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Highlights—October 8, 2011

Retirement Heist:

Throughout the IBM Pension heist, Ellen E. Schultz, a Pulitzer Prize winning investigative reporter with the Wall Street Journal, exposed IBM's and other companies shenanigans that have cost retirees millions and millions of dollars, while enriching corporate executives.

Ms. Schultz has just published a book that every IBMer should read: Retirement Heist: How Companies Plunder and Profit From the Nest Eggs of American Workers. Many IBMers are aware of the "cash balance heist" of 1999. However, IBM has been stealing money from the pension plan dating back to 1991, well before the Gerstner era.

""Retirement Heist takes a provocative look at the unseen corporate forces that have weakened our nation's employer provided retirement benefits. Ellen E. Schultz documents an emerging corporate culture - spurred on by benefit consultants - that places shareholder value and executive compensation above employee retirement security. Retirement Heist shows how the growing retirement insecurity of today is a direct outgrowth of the hidden manipulation of plan benefits for other corporate purposes. David Certner, Legislative Policy Director for AARP.

Read more...

  • Wall Street Journal: How Employers Raid Pension Plans. By Ellen E. Schultz. Excerpts: When it comes to threats to your retirement, there's one you may have overlooked: your employer. In recent years, companies have been freezing pensions, slashing retiree health benefits and eliminating 401(k) contributions.

    Companies claim they have no choice: They're victims of a "perfect storm" of an aging work force and market turmoil. But if you're one of the 50 million employees and retirees covered by a pension at a U.S. company, you can't necessarily rely on what your employer tells you.

    Here's a translation of some of employers' most common claims:

    "Spiraling costs force us to freeze your pensions." That's partly true -- but not the whole story. A little over a decade ago, pension plans had $250 billion in surplus assets. But employers siphoned billions from the pension plans to pay for restructuring costs, often by providing additional payouts in lieu of severance, and by withdrawing money to pay retiree health benefits -- and in some cases parachutes for executives.

    When the market cratered in 2008, there was no surplus to cushion the blow, and today, pensions collectively are underfunded by 20%. With one big exception: Pensions for top executives continue to spiral, and account for much of the growing pension cost companies complain about. ...

    "We're improving your pension plan." Hundreds of companies began changing their traditional pension plans, which are based on average pay and years worked, into "account-style" plans, resembling 401(k)s. Employers claimed the plans were easier to understand, but usually failed to mention that the new formula reduced pensions of older workers by 20% or more, and in many cases, including at AT&T, froze the pensions of long-tenure workers.

    "Lump sums are better for a modern work force." The new-style pension plans usually gave departing employees a choice of taking their pension in monthly payments in retirement or cashing it out in a single, one-time payout. That's a key reason employers claimed that the new account-style pensions were better than traditional pensions for a more mobile work force. But they weren't doing employees any favors.

    Employers used lump sums as carrots to lure workers in their peak earning years to retire early, and didn't tell them the payouts might be worth 20% to 50% less than the value of the monthly pension. When Mary Fletcher left her management job at IBM and was offered a lump sum, she hired an actuary, who determined that although the lump sum was $71,500, Ms. Fletcher's pension was really worth $100,000.

    "Retire now, and we'll provide health care until you reach 65, at little cost to you." Hundreds of thousands of employees, including managers at Unisys and Lucent, took this bait, believing they'd have affordable health coverage until they qualified for Medicare at age 65. But within a few years, their employers began jacking up premiums or eliminating coverage.

    When frantic retirees pointed to written promises, employers pointed to "reservation of rights" clauses in the technical plan documents, which gave the employer the legal right to renege on the promise.

    "Retiree health costs are spiraling." Retirees' premiums and other costs for health care have been jumping by hundreds of dollars a month, but not necessarily because employers are spending more for coverage. A key reason is that years ago employers capped the amounts they would pay for the benefits, so when the ceilings are reached, all the increases are passed on to the retirees. As the retirees' share of costs escalate, healthier ones drop out and get cheaper coverage elsewhere, leaving a pool of older, sicker retirees -- with higher expenses.

    Retirees' share of costs may also grow when companies, such as Xerox, segregate the retirees into their own risk pool, instead of including them in the broad-based employer plan. And some companies charge salaried retirees more to subsidize union retirees, whose premiums the companies can't unilaterally raise. (Editor's note: IBM also segregates retirees into their own risk pool.)

  • Readers comments concerning the above article follow:
    • Information such as is in this article just adds to the already overwhelming evidence that any employee who feels loyalty to an employer likely is a sucker, and the larger the employer, the bigger a sucker a "loyal" employee probably is. Many an employer will lie, cheat, or steal from its employees if it perceives the need, or to preserve the lavish compensation and perks to which senior executives feel entitled, or even out of expedience; and ordinary employees would be well-served to remember this. The only compensation you should count on is a paycheck that has cleared -- anything else that you have been promised is speculative. It will be nice to have, if you get it, but if you rely on getting it, you're a fool.
    • The fact that there is only one comment about this article while the political articles get hundreds just goes to show how clueless the average employee is about what is being done to them. It is hard to imagine what sort of person would actually think to themselves, "Hey, I know, let's steal money from our employees pension plans to make our bonuses bigger and tell them we're doing them a favor Ha Ha."
    • Disturbing, disgusting -- but great reporting, Ms. Schultz. My hat is off to the WSJ for this piece.
  • National Public Radio (NPR) Books: 'Retirement Heist': How Firms Trimmed Pensions. Excerpts: Companies have claimed for years that old-style pensions were unsustainable. Author Ellen Schultz tells Morning Edition host Steve Inskeep that there's another explanation.
    "The main narrative is that [companies] are struggling to pay both their pensions and these unexpectedly high health care costs for the retirees," Schultz says. "What isn't known is that companies were well-prepared for this phenomenon. The plans were in fact significantly overfunded. They had more than enough to pay every dime for every person currently employed and already retired." ...

    In the early 1990s, Schultz says, companies were looking for new ways to push out workers, especially older, more expensive ones. She says the expensive way would have been to pay severance, "but the cost-effective way was to instead promise them a bit more pension money in lieu of severance." In the end, "you've just laid off somebody who's expensive and it has cost you nothing." ...

    David Certner, a policy director at the AARP, says that "corporations weren't always so transparent and clear about what they were doing." Schultz says there was a massive transfer of wealth over the past two decades, from a multitude of retirees to a small number of executives. But while she calls her book Retirement Heist, she concedes that nothing that happened was illegal.

    "When you have a properly funded plan, it doesn't matter how many retirees you have or how long they live," Schultz says. "It's not the fact that you have a lot of retirees; it's the fact that you have abused the pension plan."

  • Selected reader comments concerning Ms. Schultz's NPR interview follow:
    • many a relative of mine benefitted from well run pensions plans that paid them modest amounts (though enough to live on) until they died. note that some conservatives have suggested that people should be offered a lump sum to opt out of social security going forward.
    • Interesting how when it's about using taxpayer bailout money for lavish CEO or banker/trader compensation & bonuses we're told "it was a contract, you must honor a contract." But when it is about retirement, pay or health benefits that were part of the contracts with the rest of us who actually do the work of this country, we're told "it's okay to break that contract and take away money and benefits that were promised, we're not actually doing anything 'illegal.'" Solution: let's start making these things illegal.
    • So pensions are not the tools of the devil after all, which is what the torch and pitchfork crowd has been chanting. We've squandered the retirements of people for generations to come in our rush to tear each other down. And at one point, we were on the brink of achieving pension security for a huge segment of the population. That would have been the old American way. But hey, look on the bright side: Wall Street skims off trillions more in fees through 401(k)'s, without those pesky large pension funds looking over their shoulders. It is easier to steal a little from millions of individual investors rather than a huge sum from one powerful pension administrator. I guess that is the new American way.
    • The good news is that NPR will soon forget about this very important story and give us more Palin and parry nonsense. And for an extra added bonus... republicans will build a firewall to protect corporations from this reprehensible behavior. And for super extra icing on the cake... all of you sleeping Americans will continue to have Wall Street pillage your 401Ks with their hidden money management fees. Even when they lose your money. But take heart... the corporate and banking executives who are destroying our future will be handsomely rewarded for their evil deeds.
    • That kind of corporate BS is exactly why we need a public option like the SS system. Any candidate who reaches out to touch even that plan of last resort should receive the political equivalent of a Saudi hand amputation, and they will if the electorate isn't as dumbed down by now as the article on "3rd rail" seems to indicate it might be.
    • Legal does not mean ethical. Maybe 10% of the people retiring with today's 401K would match the retirement benefit of the old define benefit program after 25 year of employment. GE and other big companies really did a number and we all pay for there short term gains.
    • Still think there is no class warfare going on in this country? RN
    • Thank you for this story--it's about two decades late, though. Our society, collectively, has been blindly worshipping the 'get rich schemes' of high flyers--and most of the egregious abuses have been in plain view for some time. The massive money at the top is often not associated with merit, but rather, manipulation. As always, there is value in noting how things are managed elsewhere in the world, where the CEO class takes FAR LESS out of company profits. But for now, we'll be satisfied if any of the presidential candidates are merely asked how they'd protect private US pensions to the point that they would be as reliable as the Social Security system has been. Yes, the answer will continue to be that we should all have a private option, even as grand theft (per this story) continues, unabated--unreformed. (While the continued thievery balloons the poverty class, who by definition will create increased public expense)
    • Pay no attention to the man behind the curtain, folks! Remember that we need to roll back regulation, so these fat cats, I mean "job creators", can do more of what they want to do. And we need to cut their taxes, too. Vote Republican!
    • Another great example of the class warfare waged by the rich against the poor and middle class for the last 30 years (or more). To the rich, the middle class are just poor people who haven't been fleeced yet.
    • Is this a surprise? There has been a massive transfer of wealth from working people to executives through many venues. What if our society and our freedom is redefined so the ultimate freedom is the freedom of markets and to make money? When does the freedom of markets and the big players in the markets (corporations) become abusive to either consumers or employees in the name of making money. Is it enough that consumers and employees have the choice to go elsewhere and that freedom alone is a check and balance on abusive behavior or selling bad products? It feels like the conservative movement is doing just this to the detriment of us all. I am reading a very provocative book Michael Sandel’s book “Justice, What is the Right Thing to Do". This is worth reading before the 2012 election.
    • Ellen Schultz is a national hero for researching and publishing this expose on pension fund abuse and transfer of wealth.
    • Hey, lighten up! They have to pay for the multi-million dollar bonuses for the CEO's somehow. What do you want them to do, sell the corporate jet?
    • My grandmother worked her entire working life for American Motors. Remember them? When she retired, she had a great pension. She lived to be 92, long after American Motors closed its doors, but her retirement package took care of her until the day she died. Today's companies have millions to pay their top executives but they cite hardship and expense when it comes to taking care of the people who keep their companies viable. Today's society thinks nothing of baseball, football, or basketball players who get multi-million dollar contracts, of news 'analysts' and anchormen/women who make a million or more in an annual salary, and we all turn a blind eye to the obscene amounts of money that go into negative political campaigns - but no one seems to care that the average American struggles to make ends meet or that their future rests on whether or not the GOP-named 'entitlement' program will be there to supplement what meager pension their greedy company might have arranged for them.
    • All these shenanigans happen because politicians let CEOs raid employee funds. That simple. Corruption. Now where are Tea Party and far right yahoos when we need them? Oops, I forgot, we need to keep government out of our life. IMHO, appropriate regulation is wise government. We did not have that, we are now reaping the rewards of inadequate and misplaced regulations.
    • I'm sure the Tea Party will be out in force defending the right of these companies to plunder their employees' pensions.
    • Let's go back to the good old days, when the poor lived and died (young) in squalor, and the wealthy had vast resources and spent it on frivolity and debauchery. Because that is what America is about.
    • There has been a "retirement heist" and in more ways than one: - first they took the pensions - then they took the houses - they they took the 401ks Next up? Social Security and Medicare. People either need to get angry or get ready to take it on the chin.
    • To me the biggest heist is 401K plan that companies started using instead of any fail proof pension plan ( Now non existent). Imagine all the hard earned money of American workers is in hands of same Wall Street corporations/Investors that consistently work to remove these American workers from their Jobs. To top it these same workers tax dollars that rescue these corporations from going Bankrupt...can there be a bigger SCAM than this ?
    • I've long suspected that the 401k was just for Wall Streets benefit. After all who would end up with these amateur investors money in the long run, the employee? Not likely. I guess we know now.
    • Excerpted from the main article, the following. "Companies have claimed for years that old-style pensions were unsustainable." Is one to take the word of double-dealers such Bank of America, Goldman-Sachs, Wells Fargo, Corporate America and or The Financial Sector, not very likely to happen I submit. By the way, if these "old style pensions" are unsustainable, for workers, how come they are just fine for executive/management retirees, and others similarly anointed ones? As I said above, the word of Corporate Americas is, unfortunately not worth the paper it might be printed on.
    • I think what the average citizen is beginning to realize is that, at least in the past 30 years, that CEO's and CFO's are not very good at business, but rather very good at being criminals. As a former small business owner I knew my employees were my greatest assets. And simply treating them fairly provided returns much greater than the financial commitment to do so. Corporations and institutions, and their respective leaders seem to fail to recognize that at some point the villagers are going to storm the castle. That they will not be able to hide in their gated communities and their executive penthouses. Even the mob knows if you squeeze a little people will pay. Squeeze to much and they stand up for themselves.
    • But the 401K was never designed to be a sole retirement plan. It was designed to be a supplement investment vehicle for retirement. Everyone now talks about 401ks as if it’s THE retirement plan. Yet corporations seem to have millions to pay the heads of companies when it’s their time for retirement or firing. In the next 40 years, we will see a generation with no social security, no retirement funds, no health care, living in poverty because we were told profits first people last.
  • Albany Times-Union Capitol Confidential: Ball questions Cuomo’s Nano deal. By Jimmy Vielkind. Full excerpt: Sen. Greg Ball is questioning the economic development deal announced last week by Gov. Andrew Cuomo, which will help a consortium of tech companies research chip manufacturing on 450-millimeter wafers. Five companies will be involved in that effort: Intel, IBM, GlobalFoundries, TSMC and Samsung. Additionally, IBM will invest $3.6 billion in developing more powerful computer chips. The state is investing $400 million through the College of Nanoscale Science and Engineering at UAlbany — no companies will get a direct subsidy, though all will benefit from the use of state-purchased equipment and facilities.

    Ball, a Republican from Brewster in Putnam County whose district includes IBM’s headquarters, said he has questions about the deal.

    As an Assemblyman, Greg Ball fought to launch an investigation into IBM’s offshore practices after they received a windfall totaling nearly $100 million from New York. In December of 2008, IBM accepted $45 million from the Empire State Development Corporation in return for not cutting jobs at its East Fishkill facility. Just two weeks later, according to reports, the company laid off 278 workers. Shortly after, Ball authored legislation to end tax incentives for companies that offshore jobs.
    “Let me explain this in simple terms. IBM has already received hundreds of millions of dollars from New York taxpayers. Not even a few years back, we found out IBM was cashing checks from taxpayers while simultaneously patenting a new technology specifically designed to outsource our jobs in America. Now, as small businesses everywhere are shutting their doors, we are going to reward these global giants with an even larger giveaway of corporate welfare, without asking the tough questions?”
    In 2009, IBM refused to respond to a Wall Street Journal report stating the company was shifting 5,000 American jobs to India. To this day, the company remains mum about how many jobs it has outsourced over the past two years.
    Ball’s war against corporate welfare to powerful multi-national corporations has been a continuous uphill fight because of powerful corporate interests in both parties. Ball first went public with the IBM issue after constituents alerted him to the severity of layoffs made by the company, including cases in which employees were refused severance and health care packages, despite being promised by the company that these benefits would be given even if layoffs were made. Ball organized and attended several rallies and press conferences outside IBM facilities to bring light to these financial dealings and the terms of the layoffs.
    “It is the new and small businesses, those creating over 70% of the jobs, that we must help if we truly want to turn this economy around. This $400 million could have been divided into 1,600 or more small business loans, spreading opportunity to new businesses and entrepreneurs statewide. In fact, a portion could have immediately went to fix bridges, roads and crumbling infrastructure, putting thousands of New Yorkers back to work, now that would have helped Main Street!”

    Selected reader comments follow:

    • Keep it going Greg Ball! Cuomo cuts State jobs while handing out corporate welfare to IBM, one of the biggest outsourcers in the country. I thought NYS was broke? It has been proven that IBM has cheated NYS taxpayers. Ball should join the protesters on Wall St. This is exactly what they are protesting down there and around the country.
    • It’s pretty disgusting to see how much NY doles out in corporate welfare, both in hand-outs and tax incentives. All of it must be made up by NY taxpayers.

      In this case, the money is being given to the Nanocollege (probably to avoid that *appearance* of corporate welfare). But given the money will be used to build and to supply expensive equipment to be used by the various participating companies, it is indeed corporate welfare. The companies no longer have to pay for, maintain or repair the tools and building, while gaining the benefit of their use.

      So taxpayers are on the hook for free space, utilities (water, gas, electricity) and extremely expensive equipment. Can’t blame the companies for taking handouts…but do blame your elected officials for giving them. They really should know better, given the track records of some of their beneficiaries like IBM.

    • Yes, the way Albany Nanotech runs is the government (research foundation) runs and pays for everything while the corporations use the employees and equipment and money. This whole thing is a heist of taxpayer money and the public needs to be clued in on this conspiracy. IBM has received enough for its only results of firing workers. ENOUGH is ENOUGH!
    • It is about time for someone to look at the slippery way IBM handles outsourcing jobs to India. I am a former IBMer that had 28+ years with the company. I was laid off and my job went to a person from India. I think something needs to be done about this. It may be too late for me, however, I do not want to see someone else go through what I went through. I have been without work for almost three years as a result of greed. TIRED OF BEING WRONGED.
  • Forbes: Triple Threats to Retirement. By Liz Davidson. Excerpts: The way we approach retirement planning has changed forever. Pre-retirees today are faced with a new triple threat to retirement security and many will need to take drastic measures to revise their strategies. One can no longer assume what they are doing is adequate. Even those who think they are doing the best retirement planning possible may run into some unexpected challenges. The threats facing pre-retirees today are three fold:
    • Employers are increasingly shifting more of a burden of funding retirement to employees and the government is expected to follow suit with reductions in Social Security. ...
    • Home equity, once a major source of retirement income, has significantly declined since the mortgage crisis and is showing no signs of recovery. ...
    • The stock market has performed well below its historical average over the last 11 years. ...
  • InvestmentNews: That retirement calculator is lying to you and your clients. Forecast returns built into most retirement tools no longer valid, experts say; 8% is history. Excerpts: Anyone who puts even minimal elbow grease into retirement planning is well aware of "the number," the anxiety-producing seven-figure sum online calculators and financial advisers say you'll need to enjoy a comfortable lifestyle after your career ends. There's a far smaller number that deserves more attention now -- the rate of return at the heart of that calculation.

    According to Ibbotson data, the long-term annualized gain for the Standard & Poor's 500-stock index dating back to 1926 is 9.9 percent. For bonds, it's 5.4 percent. (From 1970 to 2010, the Barclays Capital Aggregate Bond index average was 8.3 percent.) Plug those numbers into a portfolio of 60 percent stocks and 40 percent bonds and the return is about 8 percent, which is precisely the number most financial planners -- and retirement calculators -- were using up until recently. ...

    Today many advisers are looking out a decade or so and lowering the rate of return they expect from stocks and bonds. Jon West, a director at Research Affiliates, which manages $50 billion, says the firm's number crunching leads it to estimate that stocks could deliver 5 percent to 6 percent, and bonds 2 percent or so. That's based on getting "at least 2 percent less from dividends," anemic earnings growth, and no growth in the stock market's price-earnings ratio, he says. It produces a return below 5 percent for a 60/40 portfolio. That's a far cry from 8 percent. ...

    Monte Carlo simulations are useful but can have shortcomings. William Bernstein, a principal at Efficient Frontier Advisors and author of "The Investor's Manifesto," worries they can give a false sense of security since, for the most part, they assume normally distributed returns -- not the dramatic market meltdowns of recent years. Fidelity's calculator shows savers two probabilities: one that assumes the historical rates of return are borne out, and another shows how savers would fare if they had below-average outcomes. ...

    If using any of the calculations shows that a savings goal needs to be hiked, one way to eke more return out of a portfolio is to focus on fees. Forking over 1 percent to 1.5 percent of your money each year to cover a mutual fund's expense ratio may have been easy to overlook in the 1990s when the S&P 500's annualized return was 18.2 percent. If returns are 6 percent or 7 percent over the next decade, a 1.5 percent expense ratio cuts a net return by about 25 percent. "In this day and age, there's simply no excuse for paying [an expense ratio of] more than 0.25 percent for a portfolio of U.S. stocks and bonds, and maybe 0.5 percent for a portfolio of foreign stocks," says Bernstein.

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Anonymous: (Current Employee) “Company culture has eroded.” Pros: Interesting work. Reasonable pay. Reasonable benefits. Variety of job and pretty easy to move around. Ability to work from home. Cons: With so many layoffs, workload on remaining employees is unreasonable. Many of my colleagues have trained their offshore replacements prior to being laid off. Pay increases are laughable. Advice to Senior Management: As you make decisions about pay and opportunity for the "little people" in major market economies, consider how you would want your brother/sister or son/daughter treated.
    • IBM Software IT Architect in San Francisco, CA: (Current Employee) “You have to play the IBM game if you are to get anywhere here.” Pros: Depending on the role you are in, you have flexibility of hours and customer engagements where you can grow your skills and influence. Cons: You have to play the IBM game if you are to get anywhere here. That means not only being good at what you do, but being that political animal and playing to the management galleries and all the metrics that you are measured by. You may have all the opportunities to excel at those metrics in the roles you are in, yet you will be measured by it! This I think is the bane of a lot of big companies. They acquire companies by the dozen every year and depersonalize the new employees and pretty much break & rebuild those. Sometimes it works out well and not other times. Advice to Senior Management: We acquire many companies in a year, even in areas that we have products and people already in the market. I think this reflects badly on our capacity to build great products - be it due to lack of investment or simply incompetence - that we have to go out and spend money to get state of the art capability in the market segment. Lets put some effort into improving our product development capabilities.
    • IBM Anonymous in Dubuque, IA: (Current Employee) “Employment at an IBM GDC is relatively stable, however it does not satisfy in terms of compensation and general morale.” Pros: - Relatively stable employment; - Competitive benefits package; - Reasonable work/life balance encouraged and applied; - Sufficient opportunity for lateral movement within the organization. Cons: - Virtually no possibility for advancement; - Nepotism common; - Compensation is below industry average; - Senior management often has fundamental lack of respect for employees; - Employee turnover high. Advice to Senior Management: - Focus on employee moral and turnover rate; - Become a more competitive company in terms of salary compensation; - Streamline processes to waste less time on paperwork and devote more time to constructive, tangible output,
    • IBM Programmer Analyst in New York, NY: (Past Employee - 2009) “IBM has vast resources to advance your career needs.” Pros: IBM has world class clients, exposure to many mega sized projects AND global initiatives and has vast resources to advance your career needs. Cons: Work More and Expect Less Salary. Management always gives a hard time to work overtime. Reviews are usually very partial. Professional Development Managers do nothing to contribute to our career growth. They are more like administrative clerks. who check hours and manage some Excel sheets. Advice to Senior Management: Work More and Expect Less Salary. Management always gives a hard time to work overtime. Reviews are usually very partial. Professional Development Managers do nothing to contribute to our career growth. They are more like administrative clerks. who check hours and manage some excel sheets.
    • IBM Anonymous in Sydney (Australia): (Current Employee) “Good work life balance with less impressive salary” Pros: - Flexible work arrangements. - Good work life balance. - Wide ranges of project opportunities in multiple cities - Clearly defined career path and progression. Cons: - Not the best employer in terms of salary - Tedious paperwork compared to other employers. - Tick box approach to review and promotion. Advice to Senior Management: - IBM GBS could adopt more "consulting" like culture from PwC, Cap Gemini and the likes. - Should pay at least market rates to better retain talents.
    • IBM Anonymous in Dallas, TX: (Current Employee) “It's a good place to work.” Pros: Life Work balance is good where I'm at. Stability seems pretty good even with downed economy if you are doing a good job. Cons: Getting promoted can get difficult As in most large companies, some of the benefits have been taken away like retirement for new employees. Advice to Senior Management: Promote people based on the performance reviews and not based on structured documentation that takes months or years to fill out or complete
  • LinkedIn's Greater IBM Connection: IBM Canada DB Pension Funding Relief Statement Sept 12, 2011 Did you get your letter? Selected comments follow:
    • Are there other Canadian Retirees or IBMers eligible for a Defined Benefit plan who are concerned about a recent mailing you should have received titled IBM Canada Pension Funding Relief Statement dated Sept 12, 2011. If you are Canadian and either collecting or entitled to collect a defined benefit pension, you should have received a letter about the pension funding shortfall.

      If you didn't' receive a letter, or if you want to see other IBM Canada DB retirees reaction to the letter, go to the Rewind site at http://www.bigblueretirees.com/ for more information. It is the IBM Canada retiree site.

      If you want to object to the company's plan to extend the repayment of the shortfall, you need to mail in the form you received, anonymously...i.e. don't put your name on it and don't put a return address on the envelope, or it won't count. But you MUST send in the form if you want to object to the IBM plan.

      The objection must be received by Towers Watson by October 28, 2011. Towers Watson must receive these forms from at least 1/3 of the Plan members; otherwise IBM Canada will implement a 10 year deficit funding plan.

      If you moved since you retired, IBM may not have your new address, the letter they sent won't reach you and IBM will assume that you have agreed to their plan to prolong making the pension plan whole for 10 years! So it is up to you to be proactive.

      Note this note only applies to IBM Canada pensioners and those current employees who are vested and only to Defined Benefit plans.

    • it is a sad state of affairs that I discovered this in a Linkedin note rather than being notified by IBM or Towers - but I guess it goes with the mess I went thru at retirement - do it myself and having the chase down IBM and external retirement partners to get to the retirement stage
    • Rick, thanks for your note. I am happy that this post found you. It was the reason that I posted it.

      There is a fear amongst some of the IBM Canada retirees that that some retirees might have moved or IBM might not have all the retirees addresses. Since letter requires IBMers who object to their extended top up on the pension plan to mail in a notice of objection, those who never received the letter and therefore not objected will have 'deemed agreement' to the plan they never saw.

      There is a Facebook site for IBM Canada retirees as well as the website Rewind site at http://www.bigblueretirees.com/. Facebook site: Not sure if this link will work https://www.facebook.com/groups/207495335982893/?id=208273309238429. Other IBM Canada retirees are posting comments in both places.

      Here is the phone number offered in the IBM letter: Morneau Shepell Call Center 1-888-813-1735. There is still time for you to get the letter, the notice of objection and decide if you want to object to IBM's proposed 10 deferral plan before the October 28, 2011 deadline.

  • Washington Post: Cozy relationships and ‘peer benchmarking’ send CEOs’ pay soaring. By Peter Whoriskey. Excerpts: As the board of Amgen convened at the company’s headquarters in March, chief executive Kevin W. Sharer seemed an unlikely candidate for a raise. Shareholders at the company, one of the nation’s largest biotech firms, had lost 3 percent on their investment in 2010 and 7 percent over the past five years. The company had been forced to close or shrink plants, trimming the workforce from 20,100 to 17,400. And Sharer, a 63-year-old former Navy engineer, was already earning lots of money — about $15 million in the previous year, plus such perks as two corporate jets.

    The board decided to give Sharer more. It boosted his compensation to $21 million annually, a 37 percent increase, according to the company reports.

    Why?

    The company board agreed to pay Sharer more than most chief executives in the industry — with a compensation “value closer to the 75th percentile of the peer group,” according to a 2011 regulatory filing.

    This is how it’s done in corporate America. At Amgen and at the vast majority of large U.S. companies, boards aim to pay their executives at levels equal to or above the median for executives at similar companies.

    The idea behind setting executive pay this way, known as “peer benchmarking,” is to keep talented bosses from leaving. But the practice has long been controversial because, as critics have pointed out, if every company tries to keep up with or exceed the median pay for executives, executive compensation will spiral upward, regardless of performance. Few if any corporate boards consider their executive teams to be below average, so the result has become known as the “Lake Wobegon” effect.

  • Institute for Policy Studies: Uncle Sam Should Support Built-to-Last Companies, Not Built-to-Loot Enterprises. By Chuck Collins. Excerpts: A powerful coalition of U.S.-based global companies is lobbying hard for a "tax holiday" on offshore profits. Companies like Google, Apple, Pfizer, and General Electric have parked huge amounts of profits — a stash totaling more than $1.4 trillion —in offshore tax havens. They've stowed those funds abroad primarily to avoid having to pay federal taxes on that income.

    But now they want to bring their treasure to the United States, albeit at a steep discount on what they owe the IRS. Instead of paying the statutory corporate income tax rate of 35 percent — or even the "effective rate," which for most global companies, is closer to 11 percent — they're urging Congress to let them do this at a tax rate that's a whisker over 5 percent.

    They tell Congress they need a "tax holiday" to free up badly needed capital to invest in right here — creating jobs at a time when the U.S. economy is sputtering. ...

    The problem with these WIN America promises is this: Their pants are on fire. Here's how we know that: They waged the same campaign in 2004 with the same promises that they would create jobs, got their way, and created few jobs. Worse, some companies destroyed tens of thousands of jobs. ...

    In fact, 58 of the large corporations that took advantage of the 2004 tax holiday shed almost 600,000 workers in subsequent years. This downsizing was not a result of the economic meltdown as many of these companies prospered. Today, these 58 companies maintain combined cash reserves of more than $450 billion. There's nothing holding them back from investing in America.

    These 58 giant corporations accounted for nearly 70 percent of the total repatriated funds and collectively saved an estimated $64 billion from what they otherwise would have owed in taxes. The 10 biggest "layoff leaders" were Citigroup, Hewlett-Packard, Bank of America, Pfizer, Merck, Verizon, Ford, Caterpillar, Dow Chemical, and DuPont. ...

    Congress shouldn't be fooled again. Limited incentives should go to activities that will create jobs, not another tax holiday for off shore tax dodgers. These companies are not in the business of creating jobs. They are in the business of shifting as much wealth to their top managers and shareholders as possible. ...

    Unfortunately, a segment of corporate America embraces a "built to loot" business model. They shift every possible expense off their balance sheet and squeeze their stakeholders, with the exception of top management and shareholders. They outsource and offshore jobs and engage in accounting gymnastics to game their tax bills to nothing. They mooch from the common treasury, but don't contribute.

New on the Alliance@IBM Site
Minimize
  • Job Cut Reports
    • Comment 10/04/11: RA for 1st week in Nov. packets being printed and bound. S&D will be hit. No further details... -ChopChop-
    • Comment 10/06/11: -ChopChop-: Did your manager tell you the RA would come in Dec? I heard it's coming in Dec. -B-
    • Comment 10/07/11: Will any groups beyond S&D be hit by the RA? IBM is making big bucks right now, and the stock sky high. Why do they have to do this to their people? -Anonymous- Alliance Reply: IBM does it because they can. If you want to stop them, you need to organize and fight for a contract. No amount of complaining to any of the executives will make any difference. Fight back. Occupy IBM USA with Alliance and a union contract. Organize.
    • Comment 10/07/11: Like biker'mike (somewhere in the recent thread) I also joined in 1999 and had an actual telegraph sent to my then manager that I was an official union organizer. I've told several managers since the same thing, (4 or 5 managers) and made no secret of it as I've handed out thousands of flyers, often to people I know were managers, (never my own) and we both had a bit of a laugh about it on some occasions.

      I also filed labor charges against my second line who basically told me to take down my union signs or risk being 'written up' (whatever that implies, the court took it as a veiled threat) the case was eventually won in our favor, a nationally recognized/Federal case.

      I also confronted Gerstner and and Sam at various Shareholder meetings, the last meeting Sam actually refused to call on me at the microphone, skipping the normal functioning of the shareholder meeting, which tells an awful lot about him in my opinion.

      I get along well with my managers, (even the one in the Fed case mentioned) as I can tell them quite honestly I have nothing to hide and don't consider management the problem. Management doesn't send thousands of jobs offshore, Armonk executives do. Management didn't decide to replace thousands of Americans with visa workers as is ongoing, Armonk executives did. Managers aren't fleecing workers pensions and cutting benefits and keeping raises down, Armonk executives are.

      Managers are in many cases just as screwed as we are in terms of benefits and retirement issues and have even more difficult rights to pursue if they wanted to, and some have even told me they wanted their own union! Managers and we are basically in the same position, financially screwed.

      My ratings have been consistent 2-2+ for my career and didn't change since joining. I'm often approached by the fearful wondering why I keep my job while thousands keeping their head down and hiding their frustrations are fired. While there are many reasons, the main ones are I am a solid contributor and follow the legal rules regarding organizing, no bending things, just stick to the laws and be ready to fight legally if the company ties to violate your rights. This removes a big incentive for the company to target organizers as the company can fire hundreds who won't make a peep about leaving.

      You don't have to do what others like me have done, you can join and support the cause anonymously, but either way, stand up for yourselves and gain some self respect while you're at it. You have nothing to lose but your self imposed chains!

      POKJournal IBM Labor Group Sees Growth

      The story I'm in above notes about some workers who were fired, who tried to use union rules while not being involved with the union:"They were not involved with a union, the board said, and thus lacked the rule's protection." So if you want to stand up for your rights, smarten up and join the Alliance, regardless of the long term outcome, you can be proud of yourself for standing up while others hide or pretend they don't care about where things are heading. I wear my union button daily and my alliance tee-shirt every Friday, if you're in Fishkill, NY, look me up and say hello anytime, we can take a break and head to a break area and have a legal and protected conversation about workers rights! Plus I've met hundreds of CWA workers and even joined them on the picket lines on several occasions, my Union Brothers really are a part of my family now, I know they can be counted on, unlike the Armonk bunch.... -Bill Costine-

      Alliance reply: To clarify our membership number in the linked article: The 6000 were both supporters and members. Dues paying members at that time were about 450. Currently, we have about 200 members and 4000 supporters.

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
Minimize
  • Wall Street Journal: Home-Health Firms Blasted. Senate Panel Alleges Big Providers Abused Medicare by Tailoring Patient Care to Maximize Profits. By John Carreyrou. Excerpts: An inquiry by the Senate Finance Committee has found that the nation's three largest home-health companies tailored the care they provided to Medicare patients to maximize their reimbursements from the federal program.

    The three companies, Amedisys Inc., LHC Group Inc. and Gentiva Health Services Inc., get most of their revenues from Medicare. Home-health care, which involves sending nurses to patients' homes in an effort to cut down on costly hospitalizations, is one of the fastest-growing areas of spending for the $524 billion-a-year health plan for the elderly and disabled. The Senate committee, citing emails and other internal documents obtained from the companies, alleges that they encouraged employees to make enough home-therapy visits to reach thresholds that triggered bonus payments, whether or not the visits were medically necessary. ...

    Sen. Max Baucus (D., Mont.), the Senate Finance Committee's chairman, said "the gaming of Medicare by these companies represents serious abuse of the home-health program." Elderly patients "should not be used as pawns to increase a company's profits," and "in these tough economic times, taxpayers simply cannot afford for their dollars to be wasted on unnecessary care," he added. "The reimbursement policy encourages gaming, and gaming is what's occurred," said Sen. Charles Grassley, the committee's senior Republican member. "The federal government needs to fix the policy that lets Medicare money flow down the drain."

  • New York Times editorial: Your Soaring Insurance Premiums. Excerpts: Annual premiums for employer-sponsored health coverage soared by 9 percent for families and 8 percent for individuals this year from 2010, far faster than wages or inflation. Republicans, predictably, blamed health care reform for contributing to the rise. In fact, the reforms accounted for only 1.5 percentage points of the increase this year. The value to millions of Americans who are already getting expanded coverage and benefits is undeniable.

    So what is driving up insurance premiums? The main factors, analysts say, were increased medical care costs and higher profits for insurance companies, which charged a lot more in premiums than they paid out for medical services. Both problems are being addressed by the health care reforms. But, clearly, they will require even more vigorous attention.

    This latest survey by the Kaiser Family Foundation and the Health Research and Educational Trust found that the average total family premium climbed above $15,000 in 2011, with the worker paying roughly $4,100 and the employer about $10,900. Since the survey started in 1999, worker contributions to premiums have increased 168 percent, while wages have gone up 50 percent. ...

    For the longer term, the reform law will create a slew of pilot projects in Medicare to find ways to reduce the cost of delivering care. Any effective strategy should be pushed quickly into the private sector. Until the underlying health care costs are reduced, it will be hard to hold premiums down.

  • Consumer Reports: New rankings make choosing health insurance easier. When it comes to health insurance, a familiar name and lots of members don’t guarantee quality or customer satisfaction, according to new rankings of health-insurance plans from the National Committee for Quality Assurance that we published today. NCQA is an independent health-care quality-measurement group.

    The rankings cover 830 private, Medicare, and Medicaid health insurance plans that enroll an estimated 127 million people. Private plans are those that people join through their jobs or buy on their own.

    Our analysis of the NCQA rankings found that the five largest national insurers—Aetna, Cigna, Humana, Kaiser Permanente, and United Healthcare, plus the mostly state-based Blue Cross Blue Shield plans—account for about 75 percent of the 390 ranked private plans, but only 36 percent of the top 50.

    Here are other highlights:

    • Biggest isn’t best...
    • Small can be good...
    • Kaiser Permanente makes the grade...
    • New England plans excel...
News and Opinion Concerning the "War on the Middle Class"
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.

  • AlterNet: Why Aren't Ayn Rand's Wealthy "Job Creators" ... Creating Jobs? Excerpt: The myth of the wealthy "job creator" has been used for years to underscore a harmful vision of capitalism. By John Paul Rollert. Excerpts: With the announcement last Monday of President Obama’s plan to pay for his jobs bill with, among other things, the so-called “Buffett Rule,” we’re going to be hearing a lot more about the “job creators.” Over the last year, Congressional Republicans have consistently invoked them as a hex of sorts against any proposal to raise new tax revenue. “I am not for raising taxes in a recession,” Eric Cantor declared last November, when the Bush tax cuts were a bargaining chip in the protracted budget debate, “especially when it comes to the job creators that we need so desperately to start creating jobs again.” ...
  • Shoq Value: George Carlin on the American Dream (with transcript). Excerpts: But there’s a reason. There’s a reason. There’s a reason for this, there’s a reason education SUCKS, and it’s the same reason it will never, ever, EVER be fixed. It’s never going to get any better, don’t look for it, be happy with what you’ve got.

    Because the owners, the owners of this country don't want that. I'm talking about the real owners now, the BIG owners! The Wealthy… the REAL owners! The big wealthy business interests that control things and make all the important decisions.

    Forget the politicians. They are irrelevant. The politicians are put there to give you the idea that you have freedom of choice. You don't. You have no choice! You have OWNERS! They OWN YOU. They own everything. They own all the important land. They own and control the corporations. They’ve long since bought, and paid for the Senate, the Congress, the state houses, the city halls, they got the judges in their back pockets and they own all the big media companies, so they control just about all of the news and information you get to hear. They got you by the balls.

    They spend billions of dollars every year lobbying, lobbying, to get what they want. Well, we know what they want. They want more for themselves and less for everybody else, but I'll tell you what they don’t want:

    They don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That's against their interests.

    That's right. They don’t want people who are smart enough to sit around a kitchen table and think about how badly they’re getting fucked by a system that threw them overboard 30 fucking years ago. They don’t want that!

    You know what they want? They want obedient workers. Obedient workers, people who are just smart enough to run the machines and do the paperwork. And just dumb enough to passively accept all these increasingly shitty jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and vanishing pension that disappears the minute you go to collect it, and now they’re coming for your Social Security money. They want your retirement money. They want it back so they can give it to their criminal friends on Wall Street, and you know something? They’ll get it. They’ll get it all from you sooner or later cause they own this fucking place! Its a big club, and you ain’t in it! You, and I, are not in the big club.

  • truthOut: Five Facts You Should Know About the Wealthiest One Percent of Americans. By Zaid Jilani. Excerpts: As the ongoing occupation of Wall Street by hundreds of protesters enters its third week — and as protests spread to other cities such as Boston and Los Angeles — demonstrators have endorsed a new slogan: “We are the 99 percent.” This slogan refers an economic struggle between 99 percent of Americans and the richest one percent of Americans, who are increasingly accumulating a greater share of the national wealth to the detriment of the middle class.

    It may shock you exactly how wealthy this top 1 percent of Americans is. ThinkProgress has assembled five facts about this class of super-rich Americans:

    The Top 1 Percent Of Americans Owns 40 Percent Of The Nation’s Wealth...

    The Top 1 Percent Of Americans Take Home 24 Percent Of National Income...

    The Top 1 Percent Of Americans Own Half Of The Country’s Stocks, Bonds, And Mutual Funds...

    The Top 1 Percent Of Americans Have Only 5 Percent Of The Nation’s Personal Debt...

    The Top 1 Percent Are Taking In More Of The Nation’s Income Than At Any Other Time Since The 1920s.

  • San Francisco Chronicle: Tax rich more, Patriotic Millionaires urge. By Joe Garofoli, Chronicle Staff Writer. Excerpts: Los Altos resident Doug Edwards asked President Obama something that many Americans would consider unthinkable: "Would you please raise my taxes?" Edwards, 53, can afford it. Retired after being amply compensated for being employee No. 59 at Google, he's part of a Bay Area-birthed organization called Patriotic Millionaires for Fiscal Strength.

    The Patriotic Millionaires contend that Americans with incomes over $1 million should shoulder a larger share of the tax burden to pay for Pell Grants, road improvements and training programs "that made it possible for me to get to where I am," as Edwards told Obama during the president's appearance last week at the Mountain View social networking company LinkedIn. .../p>

    But conservatives, particularly Republicans who control the House, prefer to refer to wealthy individuals as "job creators" who will be less likely to invest in the economy should their taxes rise. Besides, if wealthy people like Edwards really want to pay more to the federal government, House Budget Committee Chairman Rep. Paul Ryan, R-Wis., said "he can send it in to the Treasury." "The reason we tax cigarettes in this country is to get people to stop smoking," Ryan said. "If you tax capital more, you get less capital. If you tax job creators more, you get fewer jobs. "That's the seed corn for the economy, which gets invested in entrepreneurs and startups and small businesses," Ryan said. Raising taxes would cut that supply off at a critical time when banks aren't loaning to small businesses as freely.

    But Ask.com founder and Oakland venture capitalist Garrett Gruener said that changes in the marginal tax rates make "zero difference" about where he is going to invest. "The kind of investing I've done for the last 25 years isn't based on how a few points of the income tax rates change," said Gruener, a Democrat and member of the Patriotic Millionaires. But "somehow, the Republicans have managed to convince 98 percent of the people that they are affected by how 2 percent of the population is taxed." ...

    While at least half of the Patriotic Millionaires would identify themselves as progressive Democrats - including several from the Bay Area - many of the rest are independents. Some are like David Watson, a 34-year-old former Google engineer, who was employee No. 83 at the search-engine behemoth. The Oakland resident is registered as a decline-to-state voter and has cast ballots for Republicans and Democrats. Raising taxes on wealthier individuals "seems like it's a common-sense thing." "I don't even see the point of why this discussion is going on," said Watson, who is now a music producer. "There should be some adults in this conversation."

  • Orion Magazine: The Reign of the One Percenters. Income inequality and the death of culture in New York City. By Christopher Ketcham. Excerpts: New York, the FPI informs us, is now at the forefront of the maldistribution of wealth into the hands of the few that has been ongoing in America since 1980, which marked the beginning of a new Gilded Age. Out of the twenty-five largest cities, it is the most unequal city in the United States for income distribution. If it were a nation, it would come in as the fifteenth worst among 134 countries ranked by extremes of wealth and poverty—a banana republic without the death squads. It is the showcase for the top 1 percent of households, which in New York have an average annual income of $3.7 million. These top wealth recipients—let’s call them the One Percenters—took for themselves close to 44 percent of all income in New York during 2007 (the last year for which data is available). That’s a high bar for wealth concentration; it’s almost twice the record-high levels among the top 1 percent nationwide, who claimed 23.5 percent of all national income in 2007, a number not seen since the eve of the Great Depression. During the vaunted 2002–07 economic expansion—the housing-boom bubble that ended in our current calamity, this Great Recession—average income for the One Percenters in New York went up 119 percent. Meanwhile, the number of homeless in the city rose to an all-time high last year—higher even than during the Great Depression—with a record 113,000 men, women, and children, many of them comprising whole families, retreating night after night to municipal shelters.

    But here’s the most astonishing fact: the One Percenters consist of just 34,000 households, about 90,000 people. Relative to the great mass of New Yorkers—9 million of us—they’re nobody. We could snow them under in a New York minute. ...

    According to the FPI, the wealth of the One Percenters derives almost entirely from the operations of the sector known as “financial services,” whose preoccupation is something they call “financial innovation.” The One Percenters draw the top salaries at commercial and investment banks, hedge funds, credit card companies, insurance companies, stock brokerages. They are the suit people at Goldman Sachs and J. P. Morgan and AIG and Deutsche Bank. To get a sense for how their fortunes have blossomed, consider the fact that the largest twenty financial institutions in the U.S., almost all of them headquartered in New York, now control upward of 70 percent of the country’s financial assets, roughly double what they controlled in the 1990s.

    And what do the suit people do to earn such heaping returns? At one time, the financial sector could be relied upon to allocate capital for the building of things that society needed—projects that also invariably created jobs. But productivity is no longer its purview. Lord Adair Turner, a financial watchdog and former banker in the city of London—the other world capital of finance—recently denounced his class as practitioners and beneficiaries of a “socially useless activity.” Paul Woolley, who runs a think tank in London called the Centre for the Study of Capital Market Dysfunctionality, observed that the “presumption that financial innovation is socially valuable” was a kind of metaphysics. “It wasn’t backed by any empirical evidence,” Woolley told John Cassidy, a staff writer for The New Yorker. Structured investment vehicles, credit default swaps, futures exchanges, hedge funds, complex securitization and derivative pools, the tranching of mortgages—these were shown to have “little or no long-term value,” according to Cassidy. The purpose was to “merely shift money around” without designing, building, or selling “a single tangible thing.” The One Percenter seeks only exchange value, as opposed to real value. Thus foreign exchange currency gambling has skyrocketed to seventy-three times the actual goods and services of the planet, up from eleven times in 1980. Thus the “value” of oil futures has risen from 20 percent of actual physical production in 1980 to 1,000 percent today. Thus interest rate derivatives have gone from nil in 1980 to $390 trillion in 2009. The trading schemes float disembodied above the real economy, related to it only because without the real economy there would be nothing to exploit.

  • Senator Bernie Sanders (I-Vt.): A Level Playing Field for American Workers. Excerpts: The Senate on Monday began debating legislation on Chinese currency manipulation. Beijing undervalues its currency, the yuan, to make its exports to the United States cheaper and U.S. goods more expensive to buy in China. Sen. Bernie Sanders is a cosponsor of the bill to put higher duties on Chinese products. The measure is part of an effort to rewrite U.S. trade policies that have had these disastrous results for American workers:
    • From 2001-2009, American multi-national corporations have laid-off 2.9 million workers in this country, while they have added 2.4 million jobs overseas.
    • Since the passage of Permanent Normal Trade Relations with China in 2000, the U.S. trade deficit with China has more than tripled. In 2000, the U.S. trade deficit with China was $83 billion. Last year, the U.S. trade deficit with China was a record-breaking $273 billion.
    • Since 2000, 2.8 million American jobs have been eliminated or displaced as a result of our increased trade deficit with China.
    • Over the last decade, more than 50,000 factories in America have been shut down. 5.5 million manufacturing jobs have been lost. We had more factory jobs in March of 1941, eight months before the attack on Pearl Harbor, than we do today.
  • truthOut: US Tax Policies Benefit Rich. By Paul Krugman. Excerpts: It seems as if a number of people in the media have decided that President Obama was fibbing when he said that some millionaires pay lower tax rates than their secretaries — because, as the usual suspects triumphantly declare, on average millionaires pay higher average taxes than middle-income Americans.

    This is, of course, stupid: the operative word is “some.”

    And we’re not talking about one or two exceptional guys, either. Look at the I.R.S. data on returns for the 400 highest incomes in America, available at irs.gov. If you look at the numbers since 2004, you’ll see that in a typical year between 30 and 40 percent of those super-high-income players paid an average tax rate of less than 15 percent; most of them paid less than 20 percent. Bear in mind that for the very wealthy, the payroll tax — the main burden on working-class Americans — is trivial because of the cap on Social Security taxes and the fact that it only applies to earned income. And what becomes clear is that Mr. Obama’s claim that Warren Buffett’s secretary pays a higher tax rate than Mr. Buffett does is absolutely, totally true.

    With taxes on the wealthy on the political radar, we’re going to be drowning in a vast wave of double-talk and smothered by the fuzzy math. Still, one has to try. So, a couple of notes. One is that you have to beware of the old trick of saying “taxes,” then slipping into “income taxes.” Most Americans pay more payroll taxes (for things like Medicare and Social Security) than income taxes, but the reverse is true at high incomes. So focusing only on income taxes makes it seem as if the rich bear much more of the burden than they really do.

  • The Raw Story: Communications Workers of America backs ‘Occupy Wall Street’ protest. By Eric W. Dolan. Excerpt: The Communications Workers of America (CWA) has become the latest union to endorsed the “Occupy Wall Street” protest that started in lower Manhattan and spread across the country. “The 700,000 members of the Communications Workers of America strongly support the Occupy Wall Street Movement,” the CWA Executive Board said Tuesday in a statement. “It is an appropriate expression of anger for all Americans, but especially for those who have been left behind by Wall Street. We support the activists’ non-violent efforts to seek a more equitable and democratic society based on citizenship, not corporate greed.”
  • Washington Post: Bernanke tells Congress to cut out the brinkmanship over budget. By Neil Irwin and Lori Montgomery. Excerpts: With his strong words, Bernanke reinserted himself into the roiling political debate over the nation’s fiscal policy — at a time when he is already under fire from some Republican presidential candidates, among others, who say he has overplayed his hand as Fed chairman. Some critics have faulted Bernanke and the Fed for taking steps to stimulate the sagging recovery on the grounds that these steps could instead hurt the economy.

    Amid a gloomy outlook for economic growth, Bernanke warned that the recovery is “close to faltering,” and he said the central bank has adjusted its forecasts downward since they were last released publicly in June.

  • The Smirking Chimp: Ah, To Be Young And In Hate: America's New Radicals Attack a System That Ignores Them. By Ted Rall. Excerpts: Who can blame young adults for rejecting the system? The political issue people care most about-jobs and the economy-prompts no real action from the political elite. Even their lip service is half-assed. Liberals know "green jobs" can't replace 14 million lost jobs; conservatives aren't stupid enough to think tax cuts for the rich will help them pay this month's bills.

    The politicians' only real action is counterproductive; austerity and bank bailouts that hurt the economy. Is the government evil or incompetent? Does it matter?

    Here in the United States, no one should be surprised that young adults are among the nation's angriest and most alienated citizens. No other group has been as systematically ignored by the mainstream political class as the young. What's shocking is that it took so long for them to take to the streets.

    Every other age groups get government benefits. The elderly get a prescription drug plan. Even Republicans who want to slash Medicaid and Medicare take pains to promise seniors that their benefits will be grandfathered in. Kids get taken care of too. They get free public education. ObamaCare's first step was to facilitate coverage for children under 18.

    Young adults get debt.

    The troubles of young adults get no play in Washington. Pundits don't bother to debate issues that concerns people in their 20s and 30s. Recent college graduates, staggering under soaring student loan debt, are getting crushed by 80 percent unemployment-and no one even pretends to care. Young Americans tell pollsters that their top concerns are divorce, which leaves kids impoverished, and global warming. Like jobs, these issues aren't on anyone's agenda.

  • AlterNet: If Top 1% Hadn't Ripped Off Trillions, You'd Likely Be Making Thousands of Dollars More Right Now. The Occupy Wall Street movement is out to focus the nation's attention on decades of increasing inequality. By Joshua Holland. Excerpts: Economists Thomas Picketty and Emanuel Saez sliced and diced America's income going all the way back to 1913, and their results tell us exactly what the Occupy Wall Street movement is about, at least in broad terms.

    Choose a year from some fondly remembered past when the American economy generated broadly shared prosperity. How about 1947? That year, the top 1 percent of U.S. households grabbed a bit less than 12 percent of the nation's pre-tax income, and the other 99 percent shared around 88 percent of the take. It wasn't a perfect time, but it was an era when a large middle-class was emerging.

    Or maybe you think 1967 was a great time to be an American worker. That year, the top 1 percent grabbed 10.7 percent of the pile, and the other 99 percent divvied up around 89 percent of our income.

    Between 1949 and 1979, those at the top never took in more than 12.8 percent of the total. When Ronald Reagan was elected in 1980, they grabbed 10 percent of our economic output, and the rest of us shared 90 percent. And that's when things started to shift, relatively rapidly. In Reagan's final year in office, the top 1 percent of American households grabbed 15.5 percent of the nation's income.

    By the time George W. Bush was elected, they were taking in 21.5 percent. And in 2007, the year before the crash, they were pulling in 23.5 percent of our pre-tax income, leaving the other 99 percent to share just 76.5 percent of the fruits of our output.

    According to Paul Buchheit, a professor with City Colleges of Chicago and founder of fightingpoverty.org, “if middle- and upper-middle-class families had maintained the same share of American productivity that they held in 1980, they would be making an average of $12,500 more per year.” The size of our economy, he wrote, “has quintupled since 1980, and we all contributed to that success. But our contributions have earned us nothing. While total income has also quintupled, percentage-wise almost all the gains went to the richest 1 percent.” This upward redistribution of wealth “translates into a trillion extra dollars of income every year for the richest 1 percent.”

  • New York Times: Democrats Seek Tax on ‘Richest,’ Aiming Gauntlet at G.O.P. By Robert Pear. Excerpts: In proposing a 5 percent surtax on incomes of more than $1 million a year to pay for job-creation measures sought by President Obama, Senate Democratic leaders on Wednesday escalated efforts to strike a more populist tone and to draw Republicans into a confrontation over how much affluent Americans should pay to help others cope with a struggling economy. ...

    Mr. Reid said the surtax would raise $445 billion over 10 years, just about the amount needed to pay for the jobs bill, though it appears unlikely it could make it through Congress. The proposal, he said, would “have the richest of the rich pay a little bit more” — specifically, “5 percent more to fund job creation and ensure this country’s economic success.” ...

    Many economists predict that the economy will still face serious problems, including high unemployment, in 2012, an election year. Mr. Reid made clear that he thought his party would gain a political advantage from the proposal. “It’s interesting to note that independents, Democrats and Republicans and even the Tea Party agree it’s time for millionaires and billionaires to pay their fair share of taxes,” Mr. Reid said Wednesday. ...

    Congressional aides said it would probably work this way: The government would collect an additional tax equal to 5.6 percent of the amount of income exceeding $1 million. So for a person with income of $1.1 million, the extra tax would be $5,600, which is 5.6 percent of $100,000. Estimates from the Congressional Joint Committee on Taxation indicate that 330,000 households have more than $1 million of income, broadly defined. ...

    Tax rates on the wealthy have declined in recent decades. The total federal tax rate for the top one-thousandth of all earners — a group that now starts at about $1.5 million in annual income — was 53.7 percent in 1980, according to research by the economists Emmanuel Saez and Thomas Piketty. By 2004, the latest year for which the economists have data, the total federal rate had fallen to 33.7 percent. ...

    “Drawing the line at a million dollars is the right thing to do,” Mr. Schumer said. “In the eyes of many, it is hard to ask more of households that make $250,000 or $300,000 a year. Many of them are not rich. In large parts of the country, that kind of income does not get you a big home or lots of vacations or anything else that’s associated with wealth.”

  • New York Times op-ed: Confronting the Malefactors. By Paul Krugman. Excerpts: When the Occupy Wall Street protests began three weeks ago, most news organizations were derisive if they deigned to mention the events at all. For example, nine days into the protests, National Public Radio had provided no coverage whatsoever.

    It is, therefore, a testament to the passion of those involved that the protests not only continued but grew, eventually becoming too big to ignore. With unions and a growing number of Democrats now expressing at least qualified support for the protesters, Occupy Wall Street is starting to look like an important event that might even eventually be seen as a turning point.

    What can we say about the protests? First things first: The protesters’ indictment of Wall Street as a destructive force, economically and politically, is completely right.

    A weary cynicism, a belief that justice will never get served, has taken over much of our political debate — and, yes, I myself have sometimes succumbed. In the process, it has been easy to forget just how outrageous the story of our economic woes really is. So, in case you’ve forgotten, it was a play in three acts.

    In the first act, bankers took advantage of deregulation to run wild (and pay themselves princely sums), inflating huge bubbles through reckless lending. In the second act, the bubbles burst — but bankers were bailed out by taxpayers, with remarkably few strings attached, even as ordinary workers continued to suffer the consequences of the bankers’ sins. And, in the third act, bankers showed their gratitude by turning on the people who had saved them, throwing their support — and the wealth they still possessed thanks to the bailouts — behind politicians who promised to keep their taxes low and dismantle the mild regulations erected in the aftermath of the crisis. ...

    Bear in mind, too, that experience has made it painfully clear that men in suits not only don’t have any monopoly on wisdom, they have very little wisdom to offer. When talking heads on, say, CNBC mock the protesters as unserious, remember how many serious people assured us that there was no housing bubble, that Alan Greenspan was an oracle and that budget deficits would send interest rates soaring.

  • New York Times op-ed: Occupied Wall Street, Seen From Abroad. The American mainstream media is gradually beginning to pay attention to the Occupy Wall Street movement and its spinoffs springing up in Atlanta, Chicago, Boston and Seattle. But from the very beginning the movement has attracted extensive coverage from Al Jazeera and other Middle Eastern news outlets and Twitter users — probably because they recognize the forces that are reshaping politics across their region.

    Indeed, the twin drivers of America’s nascent protest movement against the financial sector are injustice and invisibility, the very grievances that drove the Arab Spring.

    Go on the Web site “We are the 99 percent” and you will see the Mohamed Bouazizis of the United States, page after page of testimonials from members of the middle class who took out loans to pay for education, took out mortgages to buy their houses and a piece of the American dream, worked hard at the jobs they could find, and ended up unemployed or radically underemployed and on the precipice of financial and social ruin. ...

    Our political system is skewed to extremes by party primaries and beholden to donors at every subsequent stage. Neither Democratic nor Republican candidates can win without the support of the wealthiest 1 percent. And even if they could finance their campaigns more broadly, moderate candidates on both sides of the aisle who are willing to compromise and make the dramatic economic, environmental and energy policy changes our country needs cannot survive partisan primaries. The result is a government that does not actually represent the majority of the American people.

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.

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