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6, 2000 April, 2000

Highlights—December 10, 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.

Read more, including an excerpt that focuses on IBM's shenanigans...

An Amazon.com customer review:

Everybody needs, December 8, 2011 By Jet Captain. This is an important book for all Americans to read. Read this to understand why the whole notion of having a pension is disappearing for the American worker while at the same time the pay for CEOs and upper management is exploding beyond anything once conceivable. The author does a great job explaining some very difficult concepts that allow the reader to follow the theft of working American pensions. This book will boil your blood at time, but you never listen to another news report about why a company can't afford to pay the promised pension benefits without understanding this is just a theft!

  • Wall Street Journal: IBM Pays Premium for DemandTec. By Matt Jarzemsky. Excerpts: International Business Machines Corp. agreed to acquire DemandTec Inc. for $440 million, continuing the trend of big tech companies paying pricey premiums for companies offering Web-based software. DemandTec's flagship product analyzes data to help retailers decide how much to charge for their wares. The company has added capabilities to track promotions and work with consumer products companies.
  • UNI Global Union: Support IBM Workers - unfair pay cuts when the company makes billions. Excerpt: UNI affiliates are writing to IBM CEO Palmisano to express their outrage at the recent decision by IBM to cut pay and reduce band levels for SSR's and service workers in the US. Follow the link below to register your support for US IBM workers: http://www.uniglobalunion.org/uniindep.nsf/protestIBM?OpenForm
  • Chemistry World: US STEM graduates look beyond science for careers. Excerpts: Concern that the US is losing its scientific and technological pre-eminence has been growing for some time, accelerated by recent economic turmoil, but a new report suggests that the issue goes beyond the need for more professional scientists, engineers and mathematicians.

    The authors of the report from Georgetown University's center on education and the workforce suggest that science, technology, engineering and mathematics (STEM) need to become more lucrative to retain the most talented individuals. The report also concludes that the deeper problem, beyond the question of whether the US has sufficient STEM labour, is a broader scarcity of workers with basic STEM competencies across the entire economy. ...

    Al Teich, senior policy adviser at the American Association for the Advancement of Science, says the data have always been contradictory on the state of the US's STEM workforce. 'There is this cry that there is a shortage, but also the counterargument that if there really was a shortage then salaries would be going up more than they have been,' he tells Chemistry World. 'It is a confusing picture and it has been for a long time.'

  • US News & World Report: How Much You Get if Your Pension Fails. Excerpts: The maximum private sector traditional pension amount insured by the federal government will increase to $55,840.92 in 2012 for 65-year-old retirees, up from $54,000 in 2011. This is the first increase in pension insurance provided by the Pension Benefit Guaranty Corporation since 2009.

    The PBGC is a government agency that pays out benefits promised to private sector workers if their pension plans fail, up to annual limits. Workers who are promised benefits that exceed these limits will see their payments reduced if the pension plan terminates and is taken over by the PBGC.

    For example, if American Airlines were to end their four traditional pension plans that cover almost 130,000 employees, the PBGC would be responsible for paying about $17 billion of the approximately $18.5 billion in benefits promised to employees, according to PBGC calculations. “Based on our estimates American Airlines employees could lose a billion dollars in pension benefits if American terminates their plans,” says PBGC Director Josh Gotbaum. “This is true even if PBGC becomes responsible for those plans, because Congress has limited the size of the pensions we can pay. Unfortunately, when the agency assumed airline plans in the past, many people’s pensions were cut, in some cases dramatically.”

  • Fort Worth Star-Telegram: American Airlines pensions a rich target in bankruptcy proceedings. By Mitchell Schurman. Excerpts: American Airlines spends $800 million more a year on labor than its main rivals, a major reason that it filed for bankruptcy protection last week. Not coincidentally, it planned to spend $747 million next year on pensions and retiree medical benefits, two expenses that most competitors abandoned long ago.

    In bankruptcy court, where every expenditure is contested, this is the definition of a rich target. It's almost begging to be slashed.

    If American ultimately abandons the pensions because they're unaffordable, it would be the biggest pension bust in U.S. history. The current unfunded liability is estimated at $10.2 billion, significantly more than previous pension claims against bankrupt United Airlines and Bethlehem Steel.

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Anonymous: (Current Employee) “Good money considering cost of living in this area; work/life deteriorating; and promotions, raises, bonuses dried up.” Pros: The money is good for this area. Co-workers are good people. Work life balance is still OK despite the negative trend. Cons: IBM has held steady through the economic downturn by cutting benefits for regular employees... morale is the lowest I have seen in 10 years. Raises (other than cost of living adjustment) and promotions have been nearly eliminated even for the top contributors. Advice to Senior Management: Stop cutting basic benefits like free water and office supplies. Promote those who've earned it. Start giving bonuses again. It wasn't much, but when you got an extra $1000 every 2 years or something for a job particularly well done, it raised morale so much.
    • IBM GBS Consultant: (Current Employee) “Frustrating - So much potential squandered by living quarter to quarter instead of long term.” Pros: There are a lot of different roles you can find yourself in, which can be good from a career perspective. Often times you are thrown into the mix of something else if you are competent in your current duties and can be counted on, which can broaden your horizons and perhaps you'll find a niche you really enjoy. Some great people that work in IBM and when you get to interact with them (when IBM's internal boxes/walls don't keep you from working together) they can really be fantastic.

      Cons: You're a cog. They'll run you at 125-175% until you burn out. Work-life balance is non existent*. Related to the above, there's since everyone is running around like crazy, or they're fired, there's no surplus capacity. So when more work comes down the chute - guess what? No one else will be hired on to do it, so carve some more space into your evening's and weekends.

      Company tools are God awful. Such a mishmash of different interfaces from different acquisitions and they're are almost all terrible. The funny thing is, we make fine products/services for our customers, and have tin cans and string for all our internal processes.

      Boy do we love our process. Just a maze of process. If you're lucky, you'll have someone who can help you navigate it, but it can be crushing at times.

      Management. There are some really good managers in IBM, but there's also a lot of bad ones (especially in Exec positions). Seems like for every one "worker bee", there's a manager and 10 executives. Can be nuts.*

      * Probably depends on your pay band, job, section of the company, etc.

      Advice to Senior Management: Realize that you cannot continue to put this pressure on the work force indefinitely. There are very motivated people who are finally starting to burn out/crack and it is unfortunate.

      Please realize that there will have to be some investment in the employees (I've seen recently where some motivated/creative managers have been able to get some training for employees) is necessary both for providing a quality product to the customer and for retention purposes

      There has got to be a way to get feedback up to upper levels. Right now, there is a total disconnect between lower-to-mid levels, and upper management.

      Something has to be done about the internal firewalls between the various divisions of IBM ("blue dollars") as it causes us to waste so much time and energy while not putting the best product out.

    • IBM Account Executive in Chicago, IL: (Past Employee - 2011) “Sales” Pros: IBM is a large company with a number of horizontal opportunities. Acquire a mentor and you can move around and be protected. Cons: IBM is a product based company and the sales force is secondary. Territories are changed frequently regardless of customer relationships. Revenue is the basis for all decisions. Your experience will depend on your manager, some good, some bad. There is a culture of protection among the management team. Advice to Senior Management: Revenue is the culture among first line management and some have lost sight of the customer the most important part of the equation.
    • IBM Software Representative: (Current Employee) “Good place start a career and build some experience.” Pros: IBM will give you some good training and a good start to developing a sales career in software. After a few years if you are on the management track it is fine. If you do not go into management your career options become limited quickly. Cons: IBM has developed a very aggressive sales culture. It has become similar to the cultures of other stereotypical software sales organizations that you may have heard about or seen commercials about. The commission and rewards packages have been scaled back dramatically in recent years. Management style is very spreadsheet driven. Advice to Senior Management: The culture at IBM has taken a turn for the worse in the last few years. There is not much upside left as far as compensation and the environment is about as fun as a root canal.
    • IBM Advisory Software Engineer in Raleigh, NC: (Past Employee - 2009) “Questionable executive ethics transformed a great company into something only good for investors, so Run While U Can!” Pros: Highly competent but under appreciated co-workers, interesting work. Benefit package is good, and flex time/telecommuting is great, IF your boss will allow it. Cons: The only thing that counts is stock growth, by ANY means necessary. Treating employees like parts is going to hurt them. Advice to Senior Management: To the Execs...don't be so greedy. You could clothe, house, & feed a small nation with what you make. Without the people "beneath" you holding you up, you'd be nobody, so be a little more generous with them so they can be generous to their communities.
    • IBM Anonymous: (Past Employee - 2009) “Horrible” Pros: The retirement plan is 4% matching (100% employer contributed.) Cons: Everything else -- management, scummy practices in dealing with consultants, etc. Advice to Senior Management: Stop treating people like crap.
    • IBM Sales Specialist in Ottawa, ON (Canada): (Current Employee) “Work Hard, No Play.” Pros: Great Technology. Incredible Number of Available Internal Resources. Brand recognition. Cons: As a rep you will spend 60% of your time filling out report on your sales activities (Siebel, Control Book, ASFT, Win Plans, Win Rooms, Client Value Path) and 40% actually facing customers. Their CRM tools are glorified Excel spreadsheets from the dark ages. Serious micro-management from the top down. Advice to Senior Management: Get your sellers selling again and invest in some decent CRM tools!
    • IBM Project Manager in New Delhi (India): (Current Employee) “Good for exposure, bad for compensation/perks.” Pros: Flexibility to choose your future career path, lots of cross-functional opportunities, its a sea of opportunities, but you need to explore. Cons: Managers don't take any interest in your growth, they are only concerned with deliveries. No monitory benefits for achievements, no recognition, no rewards. Advice to Senior Management: Reduce manager control over employee future
    • IBM Business Analyst in Dublin, County Dublin (Ireland): (Current Employee) “Great experience but limited rewards.” Pros: Experience is second to none, exposure at all sorts of clients and senior professionals. Which was unreal for me when I first joined as a graduate. Cons: Pay simply is bad compared to my peers from college, 3 years on my pay has only marginally improved. IBM is the civil service of the private sector for many people in the company this is great. Advice to Senior Management: Reward employees properly and stop stabbing people in the back
    • IBM Manager: (Current Employee) “Uncertainty.” Pros: Great people doing the impossible day after day. I continued to be amazed at the talent and intellect of the IBM Team in the United States. They are some of the best and brightest IT workers in the Industry. Cons: Pressure to move work off-shore to maintain competitive rates drives a lot of change which results in reduction of US work force and increased stress for those left behind who often have to do more to make up for the lack of skills and capabilities of those in other countries. Advice to Senior Management: Your people are your greatest asset. Treat them that way.
  • Reuters, courtesy of Employee Benefit News: Are employees saving too much for retirement? By Linda Stern. Excerpts: Retirement planning almost always starts with one number: A guesstimate of the percentage of pre-retirement income you're expected to need after you retire. That's called the "replacement rate" and is often pegged by industry experts at around 80% of a household's earnings.

    For example, a recent paper from the Center for Retirement Research at Boston College titled "How much to save for a secure retirement," relies on that 80% figure. "Households with earnings of $50,000 and over needed about 80% of pre-retirement earnings to maintain the same level of consumption," writes Alicia Munnell, author of the study.

    She goes on to say that high earners need to save extremely high percentages of their income — as much as 77% for the 45-year-old just starting to save for retirement at age 62 — to produce that 80%.

    The concept underlying Munnell's paper, and a lot of other retirement planning advice, is that you can figure out how much you need to save once you have a number for that 80% replacement rate.

    But there's reason to believe that oft-quoted 80% figure is wildly on the high side. That, in turn, makes the retirement calculations based upon it also wildly off. And that means if you're trying to save enough money to produce that 80% figure, you may be putting away too much, or skimping unnecessarily on the early years of retirement.

  • Forbes: Four Ways to Take Control of Your Retirement. By Nancy Anderson. Excerpts: Here are four decisions that differentiate the super prepared from the unprepared:
    1. They chose a company with excellent benefits and stayed there. As companies freeze their defined benefit plans, maximizing employee benefits can make or break the ability to retire. ...
    2. They stayed married. ...
    3. They were homeowners with a plan to pay off their mortgage. ...
    4. They saved a high percentage of their income. ...

    Who knew that staying with the same company, celebrating the same wedding anniversary each year and staying in the same house would lead to financial success? Well, it does when you top it all off with the most important factor and that is making the most of those benefits by saving and investing the difference.

  • Plan Sponsor: More Employers Celebrating the Holidays This Season. Excerpt: A CareerBuilder survey found employees can expect more perks in the workplace this holiday season. According to the survey, 40% of employers plan to give their employees holiday bonuses this year, up from 33% in 2010. Among this group, 73% are planning to give the same amount as last year. Fourteen percent plan to provide a greater bonus than last year, while 13% plan to provide a smaller bonus.
  • Towers-Watson: Majority of U.S. Companies to Pay 2011 Executive Bonuses Equal To or Larger Than Last Year’s, Towers Watson Survey Finds. Excerpt: Despite many companies in North America anticipating a decline in shareholder value in 2011, a majority expect to pay executive bonuses that are as large as or larger than last year’s awards. Additionally, the majority of companies plan to fund this year’s bonuses at or above target levels, reflecting strong operating results, according to a survey by Towers Watson, a global professional services company.
New on the Alliance@IBM Site
  • Job Cut Reports
    • Comment 12/05/11: "By the way, can you imagine if retiree's occupied the area around corporate headquarters in Armonk until they got a raise in pensions?" I can imagine a bunch of dead retirees frozen and starved to death waiting till hell freezes over for a raise from the cheap bastards at IBM. The only way retirees will see any kind of a decent raise or affordable benefits again is if the union gets voted in and negotiates it on their behalf. IBM management didn't even send retirees a copy of the 100 year anniversary book that they were a huge part of. That's how IBM shows its appreciation to us. -Exodus2007-
    • Comment 12/10/11: On your home page list of USA employee count by year, it would be interesting to show that there were 405,000 workers in 1985 (per the below link to "the-biggest-corporate-layoffs-all-time"). I would assume most of the nearly half million employees were in the USA, Canada, and Europe pre-globalization, and the massive layoffs through the years would have affected these countries. It is especially haunting that the USA count has dropped from some part of the nearly half a million workers, even if perhaps half that was in the USA, to about 95,000. -anonymous-

      Alliance Reply: It is possible that IBM reported the US population of IBMers, during the 1980's, in some news article that has been archived or referenced. Other than that, Alliance@IBM may have referenced those numbers in our "History of Organizing IBM" section of our web site, when we were part the IBM Workers United organization from 1976-1999. The flyers are not listed chronologically.

    • Comment 12/10/11: to -jaggua- if you were there in 93 you would have understood why this happened. It was do or die so look at the big comeback of the company. Just a little misleading. -wrong number-
    • Comment 12/10/11: To -wrong number-: I was there in 1993. BAD executive decisions on RENT vs SELL, with bad executive decisions on how to utilize the SOLD machinery income and a big lack of knowledge on how to work the press cause the "paper" loses. Today IBM has a much worse cash to debt ratio and is technically insolvent, "BUT" IBM manipulates the press and the presentation (or lack of presentation) of facts and numbers to have the company riding high in the eyes of investors. -no_ky-
    • Comment 12/10/11: What happened in 1993 can not be compared to what is happening now. IBM layoffs in the past few years have happened despite record profits. Employees are no longer retrained - they are just discarded. Respect for the individual exists only in small pockets. However this problem is broader than IBM. A good part of the industry is afflicted with the same short term thinking. -HappyFormerIBMer-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • National Public Radio: Insurance Brokers' Fees Won't Count As A Health Care Expense. By Julie Appleby. Excerpts: The Obama administration ruled today that fees paid to health insurance brokers and agents won't count as medical care expenses, under limits imposed on insurers in the 2010 federal health law.

    That decision, in one of the regulations for implementing the health overhaul, is sure to disappoint insurance agents, as you might have guessed. But it's more important than you might have imagined.

    Here's why. Under the federal health law, insurers must spend at least 80 percent of the money they get through premiums on medical care and quality improvement. Of looked at another way, administrative costs can't exceed 20 percent. If they do, the insurers have to give rebates to consumers. For insurers of large groups, the target is 85 percent, or no more than 15 percent on administrative costs.

    Brokers had lobbied hard to have their fees included on the medical care side and not counted as administrative costs, which also includes such expenses as marketing and executive salaries. Brokers argued commissions would be cut and agents could lose their jobs, if the fees were counted as expenses. That would leave consumers without as much access to brokers, who help them choose health insurance.

  • Los Angeles Times: 'Obamacare' to the rescue. A woman who felt President Obama had let the middle class down has changed her mind. By Spike Dolomite Ward. Excerpts: I want to apologize to President Obama. But first, some background.

    I found out three weeks ago I have cancer. I'm 49 years old, have been married for almost 20 years and have two kids. My husband has his own small computer business, and I run a small nonprofit in the San Fernando Valley. I am also an artist. Money is tight, and we don't spend it frivolously. We're just ordinary, middle-class people, making an honest living, raising great kids and participating in our community, the kids' schools and church.

    We're good people, and we work hard. But we haven't been able to afford health insurance for more than two years. And now I have third-stage breast cancer and am facing months of expensive treatment.

    To understand how such a thing could happen to a family like ours, I need to take you back nine years to when my husband got laid off from the entertainment company where he'd worked for 10 years. Until then, we had been insured through his work, with a first-rate plan. After he got laid off, we got to keep that health insurance for 18 months through COBRA, by paying $1,300 a month, which was a huge burden on an unemployed father and his family. ...

    Not having insurance amplifies cancer stress. After the diagnosis, instead of focusing all of my energy on getting well, I was panicked about how we were going to pay for everything. I felt guilty and embarrassed about not being insured. When I went to the diagnostic center to pick up my first reports, I was sent to the financial department, where a woman sat me down to talk about resources for "cash patients" (a polite way of saying "uninsured"). "I'm not a deadbeat," I blurted out. "I'm a good person. I have two kids and a house!" The clerk was sympathetic, telling me how even though she worked in the healthcare field, she could barely afford insurance herself. ...

    If you are fortunate enough to still be employed and have insurance through your employers, you may feel insulated from the sufferings of people like me right now. But things can change abruptly. If you still have a good job with insurance, that doesn't mean that you're better than me, more deserving than me or smarter than me. It just means that you are luckier. And access to healthcare shouldn't depend on luck.

    Fortunately for me, I've been saved by the federal government's Pre-existing Condition Insurance Plan, something I had never heard of before needing it. It's part of President Obama's healthcare plan, one of the things that has already kicked in, and it guarantees access to insurance for U.S. citizens with preexisting conditions who have been uninsured for at least six months. The application was short, the premiums are affordable, and I have found the people who work in the administration office to be quite compassionate (nothing like the people I have dealt with over the years at other insurance companies.) It's not perfect, of course, and it still leaves many people in need out in the cold. But it's a start, and for me it's been a lifesaver — perhaps literally.

    Which brings me to my apology. I was pretty mad at Obama before I learned about this new insurance plan. I had changed my registration from Democrat to Independent, and I had blacked out the top of the "h" on my Obama bumper sticker, so that it read, "Got nope" instead of "got hope." I felt like he had let down the struggling middle class. My son and I had campaigned for him, but since he took office, we felt he had let us down. So this is my public apology. I'm sorry I didn't do enough of my own research to find out what promises the president has made good on. I'm sorry I didn't realize that he really has stood up for me and my family, and for so many others like us. I'm getting a new bumper sticker to cover the one that says "Got nope." It will say "ObamaCares."

  • Phawker: The Man Who Wasn't There: Meet Wendell Potter, Healthcare Executive Turned Whistleblower. By Jonathan Valania. Excerpt: This is the first installment of a massive, 30,000 word, three-part Q&A with Philadelphian Wendell Potter*, former mild-mannered Cigna health insurance executive turned whistle-blowing superman standing up for truth, justice and the American way. You may have seen Mr. Potter testifying before Congress or talking about the ills of the health insurance industrial complex on CNN or MSNBC or PBS, or in the pages of The New York Times, Wall Street Journal or Time magazine, to name but a few. Last year he published Deadly Spin, an authoritative takedown of a sick and dangerous healthcare system and the incredibly powerful and phenomenally profitable industry that games it for billions; the dark arts of modern corporate P.R.; and an impassioned call for substantive reform, basic mercy and common decency.

    In this first installment we discuss the crisis of conscience that turned him from loyal, not to mention highly paid, company man to crusading reformer and all-around thorn in the industry’s side. Having long thought he was on the side of the angels he increasingly came to realize that he was in fact playing for the other team, that the point of for-profit healthcare insurance is not paying for customers’ medical costs but avoiding doing so whenever possible. That for-profit health insurance corporations have a legal obligation to prioritize enhancing shareholder value over saving the lives of its customers. That he had blood on his hands. That he was an apologist for a system that denies medical care to more than 50 million Americans, and as a result more than 48,000 people die prematurely every year.

    Potter was tasked with writing an official-sounding report that minimized the problem and shifted all the blame on the uninsured. He helped craft reform-killing talking points for the healthcare lobby’s Congressional stooges to repeat into the cameras of Fox News and CNN. He was part of the effort to smear Michael Moore and discredit Sicko, his 2007 critique of the iniquities of the healthcare industrial complex, even though deep down he knew Moore was dead-on. The final straw was having to serve as company spokesperson through the resulting media firestorm when Cigna denied 17-year-old Nataline Sarkisyan a liver transplant and she died less than a week later.

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.

  • New York Times: Cuomo, Praised for Tax Deal, Takes Victory Lap to City. By Thomas Kaplan. Excerpts: n Friday, the Senate Democratic leader, John L. Sampson, called the governor’s success persuading a divided legislature to swiftly adopt sweeping tax legislation “an amazing thing.” The Assembly speaker, Sheldon Silver, declared, “We have the most effective governor in America today.” Not to be outdone, State Senator Kevin S. Parker, a Brooklyn Democrat, described Mr. Cuomo in an interview as “the most popular governor in the world.” ...

    Government watchdog groups were livid over Mr. Cuomo’s stealthy maneuverings in winning enactment of the tax package, which creates a new tax bracket for the state’s highest-income residents while reducing rates for millions of middle-income families. Some Republicans claimed he tried to win their votes by threatening them with political retribution if they did not support him. But as Mr. Cuomo took a victory lap on Friday, promoting aspects of the legislation outside Binghamton and in Brooklyn, he was greeted with overwhelming applause. ...

    “Everybody’s blaming everybody, and they’re pointing fingers, and nothing is happening,” Mr. Cuomo said of Washington. He described New York as “a shining example of the opposite,” adding: “What if you don’t blame each other? What if you don’t argue amongst each other? What if you don’t play politics with each other? What if you work together? What if you stop shouting and you start listening and you find out how to cooperate and how to reach compromise?

  • Washington Post: We’re past due on handling the finances of war. By Walter Pincus. Excerpts: Better late than never. It’s time to start thinking about how to pay not only for core spending by the Defense Department for what I will call “peacetime” forces, but also the costs for actual fighting, next year and beyond.

    Bush administration officials took the core Defense budget to provide a force to fight two overseas wars and grew it from $391.5 billion in 2001 to $544.6 billion in 2009. Each year, they sought supplemental billions in addition to the growing core budget. By 2009, funds for Iraq and Afghanistan fighting had totaled $1 trillion. Over the same time period, another $1 trillion had been added to core budget spending.

    Bush administration officials took the core Defense budget to provide a force to fight two overseas wars and grew it from $391.5 billion in 2001 to $544.6 billion in 2009. Each year, they sought supplemental billions in addition to the growing core budget. By 2009, funds for Iraq and Afghanistan fighting had totaled $1 trillion. Over the same time period, another $1 trillion had been added to core budget spending. ...

    But how about linking funds gained from letting the Bush upper-income tax cuts expire to paying for overseas war expenditures? That would gain $40.9 billion in fiscal 2012 according to a 2010 Treasury estimate; another $49.7 billion in fiscal 2013. It would also put us on the way to covering all the extra war expenditures by fiscal 2014.

    “If it takes the threat of a tax increase to get people to think seriously about whether it’s worth continuing to fight wars far from home — wars that have only the most tenuous connection to the national interest — then it’s a good idea,” Bruce Bartlett, a domestic policy adviser to President Ronald Reagan and Treasury official under President George H.W. Bush, wrote in November 2009.

  • The Berkley Blog: The few, the proud, the very rich. By Sylvia Allegretto. Excerpts: Much of the current political and popular discourse has focused on inequalities that exist in the U.S. In particular the Occupy movement has brought the huge disparities in wealth to the forefront. There are a few questions floating around about wealth. First, how skewed is the distribution? Second, it is true that the rich have gotten much richer over time? —a statement I often heard my Grandma make. ...

    In 2007 (the most recent SCF) the cumulative wealth of the Forbes 400 was $1.54 trillion or roughly the same amount of wealth held by the entire bottom fifty percent of American families. This is a stunning statistic to be sure.

    Upon closer inspection, the Forbes list reveals that six Waltons—all children (one daughter-in-law) of Sam or James “Bud” Walton the founders of Wal-Mart—were on the list. The combined worth of the Walton six was $69.7 billion in 2007—which equated to the total wealth of the entire bottom thirty percent! ...

    These revelations renewed my interest in the inheritance and estate tax debates. Also, didn’t I just read somewhere that Wal-Mart is substantially rolling back health care coverage for part-time workers and significantly raising premiums for many full-time staff?

  • Huffington Post: Walmart Heirs Worth Same Amount As Bottom 30 Percent Of Americans In 2007: Analysis. Excerpts: The Occupy Wall Street movement has brought increased focus on the disparity between the top one percent of earners and everyone else in the United States. But one American family paints a particularly stark picture of the country's wealth gap.

    The six children of Walmart's founders, Sam and James "Bud" Walton, had the same net worth in 2007 as the entire bottom 30 percent of American earners, according to an analysis from Sylvia Allegretto, a labor economist at University of California-Berkeley's Center on Wage and Employment Dynamics.

    Though the 2007 figure is striking, the gap between the Walmart heirs and the rest of the country may get even bigger -- the Walton's combined fortune has grown by more than $20 billion, according to data compiled from the Forbes 400 this year. ...

    The top 10 percent of U.S. earners control two-thirds of the country's wealth and the richest 400 Americans control as much wealth as the bottom 50 percent of Americans. The difference is so stark that the public opinion has turned against it: nearly three-quarters of respondents to a poll put out by The Hill said they think income inequality is a problem.

  • Nation of Change: The Walmart Heirs Have the Same Net Worth as the Bottom 30 Percent of Americans. By Pat Garofalo. Excerpts: Income inequality in the U.S. is currently the highest its been since the 1920s, with the 400 richest Americans (who are all billionaires) having as much wealth as the bottom 50 percent of Americans combined. And as it turns out, just one wealthy family has managed to amass a fortune equal to that of the combined net worth of the bottom 30 percent of Americans — the Waltons, heirs to the Walmart fortune, as Sylvia Allegretto, a labor economist at the Center on Wage and Employment Dynamics, found.

    Not only have the Waltons gathered a fortune equal to that of the bottom third of the country, but they spend it lobbying to cut their own taxes. For years, the Waltons have been supporting efforts to cut the estate tax, the tax levied on inheritance. Conservatives intent on cutting this tax — which they’ve brilliantly dubbed the “death tax” — led to President Obama agreeing to a “compromise” last year that lowered the rate and increased the tax-free exemption, giving a senseless tax break to extremely wealthy families.

  • Huffington Post: U.S. Household Wealth Third Quarter 2011: Americans Take Biggest Hit Since 2009. By Derek Kravitz and Dave Carpenter. Excerpts: Americans' wealth last summer suffered its biggest quarterly loss in more than two years as stocks, pension funds and home values lost value. At the same time, corporations raised their cash stockpiles to record levels. ...

    When their declining wealth is combined with stagnant pay, many Americans are less likely to spend. Average household income, adjusted for inflation, fell 6.4 percent last year from 2007, the year before the recession, according to the Census Bureau. That's a drag on the economy, since consumer spending accounts for 70 percent of economic activity.

  • The Raw Story: Fire dept. watches home burn because family didn’t pay fee. By Stephen C. Webster. Excerpts: Firefighters in one Tenn. county watched this week as a family’s home burned to the ground, refusing to take action to save the structure because the residents had not paid their yearly $75 fee. Homeowner Vicky Bell told a reporter with NBC affiliate station Local 6 WPSD that she immediately called 9-1-1 when the fire began, and emergency crews rushed to the scene. Unfortunately for Bell, once firefighters arrived they realized that the family had not contributed to the department this year, so they stood down — exactly as instructed to by the City of South Fulton’s “pay for spray” policy.
  • The Atlantic: President Obama's Speech: America's 'Basic Bargain' Is Broken—Now What?. Excerpts: The erosion of a "basic bargain" is an apt frame for seeing the motivations behind the both Tea Party and Occupy movement. These sweeping protests did not come out of nowhere. Middle class tensions have rumbled for years before the recession, as globalization and technology reduced opportunities for the middle class (especially for middle class men) and health care costs stripped more from our compensation, leaving workers with less to take home to their families. Each side has its own boogeyman. The Tea Party (largely) blames Washington and Obama. The Occupy protesters (largely) blame the 1 percent and the financial sector. I happen to think it's more complicated, and that there are in fact too many culprits to blame for us to march against them all at the same time. But my opinion doesn't really matter insofar as we're identifying the origins of American rage. The concept of a broken bargain hits it on the head. ...

    Much of the president's speech beat back criticism that his regulations are hurting growth. While some medium-sized companies have balked at the health care law, poll after poll demonstrates that, when it comes to firms not hiring, sales and domestic labor costs far outweigh concerns about complying with new regulations. Similarly, if you're angry about the layoffs on Wall Street that might be related to the rules in Dodd-Frank (as some of you really are, and some of you really are not), anger toward the White House should be weighed by the memory of 2008, when deregulation and poor regulation allowed the financial system to collapse -- save for a $7 trillion bailout from the Federal Reserve. If regulation has a cost, so does its absence.

  • Washington Post: Obama’s New Square Deal. By E.J. Dionne Jr. Excerpts: Obama was remarkably direct in declaring that the core ideas of the progressivism advanced by Theodore and Franklin Roosevelt were right, and that the commitments of Reagan-era supply-side economics are flatly wrong. He praised TR for knowing “that the free market has never been a free license to take whatever you can from whomever you can” and for understanding that “the free market only works when there are rules of the road that ensure competition is fair and open and honest.”

    He also eviscerated supply-side economics, a theory promising that “if we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger.” “But here’s the problem,” Obama declared. “It doesn’t work. It has never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ’50s and ’60s. And it didn’t work when we tried it during the last decade.”

  • Huffington Post: Saving Our Democracy. By Senator Bernie Sanders (I-VT). Excerpts: The Constitution of this country has served us well, but when the Supreme Court says that attempts by the federal government and states to impose reasonable restrictions on campaign ads are unconstitutional, our democracy is in grave danger. That is why I have introduced a resolution in the Senate calling for an amendment to the U.S. Constitution.

    I did not do this lightly. In fact, I had never done it before. The U.S. constitution is an extraordinary document. In my view, it should not be amended often. In light of the Supreme Court's infamous 5-to-4 decision in the Citizens United case, however, I saw no alternative.

    I strongly disagree with the ruling. In my view, a corporation is not a person. A corporation does not have First Amendment rights to spend as much money as it wants, without disclosure, on a political campaign. Corporations should not be able to go into their treasuries and spend millions and millions of dollars on a campaign in order to buy elections.

    The ruling has radically changed the nature of our democracy. It has further tilted the balance of the power toward the rich and the powerful at a time when the wealthiest people in this country already never had it so good. History will record that the Citizens United decision is one of the worst in the history of our country.

    At a time when corporations have more than $2 trillion in cash in their bank accounts and are making record-breaking profits, the American people should be concerned when the Supreme Court says that these corporations have a constitutionally-protected right to spend shareholders' money to dominate an election as if they were real, live persons. If we do not reverse this decision, there will be no end to the impact that corporate interests can have on our campaigns and our democracy. ...

    When the Supreme Court says that for purposes of the First Amendment, corporations are people, that writing checks from the company's bank account is constitutionally-protected speech and that attempts by the federal government and states to impose reasonable restrictions on campaign ads are unconstitutional, when that occurs, our democracy is in grave danger.

  • Wall Street Journal: SEC Puts Falcone, Harbinger in Its Sights. By Steve Eder. Excerpts: Hedge-fund manager Philip Falcone was threatened with possible civil-fraud charges from the top U.S. securities regulator, the latest in a series of setbacks that have buffeted the investor since he rocketed to stardom in 2007. Mr. Falcone and his firm, Harbinger Capital Partners LLC, received so-called Wells notices from the Securities and Exchange Commission, according to a regulatory filing Friday, an indication that charges are likely.

    Among the issues the SEC has explored is whether Harbinger agreed to allow some investors, including Goldman Sachs Group Inc., to cash out of their holdings while barring other clients from withdrawing their money, according to people familiar with the matter. ...

    Harbinger said it is "disappointed" with the issuance of the Wells notices, and if the SEC decides to bring an enforcement action, it intends to "vigorously defend against it," according to the filing.

    The threat of SEC charges is a blow for Mr. Falcone, who was catapulted to fame on Wall Street when his successful hedge-fund bets against subprime mortgages earned him billions of dollars. Investors flocked to Harbinger, helping push its assets to a peak of $26 billion in 2008.

  • Financial Times (United Kingdom): Republicans block consumer finance nominee. By Shahien Nasiripou. Excerpts: Senate Republicans have blocked President Barack Obama’s choice to lead a new consumer finance regulator, setting the stage for an election year battle over the direction of financial reform. The confirmation of Richard Cordray, a former Ohio attorney-general who has sued big US banks for alleged mortgage misdeeds, was prevented because supporters failed to muster the 60 votes needed under Senate rules to end debate and proceed to a final majority vote on the issue. Of the 100 senators, 53 are Democrats and aligned independents.

    Mr Cordray was nominated to lead the Consumer Financial Protection Bureau (CFPB), an agency created by last year’s Dodd-Frank financial reform law. The bureau, which consolidated powers from a variety of regulatory agencies, is meant to protect borrowers from abusive lenders. ...

    Harry Reid, Senate Democratic leader, said: “This was the first time in Senate history a party blocked a qualified nominee solely because it disagrees with the existence of an agency that was created by law.” Elizabeth Warren, a Harvard bankruptcy professor now seeking to represent Massachusetts in the Senate, conceived of the agency and led the charge for its creation. Mr Obama however declined to nominate her to lead the consumer bureau, disappointing his supporters.

  • Business Insider: Finally, A Rich American Destroys The Fiction That Rich People Create The Jobs. By Henry Blodget. Excerpts: In the war of rhetoric that has developed in Washington as both sides try to blame each other for our economic mess, one argument has been repeated so often that many people now regard it as fact: Rich people create jobs. Specifically, entrepreneurs, when incented by low taxes, build companies and create millions of jobs.

    And these entrepreneurs, therefore, the argument goes, can solve our nation's huge unemployment problem — if only we cut taxes and regulations so they can be incented to build more companies and create more jobs.

    In other words, by even considering raising taxes on "the 1%," we are considering destroying the very mechanism that makes our economy the strongest and biggest in the world: The incentive for entrepreneurs to start companies in the hope of getting rich and, in the process, creating millions of jobs.

    Now, there have long been many absurd holes in this theory, starting with

    1. Taxes on rich people (capital gains and income) are, relative to history, low, so raising them would only begin to bring them back in line with prior prosperous periods, and
    2. Dozens of rich entrepreneurs have already gone on record confirming that a modest hike in capital gains and income taxes would not have the slightest impact on their desire to create companies and jobs, given that tax rates are historically low. ...

    The most important reason the theory that "rich people create the jobs" is absurd, argues Nick Hanauer, the founder of online advertising company aQuantive, which Microsoft bought for $6.4 billion, is that rich people do not create jobs, even if they found and build companies that eventually employ thousands of people.

    What creates the jobs, Hanauer astutely observes, is the company's customers.

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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