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Meanwhile, the employee group Alliance@IBM says workers are girding for a reduction in force at the Essex facility following the technology giant’s unexpectedly low quarterly earnings report — and some cuts reportedly already have been made.
The timing of the cuts and the number of employees IBM might lay off remains unknown, said Lee Conrad of Alliance@IBM, which describes itself as an employee organization under the Communications Workers of America union. Conrad said IBM often tries to keep the number of job cuts under 500, which allows the company to avoid certain legal requirements regarding notification of state and federal governments. ...
IBM was silent on any plans to reduce its workforce, citing company policy in declining to reveal information to the Free Press and to Shumlin.
“The company does not comment on rumor and/or speculation,” said Doug Shelton, IBM’s director of corporate communications. He added that the company, which he said employs 434,246 individuals worldwide, no longer provides a count of employees at individual plants.
Shelton said the company determined after 2009 that “headcount by location was competitively sensitive.”
The Lake Champlain Regional Chamber of Commerce’s description of the local IBM plant says it has 5,400 employees.
Conrad placed the number of employees at the chip design and manufacturing facility closer to 3,600 — down from a record high of 8,500 in 2001.
Conrad said IBM has eliminated an unknown number of temporary employees hired through a South Burlington employment agency. “We do know that IBM contractors have been cut at Burlington both this week and last week. We do not know how many,” Conrad said. ...
Conrad said it is the Alliance’s understanding that the IBM human resources has been provided information regarding the layoffs and is working with the legal division to ensure all proper steps are taken. The names of those being laid off eventually will be passed down to management to begin the mass cuts, Conrad said.
“It is coming. We do know that,” Conrad said. “The past practice is to start on the night shift and continue into the day shift.”
Selected reader comments follow:
This recent quote from a “former IBM exec who spoke on the condition of anonymity” prompted revisiting the company and again asking some questions about their business model and future prospects:
“Realizing this, IBM’s become a holding company of sorts, buying assets, integrating them and reselling them as an IBM brand.”
“IBM does not want to fund its own development because past history shows we’re not very good at it.” ...
IBM’s strong bottom line growth has come from cost cutting and financial engineering, not growth in the business. The strategy they laid out in 2007 has worked quite well in terms of profit growth. Like most technology companies, IBM has a “roadmap” of what they’re going to do, but uniquely, it is a financial roadmap. Amid the roadmap’s blizzard of numbers, revenue growth only merits some hand-waving platitudes. They skillfully focus on profit growth for each segment, obscuring the lack of overall revenue growth. And the billions of dollars in euphemistically described “enterprise productivity” savings have come from squeezing employees, curbing retirement benefits (e.g. shifting from monthly to annual 401k contributions) and moving offshore aggressively (IBM arguably now stands for Indian Business Model). Cringley has chronicled how IBM has become the poster child for cutting your way to prosperity at the expense of customers and employees. ...
So while IBM’s financial engineering strategy has worked brilliantly to date, there are questions about how much longer this strategy will work, much less provide superior returns. ...
Some will argue there will always be room for integration between and on top of software services, but cloud leaders are ruthlessly removing humans from the nuts and bolts of IT operations. IBM lacks meaningful or competitive cloud technology assets and per the IBM executive above, they don’t seem particularly confident in their ability to develop new technology. The other option is to “move up the stack” and offer business consulting, which is certainly the way IBM positions the company. But contrary to the story, IBM remains extremely exposed to menial IT functions that are disappearing in the cloud era. And their intense focus on cost reduction through off-shoring doesn’t add to their business consulting skills. The rise of the cloud brings IBM’s inability to innovate to the fore and poses a real threat to their current business model. ...
Wall Street may love IBM (which is an indictment unto itself…) but mean reversion looks inexorable. IBM has put itself in thrall to Wall Street and achieved superior earnings growth through non-sustainable cost cutting and financial measures. What is good for Wall Street in this case isn’t good for customers or the long term success of the company. Historically low interest rates have also been part of the IBM story (borrowing at a rate below your dividend rate to buy back stock is cash flow accretive) and that too will mean revert one of these days.
IBM is a technology company that doesn’t really innovate. Cost cutting only takes you so far; eventually it cuts muscle as opposed to fat. Real technology companies do actual (non-financial) engineering, but IBM has committed its cash to growing EPS. IBM doesn’t even bother trying to tell a growth story (they should at least be able to grow with global GDP). ...
The big industry trends are against IBM. Not just cloud, but also outsourcing swinging back to in-sourcing and the consumerization of IT. IBM is fighting these trends, not setting an alternative agenda.
On May 14, IBM quietly announced the end of the road for 1-2-3, along with Lotus Organizer and the Lotus SmartSuite office suite. Lotus 1-2-3's day is done.
Cons: I think one of the most defeatist elements of the company is that due to its very complex matrix structure many of its divisions are in conflict or in direct competition with each other. This produces a situation where goals are disparate and misaligned and an enormous wastage of both energy and initiative.
In the most severe circumstances, one division will plan and begin to execute a new initiative and even gain some traction (including employing staff) only to be circumvented by another division with alternate goals. Unfortunately this can lead to terrible human resource management where staff is brought on, on a permanent basis, only to be released within 6 months when the initiative is stopped. This results in a negative return in investment on the human capital as they have not yet had time to contribute to the business but have cost the company a great deal to recruit and train.
Advice to Senior Management: Throughout your divisions (both geographic and business) ensure that your leaders are aligned and engaged with one another so that decisions, once made are of higher quality and have the support of all the necessary players.
No, I would not recommend this company to a friend
Many retired Americans who have paid into Medicare their entire working lives and then choose to move overseas find this situation to be unfair. This restriction on Medicare coverage also ignores the potential cost savings to Medicare offered by lower-cost health care options abroad. ...
As policy-makers grapple with this financial crisis, many people believe that more of the cost of health care will be shifted to Medicare beneficiaries in a mix of higher deductibles, co-pays and reduced benefits. While allowing seniors to receive Medicare coverage abroad is not a cure-all to this fiscal crisis, the potential savings could be significant. Health care costs for a procedure overseas can be less than half of the cost of the exact same procedure performed in the United States, saving both Medicare and the retiree money.
Other data supports workers’ perceptions about age discrimination, Ms. Setzfand said. The average duration of unemployment, for instance, is significantly longer for older workers. As of April, it was 50.2 weeks for workers 55 and older against 36.9 weeks for those under 55. “That’s a hard data point showing something working against older workers,” she said. ...
The AARP puts out a list each year of the employers that are especially friendly to older workers.
At Brian Bader's orientation for a tech-support job with Apple three years ago, he says, human-resources managers ran down the list of guidelines workers were expected to follow. Don't use explicit language on calls with customers. Treat other employees with respect. And, he says, they told the assembled recruits, don't discuss your pay with co-workers. ...
If you answered, "An employer can't legally prohibit employees from discussing how much they make," give yourself a prize. ...
Does your handbook have a policy that prohibits employees from discussing how much you pay them? If so, get rid of it.
Do your managers and supervisor know that they cannot terminate or discipline employees for discussing how much they make? If not, train them on these rules.
But with only 7% of workers possessing a guaranteed pension, Dychtwald estimates that some one-third of Baby Boomers will end up in poverty.
“If you’re the most successful one in your family, you’ll be the bank [for your less well-off siblings],” Dychtwald said at the Chicago conference. “There’s going to be a lot of have-nots.” As a result, many of us will have to re-invent ourselves and scrap the conventional notion of a do-nothing retirement at 65. Here are some myths we need to conquer...
On Monday, lawmakers pitched several amendments to further expand the program, including one from Sen. Ted Cruz (R-Tex.) to increase the limit five-fold to 300,000. Cruz described the original legislation as a “a step in the right direction, I think it’s a positive step, but I don’t think it goes nearly far enough,” calling the 180,000 cap still “arbitrarily low.” ...
The discussions are part of an ongoing tug-of-war between technology firms that say the country cannot supply enough skilled workers, whose demands have been championed largely by Sen. Orrin Hatch (R-Utah), and labor groups who say those firms are simply trying to avoid hiring more Americans. The labor groups have backing on the Judiciary Committee from Sen. Chuck Grassley (R-Iowa). ...
Schumer argued that the bill expands the program to the meet demands from business leaders but takes plenty of new precautions to protect against misuse of the H-1Bs, which he hopes will appease the labor groups.
Sen. Chuck Grassley (R-Iowa), who has long criticized the program, pushed back against the latter assertion, warning that the bill does not go far enough to stop employers from passing over talented Americans.
On Tuesday, he introduced an amendment requiring employers to make a more concerted effort to hire American employees before seeking foreign labor. In a separate measure, he urged lawmakers to require federal officials to audit at least one of every hundred employers who hire H-1B workers, citing a study from the Department of Homeland Security that found 20.7 percent of H-1B holders were associated with some of type of fraud or program violation.
Let me give a little background first. H-1B visas are the mechanism employers use to replace Americans in occupations that require a college degree with cheap foreign workers; primarily in the computer industry.
To get an H-1B visa, employers are required to certify a number of things about the nature of employment.
Examples include certifying that they are paying the prevailing wage (which, as defined by the H-1B category, is significantly less than the actual prevailing wage) and, for employers with more than 15 percent of their workforce on H-1B visas, certifying that they have recruited U.S. workers in good faith. The first step in applying for an H-1B visa is to submit a Labor Condition Application (LCA) making these declarations.
You can find a copy of an LCA here. Notice that to comply with the requirement to recruit Americans (for those employers to whom it applies), the employer merely checks a box (p. 4). In fact, other than the wage information, all the certifications are made by checking a box.
The entire LCA process is a meaningless paper-shuffling exercise.
The H-1B statutes include this notorious provision, illustrating the problem of having lobbyists write our laws:
The Secretary of Labor shall review such an application only for completeness and evidence of fraud or misrepresentation of material fact and obvious inaccuracies. Unless the Secretary finds that the application is incomplete or presents evidence of fraud or misrepresentation of material fact, or is obviously inaccurate, the Secretary shall provide the certification described in section 1101(a)(15)(H)(i)(b) of this title within 7 days of the date of the filing of the application.
The problem is that fraud and misrepresentation are higher standards than complete or obviously inaccurate. Those standards require not only a misstatement but also intent to make that misstatement. The Gang of Eight is demonstrating that they know where the problems in H-1B are; that they are going out of their way to not fix the problems; but that they want to make it appear that they are reforming the system. ...
This is not comprehensive reform. It is comprehensive fraud on the part of our legislators.
By insisting that they are making advances, not loans, these firms elude state supervision, including usury laws, licensing regulations and the federal Truth in Lending Act, which requires lenders to disclose borrowing costs. These and other subterfuges have enabled the companies to ambush pensioners with “advance” loans that carry interest charges ranging, according to a review by The Times, from 27 percent to 106 percent.
The report estimates that, at the median, Americans born between 1966 and 1975 — so-called Gen-Xers — will be able to replace just half their pre-retirement income once they stop working, well below the minimum 70 percent replacement rates recommended by most financial planners. Late baby boomers — which the report defines as those born between 1956 and 1965 -- will be able to replace 60 percent of their working incomes in retirement, the report estimates. Both replacement rates are below what financial experts say is necessary for a secure retirement. ...
The report found that the country is on the verge of a pronounced shift in retirement security. Buoyed by the run-up in housing values over the past two decades and ballooning stock prices caused by the dot-com boom, Americans born between 1946 and 1955, are approaching retirement well prepared. They have more financial assets and greater home equity, on average, than people born between 1926 and 1935 or those born between 1936 and 1945, the so-called war babies.
But the report said neither late boomers nor Gen-Xers are on track to build on that progress, largely because they are carrying more debt, often in the form of student loans, higher mortgages and credit card balances. Those trends were only magnified by the Great Recession, which cost Gen-Xers nearly half their wealth — far more than other age cohorts, according to the report.
I am a first line manager in storage development.
Large layoff going on called "Project Mercury" it affects 1/2 of my dept (8 out of 16) and 14 under my 2nd line. I have heard that the bogey for my VP was 100+. I have heard from other 1st lines that HW development, and support are being hit too.
The standard 1 year retirement bridge is being offered along with the usual 2 weeks for every year of service up to 26 weeks, etc. Well that\'s what I am being told, the formal packets are not out yet.
Supposedly managers will be impacted in this cut.
All PBC 3 employees are automatically on the list to go, no negotiation.
I have an open external req for an experienced hire and I was told that I had to keep that open and could not close it and keep another person, nor could I transfer a person on the list into my open req position.
I don't yet have any info on when the announcement date is.
Early on (4/30 is when my manager first talked to us about it) we were told July. But it wasn't clear if that meant notification in July or everyone would be gone by July.
Formal lists were submitted on Friday 5/10 and are currently undergoing legal and HR review.
"[Name], the reason for this meeting is to tell you about some changes in our team that will affect you. For us to remain competitive, and continue to meet client needs, we need to continually align our workforce skills and resources to business requirements. We have recently reviewed what services we deliver locally and what we deliver through our Global Delivery model. As a result of this review process, we are moving a number of roles to international locations.
I need to tell you today that your role is impacted by this and will no longer be performed from Australia. This means you are being given formal notice of redeployment and have been allocated four weeks to find another position within IBM. If you are unable to find another role by Fri. 14 June 2013 you will be given formal notice of the termination of employment on the grounds of redundancy.
It is important that you understand that it is your position that has become redundant. This is not a reflection on the way you have done your job."
What's crazy - while we have a semi high bench (240) on the East Coast (Melbourne/Sydney) - we are "screaming" for people on the West Coast (Perth). We have been told in town halls that we have over 200+ new openings in Perth - but no one wants to move to Perth (despite the "Go West" program being re-started (offering cash bonuses, promotions to those who move West).
We are even offering 2 year FTH contracts to folks in Europe to come to Australia! And - in the same breath - letting go over 150+ experienced IBMer's in Wave 1B. There was a Wave 1A last week (but I don't have those numbers). AND -- we've been warned there WILL be more waves this year (until Q4 2013.) Frustrated - and working 45-50 hours a week! -Australia GBS Manager-
Alliance Reply: There is an alternative to the continual firing and abuse of IBM US workers: Organize. Join together in an organization and gather your co-workers together and fight back, before the next "Resource Action". Nothing is "fair" until you bargain collectively for a Fair written agreement with IBM management. Join Alliance@IBM. Take actions that are legal and your right to take. Organize now.
Additionally, states have the option to expand their Medicaid programs to cover all people making up to 138% of the federal poverty level (which is about $33,000 for a family of four). In states that opt out of expanding Medicaid, some people making below this amount will still be eligible for Medicaid, some will be eligible for subsidized coverage through Marketplaces, and others will not be eligible for subsidies.
With this calculator, you can enter different income levels, ages, and family sizes to get an estimate of your eligibility for subsidies and how much you could spend on health insurance. As premiums and eligibility requirements may vary, contact your state’s Medicaid office or exchange with enrollment questions.
What is also clear from the filings is that there’s little sign in Oregon of the major premium hikes that the industry has been warning about for months. “I don’t see sticker shock in the rates,” said Jim Perucca, executive vice president of Independent Insurance Agents and Brokers of Oregon. ...
In Oregon, the filings show that consumers will likely see a wide variation of prices for the same benefits. For example, the premium for a “bronze” style plan for a 40-year-old non-smoker living in Portland ranged from $195 a month at Pacificare Health Plans to $401 at Trillium Community Health Plan. The two most popular companies—Regence Blue Cross Blue Shield and Kaiser Permanente —proposed prices for a person in the same category of $268 and $222 respectively, according to the state’s website. Those premiums are not that much higher than those on policies the companies sell now, according to prices on http://www.healthcare.gov/. ...
All plans, whether bronze, silver, gold or platinum, will cover certain essential health benefits such as doctors’ visits, emergency care, maternity care and prescription drugs. Some major insurers have warned those benefits — along with rules that prohibit charging people higher premiums due to their health status — will result in much higher premiums.
That's wasted money that should have been spent on improving patient care, shoring up Medicare's trust fund or reducing the federal deficit, the researchers say.
The findings appear in an article published in the International Journal of Health Services by Drs. Ida Hellander, Steffie Woolhandler and David Himmelstein titled "Medicare overpayments to private plans, 1985-2012: Shifting seniors to private plans has already cost Medicare US$282.6 billion."
The Pasadena resident and Kaiser member had lived for years with a rare condition known as Castleman's disease, which affects the lymph nodes and the body's immune system. But this was the first time he experienced such severe symptoms.
Kaiser granted his request to see a specialist in Arkansas. But it ultimately declined to pay for his treatment there. By June, Afshar said, Kaiser was arranging for hospice care so that he could die at home.
Afshar, 58, refused to accept that. Despite Kaiser's stance, he went back to Arkansas for six months of stem-cell transplants, chemotherapy and other treatments that he says saved his life. Now he owes $2 million for his care and is suing the company in state court for breach of contract and unfair business practices.
"There are other people like me with expensive diseases," he said, "and Kaiser is just giving up on us." ...
Afshar's fight with Kaiser highlights the growing tension in healthcare over how to eliminate wasteful spending without compromising the care of the sickest, most expensive patients. Under pressure to curb ballooning medical costs and hold down premiums in advance of a massive expansion of health coverage, insurers are increasingly forming smaller networks of physicians and hospitals.
But some experts worry these cost-control measures could go too far. ...
"The whole premise of managed care is that you're accepting a restricted network, but only on the condition the network is adequate," said Anthony Wright, executive director of Health Access, a consumer advocacy group. "At Kaiser, some feel restricted in getting the care they need."
In assessing retiree health care costs, the report evaluates the impact of increasing the eligibility age of Medicare. Raising eligibility from age 65 to 70 changes who is covered by Medicare and would exclude younger and possibly healthier people. Yamamoto found that raising the eligibility age would reduce overall Medicare costs by about 19 percent but will increase the per person costs by 12.5 percent for those over age 70.
Now, that's not a problem for most women because the Pregnancy Discrimination Act of 1978 requires that companies with 15 or more workers that provide health insurance include maternity coverage for employees and their spouses. (Maternity coverage generally refers to prenatal care, labor and delivery, and some postpartum care.)
However, the law doesn't require maternity coverage for dependent children and, according to Dan Priga, who heads the performance audit group at human resources consultant Mercer, roughly 70 percent of large self-funded employers that pay their workers' claims directly don't provide it.
No. But you can be certain that there will be no shortage of political candidates and high-powered political spin doctors who will be working relentlessly between now and the 2014 midterms to convince us that it will be. If the Democrats and consumer advocates who support ObamaCare are not at work developing their own strategies to counter the coming barrage of misleading spin, the GOP will have an excellent chance of controlling Capitol Hill after the next elections.
Comment by Don McCanne, M.D. Of those who are serious about health care reform, some want to abandon the Affordable Care Act (ACA) and immediately enact single payer, and others want to abandon the single payer cause and move full steam ahead with implementation of the ACA. But should we really abandon either approach?
It is clear that ACA alone will be grossly deficient. Thirty million people will remain uninsured, inadequate low actuarial value plans will become the new standard, and wasteful spending will continue because of the highly flawed, administratively complex model of ACA. So single payer should not be abandoned since it is an imperative if we want to have affordable health care for everyone.
Why shouldn't we abandon ACA? Because, quite simply, it is all that we have right now, and it will provide some limited relief for millions of people. If we were to abandon ACA now, mobilizing a social movement and then enacting and implementing single payer would still take many years - too long for those who would receive some benefit from ACA now. ...
So where is the train wreck? There isn't any. But Wendell Potter is right. The opponents of reform will latch onto every ACA implementation glitch, real or imagined, and onto the criticisms which will inevitably follow. They will attempt to frame the implementation as a debacle, and run with that in their effort to use election politics to advance their anti-government agenda.
Fidelity Benefits Consulting, which has calculated the estimates since 2002, does not include nursing home costs in its projections, which apply to retirees with traditional Medicare insurance coverage. For many, health care will be the largest expense during retirement and Sunit Patel, senior vice president at Fidelity, tells EBN that unlike food or shelter, “which you can dial up or down,” health expenses associated with aging are relatively fixed, regardless of income bracket or savings.
“While this is great news for retirees in general, I think the expectations should be that trends … are going to go up,” Patel says. “I think if you asked a year or two ago, people would have been surprised.”
The back-channel spending shows how insurers were able to fund a key—and much more politically popular—ally in their fight against the premium tax. After all, helping small businesses is a political no-brainer while aiding big insurers is a political nonstarter.
NFIB officials say they are fighting the tax because it will disproportionately affect small businesses whose owners and employees will end up footing the bill. They expect insurance companies will simply pass along the cost of the new taxes to their customers, which, according to one congressional estimate, could cost a family as much as $400 in 2016. Meanwhile, big corporations that self-fund their insurance plans are exempt from the tax.
The look behind the curtain is sure to fuel the already-intense partisan warfare over the Affordable Care Act. Republicans have vowed to run against the law in 2014 and are almost sure to point to provisions like the premium tax as reasons why the law should be repealed and its supporters replaced. Democrats, meanwhile, are likely to point to the insurance industry’s shadowy spending as more proof of why reform is needed. ...
The NFIB, which fought the failed Clinton-era health reform and led the Supreme Court challenge to the Affordable Care Act, has taken money from outside groups before, including $3.7 million from Karl Rove’s Crossroads GPS. And the NFIB’s positions on other issues, such as tax rates for the wealthy, often echo the Republican Party line. There are also now small business groups on the political left, such as the Small Business Majority and Main Street Alliance, that generally reflect liberal positions.
It’s legal for the money to flow anonymously from the insurance lobby to the NFIB. (Insurers sent tens of millions more to the U.S. Chamber to lobby on health reform as well.) But it’s something that the public—and Congress—should keep in mind when evaluating the NFIB’s claims.
"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.
Yes, debt rose substantially in the face of economic crisis — which is what is supposed to happen. But runaway deficits? Not a hint.
Yes, there are longer-term issues of health costs and demographics. As always, however, these have no relevance to what we should be doing now — and it’s far from clear why they should even be a priority for discussion. As I’ve written before, the VSP consensus seems to be that to avoid the possibility of future benefit cuts, we must commit ourselves now now now to … future cuts in benefits.
Why, it’s almost as if the real goal was to make sure that benefits get cut even if the fiscal outlook improves.
Meanwhile, our policy discourse has been dominated for years by what turns out to be a false alarm. To the millions of Americans who are out of work and may never get another job thanks to premature fiscal austerity, the VSPs would like to say, “oopsies!”
It would make more sense to dial back on the sequester, which is the biggest driver of these revised deficit figures, and work on the fundamental weaknesses in our economy that are prolonging the recession. In the long run this approach would do more to reduce deficits, too.
Instead of cutting Social Security, they should be strengthening the country's social safety net. A good start would be the passage of Sen. Tom Harkin's bill to increase Social Security's benefits. (If I were you I'd contact our senators and representative and demand that they support it. I already have, by signing this petition.)
The Mother of All Crises. You wouldn't know it from listening to most politicians, but there's a crisis going on. In fact, there are a few of them going on -- including the crisis of un- and under-employment, the crisis of wage stagnation, and the crisis caused by lost social mobility.
Each of these unaddressed problems feed into the Mother of All Economic Crises, the one that our mothers and fathers are facing and we'll all confront ourselves someday: the retirement crisis. Sen. Tom Harkin has a bill that starts to address that crisis, in a bill that should be passed immediately. ...
And yet some politicians are still obsessing instead about the phony crisis over government deficits, which has been ginned up by the corporate interests and billionaires, especially deficit-increasing corporations like defense contractors and deficit-increasing individuals like undertaxed hedge fund billionaires. ...
Economists have always spoken of retirement security as a "three-legged stool" made up of savings (including assets like a home), pensions, and Social Security. But Wall Street's greed and criminality shattered the balance sheet of middle-class America, causing Americans to lose trillions in real estate assets and much of their hard-earned savings.
Corporations have also improved their bottom line at their employees' expense by shifting from defined-benefit pension plans to 401(k) programs and other plans that over very little security to retired Americans.
In other words, corporate profits have kicked two legs off that three-legged stool. The third -- Social Security -- is splintered and cracked, thanks to Wall Street. Banks convinced Americans to sink their fortunes and their destinies into real estate in order to fuel a bubble that made bankers rich and left Americans bereft.
The “deficit problem” is man-made. When Bill Clinton was president we were paying off the debt. George W. Bush turned Clinton’s budget surpluses right around, calling deficits “extremely positive news” because they would later force cuts in government. Ronald Reagan’s “strategic deficits” began a strategy to make the borrowing appear so bad that the public would be panicked into allowing cuts in the things government does to make our lives better – so the wealthy few could have even more wealth and power. (Reagan tripled the national debt, Bush doubled it again.)
So after Bush we had a problem. When ‘W’ left office the budget deficit was $1.4 trillion. Then after Obama took office Wall Street and the right started terrifying the public about deficits and outlining their “solutions”: Cut government, cut regulation of the giant corporations, cut entitlements, cut investment in infrastructure, privatize public assets, cut the safety net, etc… Cut the things that government does to make our lives better (government spending) and cut the things government does to protect us from the immense power of the insanely wealthy and their giant corporations.
But something got in their way. The deficit started coming down before all of the “solutions” could be forced on us. The deficit is now down 60 percent as a percent of GDP from the level Bush left behind (see the chart in this post). ...
The deficit is not a problem. The Simpson-Bowles target has been reached and passed. The austerity is harming the economy and hurting people. Congress and the President should pivot to jobs. They need to fix the jobs gap, the wage gap and the trade gap, and if they continue to ignore these real problems it is up to We, the People to apply the necessary pressure to make them do it.
At every opportunity since they took over the House in 2011, Republicans have made it clear that they have no interest in reaching a compromise with the White House. For two years, they held sham negotiations with Democrats that only dragged down the economy with cuts; this year, they are refusing even to sit down at the table.
Mr. Obama hasn’t given up inviting the Republicans to join him in making the hard choices of governing, but he has been rebuffed each time. This year, in hopes of getting some support for modest tax increases on the rich, he even proposed a reduction in the cost-of-living increases for Social Security recipients. The events of the last few weeks should make it clear to him why that offer should be pulled from the table immediately. Consider...
Republican lawmakers have become reflexive in rejecting every extended hand from the administration, even if the ideas were ones that they themselves once welcomed. Under the circumstances, Mr. Obama would be best advised to stop making peace offerings. Only when the Republican Party feels public pressure to become a serious partner can the real work of governing begin.
The crisis that is about to break out involves student debt and how we finance higher education. Like the housing crisis that preceded it, this crisis is intimately connected to America’s soaring inequality, and how, as Americans on the bottom rungs of the ladder strive to climb up, they are inevitably pulled down — some to a point even lower than where they began.
This new crisis is emerging even before the last one has been resolved, and the two are becoming intertwined. In the decades after World War II, homeownership and higher education became signs of success in America. ...
Everyone recognizes that education is the only way up, but as a college degree becomes increasingly essential to making one’s way in a 21st-century economy, education for those not to the manner born is increasingly unaffordable. Student debt for seniors graduating with loans now exceeds $26,000, about a 40 percent increase (not adjusted for inflation) in just seven years. But an “average” like this masks huge variations. ...
America is distinctive among advanced industrialized countries in the burden it places on students and their parents for financing higher education. America is also exceptional among comparable countries for the high cost of a college degree, including at public universities. Average tuition, and room and board, at four-year colleges is just short of $22,000 a year, up from under $9,000 (adjusted for inflation) in 1980-81. ...
America — home of the land-grant university, the G.I. Bill and world-class public universities from California to Michigan to Texas — has fallen from the top in terms of university education. With strangling student debt, we are likely to fall further. What economists call “human capital” — investing in people — is a key to long-term growth. To be competitive in the 21st century is to have a highly educated labor force, one with college and advanced degrees. Instead, we are foreclosing on our future as a nation. ...
As bad as things are, they may get worse. With budgetary pressures mounting — along with demands for cutbacks in “discretionary domestic programs” (read: K-12 education subsidies, Pell Grants for poor kids to attend college, research money) — students and families are left to fend for themselves. College costs will continue to rise far faster than incomes. As has been repeatedly observed, all of the economic gains since the Great Recession have gone to the top 1 percent. ...
The combination of predatory for-profit schools and predatory lenders is a leech on America’s poor. These schools have even gone after young veterans who served in Iraq and Afghanistan. There are heart-rending stories of parents who co-signed student loans — only to see their child killed in an accident or die of cancer or another disease — and, like students, can’t easily discharge these debts.
Because the Italian government’s austerity budget had raised the retirement age, Mr. Dionisi, a former construction worker, became one of Italy’s esodati (exiled ones) — older workers plunged into poverty without a safety net. On April 5, he and his wife left a note on a neighbor’s car asking for forgiveness, then hanged themselves in a storage closet at home. When Ms. Sopranzi’s brother, Giuseppe Sopranzi, 73, heard the news, he drowned himself in the Adriatic.
The correlation between unemployment and suicide has been observed since the 19th century. People looking for work are about twice as likely to end their lives as those who have jobs.
In the United States, the suicide rate, which had slowly risen since 2000, jumped during and after the 2007-9 recession. In a new book, we estimate that 4,750 “excess” suicides — that is, deaths above what pre-existing trends would predict — occurred from 2007 to 2010. Rates of such suicides were significantly greater in the states that experienced the greatest job losses. Deaths from suicide overtook deaths from car crashes in 2009.
If suicides were an unavoidable consequence of economic downturns, this would just be another story about the human toll of the Great Recession. But it isn’t so. Countries that slashed health and social protection budgets, like Greece, Italy and Spain, have seen starkly worse health outcomes than nations like Germany, Iceland and Sweden, which maintained their social safety nets and opted for stimulus over austerity. (Germany preaches the virtues of austerity — for others.) ...
Somewhere between these extremes is the United States. Initially, the 2009 stimulus package shored up the safety net. But there are warning signs — beyond the higher suicide rate — that health trends are worsening. Prescriptions for antidepressants have soared. Three-quarters of a million people (particularly out-of-work young men) have turned to binge drinking. Over five million Americans lost access to health care in the recession because they lost their jobs (and either could not afford to extend their insurance under the Cobra law or exhausted their eligibility). Preventive medical visits dropped as people delayed medical care and ended up in emergency rooms. (President Obama’s health care law expands coverage, but only gradually.)
The $85 billion “sequester” that began on March 1 will cut nutrition subsidies for approximately 600,000 pregnant women, newborns and infants by year’s end. Public housing budgets will be cut by nearly $2 billion this year, even while 1.4 million homes are in foreclosure. Even the budget of the Centers for Disease Control and Prevention, the nation’s main defense against epidemics like last year’s fungal meningitis outbreak, is being cut, by at least $18 million. ...
One need not be an economic ideologue — we certainly aren’t — to recognize that the price of austerity can be calculated in human lives. We are not exonerating poor policy decisions of the past or calling for universal debt forgiveness. It’s up to policy makers in America and Europe to figure out the right mix of fiscal and monetary policy. What we have found is that austerity — severe, immediate, indiscriminate cuts to social and health spending — is not only self-defeating, but fatal.
Do the math and you'll discover that the top 7% gained a whopping $5.6 trillion in net worth (assets minus liabilities) while the rest of lost $669 billion. Their wealth went up by 28% while ours went down by 4 percent.
It's as if the entire economic recovery is going into the pockets of the rich. And that's no accident. Here's why...
But now the Wall Street behemoths are bigger than ever and President Obama is looking to cut the Social Security benefits of retirees. That will teach the Wall Street boys to be more responsible in the future. ...
While President Obama is willing to make seniors pay a price for the economic crisis, his administration is unwilling to impose any burdens on Wall Street. Specifically, it has consistently opposed a Wall Street speculation tax: effectively a sales tax on trades of stock and derivatives. The Obama administration has even used its power to try to block efforts by European countries to impose their own taxes on financial speculation.
If the idea of taxing stock trades sounds strange, it shouldn't. The United States used to impose a tax of 0.04 percent until Wall Street lobbied to eliminate it in the mid-1960s. Many countries, including the United Kingdom, Switzerland, China, and India already impose taxes on stock trades.
The tax in the UK is 0.5 percent on stock trades (0.25 percent for both the buyer and the seller). It dates back more than three centuries. The country raises more than 0.2 percent of GDP ($32 billion in the United States) from the tax each year. The tax has not prevented the London stock exchange from being one of the largest in the world. ...
There are currently two bills in Congress for a similar tax in the United States. A bill by Minnesota Representative Keith Ellison would impose the same tax as the UK on stock trades and would apply a scaled rate to options, futures, credit default swaps and other derivative instruments. It could raise more than $150 billion annually or more than $2 trillion over the ten year budget window. ...
Unfortunately the administration has consistently opposed both bills. It claims that it is concerned about the incidence of these taxes -- that ordinary investors would see large burdens from the tax. It also claims to be worried that the taxes will disrupt financial markets by making trading more costly.
Neither of these stories passes the laugh test. Ordinary investors don't trade much, and therefore are not going to feel much impact from the tax. If someone with $100,000 in a 401(k) (this is much larger than the typical 401(k)) turns it over at the rate of 50 percent annually, they would pay $15.00 each year as a result of the Harkin-DeFazio tax. ...
So the Obama administration wants us to believe that it is willing to cut the Social Security benefits of retiree living on $15,000 a year in Social Security by $450 but it opposes a Wall Street speculation tax because it is concerned that investors with $100,000 in a 401(k) may pay a few dollars a year in additional trading costs. Only a reporter with the Washington Post would believe a story like that. ...
The basic story is very simple. Wall Street bankers have a lot more political power than old and disabled people who depend on Social Security. That is why President Obama is working to protect the former and cut benefits for the latter.
Yes, the I.R.S. may have been worse than clumsy in considering an avalanche of applications for nonprofit status under the tax code, and that deserves scrutiny whether or not the agency’s employees were spurred by partisan motives. After all, some of these “tea party” groups are most likely not innocent nonprofit organizations devoted to the cultural significance of hot beverages — or to other, more civic, virtues. Rather, they and others are groups that may be illegally spending a majority of their resources on political activity while manipulating the tax code to hide their donors and evade taxes (the unwritten rule being that no more than 49 percent of a group’s resources can be used for political purposes).
The near vertical ascent in political spending by these “dark money” groups was prompted by the Supreme Court’s 2010 decision in the Citizens United case, among others, freeing them to be more active in this realm.
And it’s a bipartisan scandal, though it’s hard to tell that judging by the names some groups have adopted — as the I.R.S. should know. Can you tell which of these lean left and which ones right? Patriot Majority USA, Crossroads GPS, American Future Fund and the Citizens for Strength and Security Fund. (Nos. 1 and 4 are liberal, 2 and 3 are conservative.) ...
But even more regrettable is the long-term damage to the credibility of the I.R.S. as an impartial arbiter of whether organizations merit tax-exempt status. This will be difficult to undo, particularly because of the secrecy required for the agency to effectively examine organizations without generating doubts about them, as well as to prevent other organizations from coming up with strategies to evade scrutiny in the future. ...
Indeed, the latest revelations are not the first to cause pushback by Congressional conservatives. In 2011, tax authorities considered applying the gift tax to large contributions to 501(c)(4) groups, and they sent letters to a handful of big donors informing them they may be taxed. The agency received a swift and forceful response from the Republican senators Orrin G. Hatch of Utah, John Kyl of Arizona and others demanding to know whether the I.R.S. was acting on the basis of partisanship.
The agency folded like wet cardboard: the deputy commissioner took the extraordinary step of ending the audits in progress. (That official, who has been the acting head of the agency, was fired yesterday by the president.)
In Denmark, social policy in areas like health care, child care, education and protecting the unemployed are part of a “solidarity system” that provides strong opportunity and security for all citizens. Danes pay high taxes, but in return enjoy a quality of life that many Americans would envy.
Denmark is a small, homogenous nation of about 5.5 million people. The United States is a melting pot of more than 315 million people. No question about it, Denmark and the United States are very different countries.
But are there lessons we can learn from the social model in Denmark? If you’re interested in the answer, please attend one of a series of town meetings that I am holding throughout Vermont this weekend with Danish Ambassador Peter Taksoe-Jensen. On Saturday, the ambassador will join me for town meetings at 1 p.m. at Burlington City Hall and at 7 p.m. at the Brattleboro Museum in Brattleboro. On Sunday, join us at 10:30 a.m. at Montpelier High School in Montpelier. Admission is free, questions and comments are encouraged.
Health care in Denmark is universal, free of charge and high in quality. Everybody is covered as a right of citizenship. The Danish health care system is popular, with patient satisfaction much higher than in the United States. In Denmark, every citizen can choose a doctor in their area. Prescription drugs are inexpensive.
They’re free for those under 18 years of age. Interestingly, despite their universal coverage, the Danish health care system is far more cost-effective than ours. They spend about 11 percent of their GDP on health care. We spend almost 18 percent.
When it comes to raising families, Danes understand that the first few years of a person’s life are the most important in terms of intellectual and emotional development. In order to give strong support to expecting parents, mothers get four weeks of paid leave before giving birth.
They get another 14 weeks afterward. Expecting fathers get two paid weeks off, and both parents have the right to 32 more weeks of leave during the first nine years of a child’s life. The state covers three-quarters of the cost of child care, more for low-income workers.
At a time when college education in the United States is becoming increasingly unaffordable and the average Vermont college graduate leaves school more than $28,000 in debt, virtually all higher education in Denmark is free. That includes not just college but graduate schools as well, including medical school.
In a volatile global economy, the Danish government recognizes that it must invest heavily in training programs so workers can learn new skills to meet changing workforce demands. It also understands that when people lose their jobs they must have adequate income while they search for new jobs. If a worker loses his or her job in Denmark, unemployment insurance covers up to 90 percent of earnings for as long as two years. Here benefits can be cut off after as few as 26 weeks.
It is no secret that in our country many people are living under great stress.
Lost amid the inevitable leaks, innuendo, and grandstanding is the bigger scandal—one in which both parties are complicit. While it was politically profiling local antitax groups, the IRS seems to have been largely inert in response to complaints that organizations founded by former top aides of both Obama and George W. Bush have violated their tax-exempt status. In 2012 large tax-exempt groups, including Republican operative Karl Rove’s Crossroads GPS and the Obama-affiliated Priorities USA Action, spent hundreds of millions of political-advertising dollars, much of it harvested from secret donors.
“The irony here is that the IRS is going to get punished, justifiably, for its heavy-handed tactics with the Tea Party committees,” says Melanie Sloan, the executive director of Citizens for Responsibility and Ethics in Washington (CREW). “But the larger problem is that the IRS does nothing to enforce the law against the groups that are abusing a broken system on a much bigger scale.” ...
Sadly, in the radioactive environment in Washington, it’s difficult to envision a remedy even this elementary emerging from Congress. Instead, Republicans will scramble to link the scandal to someone—anyone!—with White House credentials. Democrats will try to protect the president by competing to devise the most draconian possible penalties for low-level, tin-eared IRS bureaucrats. The truth? Both parties exploit and profit from the farcical campaign-finance system as it now exists, and no one has the political will to change it.
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