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Highlights—December 20, 2008

  • Hudson Valley Times Record-Herald: IBM Notebook: Lose your job, train foreign replacement?. Excerpts: Last week's column about the "darker side" of Big Blue certainly touched some nerves, prompting more IBMers to vent their anger over how workers are treated. Not only is IBM continuously downsizing, they say, but it is rubbing salt in employees' wounds by having them train their overseas replacements. "There are still layoffs going on at IBM," wrote Jim Williams, who retired in 2003 and has friends who still work there. "American jobs are being sent to Brazil, China and India, and the folks losing their jobs at IBM have to train the people taking their jobs."

    After almost 28 years at Big Blue, Joe Della Pietro was laid off during a 2002 "resource action," less than four months shy of his full pension eligibility. "I know people still working there," he wrote. "The stress is even greater. The latest IBM training method (trick) is for an IBMer here in the US to teach an overseas IBMer how to do a job. Then, once the foreigner learns the job, the US IBMer is let go." According to Williams, IBM Poughkeepsie recently laid off workers in four departments. "Next time you talk with IBM, ask them about it," Williams said.

    Such questions routinely get canned replies from IBM, such as, "No announcements have been made," or "IBM does not respond to rumors or speculation." In this case, IBM spokesman Doug Shelton said, "Oh my goodness, you've got sources." According to Shelton, job cuts are continually taking place "throughout the company throughout the year." Asked if employees must train their replacements, Shelton replied, "I have no information to confirm that one way or the other."

  • New York Times: On Wall Street, Bonuses, Not Profits, Were Real. By Louise Story. Excerpts: “As a result of the extraordinary growth at Merrill during my tenure as C.E.O., the board saw fit to increase my compensation each year.” — E. Stanley O’Neal, the former chief executive of Merrill Lynch, March 2008.

    For Dow Kim, 2006 was a very good year. While his salary at Merrill Lynch was $350,000, his total compensation was 100 times that — $35 million. The difference between the two amounts was his bonus, a rich reward for the robust earnings made by the traders he oversaw in Merrill’s mortgage business.

    Mr. Kim’s colleagues, not only at his level, but far down the ranks, also pocketed large paychecks. In all, Merrill handed out $5 billion to $6 billion in bonuses that year. A 20-something analyst with a base salary of $130,000 collected a bonus of $250,000. And a 30-something trader with a $180,000 salary got $5 million.

    But Merrill’s record earnings in 2006 — $7.5 billion — turned out to be a mirage. The company has since lost three times that amount, largely because the mortgage investments that supposedly had powered some of those profits plunged in value.

    Unlike the earnings, however, the bonuses have not been reversed.

    As regulators and shareholders sift through the rubble of the financial crisis, questions are being asked about what role lavish bonuses played in the debacle. Scrutiny over pay is intensifying as banks like Merrill prepare to dole out bonuses even after they have had to be propped up with billions of dollars of taxpayers’ money. While bonuses are expected to be half of what they were a year ago, some bankers could still collect millions of dollars.

    Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino — and let them collect their winnings while the roulette wheel was still spinning.

    “Compensation was flawed top to bottom,” said Lucian A. Bebchuk, a professor at Harvard Law School and an expert on compensation. “The whole organization was responding to distorted incentives.” Even Wall Streeters concede they were dazzled by the money. To earn bigger bonuses, many traders ignored or played down the risks they took until their bonuses were paid. Their bosses often turned a blind eye because it was in their interest as well. ...

    The bonanza redefined success for an entire generation. Graduates of top universities sought their fortunes in banking, rather than in careers like medicine, engineering or teaching. Wall Street worked its rookies hard, but it held out the promise of rich rewards. In college dorms, tales of 30-year-olds pulling down $5 million a year were legion.

    While top executives received the biggest bonuses, what is striking is how many employees throughout the ranks took home large paychecks. On Wall Street, the first goal was to make “a buck” — a million dollars. More than 100 people in Merrill’s bond unit alone broke the million-dollar mark in 2006. Goldman Sachs paid more than $20 million apiece to more than 50 people that year, according to a person familiar with the matter. Goldman declined to comment.

  • New York Times: The Great Unraveling. By Thomas L. Friedman. Excerpts: The stranger, a Western businessman, slipped into the chair next to me at an Asia Society lunch here in Hong Kong and asked me a question that I can honestly say I’ve never been asked before: “So, just how corrupt is America?”

    His question was occasioned by the arrest of the Wall Street money manager Bernard Madoff on charges of running a Ponzi scheme that bilked investors out of billions of dollars, but it wasn’t only that. It’s the whole bloody mess coming out of Wall Street — the financial center that Hong Kong moneymen had always looked up to. How could it be, they wonder, that such brand names as Bear Stearns, Lehman Brothers and A.I.G. could turn out to have such feet of clay? Where, they wonder, was our Securities and Exchange Commission and the high standards that we had preached to them all these years? ...

    I have no sympathy for Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the “legal” scheme that Wall Street was running, fueled by cheap credit, low standards and high greed. What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home, and then bundling that mortgage with 100 others into bonds — which Moody’s or Standard & Poors rate AAA — and then selling them to banks and pension funds the world over? That is what our financial industry was doing. If that isn’t a pyramid scheme, what is? ...

    The Madoff affair is the cherry on top of a national breakdown in financial propriety, regulations and common sense. Which is why we don’t just need a financial bailout; we need an ethical bailout. We need to re-establish the core balance between our markets, ethics and regulations. I don’t want to kill the animal spirits that necessarily drive capitalism — but I don’t want to be eaten by them either.

  • Wall Street Journal: Motorola Freezes Pension Plan; More To Come. By Jilian Mincer. Excerpt: Motorola Inc. likely won't be the only major company to freeze its pension in 2009. Other struggling companies are expected to cut plans, and many businesses already are suspending 401(k) matches to slash expenses. However, even relatively healthy companies may be forced to make changes if Congress doesn't modify pension funding requirements, according to pension experts.
  • New York Times: In Need of Cash, More Companies Cut 401(k) Match. By Mary Williams Walsh and Tara Siegel Bernard. Excerpts: Companies eager to conserve cash are trimming their contributions to their workers’ 401(k) retirement plans, putting a new strain on America’s tattered safety net at the very moment when many workers are watching their accounts plummet along with the stock market. ...

    FedEx is not the only one. Eastman Kodak, Motorola, General Motors and Resorts International are among the companies that have cut matching contributions to their plans since September, when the credit markets froze and companies began looking urgently for cash. More companies are expected to suspend their matching contributions in 2009, according to Watson Wyatt, a benefits consulting firm. ...

    “We have had a 30-year experiment with requiring workers to be more responsible for saving and investing for their retirement,” said Teresa Ghilarducci, a professor of economics at the New School. “It has been a grand experiment, and it has failed.” ...

    The latest 401(k) cutbacks underscore workers’ vulnerability in an age when companies have been replacing defined-benefit pension plans with the newer 401(k) design. Modern 401(k) plans give workers the power to opt in and out and require them to invest their own money, bearing market risk on their own. That may be appealing when the markets are rising, but it can be terrifying when they fall, as they have recently.

    An employer’s contributions to a traditional pension plan cannot be switched on and off at will. Federal rules set a firm contribution schedule, with deadlines and penalties for companies that fall behind. Employers also get significant tax and accounting benefits from operating a traditional pension plan, so they tend to think long and hard before freezing such a plan to save money when the economy cools. In a 401(k) plan, by contrast, the employer has much greater freedom to stop making matching contributions when times are tough. The contributions are normally measured as a percentage of payroll, and the savings from any cuts are realized immediately. That greatly simplifies planning and making changes.

  • Yahoo! IBM Employee Issues message board: "unique question" by Carla Feagans. Full excerpt: My ex-husband is currently an IBM employee, and worked for IBM during the 8 years we were married. He is now working for IBM Thailand. This may not be the right place to ask this, but I am desperate for help so I am hoping you may be able to direct me to the right place. But, I apologize in advance is this is not the right venue.

    I was getting my child support checks garnished through IBM US while he was working here (first in Indiana, then he moved to Florida). However, as of October 2008, he moved to IBM Thailand and is now living in Thailand, presumably for the purpose of avoiding child support. He was also obligated to carry the kids on insurance, which he is no longer doing.

    I know he believes he has beat the system, but I have to believe that an international company like IBM would NOT condone or support his behavior. I am also confused as to how a company that sells global IT HR solutions wouldn't be able to help with an issue of wage garnishment, especially with the Deadbeat Parent Punishment Act set forth by the federal government. I have called every number I could find but have not been able to get any answers and it appears IBM is locked down tight.

    Does anyone know anything about this? Or do you know someone that could help me? I have six year old triplets who are being who might affected by this, as are their older siblings (two children from a previous marriage). So, in total - he has skipped out on five children. I really can't imagine that IBM wouldn't be able to or willing to help with this.

  • Yahoo! IBM Employee Issues message board: "Re: unique question" by "edpell". Full excerpt: Sorry to tell you but IBM does not care about you nor your children. If you bring legal action through the court system in Thailand and win then IBM will do the absolute minimum that it is required to do by Thai law. Good luck.
  • Yahoo! IBM Employee Issues message board: "Re: unique question" by Mike Saville. Full excerpt: Does anyone have a number, besides Randy McDonald, at IBM Human Resources for this lady to start calling? Probably the IBM general number would be a good start. General inquiries 1-800-IBM-4YOU (1-800-426-4968). His checks still have to be printed from IBM or related to IBM income, used to be call World Trade division but still affiliated to IBM, at least the profits are reported from IBM Thailand. He is still an IBM employee, US Citizen, pays Social Security and US income taxes. It will probably take the help of a lawyer to find the "deadbeat dad". However, I would think IBM Human Resources (payroll) would be a good way to start.
  • Yahoo! IBM Employee Issues message board: "Re: unique question" by "ian16th". Full excerpt: Carla, USA law does not apply in Thailand! Anymore than Thai or Iraqi law applies in the USA. IBM Thailand conforms to Thai law. Your ex is now an employee of IBM Thailand. Unless there is some sort of bi-lateral treaty between the USA and Thailand, I believe that you will need a Thai court order, if there is such a thing, to get anything from your wayward ex. One small piece of information, when employees move from one country to another, it is normal for all of the service to be counted to their IBM Pension, if the receiving country has a pension scheme.
  • Yahoo! IBM Employee Issues message board: "Re: unique question" by "bits_bytes_and_bugs". Full excerpt: You could try calling your elected congressperson to contact the State Department on your behalf to assess whether their is a treaty or agreement or other options to enforce this. Most likely, you'll be out of luck, but you don't know until you try.

    Another option is to go back to court and see if the payment terms can be altered - for example, if he has US assets, the court may allow you to go after them or if he is saving his income in a US bank, you may be able to go after that. Garnishing salary is not the only way to force payment of child support. And since evading child support is a crime, in some states a felony, a warrant could be issued for his arrest which would be executed upon his eventual return to the US. Now, wouldn't that be a nasty surprise!

  • ZD-Net: 'The Mother of all Demos,' 40 years later. Excerpts: On December 9, 1968, before a packed Brooks Hall auditorium in San Francisco, Douglas Engelbart, the director of Stanford Research Institute's Augmentation Research Center, took the stage and changed computing forever. During a 100-minute presentation, Engelbart demonstrated to 1,000 people the work that he and SRI's chief engineer, Bill English, had been doing, work that is still recognizable in the way that everyone uses computers today.

    It's possible, some have said, that there never had been, nor never would be, another presentation that unveiled as many new paradigm-shifting technologies. They included the world's first publicly seen mouse, as well as the introduction of hyperlinks and navigable windows. The presentation, which is visible in its entirety, drew a standing ovation.

  • New York Times: Some G.M. Retirees Are in a Health Care Squeeze. By Nick Bunkley. Excerpts: General Motors is living on borrowed time, spending more than $2 billion in cash a month and lobbying for a government bailout to keep it out of bankruptcy. And for about 100,000 of its white-collar retirees, time is about to run out on G.M.’s gold-plated medical benefits.

    To conserve its dwindling cash reserves, G.M. is eliminating lifetime health care coverage for its legions of retirees at the end of this year, leaving people like Ken Hewitt to fend for themselves in deciding how to cover their doctor’s bills and prescription drug costs. “Everybody felt like they were set for life,” said Mr. Hewitt, 81, who retired from the former Chevrolet Engineering Center in 1982 and lives north of Detroit. “It’s been difficult, but the information they’ve given us has been beneficial. Still, when you get to be our age, it’s tough to make any big changes like that.” ...

    G.M. has estimated that eliminating the white-collar retiree medical benefits, in addition to pay and staffing cuts in its current white-collar work force, will save the company about $1.5 billion annually. Union contracts prevent the company from revoking coverage for former factory workers. Ford and Chrysler already have cut health coverage for salaried retirees.

  • Yahoo! IBM Employee Issues message board: "Re: Blame the workers" by Kathi Cooper. Full excerpt: Here is the truth. GM white collar retirees lost their company health care benefits, replaced by $300 a month to purchase their own through Medicare and choice of supplemental. GM Union retirees did not lose anything. (they aren't blue collar, as you assume, they are union.) Moral of the story: If you are a GM Union retiree, your contract is honored and you do not lose company health care benefits
  • Yahoo! IBM Employee Issues message board: "Re: Blame the workers" by Kathi Cooper. Full excerpt: And if GM goes under, the white collar retirees lose the $300 subsidy and are from that point on responsible for their own Medicare and supplement, with no help from GM. Nothing changes for the union retirees (blue collar). They don't lose any health care benefits. Their retiree health care stays the same.
  • Yahoo! IBM Retiree Information Exchange message board: "Summary of Annual Report for IBM Benefits plan for Retired Employees" by "madinpok". Excerpts: The 2007 annual report says that IBM had 121,000 employees at year end. I suspect that the number will be even lower at the end of 2008 and current rumors say that IBM plans to cut 10% of the US workforce in early 2009. If true, soon, IBM India will have more employees than IBM US. IBM = Indian Business Machines, anyone? ...

    In recent years, IBM has paid out about $650 million per year for retiree medical expenses. Of that, $199 million came from retiree premiums and the rest from IBM's pocket. Over the long term, expect this number to decrease as there are fewer retirees on the old medical plan and more FHA retirees who have to pay for almost all the medical coverage out of their own pocket.

    At the beginning of 2007, the plan had just $47M in it. IBM added $893M during the year and, at year end, the plan had a surplus of $504M and a predicted future obligation of $4,968M. IBM usually seems to like to have something close to a zero balance in the plan at year end. That says they predicted the expenses pretty accurately and collected the right amount in premiums from retirees for the year.

    I'm not sure why IBM added so much (the $893M) to the plan in 2007, when they really only needed to contribute about $300M. Maybe they had the cash on hand and figured they would need to spend it in 2008 and 2009 anyway.

    Note that there is no medical benefit trust fund. This "plan" is just a bookkeeping account that the money flows through. Gerstner liquidated the medical trust fund years ago and all retiree medical expenses that are not paid by the retiree premiums are paid from IBM's operating income.

    IBM can cancel the retiree medical benefits anytime it wants to. Any money left in the account goes right back to the IBM bottom line with no penalties.

  • Yahoo! IBM Retiree Information Exchange message board: "Re: Summary of Annual Report for IBM Benefits plan for Retired Employees" by Bob Sutton. Full excerpt: Thx Mad...the 124,000 I quoted was for US retired not active employees so we are getting like GM in that respect but I agree on your comments on trends there. IBM's global supply chain over time will have only the minimum sales and services personal in high wage countries if they get away with it instead of an equitable number due to revenue contribution.

    I still have a few "About IBM brochures" with the old medical trust fund so I guess it exists in history now as you stated.....like many other things about the legacy IBM.

  • Yahoo! IBM Retiree Information Exchange message board: "Re: Summary of Annual Report for IBM Benefits plan for Retired Employees" by "madinpok". Full excerpt: You can see where the trust was dissolved here, on page 73 (page 21 of the pdf) of the 2001 Annual Report Financial section. ftp://ftp.software.ibm.com/annualreport/2001/ibm2001_financials.pdf "Dissolution of employee benefits trust (20,000,000 shares)" That added $2.2 billion to IBM's bottom line for 2001 and helped increase executive bonuses.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
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  • Families USA: Premiums vs. Paychecks. A Growing Burden for Workers. Excerpts: Throughout the first eight years of the new millennium, health care costs have skyrocketed, while working families’ wages have stood still. Other factors have also threatened families’ economic well-being, including rising gasoline prices and the downturn in the housing market, but the confluence of stagnant wages and rising health care costs has become a significant strain on family budgets. Numerous national studies have documented this damage.

    As important as these studies are, they do not reflect the varying burdens experienced by families in different states. Just as labor markets, health systems, and economic circumstances vary from one state to another, the impact caused by rising health care costs and stagnant earnings differs considerably among the 50 states.

    In 2006, Families USA undertook the first state-by-state analysis of growing health care premiums versus stagnant earnings in the new millennium. Since then, state economies have weakened, while health insurance premiums have continued their upward trend. Health care costs are now an even greater burden on American families. These reports, which are based on data from the U.S. Census Bureau, the Department of Labor, and the Department of Health and Human Services, examine what these trends mean for working families.

  • Helena Independent Record, courtesy of Physicians for a National Health Program: Single-payer insurance puts more money into health care. By Robert W. Putsch. Excerpts: Great work by Mike Dennison writing on health care reform: “Baucus health plan preserves much of the status quo” and “Why is single payer health reform not viable?” And thanks to the IR for publishing these two articles. But is Dennison right? Is there enough money in the system to provide health care for all? There’s been a long-standing dispute over how much a single-payer system can contribute to lowering health care costs.

    In August 2003, Drs. Woolhandler, Campbell and Himmelstein published a study of health-care administrative costs in the U.S. and Canada. They stated that administrative expenditures in the U.S. stood at 31 percent of overall health-care costs. A year later they wrote “only single-payer national health insurance could… allow universal coverage without any increase in total health spending.”

    Montanans spent $4.9 billion on health care in 2003. If these authors are right, then Montanans paid over $1,600 in administrative costs for every man, woman and child in the state, including the uninsured. That means that only 69 cents of every dollar spent went to health care needs. Remember, administrative costs are passed on to patients, bill by bill, paycheck deduction by paycheck deduction, and even at the pharmacy!

  • Philadelphia Inquirer: Fairness of insurance caps is questioned. By Michael Vitez. Excerpts: In May 2007, Karlin Brockington was really looking forward to vacation from her job as assistant manager of Sam Goody at the Deptford Mall. "I needed a rest," said Brockington, now 44. "This was the first time I felt like I was getting older, that I needed to slow down, that I needed to get out of retail because these kids were driving me crazy." Her problem wasn't kids or retail.

    On May 19, "I was on the floor, doing my work, and I couldn't move," she recalled. "I was like having an out-of-body experience." An employee walked past, and "I couldn't even talk to him. I wanted to tell him, 'Would you please help me?' " She dragged herself home to Lawnside and into bed.

    The next morning, her friend and manager, Cheryl Monaco, "told me to go to the hospital because in the 15 years she's known me, I've never been sick. She said go or she was going to call my mother."

    Brockington went to Cooper University Hospital - for 48 days. Acute myeloid leukemia. Brockington had been paying $19 a week from her paycheck for health insurance. For 16 months, insurance covered chemotherapy, a bone marrow transplant, five months in hospitals. But on Aug. 28, 2008, a letter came from her plan administrator. Brockington had reached her "lifetime maximum coverage of $2 million." In five days, she would be uninsured. "I started freaking out," Brockington recalled. "We started working on my options, what I could do, and there wasn't a whole lot."

  • Health Beat: On Health Care Reform Stimulating the Economy: The Massachusetts Example. By Maggie Mahar. Excerpts: Recently, a somewhat starry-eyed op-ed in the New York Times suggested that a $100 billion annual investment in universal healthcare is just the medicine that our economy needs. The goal, declared Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology: “covering every American.” It is an appealing proposition. But let me suggest that we cannot blindly invest billions in an already bloated healthcare system. We need to think through where we want the reform dollars to go. Which sectors of a $2.3 trillion health care economy should we stimulate to insure that patients receive the safest, most effective care at a price that they can afford?

    For example, should we try to create more jobs for those making diagnostic scanning equipment?

    Probably not. As Health Beat recently reported, we’re already experiencing what some call an “epidemic of diagnostic imaging.” In too many cases, patients don’t benefit. Across the board, 20 to 50 percent of high-tech diagnostic imaging fails to provide information that improves patient diagnosis and treatment. In some cases, false positives lead to unneeded biopsies and surgeries that harm patients. Recent research suggests that an explosion of MRI scans for breast cancer is leading to unnecessary mastectomies. In other words, women lose a breast for no good reason.

    So while GE might like more business making diagnostic imaging equipment, all of the medical research suggests that we already have more MRI units than we need, and that they are being overused. (Keep in mind, the goal of health care is not to create jobs: it is to improve the nation’s health.)

  • New Haven Independent, courtesy of Physicians for a National Health Program: Who's A Health Care "Moderate"? By Paul Bass. Excerpts: By Wofford’s account, “extreme left”ists are pushing government-paid health coverage for all. “Conservatives” consider any government involvement in health care “bad.” Meanwhile “most Americans” — and her insurance company — are the sensible “moderates” working toward a solution to cover at least some of the nation’s 45.7 million uninsured people, with some government help.

    Wofford’s presentation began with a mystery quote. Who, she asked the Chamber members in the crowd, said the following?

    “Millions of our citizens do not now have a full measure of opportunity to achieve and enjoy good health. Millions do not now have protection or security against the economic effects of sickness. The time has arrived for action to help them attain that opportunity and that protection.”

    Wofford revealed the answer at the end of her talk: President Harry S. Truman. ...

    “We’ve had over five decades to see how the commercial insurance market works as the key means of providing health care access,” Klein said. “The bottom line is that in all that time health care has gotten neither more affordable nor more accessible. Numerous policy fixes have been applied to goad the private health insurance system toward universality or to rein in costs. As we can see, these goals are no more within reach than they were 20 or 30 years ago.” ...

    Harry Truman did in fact propose a “government-run” single-payer plan, Klein said. People often confuse such “government-run” proposals with nationalized medical systems, she said. “Truman believed in expanding social security to include a universal health plan. He wanted to amend the Social Security Act to include national health insurance. Government would replace private insurance companies,” Klein said.

    “You have to be careful about 'government run.’ People think that means hospitals are government hospitals, and doctors are government doctors. [Rather] it was about the insurance mechanism. It was about the financing.”

  • Physicians for a National Health Program: Special Message to the Congress Recommending a Comprehensive Health Program. By Harry S. Truman, November 19, 1945. Excerpts: To the Congress of the United States: In my message to the Congress of September 6, 1945, there were enumerated in a proposed Economic Bill of Rights certain rights which ought to be assured to every American citizen. One of them was: “The right to adequate medical care and the opportunity to achieve and enjoy good health.” Another was the “right to adequate protection from the economic fears of ... sickness ...”

    In the past, the benefits of modern medical science have not been enjoyed by our citizens with any degree of equality. Nor are they today. Nor will they be in the future—unless government is bold enough to do something about it. People with low or moderate incomes do not get the same medical attention as those with high incomes. The poor have more sickness, but they get less medical care. People who live in rural areas do not get the same amount or quality of medical attention as those who live in our cities.

    Our new Economic Bill of Rights should mean health security for all, regardless of residence, station, or race—everywhere in the United States. We should resolve now that the health of this Nation is a national concern; that financial barriers in the way of attaining health shall be removed; that the health of all its citizens deserves the help of all the Nation. ...

    Appreciation of modern achievements in medicine and public health has created widespread demand that they be fully applied and universally available. By meeting that demand we shall strengthen the Nation to meet future economic and social problems; and we shall make a most important contribution toward freedom from want in our land.

  • Government Executive: Report: Medicare is a stronger insurance model than FEHBP. By Alyssa Rosenberg. Excerpts: Medicare's relatively low overhead makes it a better model for a publicly run health insurance option for people without employer-provided coverage than the Federal Employees Health Benefits Program, a health care expert said on Wednesday. "The Medicare program, as it's currently constituted, needs reform," said Jacob Hacker, co-director of the University of California-Berkeley School of Law's Center on Health, Economic and Family Security. "But I argue that a new public plan could embody many reforms and in doing so, could set a high standard for private plans."

    Medicare sets a good example for such a plan because it controls costs better than any of its competitors, has produced quality improvements in service through cooperation with organizations such as the Veterans Health Administration and would set strong benchmarks for private health insurance providers, Hacker said in a briefing paper. He released the report in coordination with the Institute for America's Future, the think tank associated with the liberal advocacy group Campaign for America's Future; and Rep. Pete Stark, D-Calif., who chairs the House Ways and Means Health subcommittee.

News and Opinion Concerning the U.S. Financial Crisis
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.

  • Pirate Ethics, by Jim Hightower. Excerpts: The difference between pirate captains of old and modern-day corporate bosses is that pirates had ethics. They fairly shared their loot, for example, with the entire crew. Contrast that with the rip-off of employees by the bosses and bankers involved in the recent tribulations of the Tribune Company. This media conglomerate, which owns some of America’s top newspapers and television stations, was bought a year ago by a Chicago real estate baron named Sam Zell.

    This fellow didn’t have anywhere near enough money to pay the $8.2 billion purchase price, but, hey, that’s no problem for a striver. Zell simply got the company’s CEO to let him use the employee’s pension fund as collateral for bank loans to buy the Tribune. Even though their money was put at risk, the employees had no say in the deal, nor in how the company was run. It was run badly. Less than a year after Zell's takeover, the Tribune has had to declare bankruptcy, and employees are likely to lose jobs, severance payments, and pensions.

    Those who pulled off this heist, however, have been much more fortunate. The former CEO was given more than $40 million when Zell took charge. Citigroup and Merrill Lynch were paid about $36 million each for being “advisors” on the deal. Another Wall Street bank, Morgan Stanley, got $7.5 million just for writing a “fairness opinion,” stating that Zell’s use of the pension fund was Kosher.

    And Zell? He had put up less than four percent of the purchase price to get control of the company, and while he might lose some of that, he cut the deal in a way that makes him a secured creditor. This means that if the Tribune’s assets have to be distributed to creditors as a result of the bankruptcy, Zell will be first in line to get his – standing in front of the employees whose company and pensions he wrecked.

    No pirate would do that to his crew.

  • New York Times: The Reckoning: White House Philosophy Stoked Mortgage Bonfire. By Jo Becker, Sheryl Gay Stolberg and Stephen Labaton. Excerpts: “We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.” — President Bush, Oct. 15, 2002.

    The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, “scared the hell out of everybody.” It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group.

    The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money. Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.

    Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in. “How,” he wondered aloud, “did we get here?” ...

    But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials. From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone. ...

    As early as 2006, top advisers to Mr. Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Mr. Bush and his team misdiagnosed the reasons and scope of the downturn; as recently as February, for example, Mr. Bush was still calling it a “rough patch.” ...

    As for Mr. Bush’s banking regulators, they once brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry. When states tried to use consumer protection laws to crack down on predatory lending, the comptroller of the currency blocked the effort, asserting that states had no authority over national banks. The administration won that fight at the Supreme Court. But Roy Cooper, North Carolina’s attorney general, said, “They took 50 sheriffs off the beat at a time when lending was becoming the Wild West.” ...

    In the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Mr. Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics. The administration did not finalize the new rules until last month. Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread.

New on the Alliance@IBM Site
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  • Job Cuts Status & Comments page
    • Comment 12/16/08: Here is what a SWG 3rd line mgr told me about the upcoming cuts: 15.000 headcounts in total / focus on US / announcement tomorrow (Wednesday 12/17) ...... happy christmas :( -jeff_p-
    • Comment 12/17/08: I was laid off from IBM in 2006 after 26 years. There was no full retirement package and healthcare was COBRA after 12 months. In case you don't know it, COBRA is incredibly expensive and was the only healthcare option open to me. As I read the comments here, everyone who has lost of their jobs or will lose their jobs to outsourcing need to be contacting President-elect Obama and your Congressman. The outsourcing that has happened is now biting us in the back because we have not stood up to the so-called globalization. Unless you stand up and do something, IBM will continue to lay people off with no benefits.

      Look what's happened to your 401(k)s. With no pension now, how does it feel to know that you'll have to live off your 401(k) as your retirement plan? Most IBMers are highly educated, professional people who should not be losing their jobs. Think Palmisano is losing any sleep on your behalf? Last I heard he was still getting his millions in salary and bonuses while the worker-bees are struggling. Where do you think our kids are going to work, after going to college and assuming loans to pay for their education, if every American corporation thinks it's o.k. to treat the American worker?

      Since when has it become acceptable that American workers assume the brunt of IBMs layoffs and downsizing? Where are the executives who make these decisions? Are they being laid off as well? Those who are afraid to say something thinking it won't happen to you, wake up! I didn't think it would happen to me and it did. IBM management says they will help you find a job but most organizations freeze their headcount when a resource action is underway and chances are slim to none that you'll find something. This game has been played for years on IBMers thinking someone is looking out for you and there are opportunities. It's a joke.

      Unless you stand up and say/do something, this will continue. The comfort level you think you have working for IBM has long gone. They told us in management school to fear the Alliance; but that seems to be the only group that is working on behalf of employees. I'm sure the automakers UAW union is getting the same response from their members. Someone needs to work on behalf of IBM employees and ensure that even those who've been resource action'd are getting the best deal. -BeenThere-

    • Comment 12/17/08: I have to agree with -BeenThere-, in the posting below. IBM's been cutting its' US head count for YEARS now. So, pretty much, if you simply WORK there, then your pretty great relative to your peers out there in industry. That said, if you are reading this, whether you're an Alliance member or not.... if you are a “2” or below and have been so for 2 or more PBC periods.... even if you've juuuussst got yourself your first raise after a couple years of “stag-alary” (read: no raises for several years...) ...go to Monster.com, go to Dice.com, or get on linkedin.com, or get with a head hunter.... ...however you choose to do it.... get out of IBM.... before they push your out. You'll be glad you did.

      Once layoffs start and the market gets flooded with tons of pushed out IBMers, sadly, it’ll get a lot harder to stand out to other employers (but things will still work out…). When I chose to leave IBM, I told my manager basically, I’d rather go while the going is good, and on my own terms. He was upset that I would choose to leave the team when everything “looked” great at the time…. I’d bet my words are ringing around in the back of head now… sadly enough. All in all, I wish everyone well this Christmas, and no matter what. If you do get RA’d just remember there will be a brighter tomorrow! -Happily Out of the IBM mess... but still Curious-

    • Comment 12/17/08: I was terminated by IBM in August 2008, apparently for expressing my concerns online, in the Poughkeepsie Journal about IBM reducing pay (eliminating shift differential) to their lowest paid employees or as they put it "becoming more competitive". I was not alone in this freedom of expression / speech. They never provided me with anything in writing as to why I was terminated. Since then, most recently, December 2008, I was hired to work as a contractor at the same site. I worked there for one day and then was notified by that contractor that IBM had blocked my access and I could not work there. Are there laws against this? Can IBM do anything to anybody???? I would appreciate your help with this matter. I believe it is a freedom of speech and human rights issue. I have filed a claim. -Anonymous-

      Alliance Reply: I have some experience with this issue, so let me share it with you. When you are employed by IBM or any contractor using the "At Will Employment" policy; you are at the mercy of their will. If the company wants to fire you for no reason or if they wish to fire you for a reason they won't discuss with you, it is their right. If you publicly disparage, denounce, or otherwise defame the company, its products or services, or its management policies; they can fire you for just cause and they will call it 'misconduct'. As long as you are employed by a company; what you say publicly can be construed as 'disparagement'. Freedom of Speech is NOT an entitlement when you are employed by a company you're speaking out against.

      The contractor is probably an "at will" employer also; and agreed in writing to several of IBM's "at will" policies as well. Frankly, the US Bill Of Rights loses jurisdiction as soon as you step upon private property and begin speaking or acting publicly, against that company. It's unbelievably sad, but it's true. Good luck with your claim. I hope you win. I just wanted to point out that it's not an easy road. Rick White, Organizer & Web Maintenance, CWA Local 1701, Alliance@IBM, www.allianceibm.org.

    • Comment 12/18/08: I was laid off in November and I am convinced that it was because of my age and length of service. IBM does not want people over 50 working for them. Even younger co-workers made comments to me asking me what am I waiting for after 32 years....I am only 54 years old. Managers within IBM are confirming the huge movement of jobs to the global delivery centers in Brazil, Argentina and India. The news is not good for those in the US. Thanks a lot, Sammy! -Anonymous-
    • Comment 12/18/08: Were you recently reclassified in 2008 from exempt to non-exempt and live in the State of California? Were you recently RA'd and also live in California? If your answer is yes, I would like to hear your story. Please contact me at: caemployees@gmail.com -Jonathan Doely-
    • Comment 12/18/08: If you know of job cuts at IBM please contact Christine Young at: Times Herald-Record 845-346-3140 or cyoung@th-record.com -Christine-
    • Comment 12/20/08: Anyone involved with CDI, Comsys, Artech or other contracting companies - prepare for some huge gouging before or in March... more percentage cuts, contract cuts and percentage evals on contracts are coming up. Right now the upper tier mgt is in a bunker mentality is the joke. TT is next on the chopping block list for January after the other cuts are done in GTS and finishing in IGS for the turnover. GDC is going to take more than 30% of work from TT by mid 2nd quarter of 09 and then the options package comes in. Options package is 30-60 days to find new position, which will be great if you can move to GDC or do a 1/4th of the pay. Neither New York or NC will be getting any new buildings or positions in 09 or first two quarters of 10 as IBM wanted for tax breaks that were already told to both locations. Sorry for the bad news, but was the latest. -IBM UC'd-
  • General Visitor's Comment page
    • Comment 12/14/08: I was out fishing and ran into a contractor I used to work with at big blow. We got to talking about the company and we both got canned about 2 years ago. He started laughing and said go look at the alliance site. I was not amazed to see nothing has changed. Big blow is still laying off. What I was amazed about is how when I started working for a good company, how the stress level went to nothing, and I no longer worry about losing my job. I am also compensated if I have to work OT and don't have to carry a pager or work holidays anymore, and can sleep through the night like normal people too. It reminds me of how bad IBM sucks. Without a Union, this company is a horrible place to try and make a living. It's so much better everywhere else I can't even begin to explain it. -Happy_Now-
    • Comment 12/17/08: One thing I would like to see change when we come out of this economic crisis is for CEO salaries and compensation to come down to a reasonable level. Sam Palmisano making $10 million per year on top of millions of dollars of stock options and bonuses is just excessive greed and not right. If Sam were anything of a man or human being, he would see it. Guys like Madoff running a ponzi scheme wiping out peoples saving make me sick. It's greedy people like Madoff and Palmisano that are ruining this country. This is where a Union could help. We need a check and balance system. -Anonymous-
    • Comment 12/20/08: Recent insider transactions for Sam Palmisano:
      Aug 28, 2008:
      250,000 shares Option Exercise at $78.13 per share. Value: $19,532,500
      55,900 shares Sale at $124.97 - $125.1 per share. Value: $6,989,000
      79,597 shares Sale at $124.77 - $124.96 per share. Value: $9,939,000
      114,503 shares Sale at $124.50 - $124.76 per share. Value: $14,271,000
      Aug 21, 2008:
      100,000 shares Option Exercise at $88.96 per share. Value: $8,896,000
      98,876 shares Sale at $121.76 - $122.5 per share. Value: $12,076,000
    • Comment 12/20/08: Jerold: My God! Does anyone know how much Sam has accumulated in 2008 so far? This is obscene!!! -Anonymous-
    • Comment 12/21/08: Has anyone else notice at USA IBM sites that the public postings for jobs IBM wants to fill with H1B visa applicants has all but disappeared? Is IBM complying with USA law still by posting these jobs in the conspicuous areas outside the cafeterias, snack areas, break areas? I also feel IBM is not even close to paying "prevailing wage" for these jobs by hiring through low cost areas and deploying these folks in higher cost metro areas like NE USA. This is illegal if they do. Maybe that is why they are not posting anymore? -IBMsux-
  • Pension Comments page
  • Raise and Salary Comments
    • Comment 12/18/08: Salary = 125,000; Band Level = 9; Job Title = Program manager; Years Service = 27; Hours/Week = 50; Div Name = CHQ; Location = Midwest; Message = 8 more years and countin' -Anonymous-
  • PBC Comments
    • Comment 12/17/08: To -DoNotBrag- , when I first came on to IBM, I was a hard worker, idealistic, and creative in my work. I too saw some problems but thought that I could be part of the solution - suggesting improvements, implementing ones that I could on my own, and working a lot of hours. I thought that by doing this I would help IBM and also be rewarded as a standout employee. I soon learned that that is not true. You can't win at IBM unless you are a brown-noser to your managers (esp. several levels above you). When I saw that working lots of OT got me nothing, not even a raise, I cut my time back to 40 hours.

      Yes, I was doing the work of 2 desks & had deadlines to meet but that didn't matter. I told my manager that it was his job to have enough people to do the work - I was going home after 40 hours & that was it. It worked. My manager farmed out some of the excess work & I got my workload down to where it could be done in 40 hours. When I switched to a different position, I told my manager up front that I will work hard for 40 hours & then go home. He responded with a "sure you will" sarcastic kind of attitude. But again, I was able to do my work in 40 hours without too much issue.

      Now that some of my work has been sent overseas, I'm not seeking out additional work as I'm planning on leaving IBM anyway. I couldn't care less if IBM succeeds or not. The problems here are so ingrained that things aren't going to change. People are either so frightened or apathetic that they aren't going to unionize. Management is so out of touch that they aren't going to affect any real change either. Like I said, I'm just padding my resume now before I move on to a job that I actually enjoy doing and get rewarded for my effort. -Tulsa employee-

    • Comment 12/17/08: Tulsa employee..."right on" and ditto. I am in RTP, NC and have been a serious slacker for several years. They steal from me, I steal from them. Period. -Suno Samp-
    • Comment 12/20/08: -Suno Samp- Bravo! Yes, I agree with you. Why should we work our butt off and get a "3"? Anyone who thinks hard work always gets good PBC's has to have a radical total lobotomy. Palmisano and McDonald and the rest of them crooks are the real slackers. All they do is exercise and collect their stock options with INSIDER information to guide them (it isn't coincidence that Sammy boy took options of over $75M up to this August before the credit and stock market crash. They hardly work but just go 'round like politicos. If Sam doesn't get insider info. then how can I get his crystal ball or oiuja board under my holiday tree!? -anonymous-
  • International Comments
Vault Message Board Posts
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Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. A sample post follows:

  • "Gone 4 years and loving it" by "blue4blue". Full excerpt: First time on the board in a year,...PwC Alum that could not handle the culture change as an IBM "Band 9 or higher". Went to Industry and love it. Good culture,..now making 100% more pay and have a family life. Other comments are correct,..don't buy into the "guilt trip" of leaving. It is a dysfunctional culture and organization. Glad to see ABC reference,...very sage man.
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.