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Highlights—February 18, 2012

  • CNET: End of an era: NASA shuts down its last mainframe. By Stephen Shankland. Excerpts: There was a time when IBM's mainframes were cutting-edge machines for scientific and engineering calculations. Those days began in the 1960s, when IBM's System 360 rewrote the rules of computing and before humans walked on the moon. Big Blue long since has moved its high-performance technical computing effort toward its high-end Blue Gene systems and more conventional Linux servers using Intel and AMD x86 chips and Unix servers with its own Power processor. IBM's System Z mainframe line is now geared for commercial customers who are willing to pay a premium for reliability and high performance for tasks such as database transactions.

    Now NASA has followed suit, switching off its last mainframe, Chief Information Officer Linda Cureton said in a blog post Saturday. "This month marks the end of an era in NASA computing. Marshall Space Flight Center powered down NASA's last mainframe, the IBM Z9 Mainframe," Cureton said.

  • Yahoo! IBM Employee Issues message board: "IBM Launches New Form of Day-Wage Labour" by "George". Full excerpt: I received an email link from an ex-IBM friend and thought it was worth passing on. Here it is: http://www.wsws.org/articles/2012/feb2012/ibmc-f11.shtml

    The website is the World Socialist Website and I am not a Socialist nor can I verify the veracity of the data but I felt it important enough to pass along.

  • Yahoo! IBM Employee Issues message board: "Re: IBM Launches New Form of Day-Wage Labour" by "NonaB". Excerpts: Would love to have a reference/link to the original Der Spiegel article referenced in the World Socialist Website piece. I figure the folks I want to show it to would find a different source to be more credible than WSWS. I went looking on the Der Spigelia site and could not find it. Anyone else have better luck? Thanks. Nona
  • Yahoo! IBM Employee Issues message board: "Re: IBM Launches New Form of Day-Wage Labour" by "George". Full excerpt: Nona, I was not able to find a reference on Spiegel websites either but the article did say this was an internal document. However, there are multiple discussions on IBM employee related forums that describe the IBM Liquid Program and it appears to foster the same goal of contract employees over regular full time employees. George.
  • Yahoo! IBM Employee Issues message board: "Re: IBM Launches New Form of Day-Wage Labour" by Susan Crayne. Full excerpts: This is a link to one of IBM's "partners" -- i.e. middlemen, in the Liquid Program. Â There are also some in India. Â So obviously they are earning some of the money that should go to the programmers. http://www.techteam.com/careers/join-the-ibm-liquid-challenge-program
  • Yahoo! IBM Employee Issues message board: "Re: IBM Launches New Form of Day-Wage Labour" by "OldUncleJosh". Full excerpt: I could only find this Der Spiegel article in German http://www.spiegel.de/wirtschaft/unternehmen/0,1518,813388,00.html and I suspect the other links (in English) are of more interest, but just in case...
  • Yahoo! IBM Employee Issues message board: "Re: IBM Launches New Form of Day-Wage Labour" by "alwaysontheroad4bigblue". Full excerpt: In http://www.ibmemployee.com/Highlights120204.shtml there are links to a news story from WRAL (Raleigh) and to a German publication "Mein Handelsblatt. " Here are the links:

    WRAL: Report: IBM plans massive job cuts in Germany. Excerpts: IBM is preparing to slash its work force in Germany by 40 percent, according to a German newspaper. Big Blue workers are in for "a massive upheaval in Germany," the paper Handelsblatt reported. "In the long run this country up to 8,000 jobs could be deleted." ...

    "This is confirmed by members of the highest governing bodies of the IBM," the newspaper said. "Some leading members expect a real clear-cutting." "In the end it may be that only 12,000 of the 20,000 jobs currently remain in the country's society," said a member of IBM's leadership crew, according to a Google translation of the German text.

    Asked about the report, IBM told the newspaper: "Given the competitive nature of our business, we discuss the details of our planning work is not public."

    And links to the German publication:

    • Original German article: "IBM baut in Deutschland Tausende Stellen ab"
    • And, a Google machine translation to English. Here's a bit of the English translation...not the best translation but you can get an idea of what's being said:
      The project is part of the ongoing program "Liquid", German for "liquid" that the old, rigid labor organization to transform the world into a new, more flexible, or just too volatile organization. The project has two main objectives: to reduce production costs to boost earnings per share more - from more than ten dollars in 2010 to $20 in 2015.
      To this end, future client projects, such as advice on the modernization of enterprise software are increasingly performed in place of previously free of permanent staff. IBM wants to advertise on Internet sites such projects, where the former can then apply permanent IT developers to the job. Not the work disappears, but the current form of fixed workplace. Should the project succeed, it will be repeated in other national companies.
  • Yahoo! IBM Employee Issues message board: "Re: IBM Launches New Form of Day-Wage Labour" by "maxxcurrey". Full excerpt: Well, I am proud to say that I am a Democratic Socialist and that when I worked at IBM last year they were trying to get programmers WORLDWIDE to sign up for this liquid BS. I said no way since I do not work for free. It is a scam IMO, they are trying to appeal to dumb and proud cheap labor country workers. Some sort of recognition was promised and one gets literally pennies for your software if it is chosen. No wonder the third world countries remain poor, if they buy into such stuff. I told my Indian colleagues I thought they were stupid if they did. They agreed, but some them still worked off hours on it.
  • Yahoo! IBM Employee Issues message board: "Re: IBM Launches New Form of Day-Wage Labour" by "thekanck". Full excerpt: Likewise, I think that the "employment concept" being articulated in the article is mostly accurate and that IBM is trying to advance the model. I have no idea wether IBM Germany is actually moving that hard and fast towards implementation. Programmers in the USA were being strongly encouraged to join a cloud-sourcing model for code development last year, I don't think it was called "liquid" at the time. I'm asking several buddies for some details...
  • Yahoo! IBM Employee Issues message board: "Re: NYT: Unboxed Extra: I.B.M. and America’s Job Challenge" by "Mike C". Excerpts: Sam, you might want to think about your life style position a bit more carefully. The Warren Buffetts of the world expect the price of the stock to continually go up. IBM no longer creates new markets. Rather, it buys out IT departments & software houses, making its money through cost squeezes.

    That's (ahem!) the expense your services represent.

    If you look at IBM's gross over the past 14 years, you'll see that it hasn't gone up. Only the net.

    That means that at some time, having squeezed the lemon dry, IBM's net earnings will stabilize and/or drop. In the meantime, IBM will continue to grow the net by firing and outsourcing and squeezing.

  • World Socialist Web Site: IBM launches new form of day-wage labour. By Dietmar Henning. Excerpts: IBM (International Business Machines) was once considered a pioneer in the field of computer technology. Now the US-based conglomerate—employing more than 400,000 people worldwide—is a pioneer of a modern form of global day-wage labour. And Germany is serving as a pilot project for a radical reorganization of its existing work structures around the world.

    According to an internal corporate strategy paper, obtained by Spiegel magazine, IBM will be reduced to a core workforce. Of the more than 20,000 employees in Germany, at least 8,000 will lose their permanent jobs and be replaced by flexible external workers.

    The programme, called “liquid,” provides for outside workers to be hired flexibly as required. The hiring of external IT experts and other specialists is to take place via a specially created Internet platform, in the form of a so-called Cloud. ...

    “Personnel organised in a ‘cloud,’” the magazine quotes from the IBM document, “would receive international employment contracts, in order to circumvent restrictive regulations in their home country.” The “globalized employment contracts” would last only for the duration of individual projects. Thus, the company would reach a state “achieved long ago by the financial markets”: it could “do away with part of the national regulations.”

    Permanent employees—with social security protection, guaranteed salary, paid vacations and sick leave, etc.—would be transformed into modern day-wage labourers, hired just for one project or contract for a limited time, sometimes by one firm and sometimes by another. “Such a system, where workers compete globally for temporary jobs using Internet platforms,” ​​comments Spiegel, means, “companies such as IBM would make huge savings and increase efficiency significantly.”

  • Der Spiegel (Germany): IBM schafft den Miet-Jobber (in German). Excerpt: IBM will allein in Deutschland bis zu 8000 Stellen streichen, doch das ist nicht alles. Denn der Plan ist offenbar Teil einer grundlegenden Neuorganisation von Arbeitsstrukturen. Einem internen Papier zufolge, das dem SPIEGEL vorliegt, will IBM die Beziehungen zu seinen Arbeitskräften radikal verändern.
    • View Google machine English language translation. Excerpts follow: Revolutionary working model. IBM manages the rental jobbers. IBM plans to cut in Germany alone, up to 8,000 jobs, but that's not all. Because the plan is apparently part of a fundamental reorganization of work patterns. According to an internal document, which SPIEGEL has obtained, IBM wants to change the relationship with its workforce dramatically.

      So the company should continue to be guided only by a small core staff. Specialists and professionals, however, IBM intends recruit to a newly created Internet platform. There will be presenting freelancers from all over the world and for certain, be certified by IBM-designed quality characteristics.

      Similar to the social network Facebook could workers in the IBM model reviews and testimonials, the employer will receive, which can then be viewed by other companies. Organized in a "cloud" (cloud) workers, states in the IBM paper would receive international contracts to circumvent restrictive legislation in their home countries.

      Employment for the duration of the projects. They will also be employed only for the duration of each project. Such a system, to compete in the global workforce to temporary jobs on internet platforms would bring huge savings corporations such as IBM and increase the efficiency significantly.

      Editor's note: There are currently 304 reader comments about this article. The Google translate service also translates these comments. Some of those comments follow below.

  • Der Spiegel (Germany). Reader comments concerning the above article. (Original German). (Google-translated English). Selected comments follow:
    • Awesome! Aside from the fact that the entrepreneurial Risikien to be again shifted to the employees: As a potential IBM customer, I would think twice to work with the store. Firstly, my project team to project conclusion would be scattered to the winds, in subsequent issues or the lack of a development project resulting in the know-how. Or Option II, a direct assignment of specialists to IBM over. Some companies and their top strategists never learn, especially in the consulting business, the employees of the actual value of the company. And when you outsource the amputated one yourself
    • This is nothing new. Simply a throwback to the days prior to any employee protection. No participation in social insurance, no notice, etc. In short, a day laborer. Slaves are not even provided for their maintenance needs.
    • This has made the SUN that way. And where Sun is today? Exactly, was swallowed up by Oracle. Outsourcing expertise is pure stupidity, the hot money, completely decadent American management! In my 36 years at one of the big oil companies, I've been through this nonsense 2x. Today (I now have my own small IT company) are also at my former employer, the most important positions and tasks back into the group brought its own structures and strengthen again. We make good money on it.
    • So what used to be called day laborers!
    • Such a model works only as long as the rent-jobbers are well paid and well treated. It should here be a model of exploitation, which is to spread the word like wildfire on the Web and the End of IBM äzipitieren pr. Only with a core staff IBM customer orders will not be able to edit. I think the IBM-manager does not know what they have been acting with it. You should think about what Crowd-Power recently launched in North Africa to pass.
    • A great idea, it works as long as the labor market is weak. Once he picks up again, because IBM is without qualified personnel. Then the consultant to collect love the scalp of another proud industrial company, they have ruined their idiocy.
    • Life planning, retirement an impossibility, but the main thing our politicians are supplied Hansel 4 years and will be paid handsomely even when they are no longer selected. What will become of the people, something which is from the people of beautiful ... no matter. Fertility, for what if I'm not looking where I get my money next month for her life. American standards, a new world order is the stated goal. I'm glad I'm retired and have grandchildren can call mine, because I'd be very scared about the future of my offspring, but this is intentional so as the new slavery makes people docile. The only way to wage war and people against each other aushetzen and doing well by shareholders, etc.
    • I predict the following times: IBM will have to fight with massive failing projects, both because mangeldem good staff, as well as for the wrong projects are hired, as well as to provide a lot of good that does not have secure jobs and are looking elsewhere. Overall, everything will be massively more expensive than now. Cause? Presumably, as always, a failure in pinstripes, the stamp his mark on the business needs, and long since we, when the full extent of the disaster becomes apparent.
    • Then I just have to wait until the stock price rises to this message Gund and sell my shares before anyone noticed that this shot is huge backfires. IBM thrives on the know-how of its employees. The sale of this knowledge to the customer is now the core business and not the building's black boxes for computer centers.
  • Austin American-Statesman: More than 100,000 Austin Energy customers hit by billing errors from $55 million IBM system. By Marty Toohey. Excerpts: A malfunctioning bill collection system has created problems for more than 100,000 Austin Energy customers since October, according to estimates of the city-owned utility. Roughly 1 in 4 customers has experienced a problem with the system, which the city is paying IBM $55 million to build and operate. Austin Energy executives say issues keep cropping up even as others are resolved and blame IBM, an assessment the company does not dispute.

    Some customers went months without receiving a utility bill. Others have been charged multiple times. Still others were unable to pay their bill online or were told that payments had been rejected when they actually went through. In some cases, businesses that owed about $3,000 were charged $30,000 or even $300,000. ...

    Austin Energy is now withholding $3.8 million in payments still owed to IBM, saying the money will not be paid until such situations are no longer occurring regularly. The city contends IBM screw-ups have cost it at least $8 million. In correspondence with city officials, IBM does not dispute the city's assessment. The company has promised to rectify the situation several times since the system went live, only to see more problems emerge. ...

    "In short, the City of Austin cannot properly operate its utilities," Weis wrote in an earlier letter to Sam Palmisano, then-CEO of IBM and now its board chairman. "My concern is the lack of progress in identifying the root cause and, frankly, the pace and quality of response from IBM." Frank Kern, an IBM vice president, wrote in response, "I want to assure you that the IBM team is equipped to handle the issues that typically arise in complex billing solutions like the one at Austin Energy, and we intend to meet IBM's contractual commitments ... in the January timeframe." ...

    Austin is not the only Central Texas-based government to have problems with IBM. In 2006, the state hired IBM to merge the data centers of 28 agencies into two streamlined and secure facilities, at an expected cost of $863 million. IBM was supposed to complete the project in December 2009 but it is still far from finishing, according to the state, which is in the process of replacing the company. ...

    Problems with the new billing system have cost Austin Energy $7 million in lost revenue, staffing and other expenses, Claypool wrote — and those problems did not emerge overnight. The system was supposed to be up and running by April 2011, but the launch date was pushed back at IBM's request. In several emails in the two months around the October start date, Claypool described the project to his IBM counterparts using phrases such as "serious concern over the quality," "severely disappointed," "subpar performance," "gravely concerned," "remedial level errors" and "seemingly endless failures and crashes by our IBM 'partners.'"

  • Yahoo! IBM Employee Issues message board: "Re: NYT: Unboxed Extra: I.B.M. and America’s Job Challenge" by "nyjints5". Full excerpt: Your point regarding IBM's gross and net over the past 14 years is very well taken.

    One day in the mid-1990's I was watching CNBC. An analyst being interviewed about corporate downsizing made a comment that I'll never forget. He said; "When are America's CEO's going to wake up and figure out they cant grow their companies by shrinking them? They can only grow them by selling more of their goods and services."

    Not a very profound comment, but it's so very true. Neither Gerstner nor Palmisano grew IBM's business by selling more of it's goods and services. I doubt Rometty can do it either.

    Any CEO can trim the rose bush. That's the easy part. Making that rose bush flourish and thrive again, is a whole different story. Unfortunately, "firing, outsourcing and squeezing" is the only strategy they can muster.

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Account Executive in Rockville, MD: (Past Employee - 2010) “Just another brick in the wall.” Pros: Huge, financially sound company, run with ruthless efficiency, that will win the IT war in the end through acquisition and brute force rather than product leadership. Cons: For the most part IBM is comprised of very average people. People can hide out for years in a company this size without ever really being noticed. Advice to Senior Management: Keep acquiring, it will be you and Oracle in the end.
    • IBM Software Engineer: (Current Employee) “As my first job, this was an interesting learning experience.” Pros: Flexible working hours - free to manage your own time. Relaxed culture - helps that most people in the Singapore lab are young. Opportunity to explore - IBM is a big company. Cons: Pay is mediocre. PBC and rating system is screwed up. Secrecy - pay scale among other things. Red tape - lots of annoying regulations to comply with. Advice to Senior Management: Reduce the bureaucracy, let people focus on their actual work Improve recognition and compensation of employees
    • IBM Project Manager, Outsourcing Services & Delivery: (Past Employee - 2011) “Great "On the Job" University, Tops Down Re-Organizations Create Insurmountable Chaos.” Pros: Highly recommend for new professionals just starting out. You will attain an IT PhD at IBM. If you succeed, you will have had to learn how to be self-sufficient, work outside the box, learn skills and expertise they don't teach you in college, and have the opportunity to work in many different fields or aspects of IT. Be prepared to wear many hats. While there is no funding for individual education activities, there is plenty of access to other education resources - online campus, self-paced resources or via company intranet combing through different organizations, departments process and technical information.

      Cons: In my opinion, constant crazy re-organization and re-process engineering leaves big gaps in resources, services. Major dictatorial decisions impacting mission critical capital, resources, programs or services are made high from the gods above--even account or dept. executives are out of loop--so employees must be able to change on a dime, relearn functions, processes and contacts. Maintaining customer sat and relationship becomes near impossible in this environment. Keep ideas, opinions, emotions in check as speaking up will only land you in big trouble. Key people, employees and contractors, go missing with no advanced notice or backfill planning--the survivors have to keep swimming against the tide. Or worse, it's like being on the Titanic and watching your co-guests fall-off the sinking ship. Budgets for customer travel, education, professional development for North American IBMers diminished year over year, sometime frozen in Jan for whole year, making new business, customer relationship maintenance, and professional development virtually impossible.

      Advice to Senior Management: See CONS. I am not clear if "management" director or below will benefit from any advice as it seemed the negative changes were out of their control. Director-level and above are too remote, too distant from that actual products and services, and seem to be working theoretically rather than realistically. If the corporation can maintain the image that they are successful with creative accounting, randomly slashing away at employee resources and operating expenses, why should they change? I guess there will be no "transformation" until the decline in quality and performance erodes contracts and the customer base to the point that the diminished global revenue is perceived.

    • IBM Anonymous: (Past Employee - 2011) “It was a good experience.” Pros: Growth rate is pretty minimal as well as the package is also very less when compared to the other companies in the industries. Cons: It was a good opportunity to learn since we get opportunity to work in large projects and learn leadership qualities as well. Advice to Senior Management: company should consider the employee's benefits as well rather than only showing interest in its delivery. There is no work life balance.
    • IBM Software Sales Representative in Edinburgh, Scotland (United Kingdom): (Current Employee) “A once great company, getting worse year by year.” Pros: Great brand recognition, great availability of technical resources, many committed staff members who are proud of who they work for. Cons: Poor compensation compared to the industry. If you are there too long your salary falls behind market average, and the only way to change is to leave. An embarrassingly manic focus on expenses.
    • IBM Anonymous: (Past Employee - 2010) “It used to be a good place to work for until management stopped caring about the employees.” Pros: The benefits were good and the employees were nice to work with. Cons: Constant layoffs. Jobs sent overseas. Advice to Senior Management: Bring jobs back to the U.S. and listen to what the employees have to say.
    • IBM Program Manager: (Past Employee - 2011) “Stuck in Stagnation for 14 Years.” Pros: Global presence, industry leader, numerous products and services, large community of brilliant people, focus on innovation, professional development resources, work life balance.

      Cons: Ambiguous, mislabeled job titles that do not truly reflect the work you do. Blocked access to professional development. Very poor, ambiguous, informal performance rating system with no management accountability. What is a 2+. There is no real recourse to dispute a rating without making enemies up your chain. Open door is a sham with consequences. Managers are forced to give sub-par ratings because there are only so many good ratings to give out; then they try to rationalize the illogical and are blindly backed up by senior management. By giving sub-par ratings, IBM reduces the percentages of raises, the amount of bonuses and ultimately promotions given to employees. Because of this, employees find themselves stuck for years. If you go to HR your career is over. The only way to progress at IBM is if you get a good manager that really likes you, will fight for you and allows you to take professional education and training courses.

      Advice to Senior Management: Stop playing games with the employees and go back to the IBM that ensured the professional development and growth of it's workforce.

    • IBM Financial Analyst in Rochester, MN: (Current Employee) “Good company to work for, but not much in the way of salary growth” Pros: Good management. The managers I had were always nice. Good 401(K) match. Good work/life balance, and flexible scheduling. Cons: Little to no salary growth. Bonuses are practically nothing. Advice to Senior Management: My advice would be to give employees a little raise every year to make them feel like they have ownership in the company.
    • IBM Managing Consultant in Bangalore (India): (Past Employee - 2012) “Neutral.” Pros: Work from home flexibility, work life balance, not to much of pressure, great support from competency and management, i enjoyed my tenure there. Cons: yearly review, senior management is not informing the process though providing review on the basis of personal guilts. very bad process of review. Advice to Senior Management: Improve the employee satisfaction by providing positive review and keep skilled resource intacted.
    • IBM Support Analyst in Markham, ON (Canada): (Past Employee - 2010) “awesome.” Pros: IBM provides a great learning environment and offers tons of people to meet. My schedule and working environment was very flexible and casual. Recognizes employees for good work. Cons: IBM has too much corporate policies, which you must follow. In addition, the job was very stressful and the managers do not care how much or long you work. Advice to Senior Management: Offer better training to employees, rather them putting them out in the wolves. It is hard for an employee to adapt.
    • IBM Anonymous in San Jose, CA: (Current Employee) “A decent place to work.” Pros: flexible schedules, work locations, lots of internal opportunities, management in general is supportive, they are making money so raises and bonuses are gettable. Cons: Not exactly cutting edge as far as technology is concerned, is quite slow to accept change, too many products in the portfolio and very little in the means of integration. Salaries not as high as should be
    • IBM Client Manager in Singapore (Singapore): (Current Employee) “demanding and in a lot of times, 'soul sucking'” Pros: 1. Great training and exposure. 2. High standards of expertise. 3. Great resume booster. 4. Open many doors of opportunities. Cons: 1. Need to be in 'in crows' (a clique of people with strong influence and power), otherwise, you will not move upwards in your career. 2. Need to serve this group with your time and interest. 3. Job demands are huge as jobs are team incentivized and one needs to play ball during and off work hours. Advice to Senior Management: 1. Encourage a balance work and life lifestyle in IBM. 2. Take away, all kinds of nepotism and encourage fairer meritocracy.
    • IBM Anonymous in Foster City, CA: (Current Employee) “My experience has been extremely positive yielding numerous opportunities for growth.” Pros: 100 year old company. Fantastic benefits. Worldwide network. Competent leadership. Strong position in the marketplace. Strong strategy for future success. Cons: Large machine that can at times seem too cumbersome. Upward mobility can at times be hingent (sic) upon who you know rather than on talent alone. Advice to Senior Management: Continue fishing in the trenches for information about what customers want. Staying in touch with what customers (internal and external) want will keep the company at the forefront of the industry.
    • IBM Anonymous in Toronto, ON (Canada): (Current Employee) “IBM = Career Death.” Pros: Decent benefits package. Big name on resume. Cons: No career growth. No value as an employee.
  • Alliance for Retired Americans Friday Alerts (PDF). This week's issue includes these stories:
    • Coyle Concerned About Proposed Means-Testing for Medicare
    • Payroll Tax Cut Bill Affects Medicare Reimbursements, Unemployment Benefits
    • Romney Flip-Flops on Social Security and Medicare
    • Health Care Reform Helps Deliver Preventive Care to 86 Million Americans
    • New Database Provides Economic Security Data for Elders and Families
  • Wall Street Journal: Signs Your Pension Plan Is in Trouble. These Four Red Flags Can Help Retirees Prepare for—and Prevent—Benefit Cuts. By Ellen E. Schultz. Excerpts: If your pension plan is underfunded, you could be at risk of losing some of your benefits. That isn't news. But did you know that your pension can be at risk even if the plan is relatively healthy? Something as seemingly innocuous as having a lump-sum payout provision, or even having a religious affiliation, could mean your benefits are vulnerable. Here are some red flags to look for, and some ways to protect yourself. ...

    Over the past decade, more than 100 employers—including hospitals, schools, nursing homes, universities, clinics and religious charities—have been claiming their pension plans are actually "church plans," a largely unregulated pension category that generally covers clergy and lay employees of churches, synagogues, mosques and other houses of worship.

    Church plans are exempt from federal pension rules, including those that require employers to fund the plans and insure them with the PBGC. This puts participants at tremendous risk.

    Employees at Augsburg Fortress, a publisher in Minneapolis that sells books published for the Evangelical Lutheran Church in America, lost 30% to 60% of their pensions when the publisher, which claimed the pension was a church plan, terminated it in 2010. Augsburg didn't respond to requests for comment.

    Last fall, the Internal Revenue Service said employers must notify their employees and retirees if they are seeking church-plan status. But the rule isn't retroactive, so if your plan has converted already, your employer doesn't have to notify you. If you are worried, ask your plan administrator if your pension is protected by the PBGC.

  • Forbes: Here's A Big Secret About Your 401(k). By Emily Lambert. Excerpts: Last week, after Obama’s State of the Union address, the Departments of Labor and Treasury issued a triumphant joint announcement. It said that as part of Obama’s “blueprint for an American economy built to last,” Labor took action to provide more transparency around 401(k) fees. If you can see past the political posturing, you’ll find that this is important. It means someone’s about to reveal a great, big secret about your 401(k) – how much you’ve been paying for it.

    This is information that has taken five years to force into the open. In November 2006 the Government Accountability Office issued a report suggesting more transparency was needed into fees, the kind participants are (often unknowingly) paying to companies like Fidelity, Bank of America‘s Merrill Lynch, BlackRock and PIMCO, among others. The murkiness has made it hard to be a smart shopper. “Participants may have more limited investment options and pay higher fees for these options than they otherwise would,” the GAO said in another report the following March.

    The GAO calculated that an additional 1% charged to a $20,000 portfolio for 20 years would reduce the amount in retirement by a whopping 17%. Small fees have big effects. ...

    It would be nice to say that people are about to find out if that’s true. The trouble is, this fee secret is so well kept that some don’t know it’s even a secret. Studies have shown many people don’t realize they even pay 401(k) fees. When your account is up or down 15%, you’re probably not watching the seemingly small 1% in fees. Financial-speak doesn’t help things. And the bad news is the rule doesn’t even get into the money paid out due to “revenue sharing.”

  • Boulder Daily Camera: From unlimited burritos to on-site yoga, Boulder firms pile on perks. Even as companies slash costs, some still use special benefits to lure workers. By Sarah Kuta. Excerpts: These benefits go beyond the usual health and dental insurance to include beer on tap, on-site yoga instructors and unlimited burritos -- all designed to make it easier to attract potential talent and increase productivity.

    Because Boulder is a hub for science, technology and health industries that compete globally for the best talent and ideas, some of the city's companies have stepped up their incentive game. ...

    SendGrid keeps a fridge stocked with beer, provides employees with freshly baked cookies from a local bakery every Tuesday and offers a free gym membership. In January, the entire office flew to Cancun for a four-day kickoff meeting. But perhaps the best perk of all? Unlimited burritos. "Because we work right above Chipotle (on Pearl Street), we have an unlimited account," Brantz said. "We can eat there whenever we want. It's dangerous." ...

    Natural Habitat Adventures in Boulder was voted the No. 1 place to work by Outside magazine two years in a row. The benefits -- which are some that "Boulderites love," according to founder Ben Bressler -- include four weeks of vacation plus two weeks of company-funded site inspections, which means a trip anywhere in the world. "We ask them to tell us how the trip went and to check out the different lodges and things, but it's pretty much a vacation," Bressler said. The company has interchangeable ski passes for employees and families, days when the entire office goes skiing or hiking, an on-site health club and organic cafe. Oh, and there's beer on tap. ...

    Google was ranked the No. 1 place to work by Forbes magazine in January. The Boulder location has 200 employees, and, in February, the company plans to open up an additional location, according to site director Scott Green. First on the Google perks list is the food, Green said. Google provides free breakfast and lunch to all employees, with an emphasis on locally grown, healthy food. The new location will include a "modest-sized" workout facility, and Google encourages people to take a jog or bike ride in the middle of the day. Employees work in small teams and Google runs on a flat-management system, which means everyone in the office is a decision-maker. "You don't need to become a manager to advance within the company," Green said.

    Editor's note: At one time IBM Boulder did offer free water in its break rooms. However, in a cost cutting move several years ago, the water jugs were removed. Employees may, however, purchase bottled water from vending machines.

  • Financial Times: Golden age of early retirement nears end. By Norma Cohen. Excerpts: The golden age of early retirement is nearing its end, new data show, with many more men now waiting until they are almost at the state pension age of 65 before they give up work. According to new information from the Office for National Statistics Pension Trends Report published on Thursday, men leaving the workforce in the middle of last year, were, on average, 64.5 years old.

    In the golden era of early retirement in the mid-1990s, that age was 63, although many left the workforce well before then, not least because some private sector employers offered generous packages to encourage people to go.

New on the Alliance@IBM Site
  • Job Cut Reports
    • Comment 02/10/12: Yesterday they had a "silent layoff" in EFK and BTV and rumor has it that they are cutting out our overtime pay, can this be verified. -upnorth-
    • Comment 02/11/12: It is an irony that with less USA IBM employees means if more of the remaining IBMers speak up and organize you all can get closer to a union with a 50% + 1 vote just a little easier than with a larger rank and file where more outreach to get members and votes would be needed. So join the Alliance now. And get to it! -UnionVox-
    • Comment 02/13/12: Just an update from the down trodden in the UK. In my last message I said that I insisted that my second line manager send through to me the process for awarding PBC scores, as I was given my PBC two weeks before Business results were known. Well, I was sent them, with a note saying that the assumption is that this matter is now closed. Second line manager was informed that I had already booked an appointment with HR and will be discussing the matter with them.

      Well, I must congratulate HR on having their responses well rehearsed! They advised me that they are aware of various issues with PBC's and that they are looking into the matter and will advise me of any findings etc etc etc. Sounded very much like they were just saying what I wanted to hear. What do you think the odds are of someone actually doing anything about doing what's morally right, not just what's right for IBM's bottom line? - No Name - Just a Number-

      Alliance Reply: Why do you expect anything different than the answer you got from HR? Do you believe they represent you in some way? IBM HR represents IBM's interests, only. Not yours. If you want someone to represent your interests, then you want a union contract.

    • Comment 02/13/12: -No Name - Just a Number- It blows my mind that IBMers actually think HR will be fair to them when they have a good case. A corporation's HR department actually effectively fairly dealing with employee ("human") issues? It is a well known myth. HR just protects the corporation from the employees and thus backs management or does damage control for management. It can care care less about employees and the human element. They treat all rank and file humans collectively as resources, not as beings. If you want real fairness you need union representation. Plain, simple, period. Without it you stand nil of a chance. -IBMUnionYes -
    • Comment 02/14/12: @owns_no_shares-- IBM is indeed growing it's price per share by firing US - EMEA - UK workers and hiring cheap labor. It has been estimated that IBM saves 80% per hourly wage when hiring over seas, but you also need to consider the IBM benefits overseas are minimal as well. The yellow flags will turn red after IBM can no longer diminish the US - EMEA - UK workforce(s) and it (IBM) will actually have to show financial growth. Yes, it will level off someday, but sadly, there will not be many US - EMEA - UK workers left in the mix. Organize now before you end up like every other RA'd person -Same-Road-Map-
    • Comment 02/15/12: I understand that 3 RSD techs have retired or quit since the beginning of the year in the branch. I told the manager that this is what they can expect when they pass around 10% pay cuts and pay band reductions. He told me that I need to work out a rotation among the remaining large system SSRs to start covering the POS/high volume calls. Y'all need to know that IBM is going to be loosing maintenance customers, and you can say you saw it here first. Major accounts like Wal-Mart, Cisco, and NetApp will be among those impacted. There are literally no people left in the field to go take the service calls. It truly is a smarter planet.... -gadfly-
    • Comment 02/18/12: US delivery friend reports 4 teamers with consistent 2+, 2s PBC reduced to 3s even while meeting 20% or greater overtime (unpaid) demand last six months. Could mean 25% RA/termination. Summary of the WRALTechWire "job cuts coming" article: SUBTRACTING RESOURCES = ADDED VALUE at IBM. Essentially, cheating customers out
    • Comment 02/18/12: From the main page: Where is your work going? The off shoring of work from IBM US to other countries continues. Many IBM employees in the US have been calling Roadmap 2015,"Roadkill 2015" for US workers. Help us expose where the work is going, what kind of work, and what accounts. We would also like info from IBM workers who saw their work off shored the past 2 years. -member-
    • Comment 02/19/12: Update on disputing my PBC 3 rating going from a 1 to a 3 as indicated in my earlier comments, first off IBM doesn't make it easy for an employee to use the open door / HR route as they state, second line management was rude and disrespectful, the guy acted like I personally attacked him, HR was slightly more understanding, however, I had good documentation to back me up, they retracted the 3 ranking and made it a 2, not sure if it was worth the stress in the end because it seems as they still won for all the hard work I did in 2011 and the stress to fight a 3 rating to end up with a meaningless 2, no raise, no bonus. "More than ever IBMer's need to come together and get unionized". -Anon-
    • Comment 02/19/12: Big cuts (i.e. RA) in Application Services group will be announced this coming week. Code name is Phoenix. More US jobs and dedicated employees will be the ax. Join the union! -KL-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Huffington Post: Young Adult Insurance Coverage Laws Boost Access to Medical Care, Reduce Costs: Report. By Jeffrey Young. Excerpts: Health reforms at the state level that permit young adults to remain on their parents' health insurance resulted in better access to medical care, an outcome that likely will broaden under President Barack Obama's health law, which allows children to keep their parents' coverage through age 26, researchers conclude in a new study.

    Researchers at the Mount Sinai School of Medicine in New York compared young adults in states that already require insurance companies to cover policyholders' children through age 26 with their counterparts in states without such laws. After Colorado, New Jersey and South Dakota enacted mandates in 2005 or 2006, young adults reported increases in health insurance coverage, more physical exams, a greater likelihood of having a primary care physician, and less occasions when they went without medical care because of costs than their counterparts in 17 states that do not mandate insurance coverage for that age group, according to the report published by journal Pediatrics on Monday.

  • Washington Post: Success of health reform hinges on hiring 30,000 primary care doctors by 2015. By Sarah Kliff. Excerpts: Decades of research have confirmed that more specialists leads to more specialty care, which leads to a more expensive system. Now, with the passage of the Affordable Care Act, tens of millions of previously uninsured Americans will be looking for a primary-care doctor. It is no exaggeration to say that the success of the health-care law rests on young doctors choosing to do something that is not in their economic self-interest. ...

    “No matter what speciality you’re going into, your medical education costs the same,” Stream says. “Think about a medical student who is sort of interested in primary care and has got $250,000 in debt. People are often driven by financial incentives, and you basically get the outcome that you incent. Health-care workforce is not different from any other sector in that regard.”

    As with speciality doctors, specialty residents bring a hospital more lucrative business. A radiologist will earn a hospital $193 in Medicare reimbursements every hour, a primary-care doctor brings in $101, according to an analysis done for a congressional watchdog agency.

    “What hospitals build, in terms of their residency training, has a lot to do with what business they’ll bring in,” says Robert Phillips, director of the Robert Graham Center, which studies health-care workforce issues. “If they have a choice between funding a primary-care residency or one in cardiology, the cardiology residency will make them a lot more money. It’s a perfect storm that aligns the incentives against everything other than primary care.”

    The greatest threat to the health-care overhaul might not be the Supreme Court, which is scheduled to hear challenges to the law next month. Or the shifting alliances of an election year. In the end, it’s more likely to be a lack of medical providers. If the law succeeds in extending health insurance to 32 million more Americans, there won’t be enough doctors to see them. In fact, the anticipated shortfall of primary-care providers, by 2015, is staggering: 29,800. ...

    “The income gap that stratifies much of society often stratifies the physician community as well,” a 2009 report on primary care from the Robert Graham Center concluded. “The ‘heart hospital’ side of a medical campus may have fountains and artwork, while the mental image of the primary-care offices is a necessarily full waiting room of a practice where physicians see 40 or more patients a day.” Those differences help explain the country’s primary-care doctor shortage. They also make an impression on medical students like Reem Nubani, a 30-year-old student at Southern Illinois University interviewing for residency slots.

  • BenefitsPro: Health care costs drop when poor are insured, study says. By Kathyrn Mayer. Excerpts: A new study coming from the University of California-Irvine may upset Republicans who argue health care reform is too costly: Researchers found health care costs on the whole fall when poorer, uninsured patients are provided health insurance. “In a case study involving low-income people enrolled in a community-based health insurance program, we found that use of primary care increased but use of emergency services fell, and–over time–total health care costs declined,” says David Neumark, an economics professor and co-author of the study.

    The study focused on uninsured people living in Richmond, Va., who fell 200 percent below poverty level. Health care costs fell by almost 50 percent per participant, from $8,899 in the first year to $4,569 in the third after they received insurance. They found there were more primary care visits, but less emergency room visits. Costs per visit for both inpatients and outpatients also decreased, as did the length of inpatient stays. Overall costs per enrollee per year for all participants with at least one year of enrollment declined from $7,604 to $4,726.

  • Rocky Mountain PBS: U.S. Health Care: The Good News. Abstract: One small community in the Colorado oil patch near the Utah border delivers the highest value-for-the-money health care in the United States, and in the process covers nearly everyone in town. How do they do it? Could other communities do it, too? Correspondent T.R. Reid interviews health policy experts at the Dartmouth Institute before heading to Colorado and other places in the U.S. where doctors and hospitals are working hard to provide excellent health care at reasonable cost.
  • The Fiscal Times: What Those New Super Drugs Really Cost. By Merrill Goozner. Excerpts: The drug industry usually defends the high price on drugs – the latest cancer therapies are tipping the scales at $100,000 a year – by pointing to the large sums it spends on research and development. It is true that drug firms spend a larger share of their revenue on R&D than most other industries, typically anywhere from 15 to 20 percent of sales. And Eli Lilly ran a Super Bowl ad claiming the cost of developing a new drug has now risen to more than $1.3 billion.

    Now Matthew Herper of Forbes Magazine, usually an insightful writer on the drug industry, has raised the stakes. He wrote last week that the cost of developing a new drug had reached breathtaking level of $3.7 billion to $11.8 billion. ...

    For many years, industry supporters have tried to create a metric for measuring the cost of developing a new drug. The Tufts University Center for the Study of Drug Development, which receives industry funding, has developed a methodology that’s widely recognized by the economics profession. Its studies are the basis for the Eli Lilly ad’s claims.

    I think they’re wrong, and the $1.3 billion-per-new-drug number is hogwash. But let me start by saying I’m not a disinterested observer in this debate. I wrote a book claiming the figure was substantially lower (“The $800 Million Pill: The Truth Behind the Cost of New Drugs”) and the title chapter sought to debunk the Tufts methodology.

    Here’s the short-hand version of my argument. First, the Tufts economists overestimated total costs by adjusting the multi-year costs for developing any single drug for inflation over the lifetime of its development and treating it like capital investment. That misses the crucial point that R&D isn’t a capital expense. It’s an annual write-off from a company’s top line and thus a deduction from taxable profits. No industry capitalizes R&D costs. The drug industry doesn’t either, including in its accounting statements to the Securities and Exchange Commission. Therefore, it shouldn’t in its public propaganda.

    Second, the Tufts researchers failed to account for research that is driven by the marketing needs of the firm, such as coming up with so-called me-too drugs or drugs designed to replace drugs coming off patent. Neither generates new drugs that are any different from what’s already on the market, and should more properly be considered a marketing expense.

    Companies also conduct hundreds of clinical trials every year, the most expensive part of drug development, that are not designed to win new approvals or even win new approved indications for old drugs. They are designed by companies to encourage physicians to use their drug. The industry even has a name for this kind of R&D: seeding trials.

  • The Hill: GOP senators push for Medicare cuts. By Alexander Bolton. Excerpts: Burr and Coburn are proposing keeping the current fee-for-service government program but requiring it to compete with private plans, introducing a premium-support plan in 2016. They would increase the Medicare eligibility age to 67 for people born after 1959 and raise Medicare premiums by 3 percent of the overall program’s costs each year until a 9 percent adjustment is reached by 2016.

    The plan would increase the cap on out-of-pocket costs for individuals earning more than $85,000 a year and couples earning more than $170,000. For example, individuals making between $85,000 and $107,000 would see out-of-pocket costs capped at $12,500.

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: Even Critics of Safety Net Increasingly Depend on It. By Binyamin Appelbaum and Robert Gebeloff. Excerpts: Ki Gulbranson owns a logo apparel shop, deals in jewelry on the side and referees youth soccer games. He makes about $39,000 a year and wants you to know that he does not need any help from the federal government.

    He says that too many Americans lean on taxpayers rather than living within their means. He supports politicians who promise to cut government spending. In 2010, he printed T-shirts for the Tea Party campaign of a neighbor, Chip Cravaack, who ousted this region’s long-serving Democratic congressman.

    Yet this year, as in each of the past three years, Mr. Gulbranson, 57, is counting on a payment of several thousand dollars from the federal government, a subsidy for working families called the earned-income tax credit. He has signed up his three school-age children to eat free breakfast and lunch at federal expense. And Medicare paid for his mother, 88, to have hip surgery twice.

    There is little poverty here in Chisago County, northeast of Minneapolis, where cheap housing for commuters is gradually replacing farmland. But Mr. Gulbranson and many other residents who describe themselves as self-sufficient members of the American middle class and as opponents of government largess are drawing more deeply on that government with each passing year. ...

    The government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007, according to a Congressional Budget Office analysis published last year. ...

    One of the oldest criticisms of democracy is that the people will inevitably drain the treasury by demanding more spending than taxes. The theory is that citizens who get more than they pay for will vote for politicians who promise to increase spending.

    But Dean P. Lacy, a professor of political science at Dartmouth College, has identified a twist on that theme in American politics over the last generation. Support for Republican candidates, who generally promise to cut government spending, has increased since 1980 in states where the federal government spends more than it collects. The greater the dependence, the greater the support for Republican candidates.

    Conversely, states that pay more in taxes than they receive in benefits tend to support Democratic candidates. And Professor Lacy found that the pattern could not be explained by demographics or social issues. ...

    Some of the fiercest advocates for spending cuts have drawn public benefits. Many, like Mr. Falk, have family members who rely on the government. They often cite that personal experience as the reason they want to cut government spending. Brian Qualley, 49, has a sister who survived a brain tumor but was disabled by its removal. The government pays for her care at an assisted-living facility. Their mother scrapes by on Social Security. ...

    Barbara Nelson has little patience for people who say they will not need government help. She considers herself lucky she has not, and obligated to provide for those who do. “Catastrophes happen in life,” she said, sitting in a coffee shop in Taylors Falls. “To be so arrogant that you think it won’t happen to you, that somehow you’re going to be one of the special ones, I disagree with that.”

  • New York Times op-ed: Moochers Against Welfare. By Paul Krugman. Excerpts: And what these severe conservatives hate, above all, is reliance on government programs. Rick Santorum declares that President Obama is getting America hooked on “the narcotic of dependency.” Mr. Romney warns that government programs “foster passivity and sloth.” Representative Paul Ryan, the chairman of the House Budget Committee, requires that staffers read Ayn Rand’s “Atlas Shrugged,” in which heroic capitalists struggle against the “moochers” trying to steal their totally deserved wealth, a struggle the heroes win by withdrawing their productive effort and giving interminable speeches.

    Many readers of The Times were, therefore, surprised to learn, from an excellent article published last weekend, that the regions of America most hooked on Mr. Santorum’s narcotic — the regions in which government programs account for the largest share of personal income — are precisely the regions electing those severe conservatives. Wasn’t Red America supposed to be the land of traditional values, where people don’t eat Thai food and don’t rely on handouts?

    The article made its case with maps showing the distribution of dependency, but you get the same story from a more formal comparison. Aaron Carroll of Indiana University tells us that in 2010, residents of the 10 states Gallup ranks as “most conservative” received 21.2 percent of their income in government transfers, while the number for the 10 most liberal states was only 17.1 percent. ...

    But why do regions that rely on the safety net elect politicians who want to tear it down? I’ve seen three main explanations.

    First, there is Thomas Frank’s thesis in his book “What’s the Matter With Kansas?”: working-class Americans are induced to vote against their own interests by the G.O.P.’s exploitation of social issues. And it’s true that, for example, Americans who regularly attend church are much more likely to vote Republican, at any given level of income, than those who don’t.

    Still, as Columbia University’s Andrew Gelman points out, the really striking red-blue voting divide is among the affluent: High-income residents of red states are overwhelmingly Republican; high-income residents of blue states only mildly more Republican than their poorer neighbors. Like Mr. Frank, Mr. Gelman invokes social issues, but in the opposite direction. Affluent voters in the Northeast tend to be social liberals who would benefit from tax cuts but are repelled by things like the G.O.P.’s war on contraception.

    Finally, Cornell University’s Suzanne Mettler points out that many beneficiaries of government programs seem confused about their own place in the system. She tells us that 44 percent of Social Security recipients, 43 percent of those receiving unemployment benefits, and 40 percent of those on Medicare say that they “have not used a government program.”

    Presumably, then, voters imagine that pledges to slash government spending mean cutting programs for the idle poor, not things they themselves count on. And this is a confusion politicians deliberately encourage. For example, when Mr. Romney responded to the new Obama budget, he condemned Mr. Obama for not taking on entitlement spending — and, in the very next breath, attacked him for cutting Medicare.

  • Slate, courtesy of AlterNet: All the Right Reasons for Raising Capital Gains Taxes. Mitt Romney's large investment income has spurred arguments about whether to raise the tax on capital gains. By Eliot Spitzer. Excerpts: The U.S. tax code: Never has so much been done by so many for so few who need so little. The recent public debate about the inequities built into the tax code—triggered by the disclosure of Mitt Romney’s tax returns—is all for the good. So is the call for a “Romney rule” mandating that capital gains be treated as ordinary income, and so be subject to the same top marginal rate of 35 percent that applies to ordinary income, rather than the current top rate of 15 percent.

    But we shouldn’t raise the capital gains tax just because it’s a popular idea. The rate should rise for philosophical, economic, and political reasons, as several colleagues and I argued in a recent debate at the Maxwell School of Public Policy at Syracuse University. ...

    This brings us to the economic arguments for raising capital gains rates. The only real caveat—for either Rawls or Nozick—is the claim that a marginal rate of 35 percent on capital gains would be such a disincentive to economic activity that the reduced economic activity would either harm the well being of the least well of member of society—the Rawls concern—or would simply reduce the total level of output, regardless of distributional concerns—the Nozick concern.

    On this pure economic issue, all serious studies of the issue (see in particular the reports by Citizens for Tax Justice and work by my fellow debater Len Burman, a superbly well-respected economist—provide dispositive evidence. The issue has been tested in the real world: Capital gains rates have through most of history been the same as those for ordinary income, but occasionally been reduced—or raised. Consequently, we have been able to measure the actual impact of rising and lowering the capital gains tax rate. Raising the rate as we have proposed would not be a disincentive to investment.

    The opposition at the debate did not raise any counter evidence. Often what is not said is more important than what is. They said nothing factual about the actual impact of an increase in the marginal rate on capital gains. Instead, they simply asserted that raising the rate would be counterproductive, with no supporting evidence. Their arguments were reminiscent of the apocryphal story of the Russian economist who rejected an answer to a real-life problem by saying: It works in practice, but it doesn’t work in theory.

  • Wall Street Journal: Budget Seeks to Boost Tax Revenue. By Siobhan Hughes. Excerpts: President Barack Obama on Monday proposed that a decades-old, widely criticized tax category be replaced by the so-called Buffett rule, which targets the wealthiest Americans. In the election-year budget proposal, the White House also called for higher taxes on the oil and gas industry, fund managers and estates while allowing Bush-era tax cuts for the wealthy to expire. It also suggested raising dividend taxes on the wealthy to the level of ordinary income. ...

    Mr. Obama backed a 30% tax on incomes of more than $1 million, embraced after billionaire Warren Buffett said the government was "coddling the super-rich." The Buffett rule would replace the alternative minimum tax, which was adopted in 1969 to target wealthy Americans who paid little or no taxes. Because the AMT was never indexed for inflation, it began affecting increasing numbers of middle-class taxpayers who had accumulated too many deductions and credits, leading Congress to enact temporary fixes. ...

    Mr. Obama would also raise the top individual income-tax rate to 39.6% for the wealthiest taxpayers starting in fiscal 2013. The plan calls for taxing long-term capital gains at 20% for upper-income Americans and taxing dividends as ordinary income for wealthier taxpayers, instead of the 15% top tax rates for dividends and capital gains instituted during the Bush administration. ...

    Mr. Obama also called for returning the estate tax to 2009 levels, or 45% with a $3.5 million exemption. For 2012, the top rate is 35%.

    The White House budget proposal also targets hedge-fund managers and private-equity partners, who currently pay a 15% capital-gains rate on "carried interest," or the share of profits from an investment fund or partnership given to managers as compensation. Mr. Obama's plan would tax those profits at ordinary income rates, raising $13 billion over 10 years.

  • New York Times: At Volcker Rule Deadline, a Strong Pushback From Wall St. By Ben Protess and Peter Eavis. Excerpts: Wall Street made its broadest assault yet against new regulation on Monday, taking aim at a rule that has come to define the battle over how to police banks in the aftermath of the financial crisis. Regulators in charge of writing the Volcker Rule, which would ban banks from trading with their own money, were inundated with complaints and suggestions on Monday, the deadline to comment on a draft proposal. More than 200 letters were expected to be filed by the midnight deadline on the rule, which regulators outlined in October.

    Commenters included the rule’s namesake, Paul A. Volcker, the former Federal Reserve chairman, who submitted a strongly worded defense of the rule’s intent in a letter on Monday. Others, like consumer advocates and lawmakers, criticized the draft rule for not being tough enough. ...

    The Volcker Rule aims to ban banks from placing bets with their own money, a practice known as proprietary trading. The rule is based on the belief that banks that enjoy government backing — like deposit insurance — should not be able to trade in this way.

  • Washington Post: How Obama and Romney would pay for the budget. By Ezra Klein. Excerpts: In 2011, federal spending was 24.1 percent of gross domestic product. Tax revenue was 15.4 percent of GDP. That’s a slight rise from 2009 and 2010, when revenue was 14.9 percent of GDP, but all three are near-record lows. Before this financial crisis, the last time federal revenue was below 16 percent was 1950 — before Medicare and Medicaid were law, and before Hawaii was even a state. For comparison, federal revenue averaged 18.2 percent of GDP during the Reagan years, and 19 percent of GDP during the Clinton years.

    There are two reasons revenue is so low. One is that the Bush tax cuts — which Obama extended in 2010 — pushed them far below where they would have been if we had stuck to Clinton’s rates. The other is that recessions bring revenue down and spending up, and we’re just coming out of a deep, long recession. ...

    Comparing the fiscal promises made by Obama and Mitt Romney isn’t quite comparing apples to apples. Obama is burdened with the responsibilities of governance. His numbers need to add up. They need to unite the congressional wing of his party. They need to fit inside a detailed budget that lays out funding levels for every agency in the federal government.

    Romney, meanwhile, is running a primary campaign. He’s trying to keep Newt Gingrich and Rick Santorum from getting too far to his right. He’s trying to mollify conservatives. He’s trying to inspire the party faithful. So his promises — like those of all candidates, including Obama in 2008 — are going to be a bit more fantastic than those of the sitting president. ...

    Obama’s plan would raise revenue to 19.2 percent of GDP. Most of that would come from people making more than $250,000 a year. In September, the nonpartisan Tax Policy Center ran the numbers on his proposal — unchanged in the budget — and estimated that taxpayers in the bottom 20 percent would pay an average federal tax rate of 1.8 percent, those in the middle 20 percent would pay 15.2 percent, and the top 1 percent would pay 36.3 percent.

    Romney’s plan cuts taxes to about 17 percent of GDP. Most of those cuts would accrue to upper-income Americans. According to the Tax Policy Center, under Romney’s plan, taxpayers in the bottom 20 percent would pay a rate of 3.4 percent, those in the middle 20 percent would pay a rate of 15.6 percent, and the top 1 percent would pay 25.9 percent.

    So low- and middle-income families would pay a bit more under Romney’s tax plan, and high-income families would pay a lot less. Taxes would also fall far short of spending. A realistic estimate of federal spending over the next decade is in the 22 to 23 percent of GDP range. Romney’s revenue is 5 to 6 percentage points below that, and since Romney has promised to balance the budget without cutting defense spending, he would have to cut every domestic spending program, including Social Security and Medicare, by more than 35 percent to make his numbers work.

  • Financial Times: An American budget for the rich and powerful. By Jeffrey Sachs. Excerpts: President Barack Obama’s budget for 2013 will set off a vitriolic battle. Republicans will rail against the Democrats’ “class warfare” and Democrats will rail against the Republicans’ “coddling of the rich”. Yet it is mostly for show. The rich will win in their fund balances while probably losing at November’s presidential polls, and the poor and working class will probably re-elect Obama but suffer a continuing decline in relative and perhaps absolute incomes.

    Consider the bottom line of the Obama budget. The policy is to cut total primary (non-interest) federal spending from about 22.6 to 19.3 per cent of gross domestic product from 2011 to 2020, while revenues would rise from recession lows of about 15.4 per cent of GDP in 2011 to some 19.7 by 2020. Compare that with Republican congressman Paul Ryan’s budget a year ago. Mr Ryan’s budget aimed for about 17 per cent of GDP in primary outlays by 2020, with revenues at about 18 per cent of GDP. The difference is modest, but the important fact is this. Both sides are committed to significant cuts in government programmes relative to GDP. These cuts will be especially swinging in the discretionary programmes for education; environmental protection; child nutrition; job re-training; transition to low-carbon energy; and infrastructure. The entire civilian discretionary budget will amount to only 2 per cent of GDP, or less, as of 2020, in the budget plans of both Obama and the Republicans.

    There are far better alternatives for America’s future. Successful northern European countries spend much more as a share of GDP on early childhood development, family support, job training, science and technology, and infrastructure, and they raise higher tax revenues to pay for them. Through a better balance of private and public investments they achieve lower unemployment, lower trade deficits, lower budget deficits, less poverty, longer holidays, better child care, higher life expectancy and higher reported life satisfaction.

    The true nature of Washington politics is thinly disguised by the heated political debate between them. Both parties depend on the money of rich corporate contributors from Wall Street, big oil, private healthcare, real estate, arms contractors and other corporate lobbies. Both cater to corporate desires, especially for tax cuts, unregulated executive pay and weak corporate regulation. ...

    Conceptually, US politics fits a modified version of the famous “median-voter theorem”, in which two political parties gravitate to nearly identical platforms to contest elections in the “middle”. In the US version, the parties converge not to the centre of public opinion, but well to the right of centre. They do so because electoral success depends not only on policy positions but also on raising huge campaign funds. Mr Obama has calibrated this well. His core constituencies of poor and working-class voters are the losers for it, though still better off than with a Republican president.

  • The Big Picture: US Debt Accumulation by President. By Barry Ritholtz. Excerpt: Here is a quick look at total debt as accumulated by each US President.
  • The Smirking Chimp: Money Throws Democracy Overboard. By Bill Moyers. Excerpts: Watching what’s happening to our democracy is like watching the cruise ship Costa Concordia founder and sink slowly into the sea off the coast of Italy, as the passengers, shorn of life vests, scramble for safety as best they can, while the captain trips and falls conveniently into a waiting life boat.

    We are drowning here, with gaping holes torn into the hull of the ship of state from charges detonated by the owners and manipulators of capital. Their wealth has become a demonic force in politics. Nothing can stop them. Not the law, which has been written to accommodate them. Not scrutiny -- they have no shame. Not a decent respect for the welfare of others -- the people without means, their safety net shredded, left helpless before events beyond their control.

    The obstacles facing the millennial generation didn’t just happen. Take an economy skewed to the top, low wages and missing jobs, predatory interest rates on college loans: these are politically engineered consequences of government of, by, and for the one percent. So, too, is our tax code the product of money and politics, influence and favoritism, lobbyists and the laws they draft for rented politicians to enact. ...

    Yes, the results are in and our elections have replaced horse racing as the sport of kings. Only these kings aren’t your everyday poobahs and potentates. These kings are multi-billionaire, corporate moguls who by the divine right, not of God, but the United States Supreme Court and its Citizens United decision, are now buying politicians like so much pricey horseflesh. All that money pouring into super PACs, much of it from secret sources: merely an investment, should their horse pay off in November, in the best government money can buy. ...

    When all is said and done, this race for the White House may cost more than two billion dollars. What’s getting trampled into dust are the voices of people who aren't rich, not to mention what's left of our democracy. As Democratic pollster Peter Hart told The New Yorker magazine’s Jane Mayer, “It’s become a situation where the contest is how much you can destroy the system, rather than how much you can make it work. It makes no difference if you have a ‘D’ or an ‘R’ after your name. There’s no sense that this is about democracy, and after the election you have to work together, and knit the country together.”

    These gargantuan super PAC contributions are not an end in themselves. They are the means to gain control of government – and the nation state -- for a reason. The French writer and economist Frederic Bastiat said it plainly: "When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it." That’s what the super PACs are bidding on. For the rest of us, the ship may already have sailed.

  • Financial Times: US taxpayers to subsidise $40bn housing settlement. By Shahien Nasiripour. Excerpts: US taxpayers are expected to subsidise the $40bn settlement owed by five leading banks over allegations that they systematically abused borrowers in pursuit of improper home seizures, the Financial Times has learnt. The deal, agreed last week, calls for Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial to pay about $5bn in cash fines and to reduce monthly payments and loan balances for distressed US borrowers by as much as about $35bn.

    However, a clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter. The existing $30bn initiative, the home affordable modification programme, or Hamp, provides taxpayer funds as an incentive to banks, third party investors and troubled borrowers to arrange loan modifications.

    Neil Barofsky, a Democrat and the former special inspector-general of the troubled asset relief programme, described this clause as “scandalous”. “It turns the notion that this is about justice and accountability on its head,” Mr Barofsky said.

  • BusinessWeek: Rising Gas Prices: Not Demand Driven. The national average for gas prices is above $3.50. Yet demand in the U.S. is at its lowest point since 1997. So what's driving this run-up? By Matthew Philips. Excerpts: Gas prices are off to a fast start in 2012. The national average for a gallon of regular gasoline is up more than 8 percent since the end of 2011, rising from $3.25 per gallon to $3.52, according to new data released by the U.S. Energy Information Administration. While gas prices tend to rise through the first half of the year, this is the earliest the average price per gallon has breached the $3.50 mark. If this pace continues, the national average should hit $4 a gallon by May, if not sooner. The last time the average price did so in the U.S. was summer 2008, when the price of oil hit $140 a barrel. Last year gas prices approached $4, hitting an average of $3.98 in April, before falling. ...

    Strangely, the current run-up in prices comes despite sinking demand in the U.S. “Petrol demand is as low as it’s been since April 1997,” says Tom Kloza, chief oil analyst for the Oil Price Information Service. “People are properly puzzled by the fact that we’re using less gas than we have in years, yet we’re paying more.”

    Kloza believes much of the increase is due to speculative money that’s flowed into gasoline futures contracts since the beginning of the year, mostly from hedge funds and large money managers. “We’ve seen about $11 billion of speculative money come in on the long side of gas futures,” he says. “Each of the last three weeks we’ve seen a record net long position being taken.”

  • The Fiscal Times: Is America Overworked? By Steve Yoder. Excerpts: With an increasingly competitive job market, Americans are logging in more time at work and skipping vacation time. According to the left leaning Center for American Progress, 86 percent of U.S. men and 67 percent of women work more than 40 hours a week, and American families worked an average of 11 hours more per week in 2006 than they did in 1979. Though the shift has helped companies cut expenses and increased U.S. productivity, a growing number of studies show that the extra work is negatively affecting our health, family lives, and effectiveness at work.

    For one, workers and their bosses often are not being paid for their extra time. Twenty-four percent of employees and forty-seven percent of employers work six or more hours a week without pay, concluded a 2007 study by corporate staffing firm Randstad. And research in 2008 by the Pew Research Center showed that 22 percent of Americans are expected to respond to work email when they’re not at work, half check job email on weekends, and a third do so while on vacation.

    That is, of course, if they ever get to take a vacation. According to a 2009 report by the human resources firm Mercer, after 10 years of service U.S. worker bees normally get 15 days of paid leave, while the Germans get 20, the British 28, and the Fins 30. But now come several new surveys last November announcing that we’re not even taking the vacation we do have. One, by travel company Expedia, found workers left 2 of their 13 days on the table—that’s $34.3 billion in free labor. ...

    But the long hours are taking a toll. A 2004 review by the federal Centers for Disease Control and Prevention concluded that in 16 of 22 studies, overtime was associated with poorer perceived general health, increased injury rates, more illnesses, and increased mortality. Two recent studies have linked long work hours to a higher risk of depression—one of them, in the June 2008 Journal of Occupational and Environmental Medicine, sampled 10,000 people and showed higher levels of anxiety and depression in those who put in the most overtime. As for the effects on those close to us, in a 2007 study by the American Psychological Association, 52 percent of employees reported that their job demands interfered with their family or home responsibilities. ...

    Whether employees take time off or not, many companies are seeing the downsides of overworked employees and are offering better vacation perks. Google offers 15 days off during the first year at the company and 25 days off after six years, Intel rewards employees with two-month sabbaticals every seven years, and IBM, Best Buy, Netflix and HubSpot have stopped counting employees’ vacation days altogether. Smaller companies have taken note. Joe Reynolds, CEO of a special-event planning company, gives his staff a fully paid one-month sabbatical to a destination of their choice every 5 years because he thinks it improves performance.

  • Christian Science Monitor: America's big wealth gap: Is it good, bad, or irrelevant? The gap between rich and poor is at its widest since the Roaring '20s. Obama complains that it's unfair, but a growing chorus of economists and sociologists say it's worse than that. By Mark Trumbull. Excerpts: Not since the Roaring '20s has the income gap between rich and poor been as wide as it is today in America – a development that has set politicians, various advocates, and average citizens debating if and why it matters.

    President Obama, revving up for a reelection campaign, decries the wealth gap as fundamentally unfair. It's one reason his economic strategy calls for higher taxes on the wealthy.

    On the Republican side, presidential hopeful Mitt Romney is seeking to fend off criticism that his wealth and some of his public comments show him to be out of touch with Main Street America. Those rising to his defense celebrate his wealth as just reward for hard work and business savvy – the very qualities the nation itself needs, they say, to get the economy going again. ...

    Inequality may be affecting growth in other ways, Mr. Gault adds. Disparities of income can mean that people lose faith that there's a fair economic playing field and that hard work will pay off. It can also mean that millions of people lack access to a good education. To the degree that these negative forces are operating, America is failing to tap the potential of its "human capital." ...

    Some thinkers even say America's very survival is at risk, if steps aren't taken to restrain the widening income divisions. Bruce Judson of the Yale Entrepreneurial Institute has estimated that the US is partway down a path of economic polarization that, based on patterns seen throughout history, could lead the country toward dissolution and revolution. He's not predicting that outcome, but asserts that the scenario is not as far-fetched as it may sound.

  • AlterNet: How a Filthy Rich 196 People Will Buy Our Election. In 2011, 196 individual donors provided nearly 80 percent of the money raised by super PACs. By Ari Berman. Excerpts: At a time when it’s become a cliché to say that Occupy Wall Street has changed the nation’s political conversation -- drawing long overdue attention to the struggles of the 99% -- electoral politics and the 2012 presidential election have become almost exclusively defined by the 1%. Or, to be more precise, the .0000063%. Those are the 196 individual donors who have provided nearly 80% of the money raised by super PACs in 2011 by giving $100,000 or more each. ...

    If 2008 was the year of the small donor, when many political pundits (myself included) predicted that the fusion of grassroots organizing and cyber-activism would transform how campaigns were run, then 2012 is "the year of the big donor," when a candidate is only as good as the amount of money in his super PAC. “In this campaign, every candidate needs his own billionaires,” wrote Jane Mayer of The New Yorker. ...

    Romney’s Restore Our Future Super PAC, founded by the general counsel of his 2008 campaign, has led the herd, raising $30 million, 98% from donors who gave $25,000 or more. Ten million dollars came from just 10 donors who gave $1 million each. These included three hedge-fund managers and Houston Republican Bob Perry, the main funder behind the Swift Boat Veterans for Truth in 2004, whose scurrilous ads did such an effective job of destroying John Kerry’s electoral prospects. Sixty-five percent of the funds that poured into Romney’s super PAC in the second half of 2011 came from the finance, insurance and real estate sector, otherwise known as the people who brought you the economic meltdown of 2007-2008. ...

    In his book Oligarchy, political scientist Jeffrey Winters refers to the disproportionately wealthy and influential actors in the political system as the “Income Defense Industry.” If you want to know how the moneyed class, who prospered during the Bush and Clinton years, found a way to kill or water down nearly everything it objected to in the Obama years, look no further than the grip of the 1% of the 1% on our political system.

    This simple fact explains why hedge-fund managers pay a lower tax rate than their secretaries, or why the U.S. is the only industrialized nation without a single-payer universal healthcare system, or why the planet continues to warm at an unprecedented pace while we do nothing to combat global warming. Money usually buys elections and, whoever is elected, it almost always buys influence. ...

    In a recent segment of his show, Stephen Colbert noted that half of the money ($67 million) raised by super PACs in 2011 had come from just 22 people. “That’s 7 one-millionths of 1 percent," or roughly .0000063%, Colbert said while spraying a fire extinguisher on his fuming calculator. “So Occupy Wall Street, you’re going to want to change those signs.”

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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