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    Highlights for week ending December 21, 2002
  • Associated Press: More Than Half of Paid Workers Have No Retirement Savings, Congressional Study Says. Excerpt: "The report 'highlights the lack of retirement security millions of Americans face,' said Rep. George Miller of California, ranking Democrat on the House Workforce and Education Committee. He cited the Treasury Department decision this week to pursue new government regulations that would help companies avoid age-discrimination lawsuits when they convert traditional pension benefits to different arrangements called cash-balance plans." ... "Unlike a traditional pension plan, the worker isn't guaranteed annual benefits after retiring. Critics say cash-balance plans hurt workers nearing retirement. President Bush 'should read this report before he decides to undercut what little retirement security is left for hardworking Americans,' Miller said."


  • Business Week: Is This the Reformer the SEC Needs? William Donaldson has the right credentials to head the commission. He'll need a lot more than that, though, to change Wall Street's ways. Excerpt: "The crisis in Corporate America demands serious reforms -- and on many key issues, Donaldson's long career record is silent at best. Last spring, when lawmakers were hammering out new codes to guide corporate governance, Donaldson was a director at Aetna, defending limits on shareholder rights that a Harvard University professor termed "dictatorial." Donaldson "has not been an exemplar or an advocate of good corporate governance," says Nell Minow, editor of The Corporate Library, a corporate governance research service."


  • New York Times: Treasury Nominee to Get Big Pension. Excerpts: "When the CSX Corporation calculates pension benefits for its chief executive, John W. Snow, nominated by President Bush last week to be Treasury secretary, he will receive credit for 44 years of service to the company, though he has worked there just 25. Moreover, Mr. Snow's benefits will be based not just on his salary, or even his salary and bonus, but also the value of 250,000 shares of stock the CSX board gave him. Getting credit for years not worked, and having virtually all compensation counted toward pension benefits, are two of the newest trends in pay for senior executives, said Judith Fischer, managing director of Executive Compensation Advisory Services. She calls such deals 'the eternal wealth syndrome.'"

    "As Treasury secretary, Mr. Snow would be in the middle of pension policy-making as the subject heats up in Washington. He would oversee new pension rules announced by the Bush administration last week that experts say can be expected to strip benefits from older workers while benefiting younger workers and saving companies money. The new rules will make it easier for companies with traditional defined-benefit pensions, which pay a monthly sum to retirees for life, to shift to so-called cash balance plans. Under the traditional plans, pension benefits are primarily based on a worker's final, and often highest-paid, years of employment. The new plans, by contrast, build benefits evenly over the course of a worker's career. Cash balance plans are a boon to younger workers, but critics say older workers could lose as much a third of their benefits. As a matter of principle, President Bush declared at a conference on retirement savings earlier this year, "What's fair on the top floor should be fair on the shop floor." But an array of rules and customs have put a distance between the retirement benefits of average workers and those of top executives." ... "In addition, CSX changed its policies, effective this coming Jan. 1, so that newly hired employees will no longer be promised lifetime health care benefits unless they work under a union contract providing such benefits."
  • If link is broken, view Adobe Acrobat version [PDF--19 KB].

  • Sanders Questions Treasury Secretary Nominee's Fitness for Job. Excerpts: "Rep. Bernard Sanders (I-VT), a senior member of the U.S. House Financial Services Committee, today launched an effort to halt the confirmation of Bush’s Treasury Secretary nominee John W. Snow unless Snow would commit to protecting the pensions of American workers. That commitment would have to include withdrawing controversial proposed IRS regulations that would green light so-called 'cash balance' pension plans. Sanders said these assurances were needed in light of the reports that Snow is receiving an extravagant pension from CSX, the company where he was the CEO, while at the same time that company was cutting back on the retiree health benefits of its workers. According to published reports, Snow is receiving a $2.47 million per year retirement benefit for life. This amount was calculated through gimmicks that give him credit for working 44 years when he really only worked 25 years and by factoring in stock benefits he received as regular income, instead of just salary as is the common practice. Those same reports note that CSX is cutting the future retiree health benefits of its workforce."

    "Sanders, a vocal critic of cash balance plans continued, 'It’s no secret that the culture of greed that dominates corporate America is costing shareholders of companies like Enron and WorldCom billions of dollars while top executives made out like bandits. But what people don’t know is that all across America these pension scams are part of the same phenomenon. Those at the top looting the company while employees are left and dry when they retire. We need a Treasury Secretary whose going to fight the looting, not one that participated in it.'"


  • Katelynn Rayme, an Associate Producer of PBS's Nightly Business Report, is "looking for someone who has either benefited or been hurt when their company changed their pension plans to cash balance pensions. This is in regard to a story we are working on regarding the Bush administration's proposed regulations which would make it less difficult for for companies to change pension plans, thus reducing pension liabilities." Ms. Rayme's contact information is shown in this Yahoo! message board post.


  • Los Angeles Times Editorial: Pension Fund Is About to Go the Way of Your 401(k). Bush administration is helping to replace nest eggs with lumps of co al.. Excerpts: "It's the holiday season, boom time for pickpockets. We're busy, we're distracted and we're in a mood to think about fellowship, not felonies. Everything's right for Light-Fingered Louie making his move in Washington. We barely notice until later that we've been robbed. Merry Christmas. The Bush administration and its pals in the corporate suites are pulling off just such a filch right now. In a truly mean-spirited retreat from the principles of hard work and loyalty, they're setting up a raid on middle-class pensions." ... "At stake are the futures of millions of American families and billions of dollars they thought they earned. But unless they are attentive, they might not notice what's missing for a few years. By then the perpetrators would be lounging at their private yacht clubs and island resorts. Business executives call their dodge the 'cash-balance' pension. It works something like this: They get the cash, and we get the balance." ... "There was a time, and it wasn't so long ago, when conservatives voiced the idea that American values meant keeping faith with those who, as Ronald Reagan put it, 'worked hard and played by the rules.' Makes you nostalgic, doesn't it?" If link is broken, view Adobe Acrobat version [PDF--35 KB].


  • Washington Post: What a Pension Shift Would Mean to You. Excerpts: "The Treasury Department's view, announced last week, that 'cash balance' pensions do not violate federal age discrimination laws may open the floodgates to these hybrid plans. Employer groups applauded cautiously, noting that other uncertainties remain for companies seeking to convert their traditional pensions. But it seems likely that conversions, which were on the rise until a Clinton administration moratorium in 1999, will resume when the Treasury's new regulations become final. That is expected next year. This is a controversy that every worker should pay attention to. Pension benefits almost always depend heavily on the passage of time, and decisions that workers make in their youth -- or that employers make for them when they're in mid-career -- can have an enormous impact on retirement income." ... "The result has been an explosion of litigation, much of it charging age discrimination. While a court could still decide that the Treasury is wrong, the agency's position in the new regulations will make those cases much harder to win. 'What the Treasury did was, they took us off at the knees,' said Kathi Cooper, the lead plaintiff in a class-action suit against IBM that accuses the computer giant of age discrimination in shifting to a cash-balance pension plan." If link is broken, view Adobe Acrobat version [PDF--27 KB].

  • Newsday: No Fan of Pension Conversions. Excerpts: "For many years, Harold Morch, a manager at North Shore University hospital in Manhasset, nursed a dream of retiring at age 62 to a quiet farm in northern Pennsylvania. But in 1999, the hospital and most others in the North Shore-Long Island Jewish Health System shifted from a traditional pension plan to a controversial new type of plan that tends to reduce the monthly benefits that older workers had expected. Now Morch is 62, and still working. He says he can't afford to leave because the new 'cash balance' plan would provide him with nearly 29 percent less than the traditional pension plan, or $947.26 a month compared with $1,330.89 under the old plan. If he waits until 65 to retire, Morch, who began working at the hospital in 1977, will receive nearly 14 percent less than he would have under the earlier plan at the same age, according to documents Morch says he obtained from North Shore's benefits office." ... "Cash balance plans are expected to become even more widespread under a new set of proposed rules issued by the Bush administration last week that would make it harder for them to be challenged for age discrimination. Of the 945 largest U.S. employers, 22 percent now offer the new plans, up from 3 percent in 1990, according to Hewitt Associates. Such a switch can help employers save money on pension costs, improving their bottom line. But the new plans can cost workers older than 40 up to one-half of their expected pensions when the conversion is made, according to advocates for workers and employers. That's because they use a formula allowing workers to build up retirement benefits evenly throughout their careers, rather than basing benefit amounts heavily on end-of-career earnings." If link is broken, view Adobe Acrobat version [PDF--15 KB].


  • Chicago Tribune: Rules disturb cash-balance foes. Excerpts: "If you like having your own retirement savings account at work, probably called a 401(k), you should love having your own pension. Maybe not. 'Millions of Baby Boomer employees are going to be devastated by this,' said Kathi Cooper of Bethalto, Ill., north of St. Louis. Watch out, says Cooper, if you get a notice from your boss that says you're being offered thousands of dollars to start an individualized pension. Cooper, 52, is the lead plaintiff in a class-action suit against her employer, International Business Machines Corp., challenging IBM's decision to convert its traditional pension to a so-called cash-balance pension." ... "Cooper says the IBM conversion would cost her $400,000 in retirement income. The issues are complex--so complex that a few years ago consultants promoting cash-balance plans to employers as cost-cutting schemes boasted that workers would seldom figure out the losses they faced. Those days are over. Extensive press coverage, congressional hearings, increasingly knowledgeable employees and plaintiffs lawyers--not to mention numerous Web sites and chat rooms devoted to cash-balance complaints--have diminished chances for stealth pension conversions." If link is broken, view Adobe Acrobat version [PDF--17 KB].


  • New York Times: It May Be Time to Plumb Your Pension's Depths. Excerpts: "At least 23 million Americans work for companies that offer traditional pension plans — the kind that provide a fixed monthly income based on length of service. For many of them, the pension regulations proposed last week by the Bush administration pose a threat to their future retirement. The new rules would make it easier for cost-conscious companies to switch to another type of pension plan that would shrink their pension liabilities, reducing some employees' benefits." ... "Hundreds of companies made conversions to these plans in relative obscurity in the 1980's and 1990's — until 1999, when older workers at I.B.M. realized midway through a conversion that the company was stripping them of anticipated retirement benefits often worth hundreds of thousands of dollars each. The issue remains tied up in court. The I.B.M. workers rallied. Congressional hearings and age-discrimination suits followed. Amid the outcry, the Internal Revenue Service, which as part of the Treasury Department regulates corporate pension plans, stopped approving conversions while it studied the legal issues. The moratorium did not stop all companies from converting pensions, but the uncertain legal environment made them move much more cautiously, and to sometimes offer sweeteners."
  • "'We've had employees who have had to purchase time from an actuary, which is about $500 an hour,' said Kathi Cooper, 52, an I.B.M. accountant and the lead plaintiff in a pending suit against that company's pension conversion. She calculated that I.B.M.'s pension changes would cost her $400,000. 'It's easy for people like me to figure this out, because I graduated magna cum laude, University of Texas, in accounting,' Ms. Cooper added. 'If the Treasury really wants to help American employees today, they've got to make regulations that will force employers to disclose this stuff in eighth-grade language. There are millions and millions of employees out there that don't have a clue what's going to happen to them.' Ms. Cooper also has advice for employees who cannot afford to hire an actuary: go to the Internet and start learning about how pension conversions work, and how your company's conversion measures up against industry norms. A good starting place for employees is the Web site cashpensions.com, which was created by I.B.M. employees and explains certain technical issues. It also offers sample letters to regulators and elected representatives, asking for more protections for workers, and provides news on pending pension litigation and links to other sites with benefits calculators." ... "'When I first filed suit against I.B.M., of course I was afraid,' she added. 'But I was more afraid of retiring and eating cat food. That was my impetus.'" If link is broken, view Adobe Acrobat version [PDF--23 KB].



  • From a message board posting (full excerpt): Question: Above you said that it doesn't hurt people who left IBM before 1995, it only has the potential to hurt those who left since 1995. Can you please explain how? In my case I only left a year ago and started to draw my monthly DB (Editor's note: "defined benefit", the original pension scheme used by IBM before the 1999 cash balance conversion) checks right away. Every month they show up now until I die and then they continue for my spouse. So how can this change hurt in this situation? The checks will keep coming, and coming. I may not get a COLA (cost of living adjustment) but I don't think this bill will allow IBM to reduce a DB pension once you start to draw it."

    Answer
    from Janet Krueger:
  • You are now a certified member of a class action lawsuit, Cooper v. IBM. This lawsuit asserts that the hybrid plan IBM converted to in 1995 was age discriminatory, based on the ERISA laws. If the Treasury is allowed to issue regulations declaring that cash balance formulae are not age discriminatory, the court could conceivably leap to the conclusion that the government no longer intends to enforce the age discrimination rules in ERISA. While this would not reduce the pension you are currently collecting, it might eliminate any chance of Cooper v IBM of resulting in a settlement that would amend your pension upwards. We need to tell the government, loud and clear, that we want the current age discrimination rules in ERISA fully enforced. The Treasury has no business shutting down current lawsuits and EEOC charges! More details about Cooper v IBM are available at http://www.cashpensions.org/IBMCertFAQ.htm

  • Has your company already converted your pension to a cash balance plan? Do you think you've already been burned once and that the new Treasury Department proposal won't do you further harm? Think again. From Dave Finlay's message board posting "Cash Balance Conversions - better the second time." Full excerpt: "Is 6% a reasonable interest rate? For those who enjoyed their cash balance conversion, it gets even better. Under the proposed IRS rules it is legal for a company to convert your cash balance again. Suppose you are a 40 year old employee admiring your $100,000 cash balance account. Suppose your company decides they would rather not contribute to your pension fund for a while. So they project your $100,000 forward to age 65 at the current (for 2003) interest rate of 2.7% and get $194,653. They convert it to an annuity at a generous rate of 6% to project an annuity of $18,318 per year, then convert it back to cash at the same interest rate to get the same cash, $194,653. And now the magic: your $194,653 is discounted back to today at the reasonable interest rate of 6%, and you have a new cash balance of $45,354. You get a 5 year wear-away, and it follows all the IRS rules. So, is 6% a reasonable interest rate?"


  • "year20man" wrote a letter to Congress and President Bush to protest the newly-proposed Treasury Department rules that would legalize cash balance conversions. Excerpt: "Until 10/31/02 I had worked as an engineer for IBM in Endicott, NY for over 23 years. In June of 1999 IBM decided to switch us to a cash balance pension plan. IBM's stated opening balance for my cash balance plan was $69K after 20 years of service, (less than one years pay), and approx. 42% less than the present value I had earned to that date under the prior DB pension plan." ... "Now the treasury Dept. wants to legalize this organized financial plunder of an entire generation of Americans? Until recently, (2-3 years ago), I considered myself a Republican. No longer. What kind calamity will our nation experience 10-20 years in the future when baby boomers are retiring by the millions and wake up to find they have no pensions, no retirement medical coverage and possibly no social security. I truly believe from all I've read and seen that it is largely the Republicans allowing and supporting US corporations to plant this time bomb.Wake up, some of America's most dangerous enemies carry briefs cases filled only with paper."


  • Newsday (courtesy of the Seattle Times): Proposed pension rules raise red flags: Older workers could see major loss of benefits. Excerpts: "But labor advocates said the proposed rules would help corporations save money at the expense of workers in their 40s, 50s and 60s, who can lose up to 50 percent of their expected benefits when traditional plans are converted. The proposed regulations issued for comment by the Treasury Department Tuesday 'give a green light to a tremendously unfair practice that robs older employees of benefits they had counted on getting,' said Karen Ferguson of the Pension Rights Center, a worker-advocacy group in Washington, D.C." ... "But even some younger workers are finding the new deal unpalatable. Jeffrey Zitz is 38-year-old senior engineer at IBM's East Fishkill, N.Y., facility who specializes in computer modeling. So when IBM announced plans in 1999 to convert to a cash-balance plan — and said the average employee would lose 20 percent of their pension benefit — Zitz made his own computer model. 'I was sure they were taking money off the table, but I didn't know how much,' he says. To Zitz's horror, he learned his loss would be closer to 65 percent. Using IBM's own numbers, he figured his monthly pension at age 65 would drop from $14,465 to just $4,542, and more recent changes have driven the figure even lower. IBM has since allowed workers as young as 40 to stick with the old plan, but that doesn't help Zitz. 'Honestly, there's not much I can do about getting that money back,' says Zitz, who says he would have to sock away $20,000 a year in after-tax income to make up the shortfall." ... "'It's unfair to say to people who have been at a firm a long time, and have made their retirement plans based on what they will accumulate under the existing plan, "We're taking away the old plan,"' said Alicia Munnell, director of the Center for Retirement Research at Boston College'." If link is broken, view Adobe Acrobat version [PDF--25 KB].


  • AON Consulting report: Age Discrimination Proposal Affects Cash Balance and Other Plans [PDF--115 KB].


  • Congressman George Miller (D-California) Says Bush Administration Plans to Weaken Regulation of Pension Plans and Reduce Payments to Older Workers. Excerpts: "'Once again, the Bush Administration has decided that what is good for the captain is not necessarily good for the sailor,' said Miller. 'This proposed change to pension rules will result in average employees losing ground in their pensions while top company executives will continue to receive lavish treatment."'Lifting the restriction on pension plan conversions is the latest in a stunning series of actions by an Administration that obviously has no compunctions against siding with corporate interests over employees and families every time,' said Miller. 'They aren’t satisfied with refusing to raise the minimum wage, extend unemployment benefits, or grant a full cost of living raise for federal workers. Now they are going after pension security, too.' The rules change would lift a ban imposed by President Clinton in 1999 that prevented the government from approving a shift from a defined benefit (company financed) pension plan to plans where most employees will receive a smaller pension. So-called cash balance pension plans were permitted initially by the first Bush Administration in 1991. Since that time, as many as 700 of America's largest companies have adopted them. Under the proposed rules change, the Administration would allow companies to establish all the terms of the cash balance plan, include the rates of return on the new plan and the estimated rate of return used to estimate the value of an employee’s benefit under the old defined benefit plan."


  • Statement by the Honorable George Miller (D-CA), December 10, 2002, Regarding New Bush Pension Plan [PDF--38.4 KB]. Full excerpt: "This is the latest example of the tin ear President Bush and his Administration have for average employees. Workers who are playing by the rules and raising families and looking forward to a secure retirement are now having the rug pulled out from under them. This is a devastating blow for employees who are in secure pension plans today at good companies and who still have another 5 or ten years left before retirement. The Bush Administration is implementing the wish list of big business with a total disregard for the financial losses average employees are going to suffer from it. Older workers, many with families, many with dreams of a secure retirement, should be very concerned about this change, because they are going to suffer big financial losses from it – thanks to the Bush Administration. Employees have already seen huge losses in their 401k plans. Now they are going to see losses to their traditional pension benefit plans at top companies across the country. The defined benefit plan is the last pillar of private pension security and it has just taken a severe blow under this proposal. The only way to stop this now is for employees to make their concerns know – to their employers, to the elected representatives and to the President. Congress could stop it, if it were not under the control of the Republicans who are unlikely to come to the rescue of average employees against the President’s wishes."


  • Los Angeles Times (courtesy of the Miami Herald): Return eyed for criticized pension plan by Kathy Kristof. This article has a short question and answer section that is useful for people unfamiliar with cash balance pensions and the way they work. Excerpts: "The Treasury Department recently proposed rules that would end a three-year moratorium on conversions to a complicated and controversial type of pension that has been criticized for depriving older workers of promised benefits. The new rules are aimed at clarifying whether converting traditional pensions to so-called cash-balance plans discriminates against older workers. As proposed, the rules would slightly modify, though largely allow, many practices that have made the plans controversial. 'The immediate impact of these rules, if they go into effect, will be to substantially slash the pensions of older workers throughout the country,' Rep. Bernie Sanders, I-Vt., said. 'Millions of workers will see a reduction in the pensions that they anticipated. This will be a disaster for them and their families.'"
A bit of (very interesting) history:
Call to action: As you already know, the Treasury put out regulations recently that would legalize cash balance conversions, even if they don't provide a choice for older workers and trigger long periods of wear away. This is simply NOT acceptable.

We have until March 13 to make our voices heard in Washington -- if we lose, and the regulations go into effect as currently proposed, two bad things will happen:

  • Companies who still have good pensions in place will have a green light for reducing them -- millions of baby boomers will be forced to pare back their retirement plans substantially, and thousands of them won't figure it out until they retire and see how little the get.
  • Hundreds of open EEOC charges and pending lawsuits against companies that have already slashed pensions through cash balance conversions will most likely be closed out with no help for the employees who already saw their promised retirements slashed.

Why you should care if...

  • You're a young employee: The new Treasury Department rules allow IBM and other employers to change financial assumptions multiple times throughout your career to retroactively reduce your "cash balance". Read Dave Finlay's analysis of how companies can do so. (also linked to higher on this page).


  • You're a "second choicer": IBM relented and gave you the choice to stay with its traditional pension. Some have speculated they did so since the legality of cash balance pension plans was not clear. The Treasury Department proposal makes it clear that such conversions are legal, and indemnifies corporations against charges of age discrimination. Given a green light from the Treasury Department, IBM could easily force all employees into a cash balance plan.


  • You're a "first choicer": As with "second choicers", given a green light from the Treasury Department, IBM may force all employees into a cash balance plan.


  • You're already retired: As Janet Krueger stated, a class-action lawsuit, Cooper v. IBM asserts that "the hybrid plan IBM converted to in 1995 was age discriminatory, based on the ERISA laws. If the Treasury is allowed to issue regulations declaring that cash balance formulae are not age discriminatory, the court could conceivably leap to the conclusion that the government no longer intends to enforce the age discrimination rules in ERISA. While this would not reduce the pension you are currently collecting, it might eliminate any chance of Cooper v IBM of resulting in a settlement that would amend your pension upwards."

Write to the Treasury and tell them no! By law, the Treasury must accept public comments through March 13, 2003. Tell them you want a pension that will not decrease as you get older. Tell them you want to receive your promised pension. Tell them you want your pension protected, not reduced. Tell them there are 80 million baby boomers out there that are retiring at unprecedented speed, and that you vote. Tell them your pension is the most important thing to you and your family's future.

Make 5 copies. Mail the original to:

Internal Revenue Service
POB 7604
CC:ITA:RU (REG-209500-86) Room 5226
Ben Franklin Station
Washington, DC 20044

Using your copies, send each to your two Senators and your Representative in Congress. Send the last one to your local paper as a letter to the editor.

(Editor's note: The easiest way to find your senators and representatives is to "search by ZIP Code" on this page. We highly recommend you write (using postal mail) or fax your senators and representative. Congress receives so much e-mail that it is largely ignored. Old fashioned "snail mail" receives more attention).

We don't need to be formal. We don't need lots of analysis, although analysis is happening, and will be posted on www.cashpensions.org when it is available. We don't need overkill. We don't have a minute to waste. We only need to get a couple of million baby boomers to write the Treasury and just say NO.

If you've got questions, give me a call.

Thanks,
Janet Krueger
507 289 9030

In other news this week:
  • Kiplinger's Personal Finance: Shortchanged by Mary Beth Franklin. Did you get a lump-sum payout from your pension plan? Check the numbers.
  • Excerpt: "'Anyone who has participated in a traditional defined-benefit pension plan or a cash-balance plan and has taken a lump-sum distribution within the past ten to 15 years should be suspicious,' says Katz."

  • Humor (Macromedia Flash animation): Mark Fiore Presents How to be part of the Jobless Recovery!


  • Annex Bulletin: Lou Gerstner’s Book: Who Says Elephants Can’t Dance? Gerstner Spills the Beans…Unwittingly Boasting about IBM Board’s Courtship in 1992, He Reveals How IBM Board Misled the Public. Excerpt: "Hopefully, the former Big Blue emperor has a better grasp of his own executive compensation. As you saw in “Sir Lou OutLayed Lay” (April 2002), Gerstner outdid even the Enron chairman in insider selling. With the help of the (new) IBM Board members - his pals whom he had appointed, the former IBM CEO took home nearly half a billion dollars in aggregate executive compensation. Gerstner’s nine years at the IBM helm will be remembered as the “Era of Greed.” They are unprecedented in IBM corporate history when it comes to plutocratic self-dealing by the top Big Blue brass. But that’s not something about which Gerstner is boasting in his book “Who Says Elephants Can’t Dance?” Self-enrichment while manipulating the stock through stock buybacks is another conflict-of-interest practice that the new SEC chairman may want to look into. If he really means business, that is."


  • Minneapolis Star Tribune: Editorial: 'Class warfare' / Who's victim, who's aggressor? Excerpts: "'Waging class warfare' is an accusation often and easily thrown at people who object to federal tax and spending policies that favor the wealthy. Sometimes that accusation has the ring of truth, but sometimes it better fits those who make it than those it is meant to describe. Now is one of those times. Consider these recent developments and then decide: Who is waging class warfare on whom?" ... "The White House is floating trial balloons on a new approach to tax cuts for next year which would argue that the affluent bear too much of the federal burden and low-income Americans too little. In order to make this argument, the White House focuses exclusively on the income tax. It argues that payroll taxes -- paid to finance Social Security and Medicare -- are not taxes at all, but fees. This, of course, would skew the tax picture dramatically because the payroll taxes take an especially big bite out of the incomes of less-wealthy Americans. That argument is going to be a hard sell, a devious word game. What should make it even more difficult are the statistics on wealth accumulation in the United States, which belie the notion that onerous tax burdens are impeding the wealthy."
  • ... "The results of that growth are stunning. Fed figures show that in 1998, the top 1 percent of wealthiest Americans held 38.1 percent of the nation's net worth. The top 10 percent held 70.9 percent. The bottom 40 percent held not even one-quarter of 1 percent."

  • Toronto Star: CNN is Such Good Fun. Excerpt: "The trouble with Canadian news, with all its earnestness and gravitas, is that it's kind of boring. It's filled with fish and wheat fields and wood and water and policy wonks. It's not the presentation on the CanNets that bugs me. Canadian anchors and reporters tend to be hairdos and shoulders above their more highly-paid U.S. counterparts. I'll take a puffy Mike Duffy over a chiselled John King anytime. It's just our news is so full of, you know, issues that affect our daily lives and stuff: the environment, the economy, the government, and other deadly dull topics. I mean, why can't we have plagues on our cruise ships? Why don't our politicians dick around with interns? Why don't our weapons inspectors dress up in leather boxers, studded collars and rubber hoods? Do you realize that, unlike the U.S. where they can pick and choose their shooting stories, just about every single murder in Canada is reported? And how come we're never having a 'showdown' with a brutal dictator? And don't get me started on foreign news, eh? Canadian news networks are all over international stories the way Larry King is all over his female guests. We Canadians are subjected to elections in Argentina, oil slicks in Spain, elections in Israel, all kinds of things happening over somewhere. And thank God too because otherwise we'd be stuck with the ho-hum headlines from home."
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