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6, 2000 April, 2000

Highlights—April 19, 2008

  • Business Day: IBM profit tops analysts' estimates. Excerpts: International Business Machines posted first-quarter profit that topped analysts' estimates and said earnings this year will exceed its previous goals, pushing the stock up 3.3%. Net income at the world's biggest computer-services company climbed to $US1.65 a share, beating the $US1.46 average of estimates compiled by Bloomberg. Armonk, New York-based IBM also said today that full-year profit will advance to at least $US8.50 a share, compared with the $US8.25 projection announced in February. ...

    Pension Costs: The executive also has reduced costs in the company's pension plan. IBM, which had more than 386,000 employees at the end of 2007, has projected savings of $US950 million for this year. The redesign is part of Palmisano's plan to boost profit to as much as $US11 a share by 2010.

    IBM also has pursued billions of dollars in stock buybacks to add to per-share earnings. On February 26, Palmisano announced plans to buy back $US12 billion in stock this year. Today the company said the buybacks helped add 13 cents a share to first- quarter profit.

  • Seeking Alpha: IBM Q1 2008 Earnings Call Transcript. Excerpt: We again expanded our gross margin, led by our two services segments, and systems and technology. This contributed another $0.14. Of that, about a $0.05 was due to the year-to-year benefit from our retirement-related plans that flowed to cost. The balance of the pension savings went to expense, for another $0.04 benefit.
  • Pension Rights Center: Pension Rights Center Seeks Withdrawal of Cash-Balance Revenue Ruling. Excerpts: In a letter to Treasury Secretary Henry M. Paulson, the Pension Rights Center calls for the withdrawal of Revenue Ruling 2008-7, which purports to legitimize “wearaway” in certain cash balance conversions that took place before the enactment of the Pension Protection Act of 2006 (PPA). “Wearaway” in cash balance conversions is an unfair corporate practice that was outlawed by the PPA because it can result in devastating losses of expected pension benefits for older workers. Read the Center’s letter, which points out that the Ruling goes against congressional intent, and conflicts with the language of the law and the controlling regulation. The Center also wrote a press release and sent a letter to key members of Congress.

    If you think Revenue Ruling 2008-7 is unfair and should be withdrawn, use our web site to send a letter to let Secretary Paulson know your concerns.

  • WashTech: DHS Changes Rule; Extends Stay For 20,000 Foreign Grads. By Priyanka Joshi. Excerpts: The American tech job market is about to get tighter, as a new rule Click here to Take Action!from the Department of Homeland Security allowing employers to hire foreign students holding F-1 visas for "Optional Practical Training" for 29 months as opposed to the hitherto 12 months, takes shape. The April 4 rule change comes within days of the U.S. Citizenship and Immigration Services reporting that since April 1, it has received 163,000 H1B visa applications for the 65,000 available visa slots, not including 20,000 visas reserved for students graduating at U.S. universities.

    The new rule, applicable to students graduating in Science, Technology, Engineering or Mathematics has received critical attention for not including public opinion on the issue, and the blogosphere has been buzzing on the subject ever since it was announced. Ben Worthen, writer for the Wall Street Journal, posted on his business technology blog, "What's striking about the new rule is how it came about." Worthen, referring to the backhanded way the rule was formulated, added, "Instead of releasing a draft and soliciting comments from the public" - the typical process for governmental rule changes - " DHS cited a clause in the Administrative Procedures Act, which is reserved for emergencies, to make the rule effective immediately". ...

    Microsoft, which has long lobbied Congress for drastically increasing the cap on H1B visas, predictably, lavished praise on DHS. The decision is, "an important step toward ensuring that American companies can continue to hire many of the world's most talented students graduating from U.S. universities," Jack Krumholtz, Microsoft's managing director federal government affairs, said in a statement. ...

    The public is getting edgier with each such announcement from the government and one has to barely skim the comments on the blogs to gauge the street sentiment accurately. A comment from "SPT" on Worther's post says, "BLS reports losing 80,000 jobs through March, layoffs at Motorola, Dell, Yahoo, AMD ... The US is in a recession, Americans are getting laid off, and DHS wants to legislate via executive edict to increase the supply of the US labor pool with foreign workers? This is insane."

  • New York Times: Crisis of Confidence. By Paul Krugman. Excerpts: The Survey Research Center of the University of Michigan has been tracking American economic perceptions since the 1950s. On Friday the center released its latest estimate of the consumer sentiment index — and it was a stunner. Americans are more pessimistic about their situation than they have been for more than a quarter century. ...

    A major reason we’re feeling so down now is that for working Americans the boom never did come back. Job creation in the post-2001 recovery was pathetic by Clinton-era standards; wages barely kept up with inflation. Instead, corporate profits and the incomes of a tiny elite surged — sucking up so much of the economy’s growth that only crumbs were left for everyone else. ...

    But my impression is that the subprime crisis — with its revelation that titans of finance were dealing in funny money and its tales of failed executives receiving hundred-million-dollar going-away presents — has resurrected the sense that something is rotten in the state of our economy. And this sense is adding to the general gloom. The question is, can the next administration end America’s malaise?

  • New York Times: Wall Streeter Converts to a Fan of Regulation. By Landon Thomas Jr. Excerpts: Robert K. Steel leans forward, speaking in a rapid, excitable burst about the powers that a superregulator might wield over Wall Street one day. “It will have the license to go everywhere: private equity funds, investment banks, hedge funds,” Mr. Steel, the under secretary of the Treasury for domestic finance, said in an interview last week. By his words and demeanor, Mr. Steel could be mistaken for a midlevel policy wonk — someone hoping to let a little sunlight disinfect the dark corners of the financial world.

    In fact, he is a former vice chairman at Goldman Sachs, the big investment bank. And in the last two years, Mr. Steel has been co-chairman of one commission that claimed heavy-handed regulation was stanching financial innovation and another that argued that hedge funds could police themselves. His apparent conversion to the merits of regulation illustrates how the laissez-faire bones of the Bush administration have been rattled by the government-brokered rescue of Bear Stearns and the trauma of the credit crisis.

  • New York Times: Big Tax Breaks for Businesses in Housing Bill. By Stephen Labaton and David M. Herszenhorn. Excerpts: The Senate proclaimed a fierce bipartisan resolve two weeks ago to help American homeowners in danger of foreclosure. But while a bill that senators approved last week would take modest steps toward that goal, it would also provide billions of dollars in tax breaks — for automakers, airlines, alternative energy producers and other struggling industries, as well as home builders.

    The tax provisions of the Foreclosure Prevention Act, which consumer groups and labor leaders say amount to government handouts to big business, show how the credit crisis, while rattling the housing and financial markets, has created beneficiaries in the power corridors of Washington. It also shows how legislation with a populist imperative offers a chance for lobbyists to press their clients’ interests. ...

    Congressional Democrats are also hearing from consumer advocates and other groups who say that the Senate bill does little to help Americans in danger of losing their homes to foreclosure. “The Senate legislation gave corporations and Wall Street billions in tax breaks,” Terence M. O’Sullivan, the president of the Laborers International Union of North America, said at a news conference on Tuesday to denounce the bill. “Tax breaks for corporate home builders won’t help stabilize the housing market, won’t create jobs and won’t prevent a single foreclosure,” he continued. “If anything, this multibillion-dollar windfall will make things worse.”

  • New York Times: Wall Street Winners Get Billion-Dollar Paydays. By Jenny Anderson. Excerpts: Hedge fund managers, those masters of a secretive, sometimes volatile financial universe, are making money on a scale that once seemed unimaginable, even in Wall Street’s rarefied realms. One manager, John Paulson, made $3.7 billion last year. He reaped that bounty, probably the richest in Wall Street history, by betting against certain mortgages and complex financial products that held them.

    Mr. Paulson, the founder of Paulson & Company, was not the only big winner. The hedge fund managers James H. Simons and George Soros each earned almost $3 billion last year, according to an annual ranking of top hedge fund earners by Institutional Investor’s Alpha magazine, which comes out Wednesday. ...

    The richest hedge fund managers keep getting richer — fast. To make it into the top 25 of Alpha’s list, the industry standard for hedge fund pay, a manager needed to earn at least $360 million last year, more than 18 times the amount in 2002. The median American family, by contrast, earned $60,500 last year.

    (Editor's note: At his level of earnings, Mr. Paulson achieved the median American family income before working his first 9 minutes of the year. Fortunately for Mr. Paulson and his hedge fund manager colleagues, his earnings were taxed at only a 15% rate...not at the 25 to 40% rate [counting both income and payroll taxes] imposed on we middle-class taxpayers.) ...

    Since 1913, the United States witnessed only one other year of such unequal wealth distribution — 1928, the year before the stock market crashed, according to Jared Bernstein, a senior fellow at the Economic Policy Institute in Washington. Such inequality is likely to impede an economic recovery, he said. “For a recovery to be robust and sustainable you can’t just have consumer demand at Nordstrom,” he said. “You need it at the little shop on the corner, too.” ...

    And Mr. Gross, the fund manager, warned that the widening divide among the richest and everyone else is cause for worry. “Like at the end of the Gilded Age and the Roaring Twenties, we are going the other way,” Mr. Gross said. “We are clearly in a period of excess, and we have to swing back to the middle or the center cannot hold."

  • Forbes commentary: Corporate Greed = Shareholder Pain. By Martin T. Sosnoff. Excerpts: When is it going to stop? I'm talking about how we shareholders are short-changed by managements of major corporations. Salaries are the least of it. Even bonuses, normally double the salary level are OK by me. It's the options and stock grants blithely rubber-stamped by outside board members chairing compensation committees that cost us big time.

    Executive compensation consultants know what they're there for: Making the headman super-rich, a billionaire by retirement age. They justify their findings by comparing compensation levels within a comparable peer group, making it a self-fulfilling closed-circuit club where everyone wins. ...

    Management talks about total shareholder distributions of $35.6 billion, but this sum includes buybacks, which benefit management much more than shareholders. These buybacks reduce the earned surplus account, making it easier to up the return on equity (ROE), thereby justifying generous stock option grants.

  • The Atlanta Journal-Constitution: Tax Day 2008: For top execs, some perks come tax-free. By Carrie Teegardin. Excerpts: Some call it The Grossest Perk. On tax day, it's the kind of benefit almost any worker would love. But this one is reserved primarily for the corporate world's top dogs. Here's how it worked for Richard F. Smith, the chief executive of Atlanta-based Equifax.

    In 2006, the newly appointed CEO of the credit reporting company earned a compensation package worth more than $7 million. Included were $80,000 for private club dues, $189,000 for relocation expenses, a $47,000 security system, $20,000 for life and liability insurance, and $13,000 for financial planning. The Internal Revenue Service considers such perks to be taxable income.

    Equifax's directors did what many boards do these days. They awarded him yet another benefit —- "grossing up" his pay by $171,935 to cover the taxes on the perks. ...

    "With the salaries and levels of compensation that these CEOs are receiving in the first place, the idea that they would need any type of tax assistance is just absurd," said Paul Hodgson, an expert on compensation issues at the Corporate Library, an independent research firm. The firm provides data and information on corporate governance issues to businesses, institutional investors, law firms and other clients. About one in five of the nation's large public companies paid part of their chief executive's tax bill, the Corporate Library found in a study of perks reported between February 2007 and February 2008. The findings are based on more detailed public disclosures aimed at transparency in executive benefits.

  • Washington Post: AFL-CIO Blames Executive Pay for Credit Crisis. By Alan Zibel. Excerpts: The AFL-CIO said yesterday that "outrageous" pay packages for banking industry executives were partly to blame for the credit crisis, encouraging risky investment strategies that ended up hurting shareholders and consumers. The labor federation, a major shareholder in public companies through union-sponsored pension funds, made the critique as it unveiled its 2008 "Executive PayWatch" portion of its Web site, which includes a compensation database. ...

    The union group's leaders argued that executive-pay packages are too often linked to short-term measures of performance, such as revenue growth, that can mask potentially catastrophic risks taken by a company.

  • Senator Bernie Sanders: Middle Class Collapse. Excerpts: In Vermont, the bad news bannered across front pages on Wednesday was that ripple effects of recession may force state lawmakers to cut about $30 million from next year's budget. There was no silver lining in the latest economic data out on Wednesday: U.S. consumer prices rose 0.3 percent in March on the back of rising oil prices while home construction fell by 12 percent to the lowest level in 17 years. Meanwhile, for anyone fretting about the fortunate few, a new congressional report documents that Bush tax breaks produced “windfalls for the wealthy.” Wall Street hedge fund managers, by the way, are “making money on a scale that once seemed unimaginable.” ...

    A new report from Congress’s Joint Economic Committee, issued on the April 15 deadline for filing income tax returns, analyzed the Bush tax cuts that “disproportionately benefited the wealthiest Americans.” The report found that “seven years after the first tax cuts were passed, the evidence is clear that these claims were false, and in reality, these tax cuts have been bad economic policy. They have done little to stimulate the economy. The economic expansion earlier in the Bush administration was one of the weakest on record, and the economy has once again fallen into recession. While having limited economic effect, the tax cuts led to massive increases in the national debt and created an enormous windfall for the very wealthiest Americans at the expense of the middle class and future generations.”

  • Reuters, courtesy of the New York Times: Generation X Glum on Retirement Prospects: Survey. Excerpt: Baby boomers say they are worried about achieving a comfortable retirement, but a new study suggests Generation X is even more pessimistic. More than two-thirds of Americans aged 27 to 42 don't think they will ever be able to stop working, according to a survey published jointly on Monday by Scottrade and BetterInvesting. In contrast, 64 percent of respondents aged 55 to 64 said they could retire and not worry, even though this group is much closer to retirement age.
  • Seattle Times: Boeing labor negotiator wants pension-plan change for new hires. By Dominic Gates. Excerpts: Boeing's top labor negotiator, Doug Kight, has an uphill battle ahead as the company undertakes difficult contract talks with both major unions this year. And one of his proposals — for enrolling new hires in a 401(k)-style retirement plan instead of the existing Boeing pension plan — won't make things any easier. Relations with the white-collar engineering union already are so strained that the union's new executive director, Ray Goforth, talks openly about the potential for a strike. ...

    To cut Boeing's enormous future pension liabilities, Kight said he'll propose to both the Machinists and the engineers to replace the employee pension for all new hires with a 401(k) plan supplemented by a company contribution.

    "This is unbelievable," said Wroblewski, district president for the International Association of Machinists (IAM) Local 751, on hearing of the idea from a reporter. Although Kight had previously informed engineering union leaders of the proposal, he hadn't mentioned it to Wroblewski.

    Wroblewski said that in 2005, when Boeing proposed taking away retiree medical benefits for new hires, "it ended in a strike ... This is unacceptable. I'm sure our members will walk again."

    Editor's note: IBM employees, don't you wish *we* had had a union when IBM screwed *us* out of our long-promised pension and retiree medical benefits?

  • CNET News: It was 20 years ago today: Not Sgt. Pepper, but my PCjr. By Charles Cooper. Excerpt: Everyone remembers their first computer. Well mine was a PCjr and I don't care how history remembers it. The piece of junk stole my heart. I wouldn't push the analogy too hard, but your first computer's a lot like your first love in one respect: years later, the memory does not fade with the passing of the seasons.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • New York Times: Co-Payments Soar for Drugs With High Prices. By Gina Kolata. Excerpts: Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.

    With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.

    The system means that the burden of expensive health care can now affect insured people, too. ...

    But the new system sticks seriously ill people with huge bills, said James Robinson, a health economist at the University of California, Berkeley. “It is very unfortunate social policy,” Dr. Robinson said. “The more the sick person pays, the less the healthy person pays.”

    Traditionally, the idea of insurance was to spread the costs of paying for the sick. “This is an erosion of the traditional concept of insurance,” Mr. Mendelson said. “Those beneficiaries who bear the burden of illness are also bearing the burden of cost.” And often, patients say, they had no idea that they would be faced with such a situation.

  • National Public Radio: Japanese Pay Less for More Health Care. By T.R. Reid. Excerpt: Japan produces cars, color TVs and computers, but it also produces the world's healthiest people. It has the longest healthy life expectancy on Earth and spends half as much on health care as the United States. That long life expectancy is partly due to diet and lifestyle, but the country's universal health care system plays a key role, too.

    Everyone in Japan is required to get a health insurance policy, either at work or through a community-based insurer. The government picks up the tab for those who are too poor. It's a model of social insurance that is used in many wealthy countries. But it's definitely not "socialized medicine." Eighty percent of Japan's hospitals are privately owned — more than in the United States — and almost every doctor's office is a private business.

    Dr. Kono Hitoshi is a typical doctor. He runs a private, 19-bed hospital in the Tokyo neighborhood of Soshigaya. "The best thing about the Japanese medical system is that all citizens are covered," Kono says. "Anyone, anywhere, anytime — and it's cheap." Patients don't have to make appointments at his hospital, either. The Japanese go to the doctor about three times as often as Americans. Because there are no gatekeepers, they can see any specialist they want. ...

    Japanese insurers are a lot more accommodating than their American counterparts. For one thing, they can't deny a claim. And they have to cover everybody. Even an applicant with heart disease can't be turned down, says Ikegami, the professor. "That is forbidden." Nor do health care plans covering basic health care for workers and their families make a profit. "Anything left over is carried over to the next year," Ikegami says. If the carryover was big, "then the premium rate would go down."

  • Washington Post: McCain: Affluent Seniors Should Pay More for Drug Benefit. By Michael D. Shear and Jonathan Weisman. Excerpt: Sen. John McCain will propose today that affluent seniors pay more for government-provided drug benefits as a way to control health-care spending, aides said in previewing a major speech on economics that the Arizona Republican will deliver in Pittsburgh. The proposal is similar to a controversial one put forth last fall by President Bush, in which married retirees who make more than $160,000 a year would pay increasingly higher costs for the newly established Medicare prescription drug plans
  • The Henry J. Kaiser Family Foundation: Health Insurance Industry Functions Similar to 'Mafia,' Opinion Piece States. Excerpts: The health insurance industry is "closest to the parasitic relationship imposed by the Mafia," with companies "raking in hefty profits and bloating cost, without providing any benefit at all," Jonathan Kellerman, a clinical professor of pediatrics and psychology at the University of Southern California Keck School of Medicine and a novelist, writes in a Wall Street Journal opinion piece. According to Kellerman, in any industry, the "middleman interposed between seller and buyer raises the price of a given service or product," and, although some "intermediaries justify this by providing benefits" or physical facilities, health insurers "provide nothing other than an ambiguous, shifty notion of 'protection.'"

    The health insurance business model "is unique in that profits depend upon goods and services not being provided," he writes, adding that, as a result, the "consequences of any insurance-based health care model" will "be progressively draconian rationing using denial of authorization and steadily rising copayments" for consumers and "massive paperwork and other bureaucratic hurdles, and steadily diminishing fee-recovery," for health care providers. Kellerman writes that, although most health care reform efforts "emphasize the need to get more people insured," such an approach makes health insurance an "important commodity," rather than a "service delivered by doctor to patient."

  • New York Times: Co-Payments Soar for Drugs With High Prices. By Gina Kolata. Excerpts: Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases. With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.

    The system means that the burden of expensive health care can now affect insured people, too. ...

    Private insurers began offering Tier 4 plans in response to employers who were looking for ways to keep costs down, said Karen Ignagni, president of America’s Health Insurance Plans, which represents most of the nation’s health insurers. When people who need Tier 4 drugs pay more for them, other subscribers in the plan pay less for their coverage.

    But the new system sticks seriously ill people with huge bills, said James Robinson, a health economist at the University of California, Berkeley. “It is very unfortunate social policy,” Dr. Robinson said. “The more the sick person pays, the less the healthy person pays.”

    Traditionally, the idea of insurance was to spread the costs of paying for the sick. “This is an erosion of the traditional concept of insurance,” Mr. Mendelson said. “Those beneficiaries who bear the burden of illness are also bearing the burden of cost.”

  • New York Times: When Drug Costs Soar Beyond Reach. Excerpts: It doesn’t take a health policy expert to recognize that something has gone terribly wrong when patients have to pay thousands of dollars a month for drugs that they need to maintain their health — and possibly save their lives. Congress needs to determine why this is happening and what can be done about it.

    The plight of patients who have recently been hit with a huge increase in their insurance co-payments for high-priced prescription drugs was laid out in The Times on Monday by Gina Kolata. Instead of paying a modest $10 to $30 co-payment, as is usually the case for cheaper drugs, patients who need especially costly medicines are being forced to pay 20 percent to 33 percent of the bill (up to an annual maximum) for drugs that can cost tens of thousands of dollars, or even hundreds of thousands of dollars, a year.

    These drugs — what insurers call Tier 4 medicines — are used to treat such serious illnesses as multiple sclerosis, hemophilia, certain cancers and rheumatoid arthritis. And since there are usually no cheaper alternatives, patients must either pay or do without, unless they can get their medicines through some charitable plan. ...

    The insurers say that forcing patients to pay more for unusually high-priced drugs allows them to keep down the premiums charged to everyone else. That turns the ordinary notion of insurance on its head. Instead of spreading the risks and costs across a wide pool of people to protect a smaller number of very sick patients from financial ruin, insurers are gouging the sickest patients to keep premiums down for healthier people. ...

    Employers, including the federal government, also bear responsibility. They have been pressing to reduce their prescription drug expenditures, and all health care expenditures, by shifting more of the burden to patients. One patient who had been paying only $20 for a month’s supply of a multiple sclerosis drug was shocked when the charge rose to $325 per month. (It has since been suspended.) Another patient found that his co-payment for a newly prescribed leukemia drug would exceed $4,000 for a 90-day supply, so he has deferred buying it. ...

    What is not clear is whether insurers are primarily reacting to pressure from employers or are exploiting the situation to increase their profits. Congress needs to probe hard to find out how many patients are facing enormous drug bills and how best to protect them from medical and financial disaster.

  • New York Times: Lower Insurance Premiums and Better Care: Un-American Health Delivery. By Mike Hale. Excerpts: If your latest battle with your H.M.O. has you pounding your head with frustration, “Sick Around the World” on PBS may spur you to more drastic action, like leaving the United States altogether.

    In this “Frontline” report on Tuesday night, the Washington Post reporter T. R. Reid travels to five countries — Britain, Japan, Germany, Taiwan and Switzerland — that manage to provide some form of universal health coverage to their populations. In each nation, he reports, insurance premiums are significantly lower than those in America (in Britain there are none), and the waiting time to see a doctor is either tolerable (in Britain) or nonexistent.

    This fast-moving and entertaining hour starts from the premise that the American health care system, with its high costs, multiple gatekeepers and failure to provide insurance for much of the population, is a failure. And Mr. Reid makes the case (in about 10 minutes per country) that other capitalist democracies have not just cheaper and more equally available health care, but also better care over all, with longer life expectancies and lower infant mortality rates. The clinics and hospitals he visits may not be as spacious and well buffed as those in American suburbs, but surveys of these countries’ citizens — the actual consumers of care — show rates of satisfaction that should make American providers blush. ...

    The key factors, Mr. Reid determines, are mandatory coverage (only in Germany are the rich allowed to opt out of the national insurance system), a competitive but nonprofit insurance system and price fixing in the medical industry. One of the greatest savings created by this increased regulation is, counter-intuitively, less bureaucracy: with no combat between insurers and insured, and with no fear on the part of doctors and hospitals that they won’t be paid, these systems have dramatically lower administrative costs than in America.
  • Human Resource Executive: John McCain on Health Reform. Many of Sen. McCain's proposals coincide with the interests of business groups -- although not all, particularly his proposal to remove self-insured plans from ERISA exemption. His proposals offer a clear contrast with his Democratic opponents. By Dallas Salisbury Excerpts: "John McCain believes in personal responsibility. Families should be in charge of their healthcare dollars and have more control over their care. Public health initiatives must be undertaken with all our citizens to stem the growing epidemic of obesity and diabetes, and to deter smoking. We can improve health and spend less, while promoting competition on the cost and quality of care, taking better care of our citizens with chronic illness, and promoting prevention that will keep millions of others from ever developing deadly and debilitating disease." ...

    The Republican candidate's healthcare proposals are very similar to those of President George W. Bush. And many have been before the Congress for up to seven years without enactment. Even discussion of such reforms has been limited since the Democrats took control of both houses of Congress. Employers, as a result, are likely to have a good deal of time to evaluate proposals of a President McCain should he put them forth with sufficient detail for evaluation. It is doubtful that he will do so prior to the election.

New on the Alliance@IBM Site:
  • Spotlight: As the Alliance@IBM CWA Local 1701 begins its Spring membership drive you need to know some hard facts.

    The Alliance has been losing members due to retirement, job loss and employee financial difficulties. This web site receives an average of 40,000 visitors a month.

    Tough economic times are obvious; however, we simply can not go on or take employee advocacy to higher levels if we don't build our dues paying membership. It is not just this web site: It is an office and an organization that is at stake. Our staff of 1 full time, 1 part time and volunteers/members are dedicated to building this organization; but it is up to YOU to see that we are able to keep the office open and the organization financially viable. We need to become financially independent--We can not continue to rely on being financed by non-IBM CWA members. IBM employees need to support their own organization!

    Frankly if IBM employees do not see the value of this employee organization then the future of our work is in jeopardy.

    Please consider joining the Alliance@IBM as a member for only $10 a month--the cost of a few Starbuck's coffees. Your dues and involvement help the Alliance with the following:

    • Organizing employees and challenging IBM on policies and practices detrimental to employees and retirees.
    • Exposing job cuts.
    • Helping employees to deal with redeployment and replacement training.
    • World wide media source for IBM employee issues.
    • Legal references and current labor law information.
    • Political action on employee issues.
    • Stockholder proposals and actions.
    • Working with International IBM employee Unions to develop worldwide responses to IBM employee issues.
    • Working with Federal, State, and Local officials to make sure IBM employees, IBM retirees and communities find information and remedies for toxic exposures from IBM sites.
    • Union privileges and benefits through Alliance@IBM's membership that are offered through the Union Plus /Privilege program.

    We also have the expense of keeping an office up and running: Rent, Office supplies, fax, phones internet access and mailings of organizing materials; such as newsletters, flyers and brochures.

    We believe Alliance@IBM has, by its very existence; given IBM Corporate Mgmt pause, during their anti-employee actions.

    The bottom line is that if we are NOT here, then IBM Corporate Management has the field. There will be some who say that employees do not want representation through an employee organization or a union. Now is the time: Prove them wrong or prove them right.

  • Plan Now! Make your voice heard at the IBM Stockholder meeting April 29th in Charlotte, North Carolina. Details to follow...
  • From the Job Cuts Status & Comments page
    • Comment 4/11/08: More offshoring news. It was just announced Tuesday that all of the jobs on the IGS side of the Enterprise Business Information (EBI) organization would be moved to the Global Delivery Centers (GDC) in a two phased approach. First phase to be complete by mid-June, rest of the transition to be complete by 10/31. This includes pretty much every job left here in the US. On the two projects that I work closely with this affects approximately 40-50 people. And there are many other areas that are affected as well. I would say probably a couple hundred people total but I don't have exact numbers. The folks leaving will have to spend the next few months training their replacements and hoping to find jobs. Executive Leadership??? IBM Values???? Doesn't exist in this company. -it_never_stops-
    • Comment 4/14/08: For those who try to imply that your able to get another job when you are RA's, you're wrong. It takes a second coming of J.C. to make it happen. I was highly rated and have had 2+ or 1 ratings since I joined IBM 9 years ago. I was the dye in the wool idiot who believed if I worked hard and made a great name for myself I would be safe. I was able to hide underneath all of the rocks I needed to in the past rounds due to connections. I perform and have a great blend of needed skills (Tech and PM) I took a job with the transition team, who were desperately seeking tech / PM/ Transition experienced resources, which fit my skill set to a T.

      Three months after joining this team, they gutted the entire org. I was canned (May 31st) Even though they considered my skills redundant (LMAO) They kept extending me for months on end. I finally put my foot down and told them NO.. either crap or get off the pot. I had been looking internally for work for several months to NO avail.

      There were tons of ops at first, but with all of the other cuts, first lines took the 3 initial jobs I had offered. That was the first 30 days, after that, no one that I applied for either responded back or would extend an offer. You have to get released by the committee of VP's to get hired on. Your position is eliminated and the cost savings for that month's stock price realized. Once you have been labeled, its over.

      Now they tried to keep extending my sentence at IBM over and over. so when I was interviewing, you don't have a firm start date when you can start at a new job.. they screw with you on this as well. They threatened that they would take my severance if I didn't continue to extend my stay. I threatened IBM with a lawsuit and they let me leave and keep my severance.

      I cannot state strongly enough to everyone of my former IBM'er.. get out. Polish that resume and start looking whilst your on their dime. Don't feel guilty about it either. They will screw you in a New York Second. The writing is on the wall. Kramer was right. The sucking sound you are hearing is the IBM jobs leaving America for good. There is a special place in hell for IBM management BTW.. The job market is not that bad for skilled workers. IBM's name still has some credibility in the market. I did get a lot of "I don't blame you for leaving" comments. Everyone knows just how bad IBM has become. IBM has passed the point of return. Its over. -X-IBM'er-

    • Comment 4/15/08: glad I quit working at IBM -Simon-
    • Comment 4/16/08: I keep hearing and reading that there aren't enough skilled IT people in the US and that is why jobs are going overseas. IT jobs are not the only jobs going off-shore so i don't get why the IT profession is getting slammed for not having the talent in the US. Because accounting jobs are going off-shore too, does that mean the US doesn't have enough qualified accountants? Because customer service jobs are being off-shored, does that mean we don't enough qualified customer service reps in the US? etc, etc. Anyway, get my point? Those saying these types of things are fools trying to justify their greedy decisions. What the US has little of are workers willing to work for $3 a day. That's the issue. Not the skill level. -Anon-
    • Comment 4/17/08: A friend of mine who still works in Rochester tells me that IBM has dropped all pretense of 'work-life balance' and renamed the process 'work life integration', which is a slick way of saying the company expects you to give to the company 100% and find a way to 'fit the rest of your life in' after serving the company. I had a sleazy acquaintance once who told me that 'his wife was married, but he wasn't'. It appears that IBM now has the same attitude. They expect you to be 'married' to them, but they have absolutely no loyalty to you. -RochFireball-
  • General Visitor's Comment page:
    • Comment 4/11/08: A quote from an IBM recruiter in the Wall Street Journal (04/08/08). It kind of sums up the IBM. If the US doesn't have great CS departments then why the hell do all these foreigners from India and China get their MS/PhD from the US Graduate Schools. "Companies in sectors that saw robust increases in recent years say their hiring is flat this year. International Business Machines Corp. says it hired 5,000 people in the U.S. last year, 36% of whom were recent university graduates -- the same as in 2006. This year, "given the broader economy in the U.S., we don't see huge growth," says Vera Chota, manager of university recruiting for IBM. Certain skills still are in strong demand, says Ms. Chota, adding that the company can't find enough qualified graduates with degrees in computer science and those who have knowledge of both business and IT."In the U.S., unfortunately, there are not enough great computer-science graduates," Ms. Chota says." -Anonymous-
    • Comment 4/14/08: Concerning the post below quoting the IBM University Recruiter: Of the 5000 new hires in the U.S in 2007, I would be interested to know how many of those are H1B visas. -John-
    • Comment 4/17/08: Think about my post.. take a minute and think. I was a 9 year employed IBM'er. I was ranked high and NEVER had a bad PBC. I was NOT part of the last rounds of the lawsuit. I took a position helping the transition team and was canned 3 months after joining. My skills were in demand skills PM Technical Transition Transformation Skills. The Band B Leader has shortly discussed how skills like mine were is strong demand. I was canned along with others because the pipeline shrank.

      So instead of moving high skilled dedicated folks like me to other positrons.. they RA'd us. As far as the demand for my skills, I was approached not once but over a dozen times for different transition PM jobs with IBM after I was cut. There is ZERO merit behind the cuts.. its not like the past. They are ruining lives versus stepping up as a corporate citizen. I was very fortunate because I landed on my feet quickly for more money. Did I also mention that I am partially disabled? I brought that up to the RA counselor I was assigned to, mentioning that if there was any way to take my career length and service and consider another option as I NEEDED a home based job due to my disability... IBM's response IT's NOT MY PROBLEM That's what the RA counselor told me.

      So get over yourself already and realize that busting your ass and making a great name for yourself means absolutely NOTHING at IBM anymore.. not a damn thing. So if you think that publishing the list to the managers will make a difference between getting axed, I don't think it will. It use to be the managers were immune from cuts. Guess what.. the game has changed and no one from the 3rd lines down are safe anymore. I know of 3rd lines having to take tech hands on jobs to retain employment. They were squared away with that luxury.

      IBM management is INTENTINALLY creating a hostile workforce. Its forced attrition. If you have been a long term IBM'er you would realize that morale has been shit for well over 5 years. They use to address it publicly and resolve things in the past. Now management is stoking that hate so people leave on their own. IBM management fears the recoil that is building out there. Two things that they fear.. these lawsuits and organized workers.

      If we organize we have more control.. PERIOD. Being a former Teamster, I know the pros and cons of a union. In the beginning of my career, I didn't think we needed a union. As I saw the abuses that we as IBM'er encounter, I know that we need a union. This is our last hope. Management has ZERO fear of its workers as we take the cuts in pay and staffing. If we don't stand up for ourselves, they will continue to make life a living hell for us.

      I cannot express how much I urge everyone to polish their resume and always keep their eye on the job market. Be prepared so when you do get RA'd, it wont hit you as hard as its hit many of our fellow IBM'er. I was fortunate that I quickly landed on my feet. The severance was nice since I was basically paid to leave this hell hole. We're at will workers and they can toy with us all they want.. get organized and reduce that ability.

      There is a special place in hell for joanne collins smee and the other useful idiots like sam. It's JCS how coined the current IBM upper management mantra.. The change we are inducing is like putting a square peg in a round hole.. keep pounding until it fits. The stuff that falls off as the pound that square peg is us. IMHO If our jobs were redundant.. I could some what agree, but I know for a fact that they were still hiring for my role as well as others and hiring tons of contractors. -X-IBMer-

  • Pension Comments page
    • Comment 4/16/08: Can someone please tell me the relevance of the term "second choicer"? As I try to understand which pensioner group I am in I am confused, as it seems that it is not simply: old plan / new plan. As I read from the various fora it seems that there are subgroups; on the other hand I might possibly be misunderstanding street lingo. Could someone please give a list of all the grouping possibilities that one might be in. Amazing that such important information should be so difficult to come by - or that I could be so stupid. TIA (not meant to be transient ischemic attack) -Old Plan Guy-
    • Comment 4/17/08: When IBM first announced the pension and retirement medical cuts in 1999, there was one group (dubbed First Choicers) that got the choice of taking the old pension plan or the new cash balance pension plan and a second group (non-choicers or converteds) that were forced into the new cash balance plan and the new FHA retirement medical plan. This was a division based on years of service and age. I can't remember the division criteria for sure, but I think you had to have 20 years of service and be 45 or older to qualify for choice of plans. I know I personally just missed.

      There was such a public firestorm protesting the forced conversions, including Senate hearings. IBM was publicly embarrassed and chastised. At the hearing, because of the furor, then IBM VP of HR Tom Bouchard testified at the Senate hearings, announcing that IBM would extend the choice criteria downward, allowing more employees choice of the pension plans. People in this group were called "Second Choicers". Again, my memory is not very good, but I think they dropped the eligibility for choice down to 40 years old and 15 years of service.

      But, the second choicers did not get the old retirement medical - they could choose the old pension plan, but they were still forced into the new retirement medical (FHA) plan .I may be a bit wrong with the age/years of service criteria, if so I' certain someone will correct me. Hope this helps -Second Choicer-

  • Raise and Salary Comments
    • Comment 04/09/08: Get ready, prepare yourself my friends. Remember June graduation for all those foreign university students with the higher math and science scores is just about 60 days away and they will be entering the job market in huge numbers. H-1B visas baby. The economy is in the tank GLOBALLY and if you're a corporate exec trying to maintain your profits, and your job when you can't increase your sales or increase your margins the only option left to improve profits and get your bonus is to close sites, cut workers, offshore more labor, play the wage arbitration game.

      The stage has already been set. Millions of dollars will be save in severance packages this layoff go around as any potential package will most likely be based on a 40 hour work week, not the actual 50 hours or more that some of you work. This is just my opinion and it may be speculative but I would not be surprised that the new hires will come in sometime in June. You'll get 60 days to cross train your replacement and be out on the streets by September. Most of you will not see the six figure like buyout packages that many of the over 70,000 UAW workers are seeing and being offered right now. Good luck to you all... -spiderman

    • Comment 04/17/08: IBM just announced record earnings yesterday, think any IBMers will get "record raises" this year? -Jaded-
  • PBC Comments
  • International Comments
Vault Message Board Posts:

Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Some sample posts follow:

  • "A depressing whiny story" by " phooey69". Excerpts: Here is a depressing, whiny story for your reading... I'm currently working on an (IBM-provided) accounting service for a customer. As you might guess with such applications, there is a lot of data collection, forms processing, etc. involved. I had an idea that, if implemented, would significantly reduce the number of forms and data collection that were required to provide the service. Implementation would have been very simple...a page of code at the most. So I discussed the idea with others...there was some pushback. No surprise there, it happens all the time. What was interesting, however, was WHY... "Uh, we would have a problem doing this..." "Why?" "Because the people supporting this application will be band 6 GRs. They don't have the skills."

    "But IBM is supposedly hiring the best and brightest out there...surely they could pick up the skills in a day or two? After all, that's what college hires do here in the US. It's not like the skills are hard to learn." "Uh, you haven't worked with these people have you? They have top CS degrees and all that, but limited drive...it'll be a lot easier if we stick to their skill set." "Are you telling me that they can't handle this? We could do this sort of thing in our sleep when I was hired." "That's what we're telling you." So what's the point of all my whining? I guess it's that we're seeing what I call "secondary effects" of IBM's hiring policies:

    1. We hire labor that is cheap, inexperienced and probably low-skilled.
    2. Instead of demanding that the new hires learn new things and increase their skills, we assume that they will stay static...in other words, "that's how things are and they're not going to change".
    3. Projects then become "dumbed down". Instead of developing great applications that may require a bit of skills enhancement, we are developing mediocre applications that can easily be supported by the cheap labor.

    I guess this isn't a new story to those in the consulting groups...it's probably quite familiar by now. But to deal with the issue up close is pretty depressing. I take the optimistic view that people naturally WANT to produce great work, and that they naturally expect great work and effort from others. But to work on a project where people have such low expectations of their co-workers...that they can't or won't increase their skills...EVER. In a way, it's the worst form of drudgery.

  • "Well, there was..." by "mogrits". Full excerpt: ...a time in IBM when we did hire the best and brightest and people really cared about their skills, learning new ones constantly, keeping the customer surprised at how good we were at what we did, etc., etc. then... it was all destroyed by a series of executives that started with Gerstner in the CEO job and continues until today. The reasons are all documented on this board repeatedly.

    Leave the Blue Pig at your earliest possible opportunity. It will NEVER get better because the core of people who could have helped restore IBM to it's glory are all gone... I'm still surprised that major customers are even doing business with IBM. Of course, since I retired from IBM, I'm still in IT and do business with a variety of vendors. I'm not real impressed with any of them anymore. Must be getting old...

  • "Besides Respect for the Individual" by "Frank Cary". Full excerpt: there was another IBM Core Value entitled "Excellence in all that we do." I think that was a call to action like the Marine Corps' "Be all that you can be." For me it was a time to research and come up with the best, not just the adequate solution. Nowadays, as ABC has pointed out, the customer is most surprised by the ferocity of our lawyers as they fight over the contracts the poor souls signed.
  • "Join the Alliance@IBM at the IBM Stockholder meeting!" by Lee Conrad. Full excerpt: Join the Alliance@IBM at the IBM Stockholder meeting! When: Tuesday April 29; Time: 8:30 am Picket line and 12:30 pm Rally. Send a message to IBM: NO pay cuts! NO offshoring IBM US jobs! COLA for retirees now! If you plan on attending contact: Allianceibmunion@gmail.com
  • "Treat Your People With Respect" by "eyes-wide-open". Full excerpt: Yet another senior person leaves to a competitor, and IBM says menacing things, sends menacing letters. The person is feeling screwed. Can they not finish the thought sentence of "I will screw this person" with "they will tell their very close client contacts" and certainly avoid ever recommending the blue pig to anyone. Dumbies. Assholes. They are who they are and they deserve the culture they are in. Missing the bigger message: "if you treated your employees with professional respect, they wouldn't be clambering to leave". They get what they deserve
  • "Integrity" by "Frank_Reality". Full excerpt: If that's the crap they spew in e-mails and letters, imagine how disparaging they are face to face. At least he left with his integrity - that's more than you can say about IBM.
If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.