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6, 2000 April, 2000

Highlights—December 24, 2011

  • CBS Evening News: The human impact of D.C. gridlock. By Ben Tracy. Excerpts: Bonnie Ornitz has been out of work for six months. "All those senses of accomplishment I had from doing my job - they just seem like ancient history now," she told CBS News correspondent Ben Tracy. Ornitz was laid off by IBM in June, after 30 years in the information technology field.

    Ornitz says being out of work is "exponentially more difficult," than she thought it'd be. "Not working is not an option. I come from a family where people worked until they were retired or dead." Ornitz has applied for 30 jobs near Los Angeles and has had just two interviews. She's collected 24 unemployment checks - $450 each week. She calls the unemployment checks "a godsend." "It is a lifeline for me and to take that away is going to be devastating," says Ornitz. ...

    Ornitz is frustrated by what she sees in Washington. "They don't face the things we face. They all want my vote -- but I don't exist to them. They don't want to see it. We're not important to them." She added: "I don't think they care one bit - on either party."

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Anonymous in South Melbourne (Australia): (Current Employee) “A mixed bag.” Pros: Get to implement the latest tech. The odd overseas trip. The work is very varied and technically very interesting. Cons: Poor pay as compared to the competition. Commissions are poor. Too many spreadsheet drivers and checkers who check the checkers! Advice to Senior Management: Look beyond the end of next quarter IBM is at risk of being seen as a cheap and nasty company to work in. We can do better.
    • IBM Senior Product Manager: (Current Employee) “a company that is busy with itself, run by finance people.” Pros: Life work balance is good! Appropriate processes in place to rate employees and award fair salaries. General information is very well communicated and made accessible on IBM's intranet. Cons: Matrix organization can be confusing and lots of different groups seem to work on the same thing. It takes a long time to figure this place out and how things are done. Advice to Senior Management: Have a better plan how to integrate acquired companies from a product portfolio point of view. Be clearer and more prescriptive how competing solutions will be consolidated otherwise people get frustrated and top talent is leaving.
    • IBM Anonymous in Raleigh, NC: (Past Employee - 2011) “disappointing.” Pros: company has an excellent reputation. Cons: all about processes and matrix management, never met my manager,
    • IBM Anonymous: (Current Employee) “Personal experience is directly related to the competency of your direct management chain.” Pros: Opportunity to work in a truly global marketplace. Cons: Many of the current crop of first line managers are not qualified to manage people. Advice to Senior Management: Recognize and rebuild the expertise that you have lost in the last few years. Those of us in the field clearly see the damage that has been done and our clients are looking elsewhere to fill the void.
    • IBM A&R Administrator in Mexico City, The Federal District (Mexico): (Past Employee - 2009) “Watch your back.” Pros: Big clients to work with; negotiating leverage. Cons: Employees care for themselves, not the company, so they'll throw you under the bus if that means saving their gut. Advice to Senior Management: Learn to listen. Hear and accept ideas from subordinates... some might actually work.
    • IBM Anonymous: (Current Employee) “Great life work balance, nice people, but compensation could be much better.” Pros: * Work from home; - many positions are 100% remote; * Nice, supportive, and smart co-workers (for the most part); * Flexible work schedule (you can pretty much set your own hours, as long as they're reasonable); * Flexibility in taking time off; * Good life work balance; * Opportunity to learn and grow professionally. Cons: * Compensation could seriously be improved - many people, including myself, are underpaid for their experience and education; * Too many meetings; * Poor planning = too many fire drills; * Lotus Notes is atrocious, so is Sametime; * Poor help desk assistance. Advice to Senior Management: * Pay people what they are worth.
    • IBM Anonymous in Raleigh, NC: (Past Employee - 2010) “Fun innovative environment.” Pros: Flexible, creative, stable, and environment with a balanced work and personal life. Cons: way too bureaucratic; takes forever to complete a project. Advice to Senior Management: continue to innovate
    • IBM Anonymous: (Current Employee) “every year it gets worse.” Pros: Potential for flexible working/working from home. Cons: Negligible raises in past 5 years together with cuts in bonus whilst company posts record profits and executive pay. Constant threat of redundancy because of policy of moving jobs to low-cost economies.
  • InfoWorld: No overtime for IT? Occupy the data center! Lawmakers want to take away overtime pay for thousands of IT workers. What's wrong with these people? By Bill Snyder. Excerpts: Working until the job is done is the ethos of most IT hands that I know or have collaborated with. If a server needs to be rebooted or a virus uprooted, people stick around to solve the problem. When they do, they deserve to be paid overtime. But a U.S. senator from the high-tech-rich state of North Carolina has a different idea. She wants to make thousands of IT workers ineligible for overtime pay, a move that would result in a substantial decrease in overall income for many employees and their families.

    In case you assumed that the Republicans have a monopoly on antilabor legislation, think again. The Computer Professionals Update Act was proposed by a Democrat, Sen. Kay Hagan, whose state is home to a heavy concentration of technology-related companies, as well as financial services outfits, including Bank of America, that are huge employers of IT workers. (In what's likely inadvertent humor, the bill is also referred to as the CPU Act.)

    Hagan's bill would amend the Fair Labor Standards Act (FSLA), which mandates that workers be paid time-and-half for work beyond 40 hours in a week -- in some cases, beyond 8 hours in a day. There are already numerous exemptions to that requirement, including salaried executives, professionals, and any IT worker "who is a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker." The current version of the FSLA goes on to specify that exempt-from-overtime jobs include "systems analysis techniques and procedures design, documentation, testing, creation, or modification of computer programs."

    Meet the CPU Act. But the CPU Act broadens that exemption so much it appears that any IT worker who is paid more than $27.63 an hour (and who isn't?) would lose the right to overtime. Here's what it says:

    • Any employee working in a computer or information technology occupation (including, but not limited to, work related to computers, information systems, components, networks, software, hardware, databases, security, Internet, intranet, or websites) as an analyst, programmer, engineer, designer, developer, administrator, or other similarly skilled worker, whose primary duty is
      (A) the application of systems, network, or database analysis techniques and procedures, including consulting with users, to determine or modify hardware, software, network, database, or system functional specifications; or
      (B) the design, development, documentation, analysis, creation, testing, securing, configuration, integration, debugging, modification of computer or information technology, or enabling continuity of systems and applications; ...

    A second Democrat, Sen. Michael Bennet of Colorado, is the cosponsor along with two Republicans, Sens. Mike Enzi of Wyoming and Johnny Isakson of Georgia.

    The motivation: Employers want to cut costs. The CPU Act is being discussed in Congress just as the jobs picture for IT workers has started to improve. With hiring on the upswing, employers want to keep costs as low as possible, and when jobs can't be outsourced, some are reluctant to provide the same level of pay and benefits they offered in the past. ...

    Because most IT workers are not members of a union (and don't seem to want unionize), it isn't clear who's fighting the bill. The AFL-CIO opposes it, but I don't know if the organization is putting real muscle into the effort. Paul E. Almeida, president of the AFL-CIO Department for Professional Employees, did send a letter to Congress, saying, "The 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." ...

    If you want to keep your overtime pay and stop this nonsense from spreading to others in the workforce, there's no better time to let your representatives know how you feel and then vote accordingly. And don't underestimate the power of protest. Earlier this year, we saw the rapacious banks scurry away from plans to impose new debit fees on users after Congress forced them to charge merchants less. Additionally, the Occupy Wall Street protests have refocused the politicians on the growing divide between corporations, whose income continues to grow, and most people, whose income has not. Maybe if IT occupied the data center, it might escape losing its overtime.

    • Capitol Hill Tax Stalemate Hurts Medicare
    • Romney Stumbles on Medicaid, Iowa Alliance Members Protest GOP Plans for Seniors
    • Walmart’s Health Insurance Changes Bad for Older Workers
    • 84 year-old Loses Right to Vote, Sues to Block New Voter ID Law
    • Happy Holidays from the Alliance
  • Wall Street Journal: Performance Reviews Lose Steam. Some Companies Find New Ways to Motivate, Exchange Feedback; A Few Scrap the Practice Altogether. By Rachel Emma Silverman. Excerpts: While most continue to perform the awkward rite of passage once or twice a year, a few companies—about 1%—are scrapping the formality altogether, according to the Corporate Executive Board. The thinking is that performance reviews are angst-provoking and even ineffective in actually motivating workers.

    Performance reviews have long received poor grades, even from those who conduct them. Nearly 60% of human-resources executives graded their own performance-management systems a C or below, according to a 2010 survey by Sibson Consulting Inc. and WorldatWork, a professional association. And one academic review of more than 600 employee-feedback studies found that two-thirds of appraisals had zero or even negative effects on employee performance after the feedback was given. ...

    A yet-to-be published study, by researchers Vicki M. Scherwin, Jean-Francois Coget and Randall J. Kirner, examined 17 firms without formal performance appraisal systems. Those organizations all reported low turnover, high employee morale and strong relationships between managers and employees, among other benefits, found the study. When feedback is "not going to be used to judge you or your fate in the company, you are more likely to be open about where you need to grow and it's going to be far more effective," says Dr. Coget of California Polytechnic State University, San Luis Obispo.

    Selected reader comments follow:

    • W. Edwards Deming called performance reviews one of the "deadly diseases" in his book, "Out of the Crisis," first published in 1982. If you haven't read the book, you should put it on your high priority list or new year's resolutions, whatever it takes to get you motivated. Dr. Deming's ideas deserve your careful attention.
    • Performance Reviews should be discarded and nothing should be used to replace them. Why would you want to substitute one disease with another? Mr. Golden's advise about reading Dr. Deming is well-founded. Deming showed reviews cause fear and they have nothing to do with why the system is not working properly. It's not as though the subject hasn't been researched enough. The only people that want to keep them going are the HR VP's that don't have the Leadership qualities they preach in their "Leadership" workshops and consultants that make a bundle of money selling their wares to those HR VP's. As they say, Anything not worth doing is not worth doing well." Ban any and all performance reviews and as Dr. Deming would say, lead people by breaking down barriers that prevent them from doing their jobs with pride and joy. Any company that does this will dominate their business.
    • Performance reviews for professional class workers are a sick joke. In the past, I have left a company due to a review I did not like. My attitude was basically- "Be my guest, find someone who you believe can do it better." And when I handed in my resignation, they were shocked and pleaded with me to stay.

      I think most engineers such as myself, who have skills very high in demand- Networking, Cisco, are really prima-donas when it comes to employment. Knowing that many jobs are waiting for them, should they decide to leave their present company. I have actually resigned from the present company I work for now, because certain things were bothering me. The CEO of our whole company, talked me into staying, by stating that he will personally take of anything that bothers me in the workplace. And he was good to his word on that, so I have stayed. It's not even a money thing with me, Networking Engineers can always make a decent living. I would rather hear the words- "We value and appreciate your hard work, and contributions to the company" than get a pay raise. But I know most workers do not have the same type of luxury that I do.

    • A significant amount of support for the elimination of traditional approaches to evaluation, motivation, and reward can be found in several places. Dan Pink, in his book, Drive, talks about how the "science" (research) has been telling us for years that performance reviews don't work. He describes how Autonomy, Mastery and Purpose are the three things that truly motivate employees to perform at high levels. The book, Tribal Leadership. also talks about how the "tribe's" Noble Cause (its purpose) and Core Values (the meaningful things the organization "stands in") are what bring about fulfilled, committed, loyal and productive employees.
    • As a 20 year mgr/director/vp, having to do these annually to check off the HR box, I can attest to every negative this article points out. Annual performance reviews are pointless and silly. If you're going to promote, give a raise or a bonus, you do it whenever the time is right. If you have a performance issue, you deal with it immediately, you don't wait until annual reviews. A good review leaves an employee expecting a promotion, raise, bonus, options, all the while there's only so much loot to go around. A bad review demotivates and reduces performance further. Over the last few years, I've simply let the employees do their own review, we read it quickly, I ask if there's anything to add or not, and then file it. The irony is, most employees are harder on themselves than I would be, with a few exceptions that think they're rocks stars.
    • There is one benefit to performance reviews, although it is a negative one. If the company has already decided to get rid of you, they give you a review that basically amounts to "does not meet expectations" and you get put on a "performance improvement plan." The reality is that no one ever survives this process--the decision has already been made--there is no hope of recovery. So, you get 6 months to a year to find another job or at least plan how to budget your unemployment.

      Otherwise, you would get no warning at all.

      But, other than this, they are useless. Useless because any boss I ever had already has decided how much of a raise, if any, they will give you and the numbers are just backed into that to produce the appropriate review "score." If they aren't doing this, they want you gone anyway.

    • The performance review process is based on two false premises 1) the managers actually know what it is they want you to do, they want you to do it, and they have the competence to judge performance and 2) they actually want you to accomplish the agreed upon tasks with the indicated performance - in fact they are usually scared "silly" (ie sh*tL*ss) that you will in fact do exactly what they wanted you to do, or even exceed it. Five years in government as an engineer, 30 years in industry as an engineer and engineering manager -never saw anything to indicate the contrary. Also, the other comments on Dr. W. Edwards Deming and his research and writings are dead on. He was on target when he made them, and now, almost 19 years after his death they are even more relevant.
    • I hated performance reviews, both my own and those for whom I did them. They are worthless dinosaurs of a by-gone era, and never did contribute to any meaningful improvement in the overall company. The problem is that those who needed improvement the most were at the top of the company, and never had the same standards imposed on them that they imposed on the rest of us!
  • Wall Street Journal: 'A Sabbatical? Me?' Yes, you. And these authors explain why your employer actually might like the idea. By Kelly Greene. Excerpts: WSJ: Why do employers agree to sabbaticals? MS. SMITH: Of Fortune's best 100 companies to work for in America, 21 of them have paid-for, formal sabbatical programs. It's a competitive advantage with regard to recruiting talent.

    Two of the trends that corporations are focusing on right now are customer experience and innovation. You have to be creative about how you enable your team to be more innovative. And if you're burned out, you're going to take it out on your customers.

    Sabbaticals also increase loyalty. We're always quoting Intel as having given thousands and thousands of sabbaticals over time. They have a two-month sabbatical, plus you can add a one-month vacation.

  • Information Week: Congressman Wants More Green Cards For Tech Workers. By Paul McDougall. Excerpts: Congressman Tim Griffin plans to introduce legislation that would make it easier for foreign tech workers who were educated in the United States to obtain a green card. "We have a shortage of STEM graduates with advanced degrees here in the United States, which hinders American job creators' ability to grow their businesses and hire additional employees," said the Arkansas Republican, in a statement Thursday. ...

    Foreign students who graduate from U.S. universities can usually get an H-1B visa to work in the United States, but such visas are good only for a maximum of six years, and the holder can only work for the company that sponsored the H-1B. If the student has no family ties in the country, obtaining a green card, which grants the right to live and work permanently in the U.S. for any employer, can be difficult and take years. ...

    Other partnership members include the CEOs of Microsoft, AOL, eBay, Xerox, and Compuware, as well as tech and sports entrepreneur Mark Cuban. Microsoft officials have previously said that the company has about 10,000 open positions it can't fill due to a lack of qualified workers. The study also found that for every 100 H-1B workers introduced into the economy, an additional 183 jobs are created for U.S. natives. It also said that the average, foreign-born adult with an advanced degree pays more than $22,500 in taxes, while receiving about $2,300 in benefits.

    Selected reader comments follow:

    • Here at IBM, US workers number 55,000 fewer employees, and many of them were a part of a "resource action". The plan is to bring India and China workers here to be trained by us - and use this Green Card as a way in - so they can then return to their home countries and steal the job of some American for dimes on the dollar. And wouldn't you know, a Republican is repeating the lie of the shortage of US tech workers - HOW ABOUT the thousands of US I/T workers who were fired in the last 3 years? Republicans are hellbent to deliver profits to the CEOs, no matter what the cost to the American people. And keep spreading the lie about the shortage of US tech workers... as if US Companies were actually contemplating a US expansion! Occupy IBM, Occupy Microsoft, Occupy Xerox. Occupy GE. Jail terms for the treasonous CEOs who brought America to brink of disaster just to grow more corporate neck fat.
    • Seriously Congressman???? Do you have ANY idea as to how many IT workers there are that are unemployed with ADVANCED degrees? I personally know SEVERAL and you want to allow foreigners that obtain those same advanced degrees a green card? How about instead of granting them green cards and removing AMERICAN workers (or off-shoring those jobs to alleged advanced degree Indians --- YES I said ALLEGED because their advanced degrees do not add up to a Bachelors and a good percentage FAKE their credentials) you back (or author) a bill that PENALIZE those companies that are insistent on off-shoring. I await your retort.
    • New study? Smoke and mirrors is more like it. Enough is enough. Give the American workers in your own country a break. The problem is not a lack of qualified workers, it is a lack of jobs. Please don't give away more of our jobs. I think most Americans would agree that it is time to help our own citizens get back to work. This kind of legislation is killing us.
    • The problem with the h1b is that the country loses more jobs than it creates. The h1bs are used as offshorers. They get trained and with email and instant message and online meetings, train their counterparts in an offshore location. The original American software developer is slowly eliminated. The solution to this is simple. Do not allow companies that have offshore facilities to use the h1b or the L1. This is simple and makes sense and will bring high-tech jobs back. The h1b visa does create jobs because they pay taxes, buy hoses and cars and consume here. If they cannot offshore jobs it would be a net positive. What is so difficult about adding legislation that says a company that off shores cannot use h1bs? That way the US can get the H1Bs without the net loss in jobs. Companies can still benefit from the h1b.
    • Hey, lobbying (er, bribing) U.S. legislators is big business. One of the companies behind this push is Intel Corporation, which is seeking further substitution of young imported workers, ideally trained at taxpayer expense, for experienced American citizen technical professionals. It seems that Intel perceives that their profits are increased via discriminating against experienced Americans in hiring decisions.

      The Senate Office of Public Records website shows that with Client Name: Intel, Filing Year: 2011, Issue: Immigration that Intel Corporation has expended $3,231,290.00 in the 2011 reports tabulated to date. Microsoft, etc. are spending similar large sums to help procure legislation that benefits employer interests at the expense of older American IT professionals. As I note in my 2007 investigative article "The Greedy Gates Immigration Gambit" that Jack Abramoff and his team helped guide the approximately $100 million in Microsoft's legislatively-connected expenditures between 1995-2000. (To find the article, search via the title for the PDF version of the article.) Microsoft helped to procure three employer-friendly changes in the controversial H-1B Visa legislation.

      To me, this is corruption, pure and simple as "things of value" were supplied in exchange for "official acts." I believe that this illegal and unethical conduct should stop.

    • Good Lord. We just had an article out here a month ago that showed companies were using the program to fill low tech jobs and undercut salaries of U.S. workers. We've already established that companies are scamming this program with actual hard evidence. Are we really going to keep pretending there is an actual need for this cap to increase???
  • Yahoo! IBM Employee Issues message board: "Re: New Legislation - easier for foreign tech workers to obtain green cards" by "alwaysontheroad4bigblue". Full excerpt: If I understand economics correctly, a "shortage" of a given commodity (including labor) causes an increase in cost (i.e. salary) of the commodity that is in short supply. Why is it then, that I.T. salaries have stagnated or gone down over the last decade?

    The reality is that H1-B and L1 visas (IBM uses a lot of L1 visas to bring in employees from IBM India, and there is no limit on the number of L1 visas) have driven down the cost of I.T. labor and causes tens of thousands of U.S. I.T. people to lose their jobs.

    Our Arkansas Republican is working for the people that pay his bills...corporate America.

  • Yahoo! IBM Employee Issues message board: "Re: New Legislation - easier for foreign tech workers to obtain green cards" by "Sam Cay". Full excerpt: I would read this as the IT resources in the US is limited but if you look at the world labor pool it is more than adequate to fill employment needs here. It suggests that is the reason for using and bringing in employees to supplement our workforce. Labor is the highest cost in a business so as you can imagine employing lower cost labor helps the bottom line. Profit doesn't care if it is Indian or US labor.
  • Yahoo! IBM Employee Issues message board: "Re: New Legislation - easier for foreign tech workers to obtain green cards" by "Paul S". Full excerpt: Another purpose is to bring in cheaper foreign labor to be trained by us and then go back to their home country and take over our jobs. Many firms are doing this.
  • Yahoo! IBM Employee Issues message board: "Re: New Legislation - easier for foreign tech workers to obtain green cards" by "Sam Cay". Full excerpt: Yes , I agree and it will be very difficult to turn this around. I have not seen any viable suggestions on how to do this.
  • Yahoo! IBM Employee Issues message board: "Re: New Legislation - easier for foreign tech workers to obtain green cards" by "cybertramp66". Full excerpt: Here's a suggestion. In the face of disastrous US employment numbers, stop H1B and all Lx work visa programs immediately. In case no one has noticed, we are at the precipice of another huge economic collapse -- some say worse than 2008. Watch Europe. It's in bad shape and shock waves will reach the US quickly once it starts unraveling.
  • Yahoo! IBM Employee Issues message board: "Re: New Legislation - easier for foreign tech workers to obtain green cards" by "maxxcurrey". Full excerpt: The solution is simple and that is quick voting for corporatists and demand that the corporatists now in office change their tune or they will be out of office. The [re]publicans are just plain crazy and the Democrats are now a right of center party, too. The right wingers have wrecked the country whether they call themselves that or not. We can never sleep, because they never do.

    For almost 200 years the U.S. had tariffs on goods to not allow easy dumping of cheap foreign goods. This idea goes back to the time of Alexander Hamilton as public policy. Now that the personnel office has been replaced by the Human Resources department we in the U.S. are not only getting dumping of cheap Chinese products we are getting dumping of cheap workers.

    The 'free trade' garbage and the other neo-liberalism nonsense spouted by the Ayn Rand cult from the Chicago School (the Greenspans, Friedmans, Pauls, Cantors, Boners, etc.) has not only been proven wrong time and again it is now come home to wreck the U.S. and not just foreign countries anymore.

    The elites want the return of feudalism so they pursue what Roosevelt termed 'economic royalism' and they throw in some old time religion and there you have it, back to the Middle Ages. Everyone had their place knew their place and it was all as their God said it should be

    Join a union and pay them a monthly bill instead of wasting the money on Comcast or some other right wing corporatist company to tell you lies.

  • Financial Times (United Kingdom): Immigration cap complaints fall away. By Helen Warrell. Excerpts: Complaints by business that the government’s immigration cap was stifling growth have fallen away amid persistent stagnation in Britain’s poor labour market, according to new research by employment analysts. The number of companies planning to hire migrant workers from outside the European Union fell by a quarter in the three months to December 2011 according to a survey of over 1,000 employers by the Chartered Institute of Personnel Development.

    The drop in demand is most prevalent in highly-skilled jobs such as engineering, IT, finance and accountancy – roles which have historically seen high levels of recruitment from countries such as India, Singapore and the US.

  • Wall Street Journal: How to Make Your Nest Egg Last Longer. When it comes time to tap savings, use the tax code to your advantage. By Anne Tergesen. Excerpts: You probably know the conventional wisdom: When spending retirement savings, drain taxable accounts first, to give the money in tax-deferred 401(k)s and individual retirement accounts more time to grow, and leave tax-free Roth IRAs for last.

    But with many nest eggs today smaller than they should be, a better approach, some financial advisers say, is to tap these accounts simultaneously in order to minimize taxes over time.

    The key is to make full use of the lower federal and state income-tax brackets many retirees are in early in retirement. To further reduce taxes, it may make sense for those with after-tax incomes between $40,000 and $90,000 to defer Social Security, says James Mahaney, vice president of strategic initiatives at Prudential Financial Inc.

    Those who stick to the convention of annually spending no more than 4% of their initial retirement savings—adjusted each year for inflation—can "use the tax code to make their portfolios last up to seven years longer," says Baylor University Prof. William Reichenstein, a principal at Retiree Inc., a Leawood, Kan., company that helps retirees plan tax-efficient withdrawals.

  • Forbes: The Slow Starvation of Senior Services. By Howard Gleckman. Excerpt: Congress is slowly starving senior services programs. In the 2012 budget it passed as it was leaving town last weekend, Congress froze or cut spending for a broad range of government programs aimed at seniors and their caregivers–everything from Meals on Wheels to long-term care ombudsman training to information and referral services.

    Most of these cuts were not dramatic and only a handful of programs were killed outright. But few received additional funding, despite the growing needs of the elderly and their families. For many programs, this was the second year in a row their budgets were frozen. And chances are good they’ll be frozen again when Congress approves their 2013 budgets a year from now.

    The funding changes were just part of what has been a steady pattern—one likely to accelerate as Congress and the President confront significant budget shortfalls. The good news for these programs is that, in face of fiscal gridlock, much bigger budget reductions have been delayed. The bad news is this gridlock won’t last forever and many senior services will face deep cuts in coming years. Much, of course, will depend on the outcome of the 2012 elections.

  • SmartMoney: 4 Reasons Boomers Need Bigger Nest Eggs than Their Parents. By Alicia Munnell. Excerpts: People often ask how baby boomers compare with their parents in terms of being prepared for retirement. The easiest way to answer that question is to look at the ratio of wealth to income from the Survey of Consumer Finances (SCF), the Federal Reserve’s comprehensive survey of household wealth in the United States. The notion is that the wealth-to-income ratio is a good proxy for the extent to which people can replace their pre-retirement earnings in retirement. From 1983 through 2007, the period during which the surveys were conducted, the ratio of wealth to income has remained virtually unchanged at any given age. That is, the lines are roughly on top of one another.

    At first glance, this regularity seems comforting, suggesting that the boomers and the cohorts that follow are as well prepared for retirement as their parents. But that conclusion is wrong. For while the boomers have been accumulating wealth at much the same pace as their parents, the world has changed in four important ways.

    1) The prevalence of defined benefit pension plans has declined dramatically over the last 25 years. ...

    2) Real interest rates have fallen significantly, so a given amount of wealth will now produce less retirement income. If people were interested in generating a given stream of income, the significant decline in interest rates since 1983 would have been expected to boost wealth accumulations. But it did not. ...

    3) Life expectancy has increased, so accumulated assets must support a longer period of retirement. ...

    4) Health care costs have risen substantially and show signs of further increase, indicating a need for greater accumulation of retirement assets.

  • Financial Times (United Kingdom): VW gives BlackBerry-wielding workers a silent night. By Chris Bryant. Excerpts: The working day is over and the Christmas holiday has officially begun, but the blinking red light or vibration of a BlackBerry is still maddeningly hard to ignore. Angered by the blurring of the dividing line between the workplace and home, Volkswagen’s powerful works council has struck an agreement with management that employees who use a BlackBerry and whose pay is governed by a collective wage tariff agreements will be subject to new email restrictions.

    So from now on, VW’s email server will cease routing messages 30 minutes after the end of an employee’s shift and will only begin sending mails again half an hour before the next working day begins. ...

    A VW works council spokesman confirmed the existence of the BlackBerry agreement but explained that the rule did not apply to senior management or other workers who fall outside trade union-negotiated pay brackets. The works council sought the restriction in response to the tendency for BlackBerry users to be contactable by employers at all hours and amid a growing awareness in Germany of the risks of employee “burn-out”.

    Selected reader comments follow:

    • Having left behind the controlling force of an autocratic employer and its compulsarily issued Blackberry I am now enjoying a life where I have resumed using a dusty old bulletproof Nokia from the broom cupboard with none of the controlling big brother. Its time we all stood up to the steady erosion of employee's rights to their own time. Why should the restrictions above apply only to 'union'staff. We are going back to Victorian workers rights. Its time to take a stand! Switch off when off duty!
    • It's about time. Employers have had it too good for too long thanks to the invention of this insidious little device. Without any say in the matter, all of us have become on call all the time, obliterating the separation of work life from home life. That's not the bargain the vast majority of workers made entering the workforce - they have had no choice in the matter. Referring to blackberry as "crakberry" misses the point. It is not optional to ignore messages when you have one. VW is setting an example here. More will follow suit. Maybe one day even British employers will realise that constant availability isn't the best way to retain a motivated and productive workforce.
    • we used to call some people as "blackberry MD" in the banking industry. it is almost a fashion to compete at who send out most emails in the middle of the night to act as if they are the hard working people, except that they are never seen enough by the people they actually work with. the biggest drawback for the blackberry is when incoming emails tend to disorient the priority of issues, that people are simply to drawn to handle every email as it comes, people end up not giving right focus or time on the issue that really matters when some instant response seems to be expected.
    • I thought it was April Fools day for a moment. If anything is insidious (@Sword of Truth) it's the Unions and their hold over German companies. Why should the union dictate whether an employee can reply or not? This is an affront to productivity, market forces and good capitalism!
    • Although it may sound a bit like a kid being happy his teachers cannot give him homework - this is in fact a very welcome and intelligent step. There should be no obligation to answer emails when you are not 'at work'. In an information economy, to be expected to respond to emails on a continual basis effectively means you are 'working' all day and evenings, and weekends, and holidays.

      Some people want to work like this (and they are usually very sad people with no personal or family life) - and they are welcome to it - they will also no doubt be paid many times more than the average wage. To conclude: if you want employees in an information economy to filter and respond to communicated information that belongs to and concerns a private business at all hours of the day, then you will have to pay them more to do so. The more logical, and cheaper solution, is to be more efficient with the passing back and forth of information so that it does not need to be handled at 11PM on a Friday night, just before Xmas.

    • Commendable decision. A small step for VW, but a big one for its workers!
New on the Alliance@IBM Site
  • Job Cut Reports
    • Comment 12/22/11: There is only so much cutting IBM can do to continue to make their tremendous numbers every quarter. They are running out of people to cut after cutting and cutting for all these years. They are getting to the point that they can't outdo themselves. What goes around comes around and they will get theirs. Happy Holidays to all of you and best of luck in the new year. -Gone_in_07-
    • Comment 12/22/11: -Gone_in_07- Your observation is all true. I hate to see what will happen when IBM has a real soft or bad QTR report. How are they gonna fool Wall St. and the 1%ers then? -Gone_in_09-
    • Comment 12/22/11: Laid off as of 12/1/11. Given 30 days to find another job in IBM, Just made the Quarter Century Club. Got my Quarter Century book and have no letters from anyone. Not one. But did get a canned letter from Palmisano saying "congratulations" for all it is worth. Hey, Sam do you have a few seconds to sign in real pen ink your signature for my Quarter Century induction? OK, you're busy. Those seconds to possibly sign might take away from selling your millions in stock options. OK, then how about Randall MacD? I forgot, he is IBM's Dogbert. That explains it all. No thanks for 25 years of dedicated service to IBM. So much for IBM's RESPECT FOR THE INDIVIDUAL. Hope everyone has a Happy Holiday and a great New Year. For me: I'm just still living, breathing, walking and trying to forget about my life in IBM. -I'veBeenMisrespected- Alliance reply: Sorry to hear of your job loss, especially at this time of year. Please let us know more details: which business unit and how many were cut. Good luck.
    • Comment 12/23/11: Country = USA; Union Affiliate = Rochester; Job Title = IBM engineer; IBM Division = STG; Message = Last week Sam was in town on his farewell tour. In his speech he was lamenting that he could have made money working somewhere else and that Warren Buffet made more than he did; but not to worry we don't need to pass the hat. The speech was video taped but has not been released. The people in attendance were speechless. -anonymous-
    • Comment 12/23/11: "So much for IBM's RESPECT for the INDIVIDUAL".... Really? That's been gone for almost 20 years. It appears that many 'individuals' disrespected themselves and didn't join Alliance when they had the chance, for twelve years. Why not? IBM can't take away your respect for yourself and your co-workers. You do that when you don't stand up for yourself, and expect someone else to do it for you. I'm very sorry that you lost your job. I'm sorry that you didn't see that forming a union in IBM and standing up for yourself and your worker-bee friends would have shown IBM how much you deserve respect...because you DO deserve respect as an IBMer. Standing up to IBM with a union earns IBM's respect when collective IBMers demonstrate to IBM that they will not take it, lying down. I feel bad that you waited until you lost your job to realize that you lost IBM's respect, when in reality, you never had it, to begin with. Best to you -I'veBeenMisrespected- -Respect?-
    • Comment 12/24/11: #midwest- to me, it's beyond belief that after this many years of continual rip offs of benefits and pay that anyone can remain on the fence. Joining the Alliance and helping to organize your co-workers is as close to a no brainer as I can imagine. There are times that it seems to me that Sam pisses down the collective leg of ibm employees, tells them it's raining, and the next thing you know they\'re all lined up to buy umbrellas from him. -Dave G.-
    • Comment 12/24/11: I left IBM earlier this year on my own free will. No workforce reduction or resource action - just had enough and left. I joined over a decade earlier and had high hopes for a solid career at IBM, but things changed early on and just got worse. It just wasn't worth wondering if I was going to be one of the unfortunates to get a pink slip this year (or next year). I wanted a little more stability than that. I was a member of the IBM union for most of the time I was at IBM, and had wished others would have done the same. I really wish the Alliance all the best in their continued persistence in trying to get the masses at IBM to join. Its an uphill battle, which I hope one day they can overcome.

      While a solid performer at IBM, I watched as others who were also solid performers get the dreaded pink slip just for being in the wrong place at the wrong time. I just didn't want to roll the dice any longer with a family to support. Not to mention management really couldn't care less about my career other than me squeezing 25 hrs of work in a 24 hr day. And come assessment time, it was always the same "We don't have much of a pool this year to give you any bonus, raise, or promotion - sorry." Talk about a broken record.

      So I found a position at another IT company not really knowing if "the grass was greener on the other side of the fence." Having worked at this new company, though, I not only know now I made the right decision, but wish I hadn't have waited so long. In less than a year here, I can already feel a large weight has been lifted from my shoulders. My pay is 15% more and I just found out I will get a 12% bonus in my next paycheck for the contributions I've made. But most of all, I really feel a since of worth - a sense of TRUE RESPECT from my management team. Totally a 180-degree turn from IBM management.

      Best of luck everyone. Keep up the fight. But realize there ARE companies out there that truly value your hard work and commitment, and at the same time treat you like a human being. -OverThere-

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • New York Times: For Medicare, We Must Cut Costs, Not Shift Them. By Ezekiel J. Emanuel. Excerpts: Suddenly, everybody is talking about turning Medicare into a voucher program. It’s not a new idea. It’s been two decades since wonks first started talking seriously about “premium support” and the idea of replacing Medicare with a competitive marketplace in which older people could shop for health insurance. But the idea got new life last week when Senator Ron Wyden of Oregon, a Democrat with a long record on health care, joined Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, in suggesting that such a scheme was the best way to cut health care spending while providing for the medical needs of the elderly. The plan resembles a proposal that Alice Rivlin, who was budget director under President Clinton, and Pete Domenici, a longtime Republican senator, have also recently been promoting. ...

    In the Wyden-Ryan proposal, the government would give each older citizen a certain amount of money — basically, a voucher — with which to buy a health insurance policy. The recipients would decide which policy to buy, based on whatever combination of benefits and price they found most appealing. If they chose a plan that cost more than the voucher, they would have to pay the difference. An earlier premium support plan by Mr. Ryan would have totally replaced traditional Medicare. This latest one would preserve Medicare as an option — although, critically, it would not guarantee that the voucher was enough to make Medicare affordable or ensure that private plans could not design a benefits package to attract only the healthiest patients. If this doesn’t sound like the kind of sweeping reform that will save us … it’s because it isn’t. ...

    Premium support is classic cost shifting, rather than cost cutting. Unless growth in health care costs is low, Medicare beneficiaries will just have to pick up the difference between the voucher’s value and the cost of the health insurance plan they purchase. In fact, the original Ryan plan would have increased out-of-pocket costs for older people by more than $6,000 in 2022. And we can’t depend on competition to bring costs down. Competition among insurance companies in general has not lowered them — in fact, from 1970 through 2009, Medicare spending per beneficiary grew at a slower rate than that of private health insurance. ...

    One of the biggest problems in the Wyden-Ryan plan is a result of what is called adverse selection. If you pay an insurance company the same amount for all enrollees, it will want to avoid insuring sick people in order to save money. Under the Wyden-Ryan plan, insurance companies would have to accept both the healthy and the sick. But they would still compete to cover the healthiest Medicare beneficiaries, offering them desirable services like health club memberships, while leaving the rest to traditional Medicare. As a result, Medicare would end up with significantly higher costs. ...

    So if premium support plans aren’t the answer, what should be done about Medicare? To address the root of the cost problem, we must change how we pay doctors and hospitals. We must move away from fee-for-service payments to bundled payments that include all the costs of caring for a patient, thereby encouraging providers to keep patients healthy and avoid unnecessary services. Medicare should announce that it will make this change by Jan. 1, 2022, and that it will begin by switching to bundled payments for cardiac and orthopedic surgery within one year and for cancer patients within five.

    Premium support will not reduce the government’s costs without shifting those costs to older people who can’t afford them. Only a plan that transforms how we pay doctors and other health care providers can do that.

  • New York Times: Supreme Court to Hear Health Care Case in Late March. By Adam Liptak. Excerpt: The Supreme Court announced on Monday that it would devote three days in late March to hearing arguments in challenges to the 2010 health care overhaul law. A decision in the case is expected by the end of June. The court agreed to hear the case on Nov. 14, saying it would put aside five and half hours for arguments and specifying how much time it would devote to each of four issues. Monday’s announcement assigned those issues to particular days, giving a sense of the logical sequence in which the justices will approach them.
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.

  • The Diane Rehm Show: Millionaires, Taxes And Jobs. In an interview on CBS sixty minutes last night, president Obama said the very rich can afford to pay a little more in taxes. In a major speech last week, he argued that even before the recent recession, Americans at the top of the income scale managed to keep their effective tax rates low and grow wealthier than those in lower brackets. Republicans accuse the president of engaging in class warfare. They say tax hikes on the wealthy would be a strike against those in a position to create new jobs. In this hour, a panel joins Diane to discuss taxing millionaires and the effect on creating new jobs. Listen now...

    Selected listener comments follow:

    • Jim978 wrote: The GOP argument that taxing "job creators" will reduce hiring makes no sense whatsoever. Here's why.

      Let's assume a business owner facing a tax increase can hire a new employee at an "all in" annual cost of $50,000, and let's also assume that employee will generate an additional $75,000 in annual revenue for the business. That would give the owner an extra $25,000 in profit each year. Why would any rational business owner turn down the additional income? (If your taxes were going up, would you turn down a $25,000 pay raise?)

      If owners would refuse to hire employees who would generate more income for their businesses because tax rates are rising, then the reverse also would be true. That is, lower a business owner's tax rate and he/she would be willing to hire an employee who would reduce profits. Show me an owner who who hires employees that lose money for the business, and I'll show you a business that won't be around for long.

    • sacchinft wrote: When times are good, Republicans want to lower taxes and cut regulations. When times are bad, Republicans want to lower taxes and cut regulations. When the economy tanks thanks to a loss of tax revenue and lack of regulations, Republicans want to lower taxes and cut regulations. Einstein once said, the definition of insanity is doing the same thing over and over, and expecting a different result.
    • Kathleen wrote: Glad Diane is back and her husband is better! Have been spending a great deal of time with 80 and 90 something union workers in the several different nursing homes my WWII teamster father has been spending time in. Talking with long time retired GM, Delphi, Postal, factory workers. Many of them have strong and clear opinions about what has happened to the US economy over the years. Almost all believe that manufacturers, corporations "sold the American worker down the pike decades ago" by first moving into states where they could pay cheaper wages etc etc. Then moving to Mexico and overseas. That the situation the US finds itself in now is a catastrophic and accumulative effect of the persistent and successful effort for the top 1% to make more and more and more and their willingness to sell again "the American workers down the pike."

      When 6 Walton family members make what the bottom 30% of employed Americans make. When Wal Mart workers are not able to organize unions. When the largest employer in the world gives minimum insurance coverage. How in the hell can anything change?

    • Keith Evenhouse wrote: When George Steinbrenner died last year, no estate taxes were collected. This saved the estate over $500,000,000 (half billion) dollars. I'm sure the Steinbrenner kids could easily pull themselves up by the bookstraps on the remaining billion plus that remained. When the extremely wealthy don't contribute to the same extent that they benefit, the remaining bill simply grows, or we radically change the compact that has been in place for generations. His death alone results in over $1.50 from every single living American just to make up the failure to collect from his estate. Our founders didn't want an aristocracy. We are now growing an aristocracy and oligarch society.
    • timben wrote: There is no tax policy which will cause a business in our economy to add an employee the business does not need, short of a direct payment of the added employee salary by the government. The definition of success in private enterprise is profit, not employment. Profit is the difference of income minus costs and employment is a cost. Modern business has become very good at minimizing costs. Labor costs are some of the highest and easiest to eliminate costs in any business in the US.

      The claim that successful business people and high income earners are "job creators" is a myth. Success in business is more about job destruction than creation. Any business that comes into extra capital from something like a tax cut is more likely to use the money to reduce labor costs than for any other purpose. I had a job as an engineer a couple of years ago in which I personally reduced the cost of production of the companies products by $1.5 million by redesign of the products and methods of production. Virtually all of this cost reduction was labor costs either direct of of suppliers. A little arithmetic will tell you that this represents 40 jobs eliminated in one year by one engineer (actually 41, as I was laid off at the end of the year as a reward for my success). This is just one example of how business uses its available capital.

      The idea that small business creates most new jobs is based on the experience of the the past few generations during which our economy has been dominated by a series of bubbles that were primarily fiction. These jobs were not real or sustainable and never were. Tim in Texas.

    • Dan Stapleton wrote: As a former small business owner (10+ years), I'm angry with the GOP argument that taxes (especially a modest tax increase) hinder the creation of jobs. My overwhelming experience was that customers (or lack thereof) are the primary factor behind hiring new employees. There were any number of other factors that rank higher than taxes. The term "job killing taxes" is a handy but totally false and misleading expression that, in my view, is solely for political gain.
    • Fairborn wrote: If it were true that the lower taxes would cause the "job creators" to create jobs, then WHERE ARE THOSE JOBS??? The lower taxes have been in effect, while the jobs are not there! It's very frustrating to continuously here this "job creators" phrase be paraded in the public discourse.
    • roland wrote: I bet $10K that the US will be just fine if millionaires are taxed a little more.
    • RF2050 wrote: I have been a small business owner for over 10 years, and I completely agree with the point made on the show that the "millionaire tax" would have very little, if any, impact on my business. Most small businesses I know don't make enough money to be affected by the tax. But even if we were making many millions of dollars in profit, our hiring decisions are purely a function of demand for the product: When there is more business, we hire more; when business slows down, we need to lay off people. Taxes are largely irrelevant. There are so many ways to write off profits (assuming you have a good accountant) that the millionaire tax would have no affect on our business. It is a political excuse.
  • New York Time op-ed: Don’t Tax the Rich. Tax Inequality Itself. By Ian Ayres and Aaaron S. Edlin. Excerpts: What we call the Brandeis Ratio — the ratio of the average income of the nation’s richest 1 percent to the median household income — has skyrocketed since Ronald Reagan took office. In 1980 the average 1-percenter made 12.5 times the median income, but in 2006 (the latest year for which data is available) the average income of our richest 1 percent was a whopping 36 times greater than that of the median household.

    Brandeis understood that at some point the concentration of economic power could undermine the democratic requisite of dispersed political power. This concern looms large in today’s America, where billionaires are allowed to spend unlimited amounts of money on their own campaigns or expressly advocating the election of others. ...

    Enough is enough. Congress should reform our tax law to put the brakes on further inequality. Specifically, we propose an automatic extra tax on the income of the top 1 percent of earners — a tax that would limit the after-tax incomes of this club to 36 times the median household income.

    Importantly, our Brandeis tax does not target excessive income per se; it only caps inequality. Billionaires could double their current income without the tax kicking in — as long as the median income also doubles. The sky is the limit for the rich as long as the “rising tide lifts all boats.” Indeed, the tax gives job creators an extra reason to make sure that corporate wealth does in fact trickle down. ...

    Here’s how the tax would work. Once a year, the Internal Revenue Service would calculate the Brandeis ratio of the previous year. If the average 1-percenter made more than 36 times the income of the median American household, then the I.R.S. would create a new tax bracket for the highest 1 percent of income and calculate a marginal income tax rate for that bracket sufficient to reduce the after-tax Brandeis ratio to 36.

    This new tax, if triggered, would apply only to income in excess of the poorest 1-percenter — currently about $330,000 per year. Our Brandeis tax is conservative in that it doesn’t attempt to reverse the gains of the wealthy in the last 30 years. It is not a “claw back” tax. It merely assures that things don’t get worse.

  • AlterNet: Romney Still Making Millions From Lucrative Bain Capital Retirement Deal, Pays Little Taxes. By Pat Garofalo. Excerpts: 2012 GOP presidential hopeful Mitt Romney has been banking on his time running the private equity firm Bain Capital to be a major selling point for his campaign. “I spent my career in the private sector. I think that’s what the country needs right now,” Romney says.

    Romney has had to contend with the fact that Bain made a lot of its money buying up companies, then laying off workers and reneging on benefits to gut those companies, burying them with debt as Bain walked away with millions. In fact, one of his former business partners has explicitly said, “I never thought of what I did for a living as job creation.” And as it turns out, even after Romney left the firm, he was profiting from Bain’s activities due to a lucrative retirement deal:

    In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney’s political aspirations. ...

    Since Romney left, Bain has made its money gutting companies like KB Toys and Clearchannel, laying off thousands of workers and leaving the companies under heavy debt loads, while Romney has reaped the benefit. Adding insult to injury, the money Romney has been collecting from Bain is likely not taxed as normal income but as “carried interest,” meaning it is subject to the capital gains tax rate of 15 percent rather than the top income tax rate of 35 percent:

    [S]ince Mr. Romney’s payouts from Bain have come partly from the firm’s share of profits on its customers’ investments, that income probably qualifies for the 15 percent tax rate reserved for capital gains, rather than the 35 percent that wealthy taxpayers pay on ordinary income. The Internal Revenue Service allows investment managers to pay the lower rate on the share of profits, known in the industry as “carried interest,” that they receive for running funds for investors.
  • Business Insider: 50 Economic Numbers From 2011 That Are Almost Too Crazy To Believe. Excerpts: Even though most Americans have become very frustrated with this economy, the reality is that the vast majority of them still have no idea just how bad our economic decline has been or how much trouble we are going to be in if we don't make dramatic changes immediately. If we do not educate the American people about how deathly ill the U.S. economy has become, then they will just keep falling for the same old lies that our politicians keep telling them.
    • #1: A staggering 48 percent of all Americans are either considered to be "low income" or are living in poverty.
    • #6: There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.
    • #7: Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.
    • #10: According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.
    • #11: Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.
    • #21: According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant. That figure is 63 percent larger than it was just ten years ago.
    • #25: According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%.
    • #26: One study found that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.
    • #30: The retirement crisis in the United States just continues to get worse. According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.
    • #32: According to a study that was just released, CEO pay at America's biggest companies rose by 36.5% in just one recent 12 month period.
    • #33: Today, the "too big to fail" banks are larger than ever. The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.
    • #34: The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.
  • Huffington Post: The Defining Issue: Not Government's Size, But Who It's For. By Robert Reich. Excerpts: Americans have never much liked government. After all, the nation was conceived in a revolution against government. But the surge of cynicism now engulfing America isn't about government's size. It's the growing perception that government isn't working for average people. It's for big business, Wall Street, and the very rich instead.

    In a recent Pew Foundation poll, 77 percent of respondents said too much power is in the hands of a few rich people and corporations. That's understandable. To take a few examples:

    • Wall Street got bailed out but homeowners caught in the fierce downdraft caused by the Street's excesses have got almost nothing. ...
    • American Airlines uses bankruptcy to ward off debtors and renegotiate labor contracts. Donald Trump's businesses go bankrupt without impinging on Trump's own personal fortune. But the law won't allow you to use personal bankruptcy to renegotiate your home mortgage.
    • If you run a giant bank that defrauds millions of small investors of their life savings, the bank might pay a small fine but you won't go to prison. Not a single top Wall Street executive has been prosecuted for Wall Street's mega-fraud. But if you sell an ounce of marijuana you could be put away for a long time. ...

    Congress hasn't even closed a loophole that allows mutual-fund and private-equity managers to treat their incomes as capital gains. So the 400 richest Americans, whose total wealth exceeds the combined wealth of the bottom 150 million Americans put together, pay an average of 17 percent of their income in taxes. That's lower than the tax rates of most day laborers and child-care workers. ...

    Get it? "Big government" isn't the problem. The problem is big money is taking over government. Government is doing less of the things most of us want it to do -- providing good public schools and affordable access to college, improving our roads and bridges and water systems, and maintaining safety nets to catch average people who fall -- and more of the things big corporations, Wall Street, and the wealthy want it to do.

  • Financial Times (United Kingdom): Indignant rich round on protest movement. By Dan McCrum. Excerpts: In the face of popular fury, political invective and protest encampments on their doorsteps, the rich are fighting back in America’s new bout of class warfare. Some of the high-profile rich, including Steve Schwarzman, John Paulson and Jamie Dimon, have sought to define the terms of a debate that will be central to next year’s presidential campaign.

    Under threat are what Barack Obama has described as the lowest tax rates for the wealthy since the 1950s, while a tax break enjoyed by private equity bosses and hedge fund managers will come under close scrutiny should Mitt Romney, a former private equity executive, be his Republican opponent.

    But like the disparate Occupy Wall Street movement, the rich employ a variety of tactics in their defence. One is to criticise the divisive tone of the debate itself as something that violates traditional American values. Leon Cooperman, a hedge fund manager and Goldman Sachs veteran, last month attacked the populist tactics of the president in an open letter widely circulated on Wall Street. ...

    Jamie Dimon, chief executive of JPMorgan Chase, has also questioned the demonisation of those who are successful. Stephen Schwarzman, a founder of private equity group Blackstone and a fundraiser for Mitt Romney’s campaign, has called for shared sacrifice, arguing that attacking the rich alone cannot solve America’s fiscal problems.

    Mr Schwarzman built his fortune with the help of a tax break known as the carried interest exemption, which allows money managers to treat their share of client investment returns as capital gains, which are subject to a lower rate of tax than income. ...

    Others point to their contribution to the economy. In October, John Paulson, the hedge fund manager who made billions betting that large numbers of subprime borrowers would default on their mortgages, issued a statement claiming that his hedge fund Paulson & Co has created over 100 high-paying jobs in New York City since it was founded.

  • New York Times opinion: Pathetic Plutocrats. By Paul Krugman. Full excerpt: One of the disadvantages of being very wealthy may be that you end up surrounded by sycophants, who will never, ever tell you what a fool you’re making of yourself. That’s the only way I can make sense of the farcical behavior of the wealthy described in this new report from Max Abelson:
    Cooperman, 68, said in an interview that he can’t walk through the dining room of St. Andrews Country Club in Boca Raton, Florida, without being thanked for speaking up. At least four people expressed their gratitude on Dec. 5 while he was eating an egg-white omelet, he said.
    “You’ll get more out of me,” the billionaire said, “if you treat me with respect.”

    What’s truly amazing is that they’re hearing things that aren’t actually being said. Obama and others say that the rich have had huge income gains relative to everyone else, so they should be asked to pay somewhat higher taxes; the rich hear that and it comes out “you are all evil”.

    What I want to know is, how did these people get where they are with such incredibly thin skins? Can you become a Master of the Universe while screaming “Ma, he’s looking at me funny!” at every hint of criticism?

  • New York Times op-ed: Deep Pockets, Deeply Political. By Charles M. Blow. Excerpt: A tiny number of wealthy Americans are playing an ever-increasing role in financing our politics. This is not a good thing for a democracy. Last week, the Sunlight Foundation, a non-profit, nonpartisan organization dedicated to making government “transparent and accountable,” issued a report, which said:
    In the 2010 election cycle, 26,783 individuals (or slightly less than one in ten thousand Americans) each contributed more than $10,000 to federal political campaigns. Combined, these donors spent $774 million. That’s 24.3% of the total from individuals to politicians, parties, PACs, and independent expenditure groups. Together, they would fill only two-thirds of the 41,222 seats at Nationals Park, the baseball field two miles from the U.S. Capitol. When it comes to politics, they are “the one percent of the one percent."

    The report also pointed out that “overwhelmingly, they are corporate executives, investors, lobbyists and lawyers” and that “a good number appear to be highly ideological.” In the 2010 election cycle, the report revealed, “the average one percent of one percenter spent $28,913, more than the median individual income of $26,364.”

  • Sunlight Foundation: The Political One Percent of the One Percent. By Lee Drutman. Excerpts: In the 2010 election cycle, the average One Percent of One Percenter spent $28,913, more than the median individual income of $26,364 At the top of this elite group are individuals such as Bob Perry, CEO of Perry Homes, who gave $7.3 million to Karl Rove’s American Crossroads in 2010 and $4.4 million to Swift Vets and POWs for Truth in 2004, and Wayne Hughes, owner and chairman of Public Storage Inc., who gave $3.25 million to American Crossroads in 2010, and Fred Eshelman, CEO of Pharmaceutical Product Development who spent $3 million in 2010 on his own group, RightChange. Sunlight’s Ryan Sibley writes more about the top donors here.

    Unlike the other 99.99% of Americans who do not make these contributions, these elite donors have unique access. In a world of increasingly expensive campaigns, The One Percent of the One Percent effectively play the role of political gatekeepers. Prospective candidates need to be able to tap into these networks if they want to be taken seriously. And party leaders on both sides are keenly aware that more than 80% of party committee money now comes from these elite donors. ...

    To the extent that donors listed occupations (many do not), the most common titles were variations on “President,” “CEO,” “Executive,” Chairman”, and “Investor.” Of the 10 companies with the most representation in The One Percent of the One Percent in the 2010 election cycle six are financial companies. Goldman Sachs, with 92, far outpaces everyone else. Citigroup, with 32, is second.

  • Washington Post opinion: Braveheart Republicans? Or false-hearted? By Dana Milbank. Excerpts: House Republicans, on the eve of Tuesday’s vote denying tax relief to 160 million Americans, huddled in a conference room in the Capitol basement for more than two hours. Were they puzzling over how to explain to constituents why they were effectively ordering a tax increase on the middle class after fighting for much larger tax breaks for the wealthy? Were they justifying the killing of a bipartisan compromise that had the support of all but eight Senate Republicans and the tacit approval of House Speaker John Boehner?

    Nope. Turns out they were talking Monday night about their favorite scenes from “Braveheart.” About 10 House Republicans went to the microphones to share their memories of the Mel Gibson film, Republican sources told my Post colleagues Paul Kane and Rosalind Helderman. ...

    That the House Republicans would embrace a doomed cause and its martyred leader gets at their main problem in the majority: They’d rather make a point than govern the country. And in this case, it’s not entirely clear what point they’re trying to make.

    Is it making sure the tax cut is paid for? For the last decade, Republicans approved billions of dollars in tax cuts, mostly for the rich, without paying for them.

  • Wall Street Journal: The GOP's Payroll Tax Fiasco. How did Republicans manage to lose the tax issue to Obama? Excerpt: GOP Senate leader Mitch McConnell famously said a year ago that his main task in the 112th Congress was to make sure that President Obama would not be re-elected. Given how he and House Speaker John Boehner have handled the payroll tax debate, we wonder if they might end up re-electing the President before the 2012 campaign even begins in earnest.

    The GOP leaders have somehow managed the remarkable feat of being blamed for opposing a one-year extension of a tax holiday that they are surely going to pass. This is no easy double play.

  • Washington Post: A tax break is lost, another is found. By Jesse Drucker. Excerpts: On either side of a two-lane road, and surrounded by the lush green mountains of Villalba in central Puerto Rico, stand a pair of manufacturing plants owned by Medtronic, the world’s biggest maker of heart-rhythm devices. Medtronic does more than half of its $16 billion in annual sales of pacemakers, defibrillators and other devices in the United States. It manufactures the equipment at this facility, legacy of a defunct U.S. tax break designed to encourage investment on the poverty-stricken island. Yet, Medtronic credits the income to a mailbox in the Cayman Islands.

    This isn’t what Congress had in mind when it did away with the federal tax credit for companies’ Puerto Rican profits. The break was attacked by Republicans and Democrats as too expensive, and, as of 2006, it ended. So Medtronic and other companies found a solution: They avoid taxes by moving those profits into shell subsidiaries in havens such as the Cayman Islands, Switzerland and the Netherlands.

    “By aggressively shifting income to offshore affiliates, companies appear to be getting U.S. tax benefits that are equal to or greater than the ones they did under the old Puerto Rico tax break,” said Stephen E. Shay, former deputy assistant secretary for international tax affairs at the U.S. Treasury and now a Harvard Law School professor. “That almost certainly was not the intent of the repeal.”

    The profits that used to benefit from the Puerto Rico credit are now part of a mountain of tax-deferred offshore earnings totaling at least $1.38 trillion, according to a May report by J.P. Morgan Chase. Companies including Apple, Google, Microsoft and Pfizer are lobbying Congress for a tax holiday to bring those profits home. Without such a break, any cash brought back to the United States would be taxed at the federal income-tax rate of 35 percent, with a credit for foreign income taxes already paid. ...

    In a memo sent to IRS auditors in February 2007, the agency called profit levels “extraordinary” in many of the offshore units created to take over for the subsidiaries that got the Puerto Rican break. In many cases, those units are generating “an inordinate amount of the profits, i.e., amounts in excess of what would be expected, based upon activity,” according to the IRS memo. ...

    Companies legally move profits offshore using “transfer pricing,” the system of allocating income between units in different countries. This lets corporations such as Medtronic say that profit from a $5,000 pacemaker was earned in the Cayman Islands, even though the device was manufactured in Puerto Rico and sold in, say, Houston. The company has accumulated $14.9 billion in income allocated to its foreign subsidiaries on which it hasn’t paid any U.S. income tax, according to its most recent annual report. ...

    The profit shifting that can stem from transfer pricing costs the U.S. government an estimated $90 billion a year, according to Kimberly Clausing, an economics professor at Reed College in Portland, Ore. That’s about double the Department of Homeland Security’s annual budget and dwarfs the revenue loss from the various tax breaks under scrutiny. ...

    Medtronic’s tax rate has plummeted. In 1995, the year before congress abolished the Puerto Rico credit, the break cut 4.2 percentage points off the company’s effective tax rate, helping to lower it to 33.5 percent. By 2011, Medtronic’s tax rate was down to half that. Overall, the savings from the low-taxed overseas income boosted Medtronic’s net income in fiscal 2011 by 30 percent, to $3.1 billion, based on tax disclosures in the company’s most recent annual report.

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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