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.
A great book. Made me so mad I had to scream (November 20, 2011). Every few pages there was another revolting abuse of power that made me so mad I had to scream and put the book down for a while. The prolonged litany of mundane, banal evil where bureaucrats in big firms try to come up with small inventions that help the firm and invariably loot the pensions and jobs of normal Americans is so plainly described in this book, you know the author couldn't be making this up: this is reality at its small minded, self serving apple core. Read the most popular review for his excellent detailed description of the problems brought into stark focus by this book: what infuriated me most in this was the abusive power of CEOs who already get paid more than the rest of all Americans combined, who further distort inequality and create yet more inequity by squeezing their golden pensions into the same pools as the working poor and so rob their trusting, unsuspecting employees even of the promise of a pension in their retirement. These guys are so self centered they are sick. Sure they may be smarter and more hard working than the rest of us, but no way not a million times smarter or hard working. C'mon people: there are only 24 hours in a day and nobody has an IQ higher than 200. Their sickness may destroy this fabulous democracy. What a shame!
Into the Big Blue Yonder. After a successful nine-year run at the helm of the company, IBM CEO Samuel Palmisano stepped down. But the 60-year-old executive left with some great parting gifts. IBM has known as Big Blue, but given the generosity of Palmisano's package, perhaps it should be called Big Green. The total deal, Footnoted.com reports, is worth more than $170 million, including: a $65.7 million cash payout for stock options and restricted stock units; $1.5 million for life from a retention plan; $4.9 million per year in cash for five years; and a big fat pension that was worth $29.8 million as of the end of last year.
Selected reader comments follow:
2011 Businessperson of the Year. The human side of the CEO's job is making sure those knockout results keep coming by developing tomorrow's leaders. Palmisano realized that the most valuable learning is delivered not by a teacher but by the world. "We made a decision to walk out of the classroom and make sure most of the experiences were being lived at the operational level," says Randall MacDonald, IBM's HR chief through all of Palmisano's tenure.
Selected reader comments follow:
Dubbed the Computer Professionals Update Act (CPU Act), Senate bill 1747 would change the Fair Labor Standards Act (FLSA) to remove overtime protection and compensation from “almost everyone working primarily in information technology” who earns either a salary, or an hourly rate of $27.63, according to Paul E. Almeida, president of the AFL-CIO Department for Professional Employees (DPE). ...
Introduced in the U.S. Senate last month by Kay Hagan (D-N.C.), the CPU Act has found a Democratic co-sponsor in Sen. Michael Bennet (Colo.), who is joined by two Republican co-sponsors, Sens. Mike Enzi (Wy.) and Johnny Isakson (Ga.). In a letter to senators, DPE President Almeida said of the corporations pushing the bill:
[T]he same companies that send work offshore and bring lower-paid workers to the U.S. on H-1B visas now want to pay U.S. workers less in the U.S.
Cons: Low morale at GDF Centers, lack of action on behalf of management when important issues are presented. The GDF I work at has experienced extremely high attrition due to people receiving much higher pay at other companies. Though some leave to go back home to their families after relocating, 3/4 of the people I know who have left did so for more money. Also, the band/pay structure makes it highly difficult to earn a decent wage after a long period of time if beginning at entry level. Raises are low and do not occur often. Work is forced upon people, rather than asking if they want the responsibility. I will stick this out until the economy picks up, then I'll likely be gone as well.
Advice to Senior Management: When you have an opportunity to speak with those of us on the front lines, please listen. We are not "commiserating," rather, we are trying to tell you how what it will take to keep the talent here. Many of us are on teams that have seen top performers leave for higher paying jobs and it affects us all, as well as the quality of service we are able to provide. When pay is an issue, you should listen up, because after all, you get what you pay for.
At a senior management (executive) level, I do understand they believe the hype of flexible work options and development options for employees, plus business growth and doing 'whatever it takes' for the client. Somewhere in the company, people are genuinely conscious of the eroding morale and skills but the efforts put in place to combat this are cursory at best, and countered by the extreme cost saving and outsourcing measures that have graduated from 'exceptional quarter end activities' to standard fare.
Cons: Literally no incentives left for doing a good job (awards, promotions, or even a 'thank you') other than if you don't outperform your peers, you be more likely to be let go sooner.
Employee ratings, succession planning and career paths are a total farce. Sorry to anyone at a senior level with 'good intentions' but it's simply not happening on the front line.
Irrespective of the individual, it feels impossible to get work done, because any investment (infrastructure, travel, or additional employees) would be considered contrary to the enterprise cost cutting or outsourcing edict, regardless of how strong the business case is.
Advice to Senior Management: Have a serious think about the long term ramifications of your actions. I have no doubt on the financial success of IBM, particularly over the past 5 years. But there is a direct and unmistakable counter effect of that growth on employee morale and skills which is going to prove extremely costly.
Don't pretend that strategies of putting most non management, non customer facing roles into low cost countries, that keep the IBM engine running, is anything but a cost cost saving exercise when the appropriate skills, experience, or culture for the role is not even a secondary consideration.
It's all very well to prioritize the shareholders, but the current path puts even the shareholders of tomorrow at risk.
Pensions are supposed to be protection for down the road. That's how Joe Serina thought of the pension he earned from serving 22 years in the Navy. But in 2008, his wife left him and he had to pay child support. ...
Serina found a company that promised retirees cash right away, but they had to hand over their pension checks for years. They asked that he reroute his pension check directly to their bank, every month, he says.
The company gave Serina $57,000 up front in exchange for his $1,400 pension check every month for eight years. That comes out to $125,000 for the company that paid him the money; the equivalent of a 23 percent interest loan. ...
The Journal's Scism tells NPR's Sullivan that investment companies so far seem to like the idea of investing in the sale of people's pensions. "There are so many financial whiz kids out there who are always willing to try to find some way to turn some consumer product into something that an investor can make money on," Scism says. "There's just constant financial engineering on all kinds of income streams."
Both political parties in Congress and the White House have agreed to change the method of measuring inflation to reduce cost of living allowances (COLAs) for current Social Security recipients—it’s called the Chained Consumer Price Index (“Chained CPI”). If the Super Committee “succeeds” in making recommendations to the full Congress on how to reduce the national debt, the Chained CPI will certainly be part of the recommendations. If the Super Committee does not submit recommendations, the Chained-CPI will rear its head again early next year as Congress struggles to find “savings” to fund such items as the “doc fix” to prevent a dramatic drop in doctor reimbursement under Medicare—what Congress gives with one hand, it takes away with the other.
That is why the conservative seniors group that I head, The Social Security Institute (SSI), plans to run this TV spot nationwide urging seniors to sign a petition demanding that current Social Security benefits and COLAs be taken off the table in all deficit discussions.
For more than 20 years, American workers were forced to overpay their Social Security taxes to build up a surplus in the Social Security Trust Fund, which now holds more than $2.5 trillion in federal bonds. Workers and retirees were promised those surpluses would safeguard and guarantee their Social Security benefits and secure them from cuts. ...
Congress and the president have spent the United States to the brink of bankruptcy and significant spending cuts must be made. However, there is more than adequate other extravagant and wasteful federal spending, including bailouts to insolvent banks and businesses that can be cut to lower the deficit and reduce the national debt without touching Social Security benefits for current retirees. Stop the financial bailouts. Terminate the corporate handouts. ...
First Washington bailed out the banks and big corporations; now it wants to sell out seniors. Now the politicians want to blame Social Security for the national debt. Now the politicians want to take money out of seniors’ mouths to pay for their own uncontrollable spending addiction. Now the politicians want to renege on the promise they made 29 years ago assuring workers that if they dutifully overpaid their Social Security taxes each and every payday, that their Social Security benefits would be secure. Now the politicians want to cut Social Security benefits. They want to treat Social Security like welfare, bailouts and handouts, and they want to treat seniors like some kind of Welfare Queens. Shame on them.
The moves, announced on the same day, might seem at odds with each other, but they represent an increasingly common pattern among American corporations, which are sitting on record amounts of cash but insist that growth opportunities are hard to find.
The result is that at a time when the nation is looking for ways to battle unemployment, big companies are creating fewer jobs, and critics say they are neglecting to lay the foundation for future growth by expanding into new businesses or building new plants. ...
The principle behind buybacks is simple. With fewer shares in circulation, earnings per share can rise smartly even if the company’s underlying growth is lackluster. In many cases, like that of the medical device maker Zimmer Holdings, executives are able to meet goals for profit growth and earn bigger bonuses despite poor stock performance.
“It’s clear there’s a conflict of interest,” said Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “Unless earnings per share are adjusted to reflect the buyback, then to base a bonus on raw earnings per share is problematic. It doesn’t purely reflect performance.” In addition, executives, who are often large shareholders, stand to benefit from even a small, short-term jump in stock prices.
Chief Executive Officer Sam Palmisano is using buybacks as he targets operating earnings of at least $20 a share by 2015, up from $13.35 the company projects for this year. IBM has spent more than $100 billion on dividends and buybacks since 2003, the year Palmisano became the chairman. He has also increased earnings by steering the company toward software and services.
A while back I posted that Sen. Bernie Sanders was on a talk show and someone asked him the question about whether the exchanges were available to retirees that had access to an employer retiree medical plan. At the time, Sen. Sanders said it was his understanding that if you had access to an employer retiree plan, you couldn't go to the exchange for coverage. IIRC, that was before the final bill was signed.
"Thanks to a little-noticed clause in a 1996 law, retiree-only health plans are exempt from the Patient Protection and Affordable Care Act that went into effect last month."
The PPACA put some limitations on deductibles -- but I would assume that if retiree-only health plans are exempt from the PPACA, that means that those limitations do not apply for retiree plans -- meaning that there is no limit to the deductibles or out of pocket charges for employer retiree medical plans.
Net: It's hard to make a decision when:
IMO, it's all a guessing game. You can't really "plan" for retirement when you don't know what the rules are.
DISCLAIMER: The above is my understanding of the current situation. I am not an attorney, nor am I a financial consultant. The above is not to be considered legal, financial, or any other type of advice. If anyone has any additional info regarding the above, please post it.
If you can't get your doctor to join Anthem during 2012, you get much reduced vision benefits starting in 2013.
lso, for those taking the Aetna Medicare Plan (PPO), your annual eye exam is covered so unless you need glasses or contact lenses during 2012, I see no reason to enroll in the Vision Plan. I have not checked the other Aetna plans.
I called my doctor's office (in Boulder) and she said she's received dozens of calls from IBMers asking about coverage. She also had received a list of IBM patients from VSP that would no longer be covered.
She said that her office is trying to negotiate with IBM but that the reimbursement provided by Anthem is very, very low so she isn't confident that she'll make any progress.
I've decided to forego the coverage and up my HCRA allowance.
“Over the past several months, activists with the Alliance for Retired Americans and other progressive groups helped send a clear message to Congress – Social Security, Medicare, and Medicaid are critical lifelines for millions of Americans and cannot be sacrificed on the altar of even greater tax breaks for Wall Street and corporate CEOs.
The survey also found:
Cuts to military pensions are "the kind of thing you have to consider," Defense Secretary Leon Panetta said in September. When President Obama unveiled his $3 trillion debt reduction plan the same month, it called GIs' benefits "out of line" with private employee retirement plans, saying the system was "designed for a different era of work." When Congress held a hearing on military retirements in October, Rep. Austin Scott (R-Ga.) promoted a cheaper 401(k)-style plan that would slash existing benefits for many troops. "I see nothing wrong with them being able to choose a different retirement plan," he said.
These ideas may sound like a bold new approach in an urgent moment—but in fact, the push for pension cuts and other corporate "reforms" at the Pentagon originates from an obscure advisory panel that has existed for a decade: the Defense Business Board. Its 21 members know little about military affairs, but they are rich in Wall Street experience, including with some of the biggest companies implicated in the 2008 financial meltdown. They are investment bank CEOs and CFOs, outsourcing experts, and layoff specialists who promote a corporate agenda of "behavior change" and "business solutions" in the military bureaucracy. The board proposes not only to slash and privatize military pensions, but also to have the Pentagon invest in oil futures, boost pay for its executives and political appointees, and make it easier for them to fire rank-and-file employees while scaling back those workers' collective-bargaining rights. ...
Over the years, the board has recommended a series of "cost-saving" measures that would channel large amounts of money to private-sector businesses. Its members have consistently advocated for the Pentagon to engage in fuel hedging—investing in oil futures to lock in a supposedly low cost for their long-term fuel needs. The board's fuel-hedging push was led by member Denis Bovin, who was a top investment banker for Bear Stearns until the firm went bust in late 2008. After consulting with energy giants BP and Shell, among others, Bovin's team concluded that the Department of Defense should invest based on rising oil prices, even while he conceded that "as a whole, DoD is not highly exposed to fuel price volatility." Such deals, he noted, would incur investment transaction costs of "$10 to $250 million per year." Even though no federal agency currently engages in fuel hedging, the board tasked Bovin with another study on oil futures last January.
The authorities dispatched several hundred police including riot officers to disperse the workers as they moved off-site and blocked a national highway.
China Labour Watch (CLW) said: "the motivation behind the strike was the factory’s decision to make workers work nightly overtime." It claims that employees had been asked to work from 6pm to midnight and sometimes 2am on top of the usual four to four and a half day shifts from 7am to 11.30 or 1pm to 5pm.
CLW said staff "commonly worked anywhere from 100 to 200 hours of overtime a month" but the factory refused to let them put the hours in at the weekend because under Chinese labour law JEC would have had to double the wages.
Medicare is nothing less than a lifeline for 49 million older and disabled Americans. It helps pay for care in a wide range of settings, including hospitals, nursing homes, outpatient clinics, doctors’ offices, hospices and at home, as well as for prescription drugs.
It is also hugely costly. The federal government spent about $477 billion in net Medicare outlays in fiscal year 2011 — 13 percent of its total spending. By 2021, it is projected to spend $864 billion — or 16 percent of the total — according to figures derived by the Kaiser Family Foundation. That rate of growth is not sustainable indefinitely.
Unfortunately, many politicians seem less interested in coming up with ways to fix Medicare than in how they might impose their ideology on the program or leverage the issue for their next political campaign. Members of both parties need to define more clearly for the public what Medicare’s true problems are and how they propose to address them. Here are some of the major issues...
In its Health at a Glance 2011 report, out today, the OECD shows that the United States spent about $7,960 per person on health care in 2009 – about 2.5 times the average of the countries studied. It also found that health spending in the U.S. has increased faster than in all other high-income OECD countries since 1970, even accounting for population growth. ...
So what are Americans getting for their money? The U.S. has the best five-year survival rate for breast cancer and comes in second, behind Japan, in terms of colorectal cancer survival. But the U.S. ranks 27th in life expectancy at birth, 31st in premature mortality, and 25th in the rate of cardiovascular mortality. The U.S. has the second worst rate of adult diabetes, behind Mexico, and has the highest rate of adult obesity, at 34 percent.
Although employers are bearing the brunt of the cost of providing health insurance, the rising cost might keep employee salaries lower or cut into other benefits, the report authors said. "In effect, the steady increase in premiums has been consuming resources that employers might otherwise have earmarked for salary or wage increases, for other benefits, or for hiring new workers," wrote the authors of the report, who were led by Cathy Schoen, senior vice president at Commonwealth Fund.
An increasing number of employers are turning to “per participant” or “unitized” pricing so an employee’s payroll contribution increases with each dependent a worker adds to their coverage, according to Aon Hewitt, a large Chicago benefits consultancy. This strategy differs from the more typical single or family coverage or so-called partner benefits that allow workers to include a spouse or domestic partner on their plan.
"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.
When the Census Bureau this month released a new measure of poverty, meant to better count disposable income, it began altering the portrait of national need. Perhaps the most startling differences between the old measure and the new involves data the government has not yet published, showing 51 million people with incomes less than 50 percent above the poverty line. That number of Americans is 76 percent higher than the official account, published in September. All told, that places 100 million people — one in three Americans — either in poverty or in the fretful zone just above it.
Warren Buffett became the de facto face of the effort to increase taxes for the nation’s wealthiest when he proclaimed his secretary had a higher tax rate than he does, his being 17 percent. But the real figure for billionaires is often a lot smaller than that. Sometimes they even have a tax rate as low as 1 percent. That’s because they derive the bulk of their income from stock appreciation, and they use complicated strategies — some of them — to make sure those gains don’t get classified as taxable income. Basically what they do is enter into transactions known as “variable pre-paid forward contracts” and it can enable them to defer paying capital gains tax until a later date…Much of the wealth never converts into income on a tax return.
Here is something no one seriously disputes: Today's big deficits were caused mainly by big tax cuts for the wealthy, two unpaid-for wars, a horrible recession caused by Wall Street greed, and an expensive prescription drug program rigged to favor pharmaceutical companies.
Here is something we should not agree to do: Cut Social Security, Medicare and Medicaid benefits.
There is surprisingly broad consensus among Americans (except inside the corporate-dominated D.C. beltway) on what to do about deficits. In poll after poll, strong majorities favor making the wealthiest Americans, who, in many cases, have never had it so good, share the sacrifice and pay a little more in taxes. Increasing taxes on the wealthy is overwhelmingly supported by Democrats and independents. A majority of Republicans and people in the Tea Party movement also support taxing millionaires to help bring down deficits. Even many millionaires say they should be paying higher taxes. At a time when many profitable corporations pay nothing in federal income taxes, there also is widespread support for closing corporate tax loopholes. Taking a hard look at mushrooming defense spending also enjoys widespread support.
Banks can still earn a profit on most checking accounts. But they are under intense pressure to make up an estimated $12 billion a year of income that vanished with the passage of rules curbing lucrative overdraft charges and lowering debit card swipe fees. In addition, with lending at anemic levels and interest rates close to zero, banks are struggling to find attractive places to lend or invest all the deposits they hold. That poses another $8 billion drag.
Put another way, banks would need to recoup, on average, between $15 and $20 a month from each depositor just to earn what they did in the past, according to an analysis of the interest rate and regulatory changes on checking accounts by Oliver Wyman, a financial consulting firm.
The key to understanding the U.S. economy is to understand that we have two economies, not one. The economy of rich Americans is booming. Salaries are high. Profits are soaring. Luxury brands and upscale restaurants are packed. There is no recession. ...
There are two forces that account for this deep divide. The first is globalization. Manufacturing employment peaked in 1979, with jobs and factories increasingly shifting overseas. For a while, the housing bubble provided construction jobs that partly offset the loss of manufacturing jobs. Now the housing bubble has burst. Good jobs for young people with a high-school diploma or less have disappeared. ...
The second force is politics. When Obama has one of his many $35,800-a-plate fundraising dinners, he doesn't meet young people struggling to cover tuition payments. Obama has been separated from reality by the White House's campaign to collect between $750 million and $1 billion for Obama's reelection bid. The big money on the Republican side is even worse. Big Oil controls the party.
The upshot is that both parties champion the 1 percent, the Republicans gleefully and the Democrats sheepishly. Both parties have worked together to gut the tax code. Companies use accounting tricks approved by the IRS to shift their profits to foreign tax havens. Hedge-fund managers and recipients of long-term capital gains pay only 15 percent top tax rates. As a result of these irresponsible tax policies and rampant tax evasion, tax collections as a share of national income have sunk to 15 percent, the lowest in modern American history.
Americans are told daily that these low tax rates on the rich are the natural order of things, that the American economy would collapse if the top 1 percent were to pay more to help fund education, job training, infrastructure, and new technologies. This claim is absurd. We should be collecting at least 3 to 4 percentage points of GNP more from the rich and the corporate sector. We could collect these added amounts by raising top tax rates on regular income and capital gains, closing down offshore tax havens, taxing net worth of high-wealth households, taxing financial transactions, and cracking down on evasion.
In the aughts, Republicans held more power for longer than at any time since the twenties, yet the result was the weakest and least broadly shared economic expansion since World War II, followed by an economic crash and prolonged slump. Along the way, the GOP suffered two severe election defeats in 2006 and 2008. Imagine yourself a rank-and-file Republican in 2009: If you have not lost your job or your home, your savings have been sliced and your children cannot find work. Your retirement prospects have dimmed. Most of all, your neighbors blame you for all that has gone wrong in the country. There’s one thing you know for sure: None of this is your fault! And when the new president fails to deliver rapid recovery, he can be designated the target for everyone’s accumulated disappointment and rage. In the midst of economic wreckage, what relief to thrust all blame upon Barack Obama as the wrecker-in-chief.
In When Did the GOP Lose Touch with Reality, a penetratingly candid and immeasurably important essay published on Nov. 20, Frum says he is haunted by his time in the Bush administration although his role was not large, and, the real decision-makers seem to sleep well at night.
I appreciate Frum's writing because he criticizes the GOP, not with ridicule or disdain, but with deep concern — concern, because he identifies as a Republican, and he knows that there are many good people in the Republican party who recognize that it has lost its way. Frum writes about America with the same type of concern, and indeed as he explains at the end of the piece, he is committed to bringing about a course corrections within the GOP because the future of our nation as a whole (the 99 percent) depends on it.
At this time last year, the commercial banking industry had spent about $42 million on lobbying, the center's data show. So far this year, the figure stands at nearly $47 million. Should this year's pace continue, 2011 will be the sixth straight year that commercial bank lobbying has set a record, according to the center.
Republicans in Washington claimed Democrats refused to budge on entitlements. John Boehner, the House speaker, and Mitt Romney, a Republican presidential candidate, as if by rote, issued statements saying it was all President Obama’s fault. But, had a single Republican on the panel endorsed even a modest increase in upper-income tax rates, Republicans could have won trillions in cuts from entitlements and discretionary spending. (Certainly far beyond anything we would endorse.) ...
And, naturally, they rejected the proposal from supercommittee Democrats to cut at least $3 trillion from the deficit, because a third of it would have come from higher taxes on the rich. When you hear Republicans claim that Democrats refused to touch their sacred cows of spending, remember that the Democratic offer would have cut $475 billion from Medicare and Medicaid over 10 years, nearly half of which would have come directly from beneficiaries. That’s more than the Bowles-Simpson deficit plan proposed, and eight times the level of Medicare cuts offered by President Obama in September.
These plans actually tipped too far in the direction of spending cuts. By comparison, the Republican offers were risible. One pretended to raise revenue by $300 billion, while actually calling for the Bush tax cuts to be permanent and even reducing the top bracket to 28 percent from 35 percent. The consequences of this failure are serious.
Income and wealth disparities become even more absurd if we look at the top 0.1% of the nation’s earners– rather than the more common 1%. The top 0.1%– about 315,000 individuals out of 315 million– are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400.
It’s crystal clear that the Bush tax reduction on capital gains and dividend income in 2003 was the cutting edge policy that has created the immense increase in net worth of corporate executives, Wall St. professionals and other entrepreneurs.
The reduction in the tax from 20% to 15% continued the step-by-step tradition of cutting this tax to create more wealth. It had first been reduced from 35% in 1978 at a time of stock market and economic stagnation to 28% . Again 1981, at the start of the Reagan era, it was reduced again to 20%– raised back to 28% in 1987, on the eve of the October 19 th– 23% crash in the market. In 1997 Clinton agreed to reduce it back to 20%, which move was an inducement for the explosion of hedge funds and private equity firms– the most “rapidly rising cohort within the top 1 per cent.” ...
I commend you to the late Justice Louis Brandeis warning to the nation that ”We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” We have to make up our minds to restore a higher, fairer capital gains tax to the wealthiest investor class– or ultimately face increased social unrest.
If anything, however, the 99 percent slogan aims too low. A large fraction of the top 1 percent’s gains have actually gone to an even smaller group, the top 0.1 percent — the richest one-thousandth of the population.
And while Democrats, by and large, want that super-elite to make at least some contribution to long-term deficit reduction, Republicans want to cut the super-elite’s taxes even as they slash Social Security, Medicare and Medicaid in the name of fiscal discipline. Before I get to those policy disputes, here are a few numbers.
The recent Congressional Budget Office report on inequality didn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, did. According to that report, between 1979 and 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent.
For the most part, these huge gains reflected a dramatic rise in the super-elite’s share of pretax income. But there were also large tax cuts favoring the wealthy. In particular, taxes on capital gains are much lower than they were in 1979 — and the richest one-thousandth of Americans account for half of all income from capital gains.
Given this history, why do Republicans advocate further tax cuts for the very rich even as they warn about deficits and demand drastic cuts in social insurance programs? ...
For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone’s income and his economic contribution.
Executive pay, which has skyrocketed over the past generation, is famously set by boards of directors appointed by the very people whose pay they determine; poorly performing C.E.O.’s still get lavish paychecks, and even failed and fired executives often receive millions as they go out the door. ...
So should the 99.9 percent hate the 0.1 percent? No, not at all. But they should ignore all the propaganda about “job creators” and demand that the super-elite pay substantially more in taxes.
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