Workers at the IBM center take calls on behalf of a variety of clients. Officials say the new jobs would pay about $22,000 a year.
The case, which concerns the pension plan at Cigna Corp., could be decided as soon as Monday. At issue: If your employer deliberately provides inaccurate information about your benefits, and you rely on it to your detriment, do you have recourse? The outcome not only could reshape the pension expectations of Cigna employees. It also could have a significant impact on 401(k)s, health plans, disability insurance and other employer-sponsored benefits. ...
Look beyond the official plan summary. Employers are required to disclose all critical details of their benefits plan in the so-called summary plan document, or SPD. In Amara v. Cigna, a lower court in New Haven, Conn., concluded that the global health-services company's SPD failed to disclose that employees' pensions would stop growing after it changed the plan in 1998, and gave them "downright misleading" information in handouts and meetings. In a decision affirmed in the Second Circuit in 2009, the court ordered Cigna to give the 27,000 employees the benefit it led them to believe they were entitled to receive, an estimated total of $80 million.
The issue now before the Supreme Court isn't whether Cigna deceived employees -- Cigna isn't appealing that decision. Instead, the company is arguing that to qualify for the benefits, the employees would have to prove they relied on the information the company provided, to their detriment. For example, a person would have to prove that if he knew his pension was frozen, he would have retired or taken another job.
Advocates for retirees say that if the court agrees with Cigna, the ruling would effectively preclude employees from bringing class-action suits and make it almost impossible for employees to win a claim, since they would have to prove they would have acted differently if they had known.
This, they say, would essentially remove any penalty for employers that deliberately mislead employees about their benefits. "Is this court going to say it's OK to lie to participants?" asks Mary Ellen Signorille, senior attorney at AARP, which, along with the U.S. Department of Justice, filed briefs on the employees' behalf, as they also had done in the Xerox case. ...
Where to Go for Help. The Pension Protection Act, which took effect in 2007, requires plans either to provide individualized pension statements every three years, disclosing the total benefits earned, or notify participants every year that benefit statements are available upon written request. (Quarterly statements must be provided for 401(k) and similar accounts, and annual statements for profit-sharing plans.)
The only way to be sure the benefit is accurate is for the employee to check the plan's calculation against the terms of the pension plan and the formal plan document. "Since plan documents are extremely complicated, it's a good idea to ask for help," says Karen Ferguson, director of the Pension Rights Center. The American Academy of Actuaries' Pension Assistance List will provide up to four hours of free help to individuals interested in checking their plans' calculations. ...
An Employee Checklist:
Which is it? Is Cigna required to honor the Written statement they sent the retiree, or are they allowed to duck their responsibility and claim it was just an "honest mistake"?
My mother taught me the answer to this question when I was seven years old. When you make a promise, you have to keep it (especially when it's in writing). If Cigna allows poorly trained HR staff to convey the wrong answer, well, that's tough. They have to honor it. The company should spend more money on training. People (and corporations) have to accept responsibility for their actions and their statements.
Leaving out the fact that your pension is being calculated based in part on a "phantom account", as the article mentions, is a violation of the fiduciary duty of every officer in the HR dept at Cigna (and I didn't make that up...it's the law).
"you need to be aware that if your employer gives you wrong information -- even if it is in writing -- and you act on it, you may be out of luck."
Unless one is very high up in the company or otherwise has positioned themselves behind their manager in order to procure a large salary, the pension is NOT livable. Retiree medical, as everyone knows, is laughable.
The best thing an employee can do is not to trust anyone and to look out for themselves, which it seems is still a difficult thing to do at IBM.
For the surveyed CEOs, the sharpest pay gains came via bonuses, which soared 19.7% as profits recovered, especially in some hard-hit industries. … Net income rose by a median of 17%; shareholders at those companies enjoyed a median return, including dividends, of 18%.
Corporate profits may be at sky-high levels, but they are not translating into shared prosperity for all. Median household income has fallen nearly 5% over the past decade and in 2010 was $50,221. The lack of wage growth has made it difficult for average Americans to keep up with rising prices on everything from gas to food.
"The anecdotal evidence is that if employees are given the choice of two similar jobs they opt for the one with better technology for its employees – for example an iPad," Mr Walshe said. Apple, he added, had also succeeded in emulating luxury goods brands, in that making its products more expensive had increased their desirability. ...
To be sure, most employees can rely on what their employers tell them about their benefits. But regardless of how the Cigna case plays out, you need to be aware that if your employer gives you wrong information -- even if it is in writing -- and you act on it, you may be out of luck. It is especially critical to keep this in mind when making life-changing and often irrevocable decisions -- such as whether to switch jobs, retire, take a payout or modify a life-insurance policy. Usually, the only thing that determines the benefit in the event of a dispute is the formal plan document.
Full disclosure, I am receiving a DB pension from IBM, but I know it might get cancelled at any time and will lose value as inflation continues since my DB check will never change. I can only hope IBM doesn't cancel my DB check and inflation stays low or deflation actually becomes a possibility. I took full advantage of IBM's 401K plan in terms of my contributions which meant I got the max IBM match. It was obvious IBM as well as almost all companies wanted to stop DB plans. I can't say I made the best decisions in my 401K plan, but I knew it was up to me and/or my advisor.
My point is that no company will offer a DB plan unless competition requires it. It's a new world. DB plans are a thing of the past; I feel lucky to have a DB check each month as well as a 401K account that I do my best to manage given my knowledge, risk tolerance, etc.
Health benefits are no different in my opinion. Instead of companies providing health benefits, I'd rather have a larger salary with the responsibility for securing health care up to me as I see fit. Obviously, if I believe I need to buy health care insurance, it would be cheaper if I'm part of a group seeking health care insurance, but those are the trade-offs I must consider. Maybe my local Credit Union can form a group to buy insurance. Again, if you think IBM or any other company OWES you health care, you need to wake up and smell the stench. Companies are in business to make profits for their shareholders; companies will only offer employee benefits that they consider mandatory to retain the type of employees they need to meet their profit objectives.
Get the picture?
You probably won't believe this, but I believe in Capitalism, but only when government gives no financial incentives for companies to do or NOT do this or that particular "plan".
Lets take a look at my experience. As a newly minted Wharton MBA in the 50's, I was offered jobs that paid as much as 160% as IBM's offers. For essentially the same level of skill, energy and foresight. I chose IBM because the interviewing manager posed two inducements. the first one was a job that was interesting in an industry that had a great future. The second was that the company had a reputation for integrity, -for treating its employees fairly, -and for providing non-payroll benefits that made up the deficit.
The gutting of benefits by IBM management, -though it doesn't affect me financially, - does affect my personal reputation. I now, -in retrospect, -find myself having worked for a firm that doesn't meet its commitments. In retrospect, I should have gone on to Wall Street.
You fail to mention that IBM has had NO problem meeting its defined benefit funding requirements, -as prior managements were frugal and fully funded those retirement trust funds.
If you look at the letter sent recently from IBM dealing with its handling of those funds, you'll notice that IBM now keeps two sets of books as to "fully funding" those plans. Recently, rules were made allowing an employer to treat 85% funding as "meets expectations". IBM has taken advantage of that loophole to declare itself overfunded, - and continues to remove moneys set aside for us retirees in the past, - in order to boost its income, -its stock price, -and its bonuses.
Bill, can you provide us with a reasonable answer as to the appropriateness and ethicality of IBM's treatment of those funds?
Thanks in advance, Mike.
And that is good.
When I was an auditor for Business Controls, I would walk in a room and announce that I was here to help. My job was to find something wrong, anything wrong.
Do NOT engage in a conversation, in my opinion. Kathi
They will encourage you to take your medications as recommended by your doctor, go for follow up visits as scheduled, stick to your diet, get necessary exercise, etc, and will check with you regularly to keep you on track.
They can also help answer questions you may have about your disease and/or treatment - things you might normally have discussed with your doctor in the past, but maybe don't get a chance to these days with the limited amount of time doctors get to spend with each patient.
The overall idea is to ensure that you are doing all you can to treat your disease, thereby lowering costs to your insurance provider and/or your employer. That's the theory, anyway.
They typically promise that they will not share your information with your employer or your insurance provider. However, the fact that they are paid by at least one of them might give you pause to wonder if they can be trusted. I know a couple of people who have used disease management services (but not from Aetna) without any problems. They did what they said they would and did not interfere with the doctor-patient relationship, or with what the insurance provider covers.
Usually, the RN who contacts you does not have any information about your medical history. You need to provide that to them or give them explicit permission to obtain it from your records.
If you have a good relationship with your doctor and you follow his recommendations on your own, then this service probably has little benefit to you. If you don't take your meds or follow your doctor's instructions, then maybe they can help you do better.
Here is some more information about such programs: http://en.wikipedia.org/wiki/Disease_management_%28health%29
Cons: I realize that I am biased, but being laid off along with10,000 others a month after IBM announced earnings of $10,000,000,000 and describing its employees as its greatest asset in a letter to shareholders certainly gives one pause considering that IBM brags about being a "trust based organization." Wake up call. It ain't a trust based organization. It's a greedy, short-sighted public company like any other. The fact that the company is so virtual - nearly 1/3 of employees are homebased and connected through phones and software - compounds the problem of extending any kind of culture to more recent hires. It's not the company it once was.
Advice to Senior Management: IBM needs to practice what it preaches when it comes to commitment to employees. Laying off thousands of people just to create a little bump in quarterly earnings is the kind of short sighted move that will ultimately destroy the company. IBM's people are its greatest asset, but pious homilies aside, it will take actual action by senior management to make good on this idea.
Cons: Too many people asking for status on same issue. Too many process (if a word is missed in a change record that is buried in an 80 page document for a unique change it will be rejected.) No opportunity to transfer internally for a better job.
Advice to Senior Management: All employees to transfer internally so their skills stay at IBM. Any employee under 30 years old will move to a new company and take skills learned at IBM elsewhere
Cons: Very slow promotions. Company pays more for new 5 year exp folks than an employee that has 10 years exp in IBM doing a better job. Good people are leaving left and right.
Advice to Senior Management: They make way too much money, they need to change and they need to concentrate on employee satisfaction, as of now they are treating employees as commodities.
Cons: Salary levels below industry. For the "new hires" of less than 2 or 3 years who think that "old-timers are complaining and whining", note that you have been initially hired at the industry rate to get you in, do not expect any pay rises, after 5 years your pay will be below industry.
Pay is based on revenue and profit targets handed down from on high from HQ in the USA, and is designed to ensure that you cannot achieve your promised pay- one year we (technical team) were not even given the targets and the money you would get if IBM reached the (unknown) target, as these figures were "confidential", so there was no way to see if you were being paid properly.
Targets are set to be unachievable, and are aggregated to such a level that "if China sneezes, your bank balance catches a cold".
IBM forces you to take on a personal credit card to avoid carrying short term expenses on its books (is this even legal?)
There is definitely an aggressive culture in the sales area, with micro-management of sales people (if you go into sales, expect that as you approach achieving your quota, that it will be raised to ensure you don't make it). Workload is high, and IBM has a lot of processes which are inefficient and time-sapping.
Advice to Senior Management: You are burning up any good will your long term employees have. If you want IBM to end up as a company filled with "not my problem" employees, you are on the right track to do it. Loyalty is a two way street, you've screwed over your technical workforce by stealth pay cuts, while the top management got massive bonuses, share issues, and pay rises. A lot of things work in IBM because there are experienced people to band-aid over the problems, if you don't want these people around, just keep on treating them poorly.
Cons: Treat employees with Masters and Ph.D. degrees like they are so stupid they cannot figure out that their bonus (2+) was 2% because we did not meet goals, but the Bloomberg headline was "IBM CEO's Incentive Pay Almost Doubles on Profit Gains", and "IBM CEO Compensation Jumps 30% in 2011"
No work like balance. Expense reimbursement rates are archaic. IBM keeps demanding more...for less. Employees are anxious with constant fear of being laid off, which creates a "blame game".
It is sad to see good, hard working, smart, loyal people loose their jobs just so that IBM can offshore more work to India, Argentina, Costa Rica, Brazil.
If you are a consultant and want to meet your targets, you cannot take all your vacation.
IBM isn't showing up on the "Best Companies to work for" anymore.
IBM used to be a fabulous company for employees who enjoyed working hard and took pride in their work.
Advice to Senior Management: They just don't care, so why give advice.
The conclusions I draw from these numbers are:
The former GM executives were among thousands of white collar retirees whose pensions were hit hard in the aftermath of bankruptcies by GM, Chrysler and a host of auto parts suppliers during the recession. Some pension plans were turned over to the Pension Benefit Guaranty Board, the government's pension insurer, because the companies couldn't pay them. ...
Overall, GM saved $4.6 billion by trimming pension and retiree health care benefits as it reorganized in bankruptcy, it said in a filing last year. That includes $2.7 billion saved by eliminating health care benefits for salaried retirees who are 65 or older and eligible for Medicare, and capping the amount GM will spend on retiree health care for salaried retirees younger than 65.
The legislation establishes a state health insurance exchange — mandated by the new healthcare reform law called the Affordable Care Act (ACA) — through which individuals and small businesses can purchase coverage. The bill envisions this exchange becoming a publicly financed health plan called Green Mountain Care that is available to all Vermont residents. Proponents of Green Mountain Care have touted it as a single-payer system, but the bill allows individuals covered under the state plan to buy supplemental policies from private insurers. In addition, individuals can keep the insurance coverage they already have.
For these and other reasons, a group called Physicians for a National Health Program contends that the Vermont bill falls short of a true single-payer model. Although Governor Shumlin disagrees with that assessment, lawmakers removed the expression "single-payer system" from the bill and replaced it with "universal and unified health system."
Rep. Paul Ryan's budget proposal – which already has passed the House – would privatize Medicare, giving future retirees a 'voucher' to buy health insurance. But independent analysts say that amount will fall far short of the actual cost of insurance and health care, leaving seniors to pay thousands out of pocket each year.
Meanwhile, the private insurance companies would spend millions to market their products to seniors, and will take billions more off the top in profits. Medicare currently is not beholden to CEOs and shareholders – only to the public and the seniors it serves. It should stay that way.
Tell your members in Congress to oppose the Ryan plan to privatize Medicare. A budget isn't just about reducing deficits, it's about our priorities and how we treat seniors and future generations.
While the largest number of Medicaid recipients are low-income children and adults, who tend to be far less politically potent voices in battles over entitlement programs than older voters, the changes to Medicaid proposed by Representative Paul D. Ryan of Wisconsin, the House budget chairman, could actually have a more direct impact on older Americans than the Medicare part of his plan.
The House plan would turn Medicaid, which provides health coverage for the poor through a combination of federal and state money, into a block grant program for states. The federal government would give lump sums to states, which in turn would be given more flexibility and independence over use of the money, though the plan does not spell out what the federal requirements would be.
Beginning in 2013, these grants would increase annually at the rate of inflation, with adjustments for population growth, a rate far below that of inflation for health care costs. As a result, states, which have said that they cannot afford to keep up with the program's costs, are likely to scale back coverage. Such a reduction, critics fear, could have a disproportionate effect on Medicaid spending for nursing home care for the elderly or disabled. ...
"This is a huge deal for the nation's seniors, and it's been largely unrecognized," said Jocelyn Guyer, the co-executive director of the Center for Children and Families at the Georgetown University Health Policy Institute. "Obviously Medicaid is a program designed for low- and modest-income people. But when it comes to nursing homes, a lot of seniors start off middle class and pay for their care with private funds but end up using the Medicaid program." ...
According to the Kaiser Family Foundation, which analyzes health care issues, 7 of 10 nursing home residents are on Medicaid, in large part because even middle-class patients often run through their savings while in a nursing home and turn to the entitlement program. ...
It is likely that Democrats will strongly oppose block grants, arguing that such a plan would shift too many Medicaid costs to states that are already slashing their budgets. At a news conference last week, Senator John D. Rockefeller IV of West Virginia sharply criticized several of the ideas for reshaping Medicaid, calling broad-based cuts "almost beyond my moral understanding."
Many states are already struggling to hold together their Medicaid programs while trying to balance budgets and deal with millions of new enrollees who signed up for the insurance program during the last recession. Ryan has touted his budget plan as a way to preserve Medicaid by offering states more flexibility to wring savings from their programs. "States will no longer be shackled by federally determined program requirements and enrollment criteria," he said of the block grants.
But many experts -- including the nonpartisan Congressional Budget Office -- have concluded that House budget proposal would more likely simply result in major cutbacks. "The repeal of the ACA combined with the adoption of the Medicaid block grant would add millions more to the number of uninsured Americans and compromise Medicaid's role as the health safety net in the next recession," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured.
"In 2002, American families had healthcare costs of $9,235, and those costs have now doubled in fewer than nine years," said Lorraine Mayne, Milliman principal and consulting actuary. "As costs continue to grow—and even as the cost trend decelerates—the total cost of care for American families constitutes a larger and larger portion of the household budget." ...
"This year, six of the fourteen cities we studied exceeded $20,000 in total costs for a typical family of four," said Milliman principal and consulting actuary Chris Girod. "But we still have several cities, Phoenix, Atlanta, and Seattle, with less than $19,000 in total costs for the typical family. These cost differences result from variation in local practice patterns and from differing costs for healthcare goods and services."
In delivering the much anticipated speech on health care, Mr. Romney was tackling head on the central challenge to his as-yet undeclared second run for the presidency: how to trumpet his legislative accomplishments as a state executive while casting himself as a lead critic of Mr. Obama's health policy, a favored target of Republican leaders and voters.
If Thursday's speech was an indicator, the logic of that dual stance may still elude the party faithful.
The effect on enrollment in state Medicaid programs could vary widely. By 2021, between 31 million and 44 million fewer people nationally would have Medicaid coverage under the House Budget Plan relative to expected enrollment under current law, the analysis finds, examining three possible scenarios using different assumptions about how states might respond to lower federal funding. Most of those people, given their low incomes and few options for other coverage, would end up uninsured.
The House Budget Plan also could affect health centers, hospitals and safety-net facilities that serve low-income and uninsured people and rely heavily on Medicaid revenues. By 2021, hospitals could see reductions in Medicaid funding of between 31 percent and 38 percent annually, or as much as $84.3 billion, under the plan compared with projected funding under current law. The reductions would come at a time when millions more people would lack coverage, increasing the potential demand for uncompensated hospital care. The report includes an in-depth discussion of methodology and state-by-state data tables.
Just like today, the debate boiled down to providing secure, affordable health care or acceding to the interests of lobbyists and corporate money. Back then the most powerful doctors' organization in the country was against any form of government guarantee of medical care for seniors, and they did almost anything to stop it. The AMA even went so far as to ignore the dangers of smoking cigarettes – they opposed the 1964 Surgeon General's warning label on cigarette packs – in exchange for votes against Medicare from members of Congress who hailed from tobacco states.
Despite these efforts, Medicare was signed into law, and it established a basic social commitment in our country: when you get older, you'll always have affordable quality health care. Today, more than 45 million seniors are enjoying the benefits of Medicare.
However, every few years since 1964, the Republicans have tried to repeal Medicare and break that commitment. The difference about today's fight is that the Republicans may very well succeed – unless Medicare's beneficiaries and supporters understand what's at stake and speak out forcefully against the threat. ...
It's important to note that seniors already spend close to a third of their income on health care, and that's with the protection of Medicare. Under the Republican budget proposal, all risk and costs associated with Medicare, which is shared by all of us today, would be shifted to the pocketbooks of seniors.
It's also important to understand that Medicare is not a profit-driven program unlike private insurance companies who do everything they can to maximize profits at the expense of patients and taxpayers. While Medicare has consistently held administrative costs to 2%, private insurance companies' administrative costs and profits have often been higher than 30%. ...
It is common for a party who wins an election in big numbers to think that the public actually endorses their policies – the idea being, "The voters didn't just put us in power, they love our ideas and want us to pursue them at all costs!" History, however, has shown that one doesn't always equal the other. Americans were upset about many things in the 2010 elections and voted accordingly; however, they certainly didn't elect Republicans because they wanted to see Medicare dismantled.
House Republicans are having a rocky time back home, with much of the wrath coming from seniors. Their anger is fueled by a House-passed privatization of Medicare that would drive up seniors' health care costs as they fend for themselves in the wilds of the private insurance market. This plan, authored by Rep. Paul Ryan (R-WI), opens the door to cuts in Social Security benefits and a higher retirement age; the latter would be devastating for workers in physically-demanding blue collar and service sector jobs. Also, Medicaid – which helps seniors afford nursing home and long-term care – would be run by state governors such as Scott Walker, John Kasich, or Chris Christie. Seniors in those states better pray for good health.
As seniors learn more details of this plan, plus hear the heated rhetoric around the debt ceiling, they are beginning to feel that the very future of retirement is on the line. What about their children and grandchildren – will they ever be able to retire?
For this awakening of older voters to grow, seniors will need more reliable information than is currently provided by a news media that is easily distracted by sideshows of birth certificates and royal weddings. Americans must know that Social Security does not cause our deficit (it is supported by worker and employer taxes and has a $2.6 trillion surplus). Additionally, we cannot allow people to fall for Ryan's shrewd but cynical ploy exempting those currently over age 55 from Medicare privatization. It's not only bad policy, but also the tired politics of divide and conquer.
The UnitedHealth Group, one of the largest commercial insurers, told analysts that so far this year, insured hospital stays actually decreased in some instances. In reporting its earnings last week, Cigna, another insurer, talked about the "low level" of medical use.
Yet the companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends. Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care. ...
"I am noticing my patients with insurance are more interested in costs," said Dr. Jim King, a family practice physician in rural Tennessee. "Gas prices are going up, food prices are going up. They are deciding to put some of their health care off." A patient might decide not to drive the 50 miles necessary to see a specialist because of the cost of gas, he said. ...
For someone like Shannon Hardin of California, whose hours at a grocery store have been erratic, there is simply no spare cash to see the doctor when she isn't feeling well or to get the $350 dental crowns she has been putting off since last year. Even with insurance, she said, "I can't afford to use it." Delaying care could keep utilization rates for insurers low through the rest of the year, according to Charles Boorady, an analyst for Credit Suisse. "The big question is whether it is going to stay weak or bounce back," he said. "Nobody knows." ...
High deductibles also can be daunting. David Welch, a nurse in California whose policy has a $4,000 deductible, said he was surprised to realize he had delayed going to the dermatologist, even though he had a history of skin cancer. Mr. Welch, who has been a supporter of the need to overhaul insurance industry practices for the California Nurses Association union, said he hoped his medical training would help him determine when to go to the doctor. "I underestimated how much that cost would affect my behavior," he said. ...
And while the slowing down of demand is good for insurers, at least in the short term, the concern is that patients may be tempted to skip important tests like colonoscopies or mammograms. The new health care law will eventually prevent most policies from charging patients for certain kinds of preventive care, but some plans still require someone to pay $500 toward a colonoscopy.
"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.
But now Mr. Boehner is coming in for a dose of the same kind of harsh criticism previously leveled at some Democrats — including President Obama — who have been honored by Catholic universities: the accusation that his policies violate basic teachings of the Catholic Church. More than 75 professors at Catholic University and other prominent Catholic colleges have written a pointed letter to Mr. Boehner saying that the Republican-supported budget he shepherded through the House will hurt the poor, the elderly and the vulnerable, and that he therefore has failed to uphold basic Catholic moral teachings. ...
The professors point out that the United States Conference of Catholic Bishops also recently issued a letter expressing concerns about budget cuts in programs that aid the poor. The letter to Mr. Boehner is signed by professors at Xavier University, from which Mr. Boehner graduated, and the University of Dayton, both in Mr. Boehner's home state of Ohio, as well as at universities like Fordham, Marquette, Notre Dame and Santa Clara.
Dear Mr. Speaker,
Mr. Speaker, your voting record is at variance from one of the Church's most ancient moral teachings. From the apostles to the present, the Magisterium of the Church has insisted that those in power are morally obliged to preference the needs of the poor. Your record in support of legislation to address the desperate needs of the poor is among the worst in Congress. This fundamental concern should have great urgency for Catholic policy makers. Yet, even now, you work in opposition to it.
The 2012 budget you shepherded to passage in the House of Representatives guts long-established protections for the most vulnerable members of society. It is particularly cruel to pregnant women and children, gutting Maternal and Child Health grants and slashing $500 million from the highly successful Women Infants and Children nutrition program. When they graduate from WIC at age 5, these children will face a 20% cut in food stamps. The House budget radically cuts Medicaid and effectively ends Medicare. It invokes the deficit to justify visiting such hardship upon the vulnerable, while it carves out $3 trillion in new tax cuts for corporations and the wealthy. In a letter speaking on behalf of the United States Conference of Catholic Bishops, Bishop Stephen Blaire and Bishop Howard Hubbard detailed the anti-life implications of this budget in regard to its impact on poor and vulnerable American citizens. They explained the Church's teachings in this regard clearly, insisting that:
A just framework for future budgets cannot rely on disproportionate cuts in essential services to poor persons. It requires shared sacrifice by all, including raising adequate revenues, eliminating unnecessary military and other spending, and addressing the long-term costs of health insurance and retirement programs fairly.
Specifically, addressing your budget, the letter expressed grave concern about changes to Medicaid and Medicare that could leave the elderly and poor without adequate health care. The bishops warned further: We also fear the human and social costs of substantial cuts to programs that serve families working to escape poverty, especially food and nutrition, child development and education, and affordable housing.
Representing the United States Conference of Catholic Bishops, Bishops Hubbard and Blaire have now endorsed with other American Christian leaders a call to legislators for a "Circle of Protection" around programs for the poor that you, Mr. Speaker, have imperiled. The statement of these Christian leaders recognizes the need for fiscal responsibility, "but not at the expense of hungry and poor people." Indeed, it continues, "These choices are economic, political—and moral. As Christians, we believe the moral measure of the debate is how the most poor and vulnerable people fare. We look at every budget proposal from the bottom up—how it treats those Jesus called 'the least of these' (Matthew 25:45)."
"As Christian leaders, we are committed to fiscal responsibility and shared sacrifice," said the statement. "We are also committed to resist budget cuts that undermine the lives, dignity, and rights of poor and vulnerable people. Therefore, we join with others to form a Circle of Protection around programs that meet the essential needs of hungry and poor people at home and abroad." ...
In the statement, the religious leaders recognize the need to reduce future deficits, "but not at the expense of hungry and poor people." They said, "These choices are economic, political—and moral. As Christians, we believe the moral measure of the debate is how the most poor and vulnerable people fare. We look at every budget proposal from the bottom up—how it treats those Jesus called 'the least of these' (Matthew 25:45). They do not have powerful lobbies, but they have the most compelling claim on our consciences and common resources. The Christian community has an obligation to help them be heard, to join with others to insist that programs that serve the most vulnerable in our nation and around the world are protected."
The statement urges government leaders to explore other areas of the budget that can be cut to reduce deficits and to create jobs and spur economic growth, noting, "Decent jobs at decent wages are the best path out of poverty, and restoring growth is a powerful way to reduce deficits."
Well, what I've been hearing with growing frequency from members of the policy elite — self-appointed wise men, officials, and pundits in good standing — is the claim that it's mostly the public's fault. The idea is that we got into this mess because voters wanted something for nothing, and weak-minded politicians catered to the electorate's foolishness.
So this seems like a good time to point out that this blame-the-public view isn't just self-serving, it's dead wrong.
The fact is that what we're experiencing right now is a top-down disaster. The policies that got us into this mess weren't responses to public demand. They were, with few exceptions, policies championed by small groups of influential people — in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes. ...
These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000?
The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.
So who was responsible for these budget busters? It wasn't the man in the street.
President George W. Bush cut taxes in the service of his party's ideology, not in response to a groundswell of popular demand — and the bulk of the cuts went to a small, affluent minority.
Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America's political and pundit elite.
Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that's who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit. ...
Does any of this matter? Why should we be concerned about the effort to shift the blame for bad policies onto the general public? One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn't be allowed to pass themselves off as deficit hawks; people who praised Ireland as a role model shouldn't be giving lectures on responsible government.
But the larger answer, I'd argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they'll do even more damage in the years ahead.
Now several prominent Democrats are abandoning the high ground and have decided to raise millions of their own secret dollars. They have promised they will again try to pass a law preventing this secrecy if they win. (They were stymied in an earlier attempt by a Republican Senate filibuster.) Whatever they gain in money, they stand to lose far more by giving up principles that President Obama and party leaders once claimed to cherish. ...
Mr. Burton now says he does not like the campaign finance rules, which the Supreme Court helped create, but is unwilling to cede the advantage to the Republicans. "The laws we have are not the ones we wish we had," he said. "But if you want to change the direction of the car, you have to have your hands on the steering wheel." ...
A political system built on secret, laundered money will inevitably lead toward an increased culture of influence and corruption. Democrats would attract more support as a principled party that refused to follow the Republicans down that dark alley.
Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder's own backyard.
Captives provide insurance to their parent companies, and the term originally referred to subsidiaries set up by any large company to insure the company's own risks. Oil companies, for example, used them for years to gird for environmental claims related to infrequent but potentially high-cost events. They did so in overseas locations that offered light regulation amid little concern since the parent company was the only one at risk.
Now some states make it just as easy. And they have broadened the definition of captives so that even insurance companies can create them. This has given rise to concern that a shadow insurance industry is emerging, with less regulation and more potential debt than policyholders know, raising the possibility that some companies will find themselves without enough money to pay future claims. Critics say this is much like the shadow banking system that contributed to the financial crisis. ...
The downside, though, is that the states are offering a refuge from other states' insurance rules, especially the all-important ones requiring companies to have sufficient reserves. California, for one, has already chosen not to try to lure such businesses. "We are concerned about systems that usher in less robust financial security and oversight," said Dave Jones, the California insurance commissioner. While saying that he wanted to remain open to innovation, Mr. Jones added, "We need to ensure that innovative transactions are not a strategy to drain value away from policyholders only to provide short-term enrichment to shareholders and investment bankers." ...
Another issue is public oversight. State regulators normally require insurance companies to make available reams of detailed information. A policyholder can find every asset in an insurer's investment portfolio, for instance, or the company the carrier turns to for reinsurance. But not if the insurer relies on a captive. The new state laws make the audited financial statements of the captives confidential.
In the last mid-term elections we saw the evolution of a new form of campaign funding that avoided the disclosure requirements of the Federal Election campaign Law (FECA). The new approach was masterminded by Karl Rove and former Republican Party leaders through American Crossroads GPS. They created a non-profit organization under 501(c)(4) of the Internal Revenue Code -- organizations that are not supposed to be primarily involved in elections -- and used it to raise tens of millions in secret donations. In total, nearly $150 million was spent by these (c)(4) groups leaving voters in the dark as to the personal interests of the donors. We can expect that to more than double in 2012 if existing laws are not enforced. Indeed Rove has announced his group alone intends to raise $120 million for 2012. ...
While the Citizen's United decision allowed unlimited donations by corporations and individuals, it did not allow anonymous donations. The federal election law requires that donors be identified. In order to do an end-around this requirement some political operatives have set up non-profit to hide donors identities. This not only violates FECA but IRS regulations as well. The Department of Justice has the authority to enforce criminal violations of FECA even without action by the Federal Election Commission.
Then, in a speech on Monday, the speaker of the House said that Republicans would insist on trillions of dollars in spending cuts in exchange for votes to raise the debt limit. He did not mention a time frame, but even a fraction of "trillions" in the near term could do huge damage to the recovery. He also did not offer specifics on how he planned to make those cuts. After the beating Republicans took for their plan to slash Medicare, he clearly decided generalities were politically safer.
There is no way to solve the country's fiscal ills without an accurate diagnosis and rigorous prescriptions for a cure. Mr. Boehner's speech was devoid of both.
Among the "obstacles" to economic success he cited, he never mentioned the recession or the financial crisis, both Bush-era creations. Rather, he blamed Obama-era stimulus spending for harming the economy and job growth. Never mind that the Congressional Budget Office found that the stimulus staved off an even deeper disaster.
Mr. Boehner charged that President Obama's policies have "crowded out" the private sector and "increased uncertainty" for "job creators." That makes no economic sense. If the government were competing with business, interest rates would be on the rise, not at rock bottom. If employers were uncertain about making new hires, they would get work done by increasing the hours of current employees. The average workweek is stuck around 34 hours, indicating a lack of work, not uncertainty.
"Saving money requires a lot of difficult choices. Which programs do we cut in tough times? Which priorities are more important than others? As we've seen here in the Senate and across the country over the last few months, a lot of people have a lot of different answers to those questions.
"Then there are the choices that aren't so tough at all. There's clear waste in the federal budget and the tax code. And then there's Big Oil. We're giving billions and billions of dollars every year - $4 billion to be exact - every cent of it taxpayer money - to oil companies that already are more than successful.
"These oil companies made $36 billion in profits during the first quarter of this year alone. Exxon made 70 percent more this year than last year.
"The industry's $36 billion in quarterly profits means it's making $12 billion a month. That's $4 billion a week. And yet the U.S. government is giving these companies $4 billion a year in corporate welfare?
"Why are taxpayers on the hook for oil companies that are doing just fine on their own?
"If we're serious about reducing the deficit, this is an easy place to start. It's a no-brainer. Let's use the savings from these taxpayer giveaways to drive down the deficit, not drive up oil company profits.
"Let's make one thing clear: wasteful subsidies have nothing to do with gas prices. These oil handouts have existed for decades. Prices have continued to rise. Oil executives' paychecks have gone up too. The $4 billion a gallon Americans are paying at the pump are not related to these subsidies - but those profits are proof enough that they don't need them.
Now it is true that banks made thousands of criminal referrals, but almost all involved low-level figures. The volume overwhelmed the Federal Bureau of Investigation, which failed to devote adequate resources. As late as 2007, the agency assigned only 120 investigators spread among 56 field offices to probe thousands of cases. More than eight times that number probed the S&L frauds, a far smaller epidemic.
Unlike the S&L debacle, there was no national task force and no comprehensive prioritization. This made it difficult to investigate the huge, fraudulent subprime lenders. And since there were no criminal referrals of these firms, the FBI wasn't even attempting to pursue them.
The two great lessons to draw from this epidemic of fraud is that if you don't look for it, you don't find it and that wherever you do look, you do find fraud. The FBI was concentrating on retail banking, or individual borrowers and smaller lenders. But the big problems were being created in the wholesale end of the business, where loans were pooled, packaged, sold and securitized. Because the FBI only looked at relatively small cases, it found only relatively small frauds. ...
Deserted by Regulators. The FBI -- deserted by the banking regulators and undercut by the Justice Department -- was so desperate that it formed a partnership with the Mortgage Bankers Association in 2007. The trade association had created an absurd definition of mortgage fraud under which accounting frauds by a lender were impossible and bankers were the victims. By 2009 the financial crisis had become so acute that Treasury Secretary Timothy Geithner discouraged criminal investigations of the large nonprime lenders.
Nobel laureate George Akerlof and Paul Romer wrote a classic article in 1993. The title captured their findings: "Looting: the Economic Underworld of Bankruptcy for Profit." Akerlof and Romer explained how bank CEOs can use accounting fraud to create a "sure thing" in the form of record short- term income, generated by making low-quality loans at a premium yield while making only minimal reserve allowances for losses. While it lasts, this fictional income allows the chief executive officer to loot the bank, which then fails, and walk away wealthy. ...
Wealth Destruction. In criminology, we call these accounting-control frauds and we know that they destroy wealth at a prodigious rate. There's no "if" about the losses -- the only questions are when they will hit, how big they will be, and who will bear them. The record income produced explains why those involved get away with it for years. Private markets don't discipline firms reporting record profits. They compete to fund them. Fraudulent CEOs can control the hiring and firing and can create the perverse incentives that produce a dynamic in which bad ethics drive good ethics out of the marketplace.
Exxon's Rex Tillerson called the proposal "misinformed and discriminatory." ConocoPhillips's James Mulva, in a letter, called the idea "un-American" because it would supposedly cost American jobs, raise consumer prices and discourage investment — a position he reasserted during the hearings.
The other three companies at the witness table, BP America, Shell and Chevron, raised similar complaints. How absurd are their claims? Utterly absurd.
Take investment. In 2005, with oil nearing $60 a barrel, Mr. Mulva and other top executives told a Senate committee that the companies did not need the tax breaks to keep exploring for oil. Congress left them in place. Now that the Senate seems serious about getting rid of them, he and his colleagues have changed their tune — even though their companies obviously need them even less at $100 a barrel.
Or take prices at the pump. In a memorandum to Senate Democratic leaders on Wednesday, the nonpartisan Congressional Research Service said that eliminating the tax benefits would have virtually no effect on the price of gasoline. The impact on industry profits — the Big Five earned a robust $35 billion in the first quarter of this year alone — would be trivial. ...
Obviously, $4-a-gallon gas has something to do with this. But there is also an elemental matter of fairness here. As Mr. Obama put it in his radio address a week ago, when the oil companies are making huge profits and people are suffering and deficits are growing, "these tax giveaways aren't right. They aren't smart. And we need to end them."
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