Welcome to IBM Employee News and Links

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• Job Cut Reports
  • Comment 02/10/12: Yesterday they had a "silent layoff" in EFK and BTV and rumor has it that they are cutting out our overtime pay, can this be verified. -upnorth-
  • Comment 02/11/12: It is an irony that with less USA IBM employees means if more of the remaining IBMers speak up and organize you all can get closer to a union with a 50% + 1 vote just a little easier than with a larger rank and file where more outreach to get members and votes would be needed. So join the Alliance now. And get to it! -UnionVox-
  • Comment 02/13/12: Just an update from the down trodden in the UK. In my last message I said that I insisted that my second line manager send through to me the process for awarding PBC scores, as I was given my PBC two weeks before Business results were known. Well, I was sent them, with a note saying that the assumption is that this matter is now closed. Second line manager was informed that I had already booked an appointment with HR and will be discussing the matter with them.

    Well, I must congratulate HR on having their responses well rehearsed! They advised me that they are aware of various issues with PBC's and that they are looking into the matter and will advise me of any findings etc etc etc. Sounded very much like they were just saying what I wanted to hear. What do you think the odds are of someone actually doing anything about doing what's morally right, not just what's right for IBM's bottom line? - No Name - Just a Number-

    Alliance Reply: Why do you expect anything different than the answer you got from HR? Do you believe they represent you in some way? IBM HR represents IBM's interests, only. Not yours. If you want someone to represent your interests, then you want a union contract.

  • Comment 02/13/12: -No Name - Just a Number- It blows my mind that IBMers actually think HR will be fair to them when they have a good case. A corporation's HR department actually effectively fairly dealing with employee ("human") issues? It is a well known myth. HR just protects the corporation from the employees and thus backs management or does damage control for management. It can care care less about employees and the human element. They treat all rank and file humans collectively as resources, not as beings. If you want real fairness you need union representation. Plain, simple, period. Without it you stand nil of a chance. -IBMUnionYes -
  • Comment 02/14/12: @owns_no_shares-- IBM is indeed growing it's price per share by firing US - EMEA - UK workers and hiring cheap labor. It has been estimated that IBM saves 80% per hourly wage when hiring over seas, but you also need to consider the IBM benefits overseas are minimal as well. The yellow flags will turn red after IBM can no longer diminish the US - EMEA - UK workforce(s) and it (IBM) will actually have to show financial growth. Yes, it will level off someday, but sadly, there will not be many US - EMEA - UK workers left in the mix. Organize now before you end up like every other RA'd person -Same-Road-Map-
  • Comment 02/15/12: I understand that 3 RSD techs have retired or quit since the beginning of the year in the branch. I told the manager that this is what they can expect when they pass around 10% pay cuts and pay band reductions. He told me that I need to work out a rotation among the remaining large system SSRs to start covering the POS/high volume calls. Y'all need to know that IBM is going to be loosing maintenance customers, and you can say you saw it here first. Major accounts like Wal-Mart, Cisco, and NetApp will be among those impacted. There are literally no people left in the field to go take the service calls. It truly is a smarter planet.... -gadfly-
  • Comment 02/18/12: US delivery friend reports 4 teamers with consistent 2+, 2s PBC reduced to 3s even while meeting 20% or greater overtime (unpaid) demand last six months. Could mean 25% RA/termination. Summary of the WRALTechWire "job cuts coming" article: SUBTRACTING RESOURCES = ADDED VALUE at IBM. Essentially, cheating customers out
  • Comment 02/18/12: From the main page: Where is your work going? The off shoring of work from IBM US to other countries continues. Many IBM employees in the US have been calling Roadmap 2015,"Roadkill 2015" for US workers. Help us expose where the work is going, what kind of work, and what accounts. We would also like info from IBM workers who saw their work off shored the past 2 years. -member-
  • Comment 02/19/12: Update on disputing my PBC 3 rating going from a 1 to a 3 as indicated in my earlier comments, first off IBM doesn't make it easy for an employee to use the open door / HR route as they state, second line management was rude and disrespectful, the guy acted like I personally attacked him, HR was slightly more understanding, however, I had good documentation to back me up, they retracted the 3 ranking and made it a 2, not sure if it was worth the stress in the end because it seems as they still won for all the hard work I did in 2011 and the stress to fight a 3 rating to end up with a meaningless 2, no raise, no bonus. "More than ever IBMer's need to come together and get unionized". -Anon-
  • Comment 02/19/12: Big cuts (i.e. RA) in Application Services group will be announced this coming week. Code name is Phoenix. More US jobs and dedicated employees will be the ax. Join the union! -KL-

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

• Huffington Post: Young Adult Insurance Coverage Laws Boost Access to Medical Care, Reduce Costs: Report. By Jeffrey Young. Excerpts: Health reforms at the state level that permit young adults to remain on their parents' health insurance resulted in better access to medical care, an outcome that likely will broaden under President Barack Obama's health law, which allows children to keep their parents' coverage through age 26, researchers conclude in a new study.

  Researchers at the Mount Sinai School of Medicine in New York compared young adults in states that already require insurance companies to cover policyholders' children through age 26 with their counterparts in states without such laws. After Colorado, New Jersey and South Dakota enacted mandates in 2005 or 2006, young adults reported increases in health insurance coverage, more physical exams, a greater likelihood of having a primary care physician, and less occasions when they went without medical care because of costs than their counterparts in 17 states that do not mandate insurance coverage for that age group, according to the report published by journal Pediatrics on Monday.

• Washington Post: Success of health reform hinges on hiring 30,000 primary care doctors by 2015. By Sarah Kliff. Excerpts: Decades of research have confirmed that more specialists leads to more specialty care, which leads to a more expensive system. Now, with the passage of the Affordable Care Act, tens of millions of previously uninsured Americans will be looking for a primary-care doctor. It is no exaggeration to say that the success of the health-care law rests on young doctors choosing to do something that is not in their economic self-interest. ...

  “No matter what speciality you’re going into, your medical education costs the same,” Stream says. “Think about a medical student who is sort of interested in primary care and has got $250,000 in debt. People are often driven by financial incentives, and you basically get the outcome that you incent. Health-care workforce is not different from any other sector in that regard.”

  As with speciality doctors, specialty residents bring a hospital more lucrative business. A radiologist will earn a hospital $193 in Medicare reimbursements every hour, a primary-care doctor brings in $101, according to an analysis done for a congressional watchdog agency.

  “What hospitals build, in terms of their residency training, has a lot to do with what business they’ll bring in,” says Robert Phillips, director of the Robert Graham Center, which studies health-care workforce issues. “If they have a choice between funding a primary-care residency or one in cardiology, the cardiology residency will make them a lot more money. It’s a perfect storm that aligns the incentives against everything other than primary care.”

  The greatest threat to the health-care overhaul might not be the Supreme Court, which is scheduled to hear challenges to the law next month. Or the shifting alliances of an election year. In the end, it’s more likely to be a lack of medical providers. If the law succeeds in extending health insurance to 32 million more Americans, there won’t be enough doctors to see them. In fact, the anticipated shortfall of primary-care providers, by 2015, is staggering: 29,800. ...

  “The income gap that stratifies much of society often stratifies the physician community as well,” a 2009 report on primary care from the Robert Graham Center concluded. “The ‘heart hospital’ side of a medical campus may have fountains and artwork, while the mental image of the primary-care offices is a necessarily full waiting room of a practice where physicians see 40 or more patients a day.” Those differences help explain the country’s primary-care doctor shortage. They also make an impression on medical students like Reem Nubani, a 30-year-old student at Southern Illinois University interviewing for residency slots.

• BenefitsPro: Health care costs drop when poor are insured, study says. By Kathyrn Mayer. Excerpts: A new study coming from the University of California-Irvine may upset Republicans who argue health care reform is too costly: Researchers found health care costs on the whole fall when poorer, uninsured patients are provided health insurance. “In a case study involving low-income people enrolled in a community-based health insurance program, we found that use of primary care increased but use of emergency services fell, and–over time–total health care costs declined,” says David Neumark, an economics professor and co-author of the study.

  The study focused on uninsured people living in Richmond, Va., who fell 200 percent below poverty level. Health care costs fell by almost 50 percent per participant, from $8,899 in the first year to $4,569 in the third after they received insurance. They found there were more primary care visits, but less emergency room visits. Costs per visit for both inpatients and outpatients also decreased, as did the length of inpatient stays. Overall costs per enrollee per year for all participants with at least one year of enrollment declined from $7,604 to $4,726.

• Rocky Mountain PBS: U.S. Health Care: The Good News. Abstract: One small community in the Colorado oil patch near the Utah border delivers the highest value-for-the-money health care in the United States, and in the process covers nearly everyone in town. How do they do it? Could other communities do it, too? Correspondent T.R. Reid interviews health policy experts at the Dartmouth Institute before heading to Colorado and other places in the U.S. where doctors and hospitals are working hard to provide excellent health care at reasonable cost.
• The Fiscal Times: What Those New Super Drugs Really Cost. By Merrill Goozner. Excerpts: The drug industry usually defends the high price on drugs – the latest cancer therapies are tipping the scales at $100,000 a year – by pointing to the large sums it spends on research and development. It is true that drug firms spend a larger share of their revenue on R&D than most other industries, typically anywhere from 15 to 20 percent of sales. And Eli Lilly ran a Super Bowl ad claiming the cost of developing a new drug has now risen to more than $1.3 billion.

  Now Matthew Herper of Forbes Magazine, usually an insightful writer on the drug industry, has raised the stakes. He wrote last week that the cost of developing a new drug had reached breathtaking level of $3.7 billion to $11.8 billion. ...

  For many years, industry supporters have tried to create a metric for measuring the cost of developing a new drug. The Tufts University Center for the Study of Drug Development, which receives industry funding, has developed a methodology that’s widely recognized by the economics profession. Its studies are the basis for the Eli Lilly ad’s claims.

  I think they’re wrong, and the $1.3 billion-per-new-drug number is hogwash. But let me start by saying I’m not a disinterested observer in this debate. I wrote a book claiming the figure was substantially lower (“The $800 Million Pill: The Truth Behind the Cost of New Drugs”) and the title chapter sought to debunk the Tufts methodology.

  Here’s the short-hand version of my argument. First, the Tufts economists overestimated total costs by adjusting the multi-year costs for developing any single drug for inflation over the lifetime of its development and treating it like capital investment. That misses the crucial point that R&D isn’t a capital expense. It’s an annual write-off from a company’s top line and thus a deduction from taxable profits. No industry capitalizes R&D costs. The drug industry doesn’t either, including in its accounting statements to the Securities and Exchange Commission. Therefore, it shouldn’t in its public propaganda.

  Second, the Tufts researchers failed to account for research that is driven by the marketing needs of the firm, such as coming up with so-called me-too drugs or drugs designed to replace drugs coming off patent. Neither generates new drugs that are any different from what’s already on the market, and should more properly be considered a marketing expense.

  Companies also conduct hundreds of clinical trials every year, the most expensive part of drug development, that are not designed to win new approvals or even win new approved indications for old drugs. They are designed by companies to encourage physicians to use their drug. The industry even has a name for this kind of R&D: seeding trials.

• The Hill: GOP senators push for Medicare cuts. By Alexander Bolton. Excerpts: Burr and Coburn are proposing keeping the current fee-for-service government program but requiring it to compete with private plans, introducing a premium-support plan in 2016. They would increase the Medicare eligibility age to 67 for people born after 1959 and raise Medicare premiums by 3 percent of the overall program’s costs each year until a 9 percent adjustment is reached by 2016.

  The plan would increase the cap on out-of-pocket costs for individuals earning more than $85,000 a year and couples earning more than $170,000. For example, individuals making between $85,000 and $107,000 would see out-of-pocket costs capped at $12,500.

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

"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: Even Critics of Safety Net Increasingly Depend on It. By Binyamin Appelbaum and Robert Gebeloff. Excerpts: Ki Gulbranson owns a logo apparel shop, deals in jewelry on the side and referees youth soccer games. He makes about $39,000 a year and wants you to know that he does not need any help from the federal government.

  He says that too many Americans lean on taxpayers rather than living within their means. He supports politicians who promise to cut government spending. In 2010, he printed T-shirts for the Tea Party campaign of a neighbor, Chip Cravaack, who ousted this region’s long-serving Democratic congressman.

  Yet this year, as in each of the past three years, Mr. Gulbranson, 57, is counting on a payment of several thousand dollars from the federal government, a subsidy for working families called the earned-income tax credit. He has signed up his three school-age children to eat free breakfast and lunch at federal expense. And Medicare paid for his mother, 88, to have hip surgery twice.

  There is little poverty here in Chisago County, northeast of Minneapolis, where cheap housing for commuters is gradually replacing farmland. But Mr. Gulbranson and many other residents who describe themselves as self-sufficient members of the American middle class and as opponents of government largess are drawing more deeply on that government with each passing year. ...

  The government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007, according to a Congressional Budget Office analysis published last year. ...

  One of the oldest criticisms of democracy is that the people will inevitably drain the treasury by demanding more spending than taxes. The theory is that citizens who get more than they pay for will vote for politicians who promise to increase spending.

  But Dean P. Lacy, a professor of political science at Dartmouth College, has identified a twist on that theme in American politics over the last generation. Support for Republican candidates, who generally promise to cut government spending, has increased since 1980 in states where the federal government spends more than it collects. The greater the dependence, the greater the support for Republican candidates.

  Conversely, states that pay more in taxes than they receive in benefits tend to support Democratic candidates. And Professor Lacy found that the pattern could not be explained by demographics or social issues. ...

  Some of the fiercest advocates for spending cuts have drawn public benefits. Many, like Mr. Falk, have family members who rely on the government. They often cite that personal experience as the reason they want to cut government spending. Brian Qualley, 49, has a sister who survived a brain tumor but was disabled by its removal. The government pays for her care at an assisted-living facility. Their mother scrapes by on Social Security. ...

  Barbara Nelson has little patience for people who say they will not need government help. She considers herself lucky she has not, and obligated to provide for those who do. “Catastrophes happen in life,” she said, sitting in a coffee shop in Taylors Falls. “To be so arrogant that you think it won’t happen to you, that somehow you’re going to be one of the special ones, I disagree with that.”

• New York Times op-ed: Moochers Against Welfare. By Paul Krugman. Excerpts: And what these severe conservatives hate, above all, is reliance on government programs. Rick Santorum declares that President Obama is getting America hooked on “the narcotic of dependency.” Mr. Romney warns that government programs “foster passivity and sloth.” Representative Paul Ryan, the chairman of the House Budget Committee, requires that staffers read Ayn Rand’s “Atlas Shrugged,” in which heroic capitalists struggle against the “moochers” trying to steal their totally deserved wealth, a struggle the heroes win by withdrawing their productive effort and giving interminable speeches.

  Many readers of The Times were, therefore, surprised to learn, from an excellent article published last weekend, that the regions of America most hooked on Mr. Santorum’s narcotic — the regions in which government programs account for the largest share of personal income — are precisely the regions electing those severe conservatives. Wasn’t Red America supposed to be the land of traditional values, where people don’t eat Thai food and don’t rely on handouts?

  The article made its case with maps showing the distribution of dependency, but you get the same story from a more formal comparison. Aaron Carroll of Indiana University tells us that in 2010, residents of the 10 states Gallup ranks as “most conservative” received 21.2 percent of their income in government transfers, while the number for the 10 most liberal states was only 17.1 percent. ...

  But why do regions that rely on the safety net elect politicians who want to tear it down? I’ve seen three main explanations.

  First, there is Thomas Frank’s thesis in his book “What’s the Matter With Kansas?”: working-class Americans are induced to vote against their own interests by the G.O.P.’s exploitation of social issues. And it’s true that, for example, Americans who regularly attend church are much more likely to vote Republican, at any given level of income, than those who don’t.

  Still, as Columbia University’s Andrew Gelman points out, the really striking red-blue voting divide is among the affluent: High-income residents of red states are overwhelmingly Republican; high-income residents of blue states only mildly more Republican than their poorer neighbors. Like Mr. Frank, Mr. Gelman invokes social issues, but in the opposite direction. Affluent voters in the Northeast tend to be social liberals who would benefit from tax cuts but are repelled by things like the G.O.P.’s war on contraception.

  Finally, Cornell University’s Suzanne Mettler points out that many beneficiaries of government programs seem confused about their own place in the system. She tells us that 44 percent of Social Security recipients, 43 percent of those receiving unemployment benefits, and 40 percent of those on Medicare say that they “have not used a government program.”

  Presumably, then, voters imagine that pledges to slash government spending mean cutting programs for the idle poor, not things they themselves count on. And this is a confusion politicians deliberately encourage. For example, when Mr. Romney responded to the new Obama budget, he condemned Mr. Obama for not taking on entitlement spending — and, in the very next breath, attacked him for cutting Medicare.

• Slate, courtesy of AlterNet: All the Right Reasons for Raising Capital Gains Taxes. Mitt Romney's large investment income has spurred arguments about whether to raise the tax on capital gains. By Eliot Spitzer. Excerpts: The U.S. tax code: Never has so much been done by so many for so few who need so little. The recent public debate about the inequities built into the tax code—triggered by the disclosure of Mitt Romney’s tax returns—is all for the good. So is the call for a “Romney rule” mandating that capital gains be treated as ordinary income, and so be subject to the same top marginal rate of 35 percent that applies to ordinary income, rather than the current top rate of 15 percent.

  But we shouldn’t raise the capital gains tax just because it’s a popular idea. The rate should rise for philosophical, economic, and political reasons, as several colleagues and I argued in a recent debate at the Maxwell School of Public Policy at Syracuse University. ...

  This brings us to the economic arguments for raising capital gains rates. The only real caveat—for either Rawls or Nozick—is the claim that a marginal rate of 35 percent on capital gains would be such a disincentive to economic activity that the reduced economic activity would either harm the well being of the least well of member of society—the Rawls concern—or would simply reduce the total level of output, regardless of distributional concerns—the Nozick concern.

  On this pure economic issue, all serious studies of the issue (see in particular the reports by Citizens for Tax Justice and work by my fellow debater Len Burman, a superbly well-respected economist—provide dispositive evidence. The issue has been tested in the real world: Capital gains rates have through most of history been the same as those for ordinary income, but occasionally been reduced—or raised. Consequently, we have been able to measure the actual impact of rising and lowering the capital gains tax rate. Raising the rate as we have proposed would not be a disincentive to investment.

  The opposition at the debate did not raise any counter evidence. Often what is not said is more important than what is. They said nothing factual about the actual impact of an increase in the marginal rate on capital gains. Instead, they simply asserted that raising the rate would be counterproductive, with no supporting evidence. Their arguments were reminiscent of the apocryphal story of the Russian economist who rejected an answer to a real-life problem by saying: It works in practice, but it doesn’t work in theory.

• Wall Street Journal: Budget Seeks to Boost Tax Revenue. By Siobhan Hughes. Excerpts: President Barack Obama on Monday proposed that a decades-old, widely criticized tax category be replaced by the so-called Buffett rule, which targets the wealthiest Americans. In the election-year budget proposal, the White House also called for higher taxes on the oil and gas industry, fund managers and estates while allowing Bush-era tax cuts for the wealthy to expire. It also suggested raising dividend taxes on the wealthy to the level of ordinary income. ...

  Mr. Obama backed a 30% tax on incomes of more than $1 million, embraced after billionaire Warren Buffett said the government was "coddling the super-rich." The Buffett rule would replace the alternative minimum tax, which was adopted in 1969 to target wealthy Americans who paid little or no taxes. Because the AMT was never indexed for inflation, it began affecting increasing numbers of middle-class taxpayers who had accumulated too many deductions and credits, leading Congress to enact temporary fixes. ...

  Mr. Obama would also raise the top individual income-tax rate to 39.6% for the wealthiest taxpayers starting in fiscal 2013. The plan calls for taxing long-term capital gains at 20% for upper-income Americans and taxing dividends as ordinary income for wealthier taxpayers, instead of the 15% top tax rates for dividends and capital gains instituted during the Bush administration. ...

  Mr. Obama also called for returning the estate tax to 2009 levels, or 45% with a $3.5 million exemption. For 2012, the top rate is 35%.

  The White House budget proposal also targets hedge-fund managers and private-equity partners, who currently pay a 15% capital-gains rate on "carried interest," or the share of profits from an investment fund or partnership given to managers as compensation. Mr. Obama's plan would tax those profits at ordinary income rates, raising $13 billion over 10 years.

• New York Times: At Volcker Rule Deadline, a Strong Pushback From Wall St. By Ben Protess and Peter Eavis. Excerpts: Wall Street made its broadest assault yet against new regulation on Monday, taking aim at a rule that has come to define the battle over how to police banks in the aftermath of the financial crisis. Regulators in charge of writing the Volcker Rule, which would ban banks from trading with their own money, were inundated with complaints and suggestions on Monday, the deadline to comment on a draft proposal. More than 200 letters were expected to be filed by the midnight deadline on the rule, which regulators outlined in October.

  Commenters included the rule’s namesake, Paul A. Volcker, the former Federal Reserve chairman, who submitted a strongly worded defense of the rule’s intent in a letter on Monday. Others, like consumer advocates and lawmakers, criticized the draft rule for not being tough enough. ...

  The Volcker Rule aims to ban banks from placing bets with their own money, a practice known as proprietary trading. The rule is based on the belief that banks that enjoy government backing — like deposit insurance — should not be able to trade in this way.

• Washington Post: How Obama and Romney would pay for the budget. By Ezra Klein. Excerpts: In 2011, federal spending was 24.1 percent of gross domestic product. Tax revenue was 15.4 percent of GDP. That’s a slight rise from 2009 and 2010, when revenue was 14.9 percent of GDP, but all three are near-record lows. Before this financial crisis, the last time federal revenue was below 16 percent was 1950 — before Medicare and Medicaid were law, and before Hawaii was even a state. For comparison, federal revenue averaged 18.2 percent of GDP during the Reagan years, and 19 percent of GDP during the Clinton years.

  There are two reasons revenue is so low. One is that the Bush tax cuts — which Obama extended in 2010 — pushed them far below where they would have been if we had stuck to Clinton’s rates. The other is that recessions bring revenue down and spending up, and we’re just coming out of a deep, long recession. ...

  Comparing the fiscal promises made by Obama and Mitt Romney isn’t quite comparing apples to apples. Obama is burdened with the responsibilities of governance. His numbers need to add up. They need to unite the congressional wing of his party. They need to fit inside a detailed budget that lays out funding levels for every agency in the federal government.

  Romney, meanwhile, is running a primary campaign. He’s trying to keep Newt Gingrich and Rick Santorum from getting too far to his right. He’s trying to mollify conservatives. He’s trying to inspire the party faithful. So his promises — like those of all candidates, including Obama in 2008 — are going to be a bit more fantastic than those of the sitting president. ...

  Obama’s plan would raise revenue to 19.2 percent of GDP. Most of that would come from people making more than $250,000 a year. In September, the nonpartisan Tax Policy Center ran the numbers on his proposal — unchanged in the budget — and estimated that taxpayers in the bottom 20 percent would pay an average federal tax rate of 1.8 percent, those in the middle 20 percent would pay 15.2 percent, and the top 1 percent would pay 36.3 percent.

  Romney’s plan cuts taxes to about 17 percent of GDP. Most of those cuts would accrue to upper-income Americans. According to the Tax Policy Center, under Romney’s plan, taxpayers in the bottom 20 percent would pay a rate of 3.4 percent, those in the middle 20 percent would pay a rate of 15.6 percent, and the top 1 percent would pay 25.9 percent.

  So low- and middle-income families would pay a bit more under Romney’s tax plan, and high-income families would pay a lot less. Taxes would also fall far short of spending. A realistic estimate of federal spending over the next decade is in the 22 to 23 percent of GDP range. Romney’s revenue is 5 to 6 percentage points below that, and since Romney has promised to balance the budget without cutting defense spending, he would have to cut every domestic spending program, including Social Security and Medicare, by more than 35 percent to make his numbers work.

• Financial Times: An American budget for the rich and powerful. By Jeffrey Sachs. Excerpts: President Barack Obama’s budget for 2013 will set off a vitriolic battle. Republicans will rail against the Democrats’ “class warfare” and Democrats will rail against the Republicans’ “coddling of the rich”. Yet it is mostly for show. The rich will win in their fund balances while probably losing at November’s presidential polls, and the poor and working class will probably re-elect Obama but suffer a continuing decline in relative and perhaps absolute incomes.

  Consider the bottom line of the Obama budget. The policy is to cut total primary (non-interest) federal spending from about 22.6 to 19.3 per cent of gross domestic product from 2011 to 2020, while revenues would rise from recession lows of about 15.4 per cent of GDP in 2011 to some 19.7 by 2020. Compare that with Republican congressman Paul Ryan’s budget a year ago. Mr Ryan’s budget aimed for about 17 per cent of GDP in primary outlays by 2020, with revenues at about 18 per cent of GDP. The difference is modest, but the important fact is this. Both sides are committed to significant cuts in government programmes relative to GDP. These cuts will be especially swinging in the discretionary programmes for education; environmental protection; child nutrition; job re-training; transition to low-carbon energy; and infrastructure. The entire civilian discretionary budget will amount to only 2 per cent of GDP, or less, as of 2020, in the budget plans of both Obama and the Republicans.

  There are far better alternatives for America’s future. Successful northern European countries spend much more as a share of GDP on early childhood development, family support, job training, science and technology, and infrastructure, and they raise higher tax revenues to pay for them. Through a better balance of private and public investments they achieve lower unemployment, lower trade deficits, lower budget deficits, less poverty, longer holidays, better child care, higher life expectancy and higher reported life satisfaction.

  The true nature of Washington politics is thinly disguised by the heated political debate between them. Both parties depend on the money of rich corporate contributors from Wall Street, big oil, private healthcare, real estate, arms contractors and other corporate lobbies. Both cater to corporate desires, especially for tax cuts, unregulated executive pay and weak corporate regulation. ...

  Conceptually, US politics fits a modified version of the famous “median-voter theorem”, in which two political parties gravitate to nearly identical platforms to contest elections in the “middle”. In the US version, the parties converge not to the centre of public opinion, but well to the right of centre. They do so because electoral success depends not only on policy positions but also on raising huge campaign funds. Mr Obama has calibrated this well. His core constituencies of poor and working-class voters are the losers for it, though still better off than with a Republican president.

• The Big Picture: US Debt Accumulation by President. By Barry Ritholtz. Excerpt: Here is a quick look at total debt as accumulated by each US President.
• The Smirking Chimp: Money Throws Democracy Overboard. By Bill Moyers. Excerpts: Watching what’s happening to our democracy is like watching the cruise ship Costa Concordia founder and sink slowly into the sea off the coast of Italy, as the passengers, shorn of life vests, scramble for safety as best they can, while the captain trips and falls conveniently into a waiting life boat.

  We are drowning here, with gaping holes torn into the hull of the ship of state from charges detonated by the owners and manipulators of capital. Their wealth has become a demonic force in politics. Nothing can stop them. Not the law, which has been written to accommodate them. Not scrutiny -- they have no shame. Not a decent respect for the welfare of others -- the people without means, their safety net shredded, left helpless before events beyond their control.

  The obstacles facing the millennial generation didn’t just happen. Take an economy skewed to the top, low wages and missing jobs, predatory interest rates on college loans: these are politically engineered consequences of government of, by, and for the one percent. So, too, is our tax code the product of money and politics, influence and favoritism, lobbyists and the laws they draft for rented politicians to enact. ...

  Yes, the results are in and our elections have replaced horse racing as the sport of kings. Only these kings aren’t your everyday poobahs and potentates. These kings are multi-billionaire, corporate moguls who by the divine right, not of God, but the United States Supreme Court and its Citizens United decision, are now buying politicians like so much pricey horseflesh. All that money pouring into super PACs, much of it from secret sources: merely an investment, should their horse pay off in November, in the best government money can buy. ...

  When all is said and done, this race for the White House may cost more than two billion dollars. What’s getting trampled into dust are the voices of people who aren't rich, not to mention what's left of our democracy. As Democratic pollster Peter Hart told The New Yorker magazine’s Jane Mayer, “It’s become a situation where the contest is how much you can destroy the system, rather than how much you can make it work. It makes no difference if you have a ‘D’ or an ‘R’ after your name. There’s no sense that this is about democracy, and after the election you have to work together, and knit the country together.”

  These gargantuan super PAC contributions are not an end in themselves. They are the means to gain control of government – and the nation state -- for a reason. The French writer and economist Frederic Bastiat said it plainly: "When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it." That’s what the super PACs are bidding on. For the rest of us, the ship may already have sailed.

• Financial Times: US taxpayers to subsidise $40bn housing settlement. By Shahien Nasiripour. Excerpts: US taxpayers are expected to subsidise the $40bn settlement owed by five leading banks over allegations that they systematically abused borrowers in pursuit of improper home seizures, the Financial Times has learnt. The deal, agreed last week, calls for Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial to pay about $5bn in cash fines and to reduce monthly payments and loan balances for distressed US borrowers by as much as about $35bn.

  However, a clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter. The existing $30bn initiative, the home affordable modification programme, or Hamp, provides taxpayer funds as an incentive to banks, third party investors and troubled borrowers to arrange loan modifications.

  Neil Barofsky, a Democrat and the former special inspector-general of the troubled asset relief programme, described this clause as “scandalous”. “It turns the notion that this is about justice and accountability on its head,” Mr Barofsky said.

• BusinessWeek: Rising Gas Prices: Not Demand Driven. The national average for gas prices is above $3.50. Yet demand in the U.S. is at its lowest point since 1997. So what's driving this run-up? By Matthew Philips. Excerpts: Gas prices are off to a fast start in 2012. The national average for a gallon of regular gasoline is up more than 8 percent since the end of 2011, rising from $3.25 per gallon to $3.52, according to new data released by the U.S. Energy Information Administration. While gas prices tend to rise through the first half of the year, this is the earliest the average price per gallon has breached the $3.50 mark. If this pace continues, the national average should hit $4 a gallon by May, if not sooner. The last time the average price did so in the U.S. was summer 2008, when the price of oil hit $140 a barrel. Last year gas prices approached $4, hitting an average of $3.98 in April, before falling. ...

  Strangely, the current run-up in prices comes despite sinking demand in the U.S. “Petrol demand is as low as it’s been since April 1997,” says Tom Kloza, chief oil analyst for the Oil Price Information Service. “People are properly puzzled by the fact that we’re using less gas than we have in years, yet we’re paying more.”

  Kloza believes much of the increase is due to speculative money that’s flowed into gasoline futures contracts since the beginning of the year, mostly from hedge funds and large money managers. “We’ve seen about $11 billion of speculative money come in on the long side of gas futures,” he says. “Each of the last three weeks we’ve seen a record net long position being taken.”

• The Fiscal Times: Is America Overworked? By Steve Yoder. Excerpts: With an increasingly competitive job market, Americans are logging in more time at work and skipping vacation time. According to the left leaning Center for American Progress, 86 percent of U.S. men and 67 percent of women work more than 40 hours a week, and American families worked an average of 11 hours more per week in 2006 than they did in 1979. Though the shift has helped companies cut expenses and increased U.S. productivity, a growing number of studies show that the extra work is negatively affecting our health, family lives, and effectiveness at work.

  For one, workers and their bosses often are not being paid for their extra time. Twenty-four percent of employees and forty-seven percent of employers work six or more hours a week without pay, concluded a 2007 study by corporate staffing firm Randstad. And research in 2008 by the Pew Research Center showed that 22 percent of Americans are expected to respond to work email when they’re not at work, half check job email on weekends, and a third do so while on vacation.

  That is, of course, if they ever get to take a vacation. According to a 2009 report by the human resources firm Mercer, after 10 years of service U.S. worker bees normally get 15 days of paid leave, while the Germans get 20, the British 28, and the Fins 30. But now come several new surveys last November announcing that we’re not even taking the vacation we do have. One, by travel company Expedia, found workers left 2 of their 13 days on the table—that’s $34.3 billion in free labor. ...

  But the long hours are taking a toll. A 2004 review by the federal Centers for Disease Control and Prevention concluded that in 16 of 22 studies, overtime was associated with poorer perceived general health, increased injury rates, more illnesses, and increased mortality. Two recent studies have linked long work hours to a higher risk of depression—one of them, in the June 2008 Journal of Occupational and Environmental Medicine, sampled 10,000 people and showed higher levels of anxiety and depression in those who put in the most overtime. As for the effects on those close to us, in a 2007 study by the American Psychological Association, 52 percent of employees reported that their job demands interfered with their family or home responsibilities. ...

  Whether employees take time off or not, many companies are seeing the downsides of overworked employees and are offering better vacation perks. Google offers 15 days off during the first year at the company and 25 days off after six years, Intel rewards employees with two-month sabbaticals every seven years, and IBM, Best Buy, Netflix and HubSpot have stopped counting employees’ vacation days altogether. Smaller companies have taken note. Joe Reynolds, CEO of a special-event planning company, gives his staff a fully paid one-month sabbatical to a destination of their choice every 5 years because he thinks it improves performance.

• Christian Science Monitor: America's big wealth gap: Is it good, bad, or irrelevant? The gap between rich and poor is at its widest since the Roaring '20s. Obama complains that it's unfair, but a growing chorus of economists and sociologists say it's worse than that. By Mark Trumbull. Excerpts: Not since the Roaring '20s has the income gap between rich and poor been as wide as it is today in America – a development that has set politicians, various advocates, and average citizens debating if and why it matters.

  President Obama, revving up for a reelection campaign, decries the wealth gap as fundamentally unfair. It's one reason his economic strategy calls for higher taxes on the wealthy.

  On the Republican side, presidential hopeful Mitt Romney is seeking to fend off criticism that his wealth and some of his public comments show him to be out of touch with Main Street America. Those rising to his defense celebrate his wealth as just reward for hard work and business savvy – the very qualities the nation itself needs, they say, to get the economy going again. ...

  Inequality may be affecting growth in other ways, Mr. Gault adds. Disparities of income can mean that people lose faith that there's a fair economic playing field and that hard work will pay off. It can also mean that millions of people lack access to a good education. To the degree that these negative forces are operating, America is failing to tap the potential of its "human capital." ...

  Some thinkers even say America's very survival is at risk, if steps aren't taken to restrain the widening income divisions. Bruce Judson of the Yale Entrepreneurial Institute has estimated that the US is partway down a path of economic polarization that, based on patterns seen throughout history, could lead the country toward dissolution and revolution. He's not predicting that outcome, but asserts that the scenario is not as far-fetched as it may sound.

• AlterNet: How a Filthy Rich 196 People Will Buy Our Election. In 2011, 196 individual donors provided nearly 80 percent of the money raised by super PACs. By Ari Berman. Excerpts: At a time when it’s become a cliché to say that Occupy Wall Street has changed the nation’s political conversation -- drawing long overdue attention to the struggles of the 99% -- electoral politics and the 2012 presidential election have become almost exclusively defined by the 1%. Or, to be more precise, the .0000063%. Those are the 196 individual donors who have provided nearly 80% of the money raised by super PACs in 2011 by giving $100,000 or more each. ...

  If 2008 was the year of the small donor, when many political pundits (myself included) predicted that the fusion of grassroots organizing and cyber-activism would transform how campaigns were run, then 2012 is "the year of the big donor," when a candidate is only as good as the amount of money in his super PAC. “In this campaign, every candidate needs his own billionaires,” wrote Jane Mayer of The New Yorker. ...

  Romney’s Restore Our Future Super PAC, founded by the general counsel of his 2008 campaign, has led the herd, raising $30 million, 98% from donors who gave $25,000 or more. Ten million dollars came from just 10 donors who gave $1 million each. These included three hedge-fund managers and Houston Republican Bob Perry, the main funder behind the Swift Boat Veterans for Truth in 2004, whose scurrilous ads did such an effective job of destroying John Kerry’s electoral prospects. Sixty-five percent of the funds that poured into Romney’s super PAC in the second half of 2011 came from the finance, insurance and real estate sector, otherwise known as the people who brought you the economic meltdown of 2007-2008. ...

  In his book Oligarchy, political scientist Jeffrey Winters refers to the disproportionately wealthy and influential actors in the political system as the “Income Defense Industry.” If you want to know how the moneyed class, who prospered during the Bush and Clinton years, found a way to kill or water down nearly everything it objected to in the Obama years, look no further than the grip of the 1% of the 1% on our political system.

  This simple fact explains why hedge-fund managers pay a lower tax rate than their secretaries, or why the U.S. is the only industrialized nation without a single-payer universal healthcare system, or why the planet continues to warm at an unprecedented pace while we do nothing to combat global warming. Money usually buys elections and, whoever is elected, it almost always buys influence. ...

  In a recent segment of his show, Stephen Colbert noted that half of the money ($67 million) raised by super PACs in 2011 had come from just 22 people. “That’s 7 one-millionths of 1 percent," or roughly .0000063%, Colbert said while spraying a fire extinguisher on his fuming calculator. “So Occupy Wall Street, you’re going to want to change those signs.”