republican Party

  • CNN/Fortune/Money: Sam Palmisano's legacy of leadership at IBM. By Geoff Colvin. Excerpts: Really good CEOs are rare partly because they use all of their brains. Most people don't. We carry around either massive left brains -- logical, analytical, not very touchy-feely -- or, more rarely in today's world, we rely on big right brains -- imaginative, feeling, intuitive, uncomfortable with algebra. Running a giant company obviously demands both, and the best business leaders can bat from either side of the plate. That group includes IBM chief Sam Palmisano who's stepping down at year-end after nearly a decade as CEO, looking like a business Mickey Mantle. The business world's ultimate endorser, Warren Buffett, announced recently he'd bought $10.7 billion of IBM stock, saying Palmisano has "delivered bigtime." ...

    2011 Businessperson of the Year. The human side of the CEO's job is making sure those knockout results keep coming by developing tomorrow's leaders. Palmisano realized that the most valuable learning is delivered not by a teacher but by the world. "We made a decision to walk out of the classroom and make sure most of the experiences were being lived at the operational level," says Randall MacDonald, IBM's HR chief through all of Palmisano's tenure.

    Selected reader comments follow:

    • "In management the brain's two halves are the financial side and the human side. Most managers, lucky, are really good with one or the other. Palmisano was excellent with both." Oh Yea! ask the thousands of X IBMers who were shown the door and made to train there Indian replacements or ask the thousands who were close to retirement who were also shown the door. And last, ask the taxpayers who funded IBM projects and then learn that IBM offshored the jobs???? Now ask the remaining IBM employees what they think of IBM and then ask the ones who were there before Sammy Boy came along?
    • Since Sammy Boy took the helm at IBM, employee moral has nose dived! Just ask any IBMer
    • Confirmed. Employee satisfaction in IBM is probably the lowest in all IT company currently. Anti-Crisis actions which IBM did the last 3 years are just excuse to earn more money nothing more. All quality employees are looking and leaving for better. This problem is really big especially in IBM EMEA offices.
    • 50/50 are the actual consequences , yes the company market share and yearly income are biggest than ever , but the employee satisfaction is lower than ever in IBM , all qualified experts are leaving because of "anti-crisis actions" taken from IBM last 3-4 years. Employee satisfaction is near 0 except the hi-managment which is usual for all big company's This will be followed from low quality on some specific sectors and will lead to very bad results in near future. IBM must remember one thing - Satisfied Employees means stable company and growing quality something which IBM is far far away from. If the behavior against the regular employees is not changed soon IBM will follow HP, Apple, Motorola and many more which decided that the money are more important than the people which are actually making these money for them.
    • Palmisano achieved the results you quote by offshoring thousands and thousands of U.S. based jobs, lining his fat pockets in the process. And yes, morale is in the ditch across the company. Someday there will be a Harvard Business School course on how to run a good company into the ground by being a short-term profit pirate.
    • Palmisano was a driving force behind shifting US tech jobs overseas. Thus his role in creating the economic mess we are in is more significant than any US President. He did what CEOs are required to do, make money, but his methods contributed mightily to killing our golden goose.
    • He made good business moves as the article said - dumping low margin and commodity businesses, but he along with Randy D. sold the US employees down the river - very disappointing for a CEO that was raised in the old IBM culture of respect for the individual which is now dead. Worse, it wasn't necessary to shaft the loyal and talented employees in the process, and for that he should be ashamed. However, like all other insular executives, they'll never recognize the unnecessary and morally bankrupt damage he did to talented and loyal US employees - especially the older ones. Now, most staff have less than 5 years tenure - can you spell age discrimination?
    • As a consultant to IBM for more than 10 years, I've seen investment in IBM's people decline year after year. This article features some good sound bites and the optics of the corporate service corps are brilliant, but ask any top-rated IBMer who's been told "there's no money for education, and be thankful for your 1% raise" while he/she reads about the megamillion $$$ bonuses paid to the top executives, and you'll get to the heart of Sam Palmisano's legacy.

  • truthOut: Corporations Pushing Bill to Take Away Overtime from Computer and Web Workers. By Adele Stan, AFL-CIO Now Blog. Excerpts: Apparently unsatisfied by the enormous profits they’ve made while average Americans suffer in a difficult economy, corporations are pushing Congress to enact a new law that would exempt a large class of workers from receiving overtime pay. And they’re receiving support from members of both parties on Capitol Hill.

    Dubbed the Computer Professionals Update Act (CPU Act), Senate bill 1747 would change the Fair Labor Standards Act (FLSA) to remove overtime protection and compensation from “almost everyone working primarily in information technology” who earns either a salary, or an hourly rate of $27.63, according to Paul E. Almeida, president of the AFL-CIO Department for Professional Employees (DPE). ...

    Introduced in the U.S. Senate last month by Kay Hagan (D-N.C.), the CPU Act has found a Democratic co-sponsor in Sen. Michael Bennet (Colo.), who is joined by two Republican co-sponsors, Sens. Mike Enzi (Wy.) and Johnny Isakson (Ga.). In a letter to senators, DPE President Almeida said of the corporations pushing the bill:

    [T]he same companies that send work offshore and bring lower-paid workers to the U.S. on H-1B visas now want to pay U.S. workers less in the U.S.
  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM IT Specialist in Dubuque, IA: (Current Employee) “Barely There.” Pros: Work experience received by being involved on several accounts, some certifications paid for, benefit package, ability to work from home if necessary, training, 401K matching.

      Cons: Low morale at GDF Centers, lack of action on behalf of management when important issues are presented. The GDF I work at has experienced extremely high attrition due to people receiving much higher pay at other companies. Though some leave to go back home to their families after relocating, 3/4 of the people I know who have left did so for more money. Also, the band/pay structure makes it highly difficult to earn a decent wage after a long period of time if beginning at entry level. Raises are low and do not occur often. Work is forced upon people, rather than asking if they want the responsibility. I will stick this out until the economy picks up, then I'll likely be gone as well.

      Advice to Senior Management: When you have an opportunity to speak with those of us on the front lines, please listen. We are not "commiserating," rather, we are trying to tell you how what it will take to keep the talent here. Many of us are on teams that have seen top performers leave for higher paying jobs and it affects us all, as well as the quality of service we are able to provide. When pay is an issue, you should listen up, because after all, you get what you pay for.

    • IBM Executive Consultant in Rome (Italy): (Current Employee) “Many light too much shadows during 30 years of relation.” Pros: Relationship with colleagues, active and very rich (in terms of thinking) enterprise. Cons: Too much long management chain in the organization, low propension to invest in new business model and to take innovative areas. Advice to Senior Management: Invest in skill, award competencies
    • IBM Anonymous: (Current Employee) “Positive experience.” Pros: Good work/life balance. Salary is good. Cons: Too much off-shoring. Small team sizes in US. Advice to Senior Management: Show more value in your employees and quit worrying about cutting costs 100% of the time
    • IBM Senior Consultant: (Past Employee - 2010) “It's a great experience for a short period of time, not a long term option.” Pros: As a consultant you are given the rare opportunity to work in a variety of Fortune 500 companies and see what they do right/wrong. You will rarely be bored. Cons: Road warrior becomes less of a novelty and more of a hassle. You are given zero notice when you will be shipping out to a new engagement. Advice to Senior Management: Develop better means to keep employees with IBM for longer tenures. Especially in the services space ensure there is a method for sustaining employees.
    • IBM Sales Specialist in Atlanta, GA: (Current Employee) “Get the best salary you can walking in the door because raises are few and far between.” Pros: - Work at home. - Management rarely stands in the way of job changes. Cons: - Pay, raises, promotions, etc. - Health care costs increase greater than raises. - Only one goal--increase EPS for investors. - Little training. - Little management support for getting job done. Advice to Senior Management: Stop opening each quarter with a picture of the EPS growth. Stop telling us how much money IBM is making while giving none of it to the employee. Only company I've ever worked for where after 5 years of record profits I bring home less money.
    • IBM Analyst: (Current Employee) “An almost daily question of how much worse could it get.” Pros: IBM is a giant company with some great people and the potential to gain invaluable experience if you know where to look. It is, from what I've seen, genuinely trying to promote cultural and gender diversity as well as flexible work options for employees where appropriate, although it can be easily contradicted by individual managers.

      At a senior management (executive) level, I do understand they believe the hype of flexible work options and development options for employees, plus business growth and doing 'whatever it takes' for the client. Somewhere in the company, people are genuinely conscious of the eroding morale and skills but the efforts put in place to combat this are cursory at best, and countered by the extreme cost saving and outsourcing measures that have graduated from 'exceptional quarter end activities' to standard fare.

      Cons: Literally no incentives left for doing a good job (awards, promotions, or even a 'thank you') other than if you don't outperform your peers, you be more likely to be let go sooner.

      Employee ratings, succession planning and career paths are a total farce. Sorry to anyone at a senior level with 'good intentions' but it's simply not happening on the front line.

      Irrespective of the individual, it feels impossible to get work done, because any investment (infrastructure, travel, or additional employees) would be considered contrary to the enterprise cost cutting or outsourcing edict, regardless of how strong the business case is.

      Advice to Senior Management: Have a serious think about the long term ramifications of your actions. I have no doubt on the financial success of IBM, particularly over the past 5 years. But there is a direct and unmistakable counter effect of that growth on employee morale and skills which is going to prove extremely costly.

      Don't pretend that strategies of putting most non management, non customer facing roles into low cost countries, that keep the IBM engine running, is anything but a cost cost saving exercise when the appropriate skills, experience, or culture for the role is not even a secondary consideration.

      It's all very well to prioritize the shareholders, but the current path puts even the shareholders of tomorrow at risk.

  • National Public Radio (NPR): For Retirees, Selling Pensions A Risky Bet. Excerpts: In today's tough economy, many people are doing whatever they can to make it through one more mortgage payment or survive other financial hardships that have reached their doorstep. For some retirees, that means selling their pensions for a lump-sum payment. "They don't have a lot of other avenues to go to," says Leslie Scism of the Wall Street Journal, who has reported on this trend. "For many people, it's a way to get some quick cash."

    Pensions are supposed to be protection for down the road. That's how Joe Serina thought of the pension he earned from serving 22 years in the Navy. But in 2008, his wife left him and he had to pay child support. ...

    Serina found a company that promised retirees cash right away, but they had to hand over their pension checks for years. They asked that he reroute his pension check directly to their bank, every month, he says.

    The company gave Serina $57,000 up front in exchange for his $1,400 pension check every month for eight years. That comes out to $125,000 for the company that paid him the money; the equivalent of a 23 percent interest loan. ...

    The Journal's Scism tells NPR's Sullivan that investment companies so far seem to like the idea of investing in the sale of people's pensions. "There are so many financial whiz kids out there who are always willing to try to find some way to turn some consumer product into something that an investor can make money on," Scism says. "There's just constant financial engineering on all kinds of income streams."

  • Forbes op-ed: Get Off My Social Security. By Lawrence Hunter. Excerpts: Disagreement over taxes and defense spending seem to have derailed the Super Committee, for now. There is, however, a bipartisan consensus in Washington to cut the Social Security benefits of current retirees—not 10 years from now, not five years, not two years but right now—as soon as Congress can agree on what to do about taxes and the military.

    Both political parties in Congress and the White House have agreed to change the method of measuring inflation to reduce cost of living allowances (COLAs) for current Social Security recipients—it’s called the Chained Consumer Price Index (“Chained CPI”). If the Super Committee “succeeds” in making recommendations to the full Congress on how to reduce the national debt, the Chained CPI will certainly be part of the recommendations. If the Super Committee does not submit recommendations, the Chained-CPI will rear its head again early next year as Congress struggles to find “savings” to fund such items as the “doc fix” to prevent a dramatic drop in doctor reimbursement under Medicare—what Congress gives with one hand, it takes away with the other.

    That is why the conservative seniors group that I head, The Social Security Institute (SSI), plans to run this TV spot nationwide urging seniors to sign a petition demanding that current Social Security benefits and COLAs be taken off the table in all deficit discussions.

    For more than 20 years, American workers were forced to overpay their Social Security taxes to build up a surplus in the Social Security Trust Fund, which now holds more than $2.5 trillion in federal bonds. Workers and retirees were promised those surpluses would safeguard and guarantee their Social Security benefits and secure them from cuts. ...

    Congress and the president have spent the United States to the brink of bankruptcy and significant spending cuts must be made. However, there is more than adequate other extravagant and wasteful federal spending, including bailouts to insolvent banks and businesses that can be cut to lower the deficit and reduce the national debt without touching Social Security benefits for current retirees. Stop the financial bailouts. Terminate the corporate handouts. ...

    First Washington bailed out the banks and big corporations; now it wants to sell out seniors. Now the politicians want to blame Social Security for the national debt. Now the politicians want to take money out of seniors’ mouths to pay for their own uncontrollable spending addiction. Now the politicians want to renege on the promise they made 29 years ago assuring workers that if they dutifully overpaid their Social Security taxes each and every payday, that their Social Security benefits would be secure. Now the politicians want to cut Social Security benefits. They want to treat Social Security like welfare, bailouts and handouts, and they want to treat seniors like some kind of Welfare Queens. Shame on them.

  • New York Times: As Layoffs Rise, Stock Buybacks Consume Cash. By Nelson D. Schwartz. Excerpts: When Pfizer cut its research budget this year and laid off 1,100 employees, it was not because the company needed to save money. In fact, the drug maker had so much cash left over, it decided to buy back an additional $5 billion worth of stock on top of the $4 billion already earmarked for repurchases in 2011 and beyond.

    The moves, announced on the same day, might seem at odds with each other, but they represent an increasingly common pattern among American corporations, which are sitting on record amounts of cash but insist that growth opportunities are hard to find.

    The result is that at a time when the nation is looking for ways to battle unemployment, big companies are creating fewer jobs, and critics say they are neglecting to lay the foundation for future growth by expanding into new businesses or building new plants. ...

    The principle behind buybacks is simple. With fewer shares in circulation, earnings per share can rise smartly even if the company’s underlying growth is lackluster. In many cases, like that of the medical device maker Zimmer Holdings, executives are able to meet goals for profit growth and earn bigger bonuses despite poor stock performance.

    “It’s clear there’s a conflict of interest,” said Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “Unless earnings per share are adjusted to reflect the buyback, then to base a bonus on raw earnings per share is problematic. It doesn’t purely reflect performance.” In addition, executives, who are often large shareholders, stand to benefit from even a small, short-term jump in stock prices.

  • Bloomberg/Newsweek: IBM Adds $7 Billion for Buybacks to Boost Per-Share Earnings. By Sarah Frier. Excerpts: International Business Machines Corp., the biggest computer-services provider, added $7 billion to its share-buyback plan to boost per-share earnings and investor returns. The addition brings the size of the repurchase program to $12.2 billion, as IBM had $5.2 billion remaining of its previous repurchase authorization, according to a statement from the Armonk, New York-based company today. Last week, IBM said it had bought back $11.5 billion of stock this year. ...

    Chief Executive Officer Sam Palmisano is using buybacks as he targets operating earnings of at least $20 a share by 2015, up from $13.35 the company projects for this year. IBM has spent more than $100 billion on dividends and buybacks since 2003, the year Palmisano became the chairman. He has also increased earnings by steering the company toward software and services.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Towers Watson Health Care Changes Ahead Survey" by "fhawontcutit". Full excerpt: In ibmpension@yahoogroups.com, "teamb562" <teamb562> wrote: So, the message is (if you are a 2nd choicer) to burn down the FHA asap? team, The problem, as I see it, (not being privy to IBM's plans), is trying to make a decision based on what *may* or *may not* happen in the future. The further away from Medicare you are, the bigger the crapshoot, imo. Here is what we know:
    1. IBM can take away the FHA. The plan can be terminated or changed. IBM doesn't have to provide retiree medical AT ALL.
    2. Because of FAS 106 accounting, companies get an immediate boost to income when they reduce/eliminate retiree health benefits -- they even get a boost to immediate income for FUTURE benefits that are reduced/eliminated. Ellen Schultz has quite a bit of info in her book. Companies can play games with their retiree health plans to boost earnings per share.
    3. I have asked the question previously and no one has an answer: Assuming the insurance exchanges get up and running in 2014 (pending Supreme Court decision on constitutionality of the PPACA), will someone who has ACCESS to a retiree plan be able to go to the exchange and get coverage? Or will that retiree BE FORCED to get coverage through the employer plan?

      A while back I posted that Sen. Bernie Sanders was on a talk show and someone asked him the question about whether the exchanges were available to retirees that had access to an employer retiree medical plan. At the time, Sen. Sanders said it was his understanding that if you had access to an employer retiree plan, you couldn't go to the exchange for coverage. IIRC, that was before the final bill was signed.

    4. According to an article by Ellen Schultz,
      "Thanks to a little-noticed clause in a 1996 law, retiree-only health plans are exempt from the Patient Protection and Affordable Care Act that went into effect last month."

      The PPACA put some limitations on deductibles -- but I would assume that if retiree-only health plans are exempt from the PPACA, that means that those limitations do not apply for retiree plans -- meaning that there is no limit to the deductibles or out of pocket charges for employer retiree medical plans.

    5. The move is clearly toward high-deductible plans. Wendell Potter, the ex-Cigna-VP-turned-whistleblower, has mentioned this in his book and his blog. One of the reasons he left his job was because of this move toward high-deductible plans in the industry. Wendell mentions plans with deductibles as high as $50,000. (No -- that's not a typo.) http://wendellpotter.com/2011/06/insurerss-bait-and-switch/ "In Indiana, annual family deductibles for Anthem's CoreShare Plan go as high as $50,000. Just stop for a moment for that to sink in. There are not many American families that could spend $50,000 a year out of their own pockets for care and not face bankruptcy. More than half of American families don't even earn $50,000 a year."
    6. So -- if you can't go to the exchange and are forced to get coverage from the employer retiree plan, couldn't the employer raise deductibles to $50,000 or more? And there is nowhere else you could go for coverage? (I don't know -- I'm asking.)

    Net: It's hard to make a decision when:

    1. The FHA can change or be eliminated.
    2. We don't know what will happen with the PPACA and the Supreme Court.
    3. We really haven't gotten an answer on whether the exchanges will be available to retirees, assuming the exchanges are up and running in 2014.
    4. The Republicans want to repeal the PPACA. There has been a move to raise the Medicare eligibility age to 67. Romney wants to voucherize Medicare. Everything can change depending upon the 2012 and 2014 elections.

    IMO, it's all a guessing game. You can't really "plan" for retirement when you don't know what the rules are.

    DISCLAIMER: The above is my understanding of the current situation. I am not an attorney, nor am I a financial consultant. The above is not to be considered legal, financial, or any other type of advice. If anyone has any additional info regarding the above, please post it.

  • Yahoo! IBM Retiree information exchange: "Anthem - Blue View Vision" by Bart Bartholomew. Full excerpt: Apologies if this has already been discussed. I missed it, if so. I received an IBM Open Enrollment notice via snail mail that starting in 2012, IBM's vision plan choice is Anthem - Blue View Vision. It says that we will be receiving the same level of features and benefits as we had previously, but color me skeptical. Anthem is part of Blue Cross and Blue Shield, a company that does not have as stellar a record of coverage as VSP does. Anyone else have an opinion of this 'new' coverage? Any idea why IBM apparently dropped VSP, an insurer my eye doctor told me was one of the best? Yeah, yeah ... I know - money. Bart
  • Yahoo! IBM Retiree information exchange: "Re: Anthem - Blue View Vision" by "ibmshaftee". Full excerpt: I did some research and am not happy. First I called my providers and told them about the change and that it was a part of Blue Cross etc. They both said they take Blue Cross so I should be OK. I called Blue View and found out that we are part of something they call "access network" and neither of my providers were in it and not many medical doctors are. Only providers around here are Sears and a couple of opticians. No doctors. I have been going to the same eye clinic for over 30 years since I prefer ophthalmologists and am not about to change. Apparently I can use the Eye Med card and get a discount but that is it.
  • Yahoo! IBM Retiree information exchange: "Re: Anthem - Blue View Vision" by Julian Thomas. Full excerpt: Aren't ophthalmologists covered by the medical plans?
  • Yahoo! IBM Retiree information exchange: "Re: Anthem - Blue View Vision" by "ibmshaftee". Full excerpt: Aren't ophthalmologists covered by the medical plans? Only if it is a medical procedure, not covered for routine eye exams.
  • Yahoo! IBM Retiree information exchange: "Re: Anthem - Blue View Vision" by "nkp766". Full excerpt: Go to http://www.anthem.com/preenrollment and log in with the ID "IBM" without the quotes. Click on "2012 Vision Plan Summary" and you will see that your 2012 eye exam is covered in full even if your doctor does not participate with Anthem. 2012 is a transition year where you get many of the same benefits you had with VSP. Now click on "2013 Vision Plan Summary" and you will see that starting in 2013 the Anthem plan is much worse than VSP if your doctor is Out-of-Network.

    If you can't get your doctor to join Anthem during 2012, you get much reduced vision benefits starting in 2013.

    lso, for those taking the Aetna Medicare Plan (PPO), your annual eye exam is covered so unless you need glasses or contact lenses during 2012, I see no reason to enroll in the Vision Plan. I have not checked the other Aetna plans.

  • Yahoo! IBM Retiree information exchange: "Re: Anthem - Blue View Vision" by "jworman". Full excerpt: When I got the mailing, I checked with my optometrist he wasn't going to sign up with Anthem - Blue View Vision as they pay so little that he would perform his services at a loss. I went on line and cancelled my vision plan. There wasn't all that much difference, and my glasses can easily last for a couple of years. Oh well, the sign of times to come.
  • Yahoo! IBM Retiree information exchange: "Re: Anthem - Blue View Vision" by "alwaysontheroad4bigblue". Full excerpt: I'm still an active employee. I posted this on the ibmemployeeissues group: 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 I have 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.

  • Alliance for Retired Americans: Retiree Leader: End of Super Committee Good News for Seniors. “Unconscionable” to Cut Retiree Programs to Pay for Tax Cuts for Millionaires. By Edward F. Coyle. Excerpts: “The lack of recommendations today from the Super Committee is good news for current and future retirees.

    “Over the past several months, activists with the Alliance for Retired Americans and other progressive groups helped send a clear message to Congress – Social Security, Medicare, and Medicaid are critical lifelines for millions of Americans and cannot be sacrificed on the altar of even greater tax breaks for Wall Street and corporate CEOs.

  • Wells Fargo news release: 80 Is The New 65 For Many Middle Class Americans When It Comes To Retirement, Wells Fargo Retirement Survey Finds. Excerpts: he concept of a “retirement age” is going the way of the typewriter, another 20th-century relic that has been made irrelevant by changing circumstances. Middle class Americans now expect to work until they have saved enough to afford to retire, according to results from the seventh annual Retirement Survey from Wells Fargo & Company (NYSE:WFC). Three fourths (76%) of the 1,500 middle class Americans surveyed by telephone by Harris Interactive in August and September 2011 say it is more important to have a specific amount saved before retirement, regardless of age, while only 20% say it is more important to retire at a specific age, regardless of savings.

    The survey also found:

    • A quarter (25%) of middle class Americans say they will “need to work until at least age 80” to live comfortably in retirement
    • Three-fourths (74%) of middle class Americans expect to work in their retirement years, including 39% of all respondents who will need to work to make ends meet or maintain their lifestyles, while 35% say they will work because they want to, rather than out of financial need.
    • Among middle class Americans age 40 to 59, 54% say they will “need to work,” compared to 34% of those age 25 to 39. Accordingly, only 25% of those between the ages of 40 and 59 say they will work in retirement because they “want to,” versus 45% of Americans between the ages of 25 and 39.
    • Of the Americans who will work in retirement, 47% say they will do “similar work” to their pre-retired years, while 42% say they will work in a position that requires “less responsibility.”

  • Mother Jones: Inside the Corporate Plan to Occupy the Pentagon. Behind the growing push to slash soldiers' pensions and other military costs is a little-known advisory group—stacked with Wall Street executives. By Adam Weinstein. Excerpts: With time fast running out for the so-called deficit supercommittee, the mammoth amount of government money spent on the military has become a prime target in Washington. But the main focus isn't on big-ticket weapons projects or expensive wars—it's on retirement benefits for the roughly 17 percent of soldiers, Marines, sailors, and airmen who have served 20 years or more in uniform. Currently the total cost of their benefits is about $50 billion a year.

    Cuts to military pensions are "the kind of thing you have to consider," Defense Secretary Leon Panetta said in September. When President Obama unveiled his $3 trillion debt reduction plan the same month, it called GIs' benefits "out of line" with private employee retirement plans, saying the system was "designed for a different era of work." When Congress held a hearing on military retirements in October, Rep. Austin Scott (R-Ga.) promoted a cheaper 401(k)-style plan that would slash existing benefits for many troops. "I see nothing wrong with them being able to choose a different retirement plan," he said.

    These ideas may sound like a bold new approach in an urgent moment—but in fact, the push for pension cuts and other corporate "reforms" at the Pentagon originates from an obscure advisory panel that has existed for a decade: the Defense Business Board. Its 21 members know little about military affairs, but they are rich in Wall Street experience, including with some of the biggest companies implicated in the 2008 financial meltdown. They are investment bank CEOs and CFOs, outsourcing experts, and layoff specialists who promote a corporate agenda of "behavior change" and "business solutions" in the military bureaucracy. The board proposes not only to slash and privatize military pensions, but also to have the Pentagon invest in oil futures, boost pay for its executives and political appointees, and make it easier for them to fire rank-and-file employees while scaling back those workers' collective-bargaining rights. ...

    Over the years, the board has recommended a series of "cost-saving" measures that would channel large amounts of money to private-sector businesses. Its members have consistently advocated for the Pentagon to engage in fuel hedging—investing in oil futures to lock in a supposedly low cost for their long-term fuel needs. The board's fuel-hedging push was led by member Denis Bovin, who was a top investment banker for Bear Stearns until the firm went bust in late 2008. After consulting with energy giants BP and Shell, among others, Bovin's team concluded that the Department of Defense should invest based on rising oil prices, even while he conceded that "as a whole, DoD is not highly exposed to fuel price volatility." Such deals, he noted, would incur investment transaction costs of "$10 to $250 million per year." Even though no federal agency currently engages in fuel hedging, the board tasked Bovin with another study on oil futures last January.

  • Channel Register (United Kingdom): 1,000 Chinese workers strike at Apple and IBM supplier. Cupertino singled out on forced overtime, conditions. By Paul Kunert. Excerpts: Around 1,000 workers at a Chinese plant that manufactures components for Apple and IBM downed tools this week in protest against enforced overtime, a rights group has claimed. The disgruntled staffers - about a third of all employees - at Jingmo Electronics Corporation (JEC) in south China's industrial district of Shenzhen held a one-day strike on 22 November.

    The authorities dispatched several hundred police including riot officers to disperse the workers as they moved off-site and blocked a national highway.

    China Labour Watch (CLW) said: "the motivation behind the strike was the factory’s decision to make workers work nightly overtime." It claims that employees had been asked to work from 6pm to midnight and sometimes 2am on top of the usual four to four and a half day shifts from 7am to 11.30 or 1pm to 5pm.

    CLW said staff "commonly worked anywhere from 100 to 200 hours of overtime a month" but the factory refused to let them put the hours in at the weekend because under Chinese labour law JEC would have had to double the wages.

New on the Alliance@IBM Site
  • 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 raises, cuts in band levels. This is a corrupt organization 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 benefits 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 editorial: Fixing Medicare. Excerpts: There is no way to wrestle down the deficit without reining in Medicare costs. Ensuring that the program provides quality health care coverage to millions of older and disabled Americans is essential. These goals are not incompatible, but they require a judicious approach to policy making that is depressingly absent in Washington.

    Medicare is nothing less than a lifeline for 49 million older and disabled Americans. It helps pay for care in a wide range of settings, including hospitals, nursing homes, outpatient clinics, doctors’ offices, hospices and at home, as well as for prescription drugs.

    It is also hugely costly. The federal government spent about $477 billion in net Medicare outlays in fiscal year 2011 — 13 percent of its total spending. By 2021, it is projected to spend $864 billion — or 16 percent of the total — according to figures derived by the Kaiser Family Foundation. That rate of growth is not sustainable indefinitely.

    Unfortunately, many politicians seem less interested in coming up with ways to fix Medicare than in how they might impose their ideology on the program or leverage the issue for their next political campaign. Members of both parties need to define more clearly for the public what Medicare’s true problems are and how they propose to address them. Here are some of the major issues...

  • Kaiser Health News: Report: U.S. Outspends Other Countries On Health Care. By Julie Appleby. Excerpts: We’re No. 1. In health spending. Again. The United States far outpaces other countries in how much it spends on health care, although Americans have a lower rate of doctor visits and hospitalizations than most of the other 34 member countries of the Organization for Economic Co-operation and Development.

    In its Health at a Glance 2011 report, out today, the OECD shows that the United States spent about $7,960 per person on health care in 2009 – about 2.5 times the average of the countries studied. It also found that health spending in the U.S. has increased faster than in all other high-income OECD countries since 1970, even accounting for population growth. ...

    So what are Americans getting for their money? The U.S. has the best five-year survival rate for breast cancer and comes in second, behind Japan, in terms of colorectal cancer survival. But the U.S. ranks 27th in life expectancy at birth, 31st in premature mortality, and 25th in the rate of cardiovascular mortality. The U.S. has the second worst rate of adult diabetes, behind Mexico, and has the highest rate of adult obesity, at 34 percent.

  • MedPage Today: Health Insurance Premiums Up by Half Since 2003. By Emily P. Walker. Excerpts: The average premium for a family's employer-based health insurance in 2010 was nearly $14,000, which represents a 50% increase since 2003, according to a study from the Commonwealth Fund. If the rate of growth continues, the average annual total premium for a family in 2020 could be nearly $24,000, according to the report. That total includes both what the employer and the employee pay. ...

    Although employers are bearing the brunt of the cost of providing health insurance, the rising cost might keep employee salaries lower or cut into other benefits, the report authors said. "In effect, the steady increase in premiums has been consuming resources that employers might otherwise have earmarked for salary or wage increases, for other benefits, or for hiring new workers," wrote the authors of the report, who were led by Cathy Schoen, senior vice president at Commonwealth Fund.

  • New York Times: Young Adults’ Coverage May Cost Parents Even More. By Bruce Japsen. Excerpts: A popular part of the federal health care legislation that allows young people to stay on their parents’ insurance coverage until they are 26 is prompting some creative pricing by employers who are turning to new strategies to charge their workers extra for children on their benefit plans.

    An increasing number of employers are turning to “per participant” or “unitized” pricing so an employee’s payroll contribution increases with each dependent a worker adds to their coverage, according to Aon Hewitt, a large Chicago benefits consultancy. This strategy differs from the more typical single or family coverage or so-called partner benefits that allow workers to include a spouse or domestic partner on their plan.

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.

  • New York Times, courtesy of truthOut: "Near Poor" Struggling Just Above Poverty Startle the Census. By Jason DeParle, Robert Gebeloff and Sabrina Tavernise. Excerpts: They drive cars, but seldom new ones. They earn paychecks, but not big ones. Many own homes. Most pay taxes. Half are married, and nearly half live in the suburbs. None are poor, but many describe themselves as barely scraping by. Down but not quite out, these Americans form a diverse group sometimes called “near poor” and sometimes simply overlooked — and a new count suggests they are far more numerous than previously understood.

    When the Census Bureau this month released a new measure of poverty, meant to better count disposable income, it began altering the portrait of national need. Perhaps the most startling differences between the old measure and the new involves data the government has not yet published, showing 51 million people with incomes less than 50 percent above the poverty line. That number of Americans is 76 percent higher than the official account, published in September. All told, that places 100 million people — one in three Americans — either in poverty or in the fretful zone just above it.

  • truthOut: Billionaires Use Tax Loophole to Lower Their Tax Rates to One Percent. By Pat Garofalo. Excerpts: In 2009, 1,470 households reported income of more than $1 million but paid no federal income tax on it, through their use of various tax loopholes and shelters. Tax rates for millionaires have fallen by 25 percent since the mid-’90s, while one quarter of millionaires currently pay lower tax rates than the average middle-class household. Numbers like these are the driving force behind the Buffett rule, the administration’s proposal aimed at ensuring that millionaires can’t pay lower tax rates than middle-class families. To add to the pile of evidence that such a rule is necessary, Bloomberg News ran a segment today on billionaires who manipulate the tax code to lower their tax rate all the way down to one percent:
    Warren Buffett became the de facto face of the effort to increase taxes for the nation’s wealthiest when he proclaimed his secretary had a higher tax rate than he does, his being 17 percent. But the real figure for billionaires is often a lot smaller than that. Sometimes they even have a tax rate as low as 1 percent. That’s because they derive the bulk of their income from stock appreciation, and they use complicated strategies — some of them — to make sure those gains don’t get classified as taxable income. Basically what they do is enter into transactions known as “variable pre-paid forward contracts” and it can enable them to defer paying capital gains tax until a later date…Much of the wealth never converts into income on a tax return.
  • Huffington Post: Democrats, Stop Caving In. By Senator Bernie Sanders (I-VT). Excerpts: Here is something we all can agree on: Federal deficits are a serious problem.

    Here is something no one seriously disputes: Today's big deficits were caused mainly by big tax cuts for the wealthy, two unpaid-for wars, a horrible recession caused by Wall Street greed, and an expensive prescription drug program rigged to favor pharmaceutical companies.

    Here is something we should not agree to do: Cut Social Security, Medicare and Medicaid benefits.

    There is surprisingly broad consensus among Americans (except inside the corporate-dominated D.C. beltway) on what to do about deficits. In poll after poll, strong majorities favor making the wealthiest Americans, who, in many cases, have never had it so good, share the sacrifice and pay a little more in taxes. Increasing taxes on the wealthy is overwhelmingly supported by Democrats and independents. A majority of Republicans and people in the Tea Party movement also support taxing millionaires to help bring down deficits. Even many millionaires say they should be paying higher taxes. At a time when many profitable corporations pay nothing in federal income taxes, there also is widespread support for closing corporate tax loopholes. Taking a hard look at mushrooming defense spending also enjoys widespread support.

  • New York Times: Banks Quietly Ramping Up Costs to Consumers. By Eric Cash. Excerpts: Even as Bank of America and other major lenders back away from charging customers to use their debit cards, many banks have been quietly imposing other new fees. Need to replace a lost debit card? Bank of America now charges $5 — or $20 for rush delivery. Deposit money with a mobile phone? At U.S. Bancorp, it is now 50 cents a check. Want cash wired to your account? Starting in December, that will cost $15 for each incoming domestic payment at TD Bank. Facing a reaction from an angry public and heightened scrutiny from regulators, banks are turning to all sorts of fees that fly under the radar. Everything, it seems, has a price. ...

    Banks can still earn a profit on most checking accounts. But they are under intense pressure to make up an estimated $12 billion a year of income that vanished with the passage of rules curbing lucrative overdraft charges and lowering debit card swipe fees. In addition, with lending at anemic levels and interest rates close to zero, banks are struggling to find attractive places to lend or invest all the deposits they hold. That poses another $8 billion drag.

    Put another way, banks would need to recoup, on average, between $15 and $20 a month from each depositor just to earn what they did in the past, according to an analysis of the interest rate and regulatory changes on checking accounts by Oliver Wyman, a financial consulting firm.

  • The Huffington Post: The Super Committee's Big Lie. By Jeffrey Sachs. Excerpts: The big political lie of the Super Committee is that the deficit must be closed mainly by cutting government spending rather than by raising taxes on corporations and the super-rich. Both parties are complicit. The Republicans want to close the deficit entirely by cutting spending; Obama has brandished the formula of $3 of cuts for every $1 of tax revenues. On either approach, the poor and middle class would suffer grievously while the rich and powerful would win yet again (at least until the social pressures boil over).

    The key to understanding the U.S. economy is to understand that we have two economies, not one. The economy of rich Americans is booming. Salaries are high. Profits are soaring. Luxury brands and upscale restaurants are packed. There is no recession. ...

    There are two forces that account for this deep divide. The first is globalization. Manufacturing employment peaked in 1979, with jobs and factories increasingly shifting overseas. For a while, the housing bubble provided construction jobs that partly offset the loss of manufacturing jobs. Now the housing bubble has burst. Good jobs for young people with a high-school diploma or less have disappeared. ...

    The second force is politics. When Obama has one of his many $35,800-a-plate fundraising dinners, he doesn't meet young people struggling to cover tuition payments. Obama has been separated from reality by the White House's campaign to collect between $750 million and $1 billion for Obama's reelection bid. The big money on the Republican side is even worse. Big Oil controls the party.

    The upshot is that both parties champion the 1 percent, the Republicans gleefully and the Democrats sheepishly. Both parties have worked together to gut the tax code. Companies use accounting tricks approved by the IRS to shift their profits to foreign tax havens. Hedge-fund managers and recipients of long-term capital gains pay only 15 percent top tax rates. As a result of these irresponsible tax policies and rampant tax evasion, tax collections as a share of national income have sunk to 15 percent, the lowest in modern American history.

    Americans are told daily that these low tax rates on the rich are the natural order of things, that the American economy would collapse if the top 1 percent were to pay more to help fund education, job training, infrastructure, and new technologies. This claim is absurd. We should be collecting at least 3 to 4 percentage points of GNP more from the rich and the corporate sector. We could collect these added amounts by raising top tax rates on regular income and capital gains, closing down offshore tax havens, taxing net worth of high-wealth households, taxing financial transactions, and cracking down on evasion.

  • The Coffee Party USA: GOP's David Frum answers critics, stands up for 99 percent. By Eric Byler. Excerpts: Former Bush 43 speech-writer David Frum is one of the most respected thinkers in America. He is a free-market, limited-government, low-taxes conservative who has, in a single paragraph of his recent essay in New York Magazine, encapsulated the first 10 years of the 21st century more cogently than any writer to date:
    In the aughts, Republicans held more power for longer than at any time since the twenties, yet the result was the weakest and least broadly shared economic expansion since World War II, followed by an economic crash and prolonged slump. Along the way, the GOP suffered two severe election defeats in 2006 and 2008. Imagine yourself a rank-and-file Republican in 2009: If you have not lost your job or your home, your savings have been sliced and your children cannot find work. Your retirement prospects have dimmed. Most of all, your neighbors blame you for all that has gone wrong in the country. There’s one thing you know for sure: None of this is your fault! And when the new president fails to deliver rapid recovery, he can be designated the target for everyone’s accumulated disappointment and rage. In the midst of economic wreckage, what relief to thrust all blame upon Barack Obama as the wrecker-in-chief.

    In When Did the GOP Lose Touch with Reality, a penetratingly candid and immeasurably important essay published on Nov. 20, Frum says he is haunted by his time in the Bush administration although his role was not large, and, the real decision-makers seem to sleep well at night.

    I appreciate Frum's writing because he criticizes the GOP, not with ridicule or disdain, but with deep concern — concern, because he identifies as a Republican, and he knows that there are many good people in the Republican party who recognize that it has lost its way. Frum writes about America with the same type of concern, and indeed as he explains at the end of the piece, he is committed to bringing about a course corrections within the GOP because the future of our nation as a whole (the 99 percent) depends on it.

  • Charlotte Observer: Banks near record spending on D.C. lobbyists. By Andrew Dunn. Excerpts: The money banks spend on lobbying is on pace to reach a record high again this year as the industry battles to weaken or repeal hundreds of rules being crafted by federal regulators. Lobbying outlays by the five biggest spenders in the commercial banking sector increased 12 percent in the first three quarters of 2011 over the same period last year, an Observer analysis of federal lobbying disclosure records shows. ...

    At this time last year, the commercial banking industry had spent about $42 million on lobbying, the center's data show. So far this year, the figure stands at nearly $47 million. Should this year's pace continue, 2011 will be the sixth straight year that commercial bank lobbying has set a record, according to the center.

  • New York Times editorial: The Supercommittee Collapses. Excerpts: The smoke from the smoldering failure known as the deficit “supercommittee” spread heavily across Capitol Hill on Monday, allowing Republicans to obscure the simple truth about the failure to reach an agreement. The only reason the committee failed was because Republicans refused to raise taxes on the rich, and, in fact, wanted to cut them even below their current bargain-basement level.

    Republicans in Washington claimed Democrats refused to budge on entitlements. John Boehner, the House speaker, and Mitt Romney, a Republican presidential candidate, as if by rote, issued statements saying it was all President Obama’s fault. But, had a single Republican on the panel endorsed even a modest increase in upper-income tax rates, Republicans could have won trillions in cuts from entitlements and discretionary spending. (Certainly far beyond anything we would endorse.) ...

    And, naturally, they rejected the proposal from supercommittee Democrats to cut at least $3 trillion from the deficit, because a third of it would have come from higher taxes on the rich. When you hear Republicans claim that Democrats refused to touch their sacred cows of spending, remember that the Democratic offer would have cut $475 billion from Medicare and Medicaid over 10 years, nearly half of which would have come directly from beneficiaries. That’s more than the Bowles-Simpson deficit plan proposed, and eight times the level of Medicare cuts offered by President Obama in September.

    These plans actually tipped too far in the direction of spending cuts. By comparison, the Republican offers were risible. One pretended to raise revenue by $300 billion, while actually calling for the Bush tax cuts to be permanent and even reducing the top bracket to 28 percent from 35 percent. The consequences of this failure are serious.

  • Forbes: The Top 0.1% Of The Nation Earn Half Of All Capital Gains. By Robert Lenzner. Excerpts: Capital gains are the key ingredient of income disparity in the US– and the force behind the winner takes all mantra of our economic system. If you want even out earning power in the U.S, you have to raise the 15% capital gains tax.

    Income and wealth disparities become even more absurd if we look at the top 0.1% of the nation’s earners– rather than the more common 1%. The top 0.1%– about 315,000 individuals out of 315 million– are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400.

    It’s crystal clear that the Bush tax reduction on capital gains and dividend income in 2003 was the cutting edge policy that has created the immense increase in net worth of corporate executives, Wall St. professionals and other entrepreneurs.

    The reduction in the tax from 20% to 15% continued the step-by-step tradition of cutting this tax to create more wealth. It had first been reduced from 35% in 1978 at a time of stock market and economic stagnation to 28% . Again 1981, at the start of the Reagan era, it was reduced again to 20%– raised back to 28% in 1987, on the eve of the October 19 th– 23% crash in the market. In 1997 Clinton agreed to reduce it back to 20%, which move was an inducement for the explosion of hedge funds and private equity firms– the most “rapidly rising cohort within the top 1 per cent.” ...

    I commend you to the late Justice Louis Brandeis warning to the nation that ”We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” We have to make up our minds to restore a higher, fairer capital gains tax to the wealthiest investor class– or ultimately face increased social unrest.

  • New York Times op-ed: We Are the 99.9%. By Paul Krugman. Excerpts: “We are the 99 percent” is a great slogan. It correctly defines the issue as being the middle class versus the elite (as opposed to the middle class versus the poor). And it also gets past the common but wrong establishment notion that rising inequality is mainly about the well educated doing better than the less educated; the big winners in this new Gilded Age have been a handful of very wealthy people, not college graduates in general.

    If anything, however, the 99 percent slogan aims too low. A large fraction of the top 1 percent’s gains have actually gone to an even smaller group, the top 0.1 percent — the richest one-thousandth of the population.

    And while Democrats, by and large, want that super-elite to make at least some contribution to long-term deficit reduction, Republicans want to cut the super-elite’s taxes even as they slash Social Security, Medicare and Medicaid in the name of fiscal discipline. Before I get to those policy disputes, here are a few numbers.

    The recent Congressional Budget Office report on inequality didn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, did. According to that report, between 1979 and 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent.

    For the most part, these huge gains reflected a dramatic rise in the super-elite’s share of pretax income. But there were also large tax cuts favoring the wealthy. In particular, taxes on capital gains are much lower than they were in 1979 — and the richest one-thousandth of Americans account for half of all income from capital gains.

    Given this history, why do Republicans advocate further tax cuts for the very rich even as they warn about deficits and demand drastic cuts in social insurance programs? ...

    For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone’s income and his economic contribution.

    Executive pay, which has skyrocketed over the past generation, is famously set by boards of directors appointed by the very people whose pay they determine; poorly performing C.E.O.’s still get lavish paychecks, and even failed and fired executives often receive millions as they go out the door. ...

    So should the 99.9 percent hate the 0.1 percent? No, not at all. But they should ignore all the propaganda about “job creators” and demand that the super-elite pay substantially more in taxes.

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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