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Highlights—October 13, 2012

  • The Times of India: IBM establishes Watson team in India. By Sujit John. (If link is broken, view PDF version.) Excerpts: IBM has established a Watson software and services team in its Bangalore facility, the first such outside the US. Watson is IBM's powerful artificial intelligence computing system that rose to fame last year when it beat the best of human competitors in the complex quiz show Jeopardy in the US. The computer uses natural language processing capabilities, machine learning and the vast quantities of data fed into it to directly and precisely answer questions posed in everyday human diction in seconds. ...

    Watson is already being used by WellPoint, one of the biggest medical insurers in the US, to improve the accuracy and speed of insurance approval and authorization. It's also being used by Citibank, but Citi has not yet made public the uses it is putting Watson to.

    The Indian team, which will be part of the India Software Labs, will work with all of these clients. "It will also start understanding new markets where Watson could be used," Saxena said. Saxena, who grew up in Hyderabad and did a management sciences degree from BITS Pilani, went to the US in 1988 for an MBA. He subsequently founded two companies in the US, the second of which was acquired by IBM in 2006, and he has been with IBM since.

    IBM has nearly a third of its employees in India, and its engineers here have done leading edge work in areas like analytics and solar data centres.

  • Wall Street Journal: Huawei's Ally: IBM U.S. Giant Has Been a Key Partner of Controversial Firm. By Spencer E. Ante. Excerpts: Congressional critics allege Huawei Technologies Co. relied on state support and stolen technology to become the world's second-largest provider of telecom equipment. Another factor has been crucial to Huawei's rise, say the Chinese company's executives: IBM.

    Huawei has long denied claims of bad behavior. But its practices have risen to the fore since it emerged from obscurity in the past decade to become a potent force in the telecom-equipment business.

    U.S. government concerns culminated this week in a report by the House intelligence committee that labeled the company a security threat and warned U.S. telecom companies against doing business with it.

    Huawei has pointed to its relationships with companies like International Business Machines Corp. to explain its expansion. In an interview earlier this year, Huawei's senior vice president for the U.S., Charles Ding, said his company had worked closely with IBM since 1997, and that the U.S. company has played a key role in Huawei's success. Without IBM, Mr. Ding said, "We could not have had the Huawei of today."

    In its report, the House panel said Huawei only provided a vague description of the advice it got from IBM and other consultants, rejecting Huawei's claim that its success was due in part to those relationships. IBM declined to discuss its relationship with Huawei in detail, saying only that it provides consulting for thousands of clients across the globe. ...

    IBM helped teach Huawei Western management techniques and packaged its technology with the Chinese company's products, helping Huawei evolve from a local player into a global competitor, according to Huawei executives and public documents. Its consultants have worked with Huawei since the late 1990s and continue to assist it with important initiatives.

    In 2000, the companies announced a plan to jointly develop networking gear. Last year, IBM advised Huawei on its expansion into selling smartphones and tablets, which in 2011 accounted for about a fifth of the Chinese company's revenue.

    Selected reader comments follow:

    • "IBM declined to discuss its relationship with Huawei in detail, saying only that it provides consulting services for thousands of clients across the globe." There you go. Capitalism at its best. Money first. Country, dignity, all else last. Good job. Greed is good.
    • Yes, both IBM and GE have descended to a state where they will do anything for a buck, even if it undermines the U.S. and our security. I used to love IBM, but now, knowing about their push for smart meters in homes to monitor our every move and to ration our use of electricity, along with their complicity with the Chinese, I would like to see IBM and GE fade from the American scene.
    • So, how long have the best or our best consulting firms been advising the Chinese government and what, exactly, have they been consulting them on?
    • Everything, Mr. Entrikin. Greedy American executives, seeking to raise profits by reducing wage costs, built our new adversary.
    • It looks like IBM went "whole hog" on their business arrangements with this Chinese company. In other words, they didn't stop and think about the longer term implications of their actions. In the rush to make money on these lucrative contracting opportunities, they put one hand over their other eye.
    • Transnational companies like IBM and GE have taken Globalism to the next level by abandoning their founding nations and playing one against the other while they deplete the capital and jobs in the high wage country supply chains and redeploy it to low wage countries to maximize their global profits.

      What high wage countries need to do is to insist that such transnationals invest in their national supply chain in direct proportion to the revenue they derive in that country so that we have balanced trade not the unbalanced kind we have now that favors mercantilist countries like China.

    • Huawei hired IBM consultants and other consulting companies to improve its business practices and its internal organization structures. Additionally, Huawei cooperated with IBM building advanced products using IBM chips that helped IBM as well as Huawei. As a result, Huawei succeeded in China first and then succeeded outside China. If the US Congress wants to stop Huawei's growth in the US, then it better be prepared to receive similar treatment in China.
  • Yahoo! IBM Pension and Retirement Issues message board: "Should I use the future health account sooner rather than later" by "baj316". Full excerpt: I was laid off earlier this year and have a future health account balance. What I am looking for is some opinions on using it sooner rather than later.

    I do understand that I never want to draw the FHA to $0 as that will greatly limit my options if I need to rely on IBM benefits. And as long as there is a balance in the FHA I can either use the FHA funds or pay for benefits out of my pocket.

    Right now my wife is working (I am back in school) and we have the option of buying benefits through her employer at about $400 / mo or buying the benefits through IBM which will be about $1000 / mo (these are just ball park numbers but they make the point).

    So my thinking is that since the FHA is not guaranteed and IBM can take back the FHA at any time, while it is available to me I may as well use it even though we could buy the benefits at a much cheaper rate through my wife's employer. As long as I never draw the FHA to $0 we can always pay for the benefits out of our pocket. So why not use the majority of what IBM has set aside while it is available? Thoughts?

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "madinpok". Full excerpt: You're in a situation where you have to gamble on what you think the future holds.

    If you believe that IBM will keep the FHA plan until your wife stops working, then you would be better off using her benefits now and letting the FHA account stay idle. Once you both retire, insurance will cost more than it does for an active employee. So you'd be better off using her lower cost coverage now while you can.

    But if you believe IBM will take the FHA away before you both retire, then you would be better off using in now.

    I think you've analyzed things correctly. It all comes down to what you want to gamble on.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "willbefree25". Full excerpt: BIG thought...can you use both the FHA AND your wife's benefits at the same time? IF you cannot, BIG thought - can you get BACK on your wife's benefits once the pathetically meager FHA is gone, especially if you have a pre-existing condition when that time comes?

    Beware, beware, beware.

    My FHA sits, unused, forever and a day (yes, IBM wins, once again) because of this situation.

    IBM is NOT your friend.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "netmouser". Full excerpt: A side thought is if you have something remaining in FHA credits at age 65, you have access to IBM's retiree plans. Many people really like the Aetna Integration Plans. I saw that as a plus for FHA.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "ambassadoralvin". Full excerpt: I am in exactly the same situation and have chosen to defer using the FHA. This is based on our respective ages, my wife's retirement plans, and the extra premium in her plan for employee + 1. My wife plans to retire in about 5 years and will be covered by Medicare at that time. I am 55 so I have 10 years to go for Medicare. I can get coverage through my wife's plan at $2500 per year. And I estimate the FHA at single coverage is good for approx. 5 years. So here is the math (not exact, but close enough):
    • Option A: Use the FHA now - I exhaust the FHA by age 60 and since my wife is retired I pay full freight in the cheapest medical plan, about $7K a year. Total costs over 10 years is about $35K.
    • Option B: Defer the FHA and its still available - I pay $12500 in my wife's medical plan for 5 years then use the FHA for 5 years. Total costs over 10 years is $12.5 K.
    • Option C: Defer the FHA and IBM confiscates it - I pay $12500 in my wife's medical plan for 5 years and pay full freight for 5 more years. Total costs over 10 years is about $47.5K.

    If I take Option A I am committing to spending $35K over a ten year period. Since the maximum cost in that 10 year period is $47.5K then if I choose Option B over Option A I am betting $12.5K it doesn't turn into Option C. If I win that bet I save $22.5K. If I rate the bet as a toss up then I have to got with Option B (my potential winnings are almost twice my potential losses). Personally I think the odds are decent that IBM won't confiscate the FHA (its a fixed sunk cost and they are chasing future variable costs) so I am going with Option B.

    Your mileage may vary. But look up the cost of the various medical plans involved and do some math. Opinions are just opinions (mine included), but math provides hard information to base decisions on.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "willbefree25". Full excerpt: > Option A: Use the FHA now. Can you get back in your wife's plan when you exhaust the FHA, assuming no pre-existing conditions? Does this option include your being in the FHA and your wife's plan at the same time? If that is possible, the FHA would be primary for you for the 5 years, correct?

    > Option B: Defer the FHA. So you opt out of your wife's plan when you use the FHA for 5 years? Same question as above - are you confident you can get back in your wife's plan, again assuming no pre-existing conditions?

    > Option C: Defer the FHA and IBM confiscates it. Keep in mind, they can cancel it even it is being used, can't they? Why, yes they can, they're IBM and we don't have a contract.

    >Personally I think the odds are decent that IBM won't confiscate the FHA. Decent and IBM is an oxymoron. Yes, I know how you used 'decent', but don't trust IBM, they will screw you first chance they get to bribe a politico to write a law in their favor.

    So many questions, so many issues because the Second and No Choicer longtime loyal IBM employees were screwed out of the promise lifetime retiree medical. Oh well.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "nowwicked". Full excerpt: I like your way of thinking. Logical, rational, doing the math, comparing the numbers. Assessing the risk.

    Trust went out the window a couple of decades ago for everyone I know either who has left or is still employed. We all realize we are mercenaries for hire. We work there as long as the pay for our sword is good and they keep us for as long as they feel we have the sharpest sword for the money.

    We neither expect anything else as we won't get it, nor do we give anything else because they haven't earned it. This is not the world I was born into, but it is the world in which I now live.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "abouthadit". Full excerpt: Alvin, you didn't mention your current health situation.

    My independent children have elected to go bare and pay al la carte for health services. So far, they've done well and saved a bunch on premiums.

    Of course, that's not for everyone but it is an option for some folks.

    For folks like Willbefree25, a full refund for psychiatric treatment would be justified given that they had no effect.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "madinpok". Full excerpt: Most people think that going without health insurance is low risk, especially if they are young and healthy. But although the chances of something going wrong are small, when it does, the cost can be huge.

    Some years back, the daughter of one of my co-workers graduated from college and had a job lined up starting in the fall. Her college medical coverage ended at graduation in June. And her job coverage wouldn't begin until she actually started work. Neither she nor her parents thought it would be a problem not having insurance coverage for a few months.

    Over the summer, she became ill and was diagnosed with leukemia. She had to forgo taking the job as she was too ill to work and was left uninsurable.

    Her parents decided to pay her medical bills out of their own pocket so she could get something more than minimal emergency treatment. It nearly bankrupted them.

    Only fools go without insurance by choice if they can otherwise afford it.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "willbefree25". Full excerpt: > Only fools go without insurance by choice if they can otherwise afford it. So you mean IBM leaving thousands of longtime loyal employees without promised retiree medical coverage, when we most need it, was NOT in our best interest? Kind of like the 'portable' pension that Socks Bouchard spoke so highly of, which IBM tried to jam down the throats of Second Choicers and of course succeeded in jamming with No Choicers?

    I'll be darned, so the FHA was NOT part of the Respect For The Individual code of IBM.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "ibmretiree2006". Full excerpt: Respect for the Individual??? I seem to remember that FANTASY from years ago. I thought it was Respect for the Profit Line? It didn't take Lou and company long to recognize that people at age 30 don't need nearly as much medical as you old farts (me included). And yet I seem to recall that the executives, no matter the age, had excellent medical benefits and, more importantly, great retirement benefits. Because they, obviously, are better people than the peons who actually do the work. Makes you proud, doesn't it??
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "nowwicked". Full excerpt: I was extremely disappointed when IBM changed the original core beliefs. I stayed because it was in my best interests to do so. This was about the time I realized we are all mercenaries, not employees.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Should I use the future health account sooner rather than later" by "cookewj". Full excerpt: Two important points, one to echo comments from above: My son left his job to return to school for an MBA. Twelve hours before he was to have left for NYC and school, his brain cancer let itself be known in a dramatic fashion. Long story for another time, but insurance then, and ongoing, has been a series of horror stories.

    Age 26. $2M plus in medical care; at least that much still to come. My one consolation is that my son is still alive.

    Point two, relative to such black swan events being covered by high deductible plans: understand that the BC/BS high deductible plan offered by IBM does not meet the Creditable Insurance standard, that must be met consistently over time to allow one to avoid pre-existing exclusions in buying insurance if job loss, and consequently insurance loss, leaves one uninsured for more than 60 days, and one then attempts to then buy an insurance policy. The great Obama solution to this problem has not kicked in yet.

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM overall is a great place to work” Current Employee. Pros: IBM are good at ratings and feedback to provide the employee with knowledge about how they are performing and how they could improve. This system will root out those not suited to being an IBMer and they tend to leave the company, which raises the average calibre of staff. Training is excellent and support is always available. High standards of working practice and managerial behaviour keeps employees happy and retains staff. True work life balance can be achieved at IBM and senior banded employees diarise their own time to work around personal commitments. Cons: Salary is an issue and I have seen many excellent IBMers leave the company because they can achieve significantly higher salaries elsewhere. Also, there is no pro-active 121 help with career advancement and I have lost count of the number of times a manager has told me that it is the individual's responsibility to further their own career, but this is very difficult in a company the size of IBM, since you need help from other people to advance. If you are female and planning to take time out to have a family, be prepared for your career to stagnate, there is no mechanism in IBM to give women returning to work a leap forward and this can be very demoralising. Advice to Senior Management: Increase base salaries before you lose some of the great talent the company has spent years nurturing. Implement a managed back to work boost service from HR for women returning to work after having a baby.
    • Still one of the big players, but...” Former Employee. Pros: Good opportunities if you want to work in emerging markets, e.g. Africa. Good name to have on your resume. Cons: Roadmap to increase earnings per share drastically squeezes substance out of the company and might lead to diminished performance and opportunities for employees in the long run.
    • Dinosaur approaching KT” Current Employee in Sydney (Australia). Pros: OK brand-name to have in CV. Cons: Everything. Great IT company ruined after merge in 2002 with PWC bean-counter culture. Deceptive pay - bonuses that are impossible to achieve. Horrific politics/waiting to be off-shored to India. Advice to Senior Management: Get a time machine - dial it to 2002 - cancel PWC merge
    • Great Resume Builder” Current Employee in Washington, DC. Pros: - Great Work Life Balance; - No crazy work weeks like some other top tier firms; - Reasonable vacation and flexible working environment; - Name recognition of a top tier firm that will be beneficial moving forward. Cons: - Focus on Billability over personal career growth; - Project placement often does not relate to skills you were hired for; - Overly involved process for promotion.
    • Keep IBM jobs in the USA” Former Business Analyst in Costa Mesa, CA. Pros: Great place to work until position moved off shore. Cons: Laid off due to position moved off shore. Advice to Senior Management: Keep jobs in the USA.
    • Average” Current Employee. Pros: Good work-life balance. Focus on high quality deliverables. Ample learning opportunities. The environment is conducive to your overall growth as a leader. Cons: Salary not satisfactory. Bonus seems negligible. No perks. No central system for talent recognition. It seems a if too much power has been given to PeM which sometimes drains the employees of their zeal to deliver perfectly. Advice to Senior Management: Remove the hierarchy in management . HR department should take care off all the pecuniary entitlements of employees. If the hierarchy is to stay ,there must be a separate department to look after the talent recognition and retention eliminating the current system of feedback from managers.
    • Average job for average pay for average employees” Current Employee in Atlanta, GA. Pros: IBM sells most solutions. If the client needs it, good chance you can sell it. The badge and the reputation get you in to many engagements that otherwise would be out of reach. Work at home, travel policies, diversity and corporate culture are all very good. Cons: Layers of approvals and thin staffing make actual delivery a nightmare. Just because you can sell it, doesn't not mean you may actually close the deal. If you care and are aggressive, you will feel like you have weights on your ankles. Advice to Senior Management: Invest in people. Cheaper outsiders with no industry or solution skills will not improve sales.
    • Software Client Leader” Former Sales Specialist in Atlanta, GA . Pros: Great people and technology. Learned a lot and was able to build my skills for a successful career. Cons: Top heavy. Too many managers, VP, Director, BUE, CUE, FLM for each brand, Product Manager, etc.,.. and major focus on EPS, not work life balance or people. Avg pay, below market value. Advice to Senior Management: Bring jobs back to US and stop offshoring for profit. Focus on quality and customer satisfaction.
  • Alliance for Retired Americans: Friday Alert. This week's articles include:
    • Vice Presidential Debate Highlights the Romney-Ryan Budget
    • Alliance State Affiliate Activities: Texas, Ohio, and More!
    • Sen. Baucus Works to Block Cuts to Social Security Administration Funding
    • Tea Party to Try Voter Intimidation, but Civil Rights Groups Prepared
    • Video, Fact Sheets include Alliance/AFSCME Retiree, Information You Can Share
    • Sen. Scott Brown Uses SOAR Retiree Steve Skvara without Permission in Attack Ad
    • Alliance Leaders Travel to Wisconsin, New Mexico, and Kentucky
  • ZD-Net: GM to scale back outsourcing in 1,500 Michigan tech jobs boost. General Motors will create 1,500 new jobs, boosting the Michigan economy, as the car maker shifts to plow IT work and spending back into the company. By Zack Whittaker. Excerpts: Reuters reports that the car maker will hire software developers, database experts, analysts and a bevy of other IT positions through 2016 in Warren, MI. The Michigan-based technology center will be the second development centers following the announcement of a similar Austin, TX.-based center last month. ...

    Currently, GM has around only 10 percent of its IT staff within the company. The remaining 90 percent will be clawed back in the coming years as the trend towards increasing levels of mobile technology transmit from the user's pocket into the vehicle.

  • AARP: Boomer Women Face Greater Financial Challenges In Retirement. By Carole Fleck. Excerpt: An AARP study, based on interviews with 4,000 people ages 50 to 64, found that women consistently reported more consternation than men about their current financial state and future outlook. Of course, the deep recession didn’t make anyone feel flush with confidence. But women were clearly more worried.
  • Baseline: Employers Find Value in Older Employees. By Dennis McCafferty. Excerpt: Watch out, Gen Y—the Boomers are back. Or, at least, that's the impression cast by a recent survey from Adecco Staffing US (www.AdeccoUSA.com), in which more than 500 hiring managers were asked to compare and contrast mature workers and Millennials. For years, it seems, many older employees have appeared to walk around the office with a big bull's-eye on their backs, and many felt they were "fair game" for layoffs and unjust terminations. But the survey findings reveal that companies now recognize the value that highly experienced staffers bring—especially when it comes to reliability and professionalism. "The rise of mature workers in today's workforce is a direct result of economic and societal factors," says Joyce Russell, president of Adecco Staffing US. "These are individuals who paid their dues long ago. Given their years of experience and work ethic, they make excellent job candidates and strong employees." For the purposes of the survey, mature workers are defined as those age 50 or older. Millennials were born between 1981 and 2000, according to accepted definitions.
  • Bloomberg: Women Flock to Startups While Trailing in Computer Science: Tech. By Ari Levy and Willow Bay. Excerpts: Women in technology say they have plenty of opportunities to start Web-based companies and raise capital, though there are still too few of them studying computer science and taking engineering roles.

    That’s the message from a group of female executives on “Women to Watch,” which aired yesterday on Bloomberg Television. The special features Facebook Inc. (FB) Vice President Carolyn Everson, SurveyMonkey.com LLC Senior Vice President Selina Tobaccowala, Stella & Dot founder Jessica Herrin and venture capitalist Theresia Gouw Ranzetta from Accel Partners.

    “For the first time, I actually see male co-founders and male co-founding teams who are explicitly looking to bring women into the executive team or the founding team,” said Ranzetta, whose investments include Imperva Inc. (IMPV) and Trulia Inc. She said companies are saying, “‘You know, two-thirds of my users, my most valuable users, are women. We’ve got to get a woman into the boardroom here, right?’”

    A selected reader comment follows:

    • software_advice4u: The only lie that is being perpetrated in the computing industry today is that there isn't enough talent going around (whether men or women). I find it disingenuous for the media to place women managers and founders of tech companies as the "heroes" of the tech industry when companies are not trying to hire Americans who have CS, EE, SE or any of those STEM degrees that are so difficult to get in the first place. Exactly what are you going to do with all that glut of talent out there? Is the solution simply to continue to "mentor" younger women in college? Those women aren't going to get hired anyway. And if they do...they will leave the industry within 5 years.

      Women soon find out what it really means to work in a tech sweatshop...long hours, falling salaries (thanks to cheap foreign hires), a man's world out there, no vacation, and no work life balance. Ladies, don't fool yourselves. Corporate Confidential has already exposed the real deal in the corporate tech world, too. You don't go to a tech company that requires you to work 100+ hours (a la Marissa Mayer style) and expect to take time off for maternity leave, sick leave, your kid's soccer game. You do it, then career suicide for you. Women are free to choose whatever field they want...so, they might as well choose another field that is more sane and requires less work.

  • Investment News: The UnCOLA: Social Security recipients to get puny cost-of-living boost. Unofficial estimate forecasts benefits will increase by 1.5% to 1.7% in 2013, less than half of the 3.6% increase in 2012. By Mary Beth Franklin. Excerpt: Social Security recipients will receive a cost-of-living increase for 2013, but it will be only about half as large as the COLA they received this year, according to an unofficial estimate by the American Institute for Economic Research, an independent economic research in Great Barrington, Mass.

    AIER economists estimate the 2013 increase to be between 1.5% and 1.7%, two percentage points below the 3.6 % increase seniors received for 2012.

  • Morningstar: Personal Finance Not Shopping for Medicare May Cost You in 2013. If you're among the millions of Part D participants at risk for double-digit premium hikes next year, check your options before grabbing your checkbook. By Mark Miller. Excerpts: Although the cost of Medicare Advantage plans will rise modestly next year, many of the top prescription drug plans are boosting premiums by double digits. What's worse, the 2013 Part B premium (outpatient services)--which won't be announced until the end of October--is projected to jump 5%-10% next year. ...

    Prescription Drugs: Seven of the top 10 stand-alone drug plans will have double-digit percentage increases next year, according to Avalere Health, a health-care consulting and research company. More than 80% of Part D beneficiaries are in these plans; Avalere data shows that 5.9 million will pay double-digit increases next year if they don't switch. That's a whopping 29% of all Part D enrollees. ...

    A new study suggests enrollees are leaving money on the table. A team of researchers at the University of Pittsburgh Graduate School of Public Health found that Medicare beneficiaries overpay by hundreds of dollars annually because of difficulties selecting the ideal prescription drug plan for their medical needs. Only 5.2% of beneficiaries chose the least-expensive Part D plan that met their medical needs in 2009, overspending on premiums and prescription drugs by an average of $368 a year. ...

    Resources for Shopping: The Medicare Plan Finder on the Medicare website is the authoritative online resource for plan shopping. Plug in your Medicare number and drugs (you'll need each drug's name and dosage). The tool then displays a list of possible plans; their estimated costs, premiums, and deductibles; which drugs are covered; and customer-satisfaction ratings. The finder also will give you advice about drug utilization and restrictions.

  • Associated Press, courtesy of the Washington Post: Kodak asks bankruptcy court permission to end retiree medical, other benefits at end of year. Excerpts: Eastman Kodak Co. said Wednesday it has asked a bankruptcy court judge to allow it to end retiree medical and some other benefits at the end of the year as part of its restructuring. The company said it reached an agreement with the court-appointed committee of retirees to pay a total of $650 million in claims and $7.5 million in cash into a fund that could be used for future payments in exchange for eliminating its current $1.2 billion liability for medical, dental, life insurance and survivor income benefits. ...

    An association that represents about 5,000 Kodak retirees said it was surprised and disappointed by the proposal, which would affect about 56,000 retirees, dependents and survivors.

  • Rochester (NY) Democrat and Chronicle: Kodak cuts mean crisis for thousands. Under-65 retirees will have big costs. By Matthew Daneman. Excerpts: “Maybe what they’re doing is understandable given the current circumstances,” said Jim Patton, 69, of Pittsford, who retired from the company in 2001 after 30-plus years. “But I’m terribly disappointed Kodak and Kodak management has let things get to where it is.”

    For Kodak’s roughly 38,000 U.S. retirees dependent on the company for health care benefits, as well as an additional 18,000 disabled former workers and survivors, the benefit cuts will mean anything from a minor inconvenience to a major financial crisis.

    Retirees under the age of 65, and thus not eligible for Medicare, could end up spending as much as $1,000 a month out of pocket for coverage comparable to what they get now through Kodak, said Ron Brandwein, a health insurance information specialist at the local Lifespan office.

    That’s because being under 65 and buying an individual policy often means facing rates 40 percent to 60 percent higher than group rates, said Stephen Smola of Rochester health benefit firm Smola Consulting.

  • Yahoo! IBM Pension and Retiree Issues message board: "Re: Retirees Lose at Kodak" by "fhawontcutit". Full excerpt: And IBM can terminate its retiree health plans.

    From 2004, courtesy of Ellen Schultz: How Cuts in Retiree Benefits Fatten Companies' Bottom Lines - Trimming a Health-Care Plan Creates Accounting Gains, Under Some Arcane Rules.

  • Alliance Life Insurance Company news release: Despite Party Affiliation, Allianz Life Survey Finds Transition Boomers United in Concerns about Retirement Outlook. Ahead of Presidential Election, Boomers 5-10 Years from Retirement Cite Rising Healthcare Costs and Social Security as Top Economic Issues. Excerpt: Regardless of party affiliation, Transition Boomers – those ages 55 to 65 who are less than 10 years away from retirement – agree that rising healthcare costs will have the greatest effect on their retirement outlook, according to the 2012 Retirement & Politics Survey* from Allianz Life Insurance Company of North America (Allianz Life®). Sixty-seven percent of all Transition Boomers listed healthcare expenses as their top concern, with Republicans at 64%, Democrats at 69%, and Independents at 66%. Social Security ranked second at 53% for all Transition Boomers, followed by tax payment changes (31%), rising national debt (26%), unemployment (19%) and education (4%).
New on the Alliance@IBM Site
  • Job Cut Reports
    • Comment 10/02/12: "Executive Management shouldn't be receiving these outlandish compensation packages!!!" Sure, but they have something you folks do not have, or fight to have. Something called a signed piece of paper called a CONTRACT. Executive Management has precommitted awards they set themselves to easily reach. What do you have?? No raise. No bonus. Maybe no job. The IBM executives protect themselves and IBMers do not even flock or herd to protect themselves which they can easily do with a union contract.-anonymous-
    • Comment 10/09/12: With Retail Services Division that handles Point of Sale going to Toshiba in a few years,with minimal personnel transferring to Toshiba, Enterprise Services Division has plenty of rumors flying. Pay cuts next year, layoffs and something late next year referencing personnel which have over 30 years of service forced to retire. IBM has to reduce costs of maintenance on larger Z mainframe products and therefore have to reduce headcount in ESD to 50% of current levels by 1/1/2014. -anonymous-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Huffington Post: Romney's Phony Answers to Tough Health Care Questions. By Wendell Potter. Excerpts: During last week's debate, GOP presidential nominee Mitt Romney once again pledged to repeal Obamacare, but he was light on details about what he would replace it with, other than to suggest that his administration would encourage states to come up with reform plans of their own.

    "What we did in Massachusetts is a model for the nation, state by state," he said. "And I said that at that time. The federal government taking over health care for the entire nation and whisking aside the 10th Amendment, which gives states the rights for these kinds of things, is not the course for America to have a stronger, more vibrant economy."

    But considering that the Massachusetts law was the model for Obamacare, what, other than replicating what Massachusetts did, are the states to do?

    High on the list of recommendations in Romney's health care platform is an idea frequently touted as a silver bullet by conservatives: allow insurance companies to sell policies across state lines. Doing so, they say, will increase competition and, consequently, bring down the cost of coverage.

    The problem is that no one had done a study to determine definitively whether the across-state-lines idea would work -- until now. And the conclusion of that study, conducted by the Georgetown University Health Policy Institute, is that allowing coverage to be purchased across state lines is much more of a blank than a bullet. ...

    Georgia, Maine and Wyoming have enacted legislation in recent years to allow out-of-state insurers to sell policies within their borders. Lawmakers in Kentucky, Rhode Island and Washington passed bills requiring their insurance departments to research the idea and determine interest from out-of-state insurers.

    The lawmakers who championed the legislation expected their states would be inundated with applications from insurers far and wide eager to sell their policies. But it hasn't happened. In fact, not a single insurance company has expressed the slightest interest in doing business in any of those six states. ...

    So the next time you hear a candidate tell you how great it will be when insurers can sell their products across state lines, be aware that they already can. They just don't have the slightest interest in doing so.

  • Kaiser Health News: Study: Health Insurance Costs To Fall For Businesses Under 50 Employees. By Mary Agnes Carey. Excerpts: The analysis, prepared by Urban’s Health Policy Center, says that if all provisions of the health law were implemented this year, the number of Americans covered by employer-sponsored insurance would increase by 2.7 percent and costs-per-person for small businesses (fewer than 50 workers) would decrease by 7.3 percent. Overall for small businesses, those with under 100 employees, total health insurance spending would be reduced by 1.4 percent.

    Only mid-size businesses, which the study defines as having 101 to 1,000 employees, would see a 4.6 percent increase in costs-per-insured-person.

    Since most large businesses (more than 1,000 employees) currently provide health insurance for their workers, the law would increase their costs by 4.3 percent, due mostly to somewhat higher employee enrollment rates because of an increase in the number of workers and dependents who will get coverage.

  • WorkForce: Is Choosing a Defined Contribution in Health Care Taking the Radical Route? The option, which gives employees more autonomy, could revolutionize employer-provided health benefits, proponents say. By Charlotte Huff. Excerpts: Employees at Christensen Group Insurance, who previously had been given only one health plan option, sat down to a banquet when they enrolled for 2012. Working their way through an online program, the employees perused eight health insurance plans. To make their purchase, they were provided a lump sum, also called a defined contribution by proponents who say the approach could revolutionize employer-provided health benefits as 401(k)s did with retiree benefits. ...

    Still, the first employers to take the plunge face numerous uncertainties, among them whether their workers can shop wisely, says Andrew Webber, CEO of the National Business Coalition on Health, a not-for-profit organization in Washington. "Going to a defined contribution in health care is a radical departure," he says. "It gives all of the responsibility over to the employee. What if the employee makes poor decisions as they have with 401(k)s, perhaps?" ...

    Along with Aon Hewitt, other large human resources consultancies are jockeying to fill what they perceive as an emerging business opportunity. Officials at New York-based Mercer and Extend Health Inc. in San Mateo, California, which was recently purchased by Towers Watson & Co., also report exchanges in the works.

  • Washington Post: Study: When health insurance costs rise, productivity drops. By Sarah Kliff. Excerpt: As health insurance premiums steadily increase, employers have increasingly shifted costs onto workers. Employees’ shares of monthly premiums have gone up, as has cost-sharing for various services.

    The whole idea is to save money, and reduce the employer’s health spending burden. It might, however, comes with a hidden cost: A new working paper from Truven Healthcare’s Teresa Gibson, Harvard’s Michael Chernew and the University of Michigan’s A. Mark Fendrick find that as co-payments go up, productivity drops — most likely as a result of employees skipping out on care altogether.

  • Seattle Times: “ObamaCare” or affordable health? – A Canadian perspective. By Carolyn Higgins. Excerpts: When it comes to describing President Obama’s Affordable Healthcare Act, much is suggested by conservative use of the term “ObamaCare.” Even a newly-arrived visitor to this country would find the controversy obvious. As a Canadian living in the U.S. now for many years, I have always found American attitudes toward healthcare perplexing. My career has focused on healthcare systems in both countries, so I find the phenomenon of American hostility to “socialized medicine” even less understandable.

    Have I been everlastingly grateful to flee the purported queues in the land of my birth and avail myself of the high-tech healthcare available in the U.S.?

    Not so much.

    The system that I knew from childhood through early adulthood was easily navigated and delivered excellent care. Even my first experience in handling my own insurance plan was seamless. As a 20-year-old university student, I transferred from the provincial university in the city where I’d grown up to the flagship university in another province. I developed a nasty case of bronchitis in my first month at school and needed care. But I was concerned: each province administers its own plan and I didn’t have coverage in my new home province. But the receptionist in the office of the doctor I’d chosen reassured me. All I had to do was fill out one form to apply for coverage – available at the doctor’s office – and my visit would be covered retroactively.

    And it was. End of story.

    Contrast this experience to my first medical appointment in the U.S. My husband’s employer-provided plan gave us three options, and each offered a small pool of providers compared to the unlimited access with which I’d grown up. I presented myself at the HMO office and was told who my physician would be. I would soon find that appointments were difficult to get for spur of the moment matters, and it would almost assuredly not be “my” doctor who would see me for unexpected needs. All visits had one thing in common, though: paper. It came in many forms – Explanation of Benefits forms (EOB), accident forms to complete if one of my family should be seen for an injury – and it was endless. Premiums were appallingly high compared to the minimal fees I’d paid in Canada, and every visit was subject to co-pays, deductibles, and any number of other complexities.

    Americans assumed that I must be delighted to find myself in this land of medical plenty. “I’d hate to live in Canada,” they’d say to me. “You can’t choose your own doctor there.” I was also told about the long waits for care and other horrors of “socialized medicine.”

    Why, I wondered, were Americans so set against universal medical coverage? One thing I’ve heard repeatedly is that it would be an assault on freedom. I’m not sure what freedom that would be – the freedom to bear the burden of financial ruin in the event of a catastrophic illness? The freedom to die if one can’t afford medical care? What makes people here demean something that many Canadians prize?

  • Physicians for a National Health Program: Who will remain uninsured? After Millions of Californians Gain Health Coverage Under the Affordable Care Act, Who Will Remain Uninsured? By Laurel Lucia, Ken Jacobs, Miranda Dietz, Dave Graham-Squire, Nadereh Pourat, and Dylan H. Roby. Excerpt: The implementation of the Affordable Care Act (ACA) is predicted to expand coverage to millions of Californians by 2019. This increase in coverage will primarily result from the expansion of Medi-Cal and the availability of subsidized coverage in the California Health Benefit Exchange (Exchange). However, three to four million Californians could remain uninsured even after the law is fully implemented.
  • Georgetown University's Center on Health Insurance Reform: Selling Health Insurance Across State Lines: An Assessment of State Laws and Implications for Improving Choice and Affordability of Coverage (PDF). Extracts: Key findings:
    • To date, although all states have long had the authority to do so, only six have enacted across state lines legislation. ...
    • The stated purpose of laws permitting the sale of health insurance across state lines and the formation of interstate compacts were largely similar across the states. ...
    • Across state lines proposals have been unsuccessful at meeting their stated goals. ...
    • Across state lines legislation was largely unsuccessful because of the localized nature of how health care is delivered. ...
    • Practical barriers and administrative obstacles also hinder success. ...
    • Once enacted, these laws appear to lack any organized champion.
  • Los Angeles Times: Fact check: Ryan misrepresents effect of his Medicare plan. By Noam N. Levey. Excerpt: Rep. Paul D. Ryan claimed inaccurately that the Medicare plan he and Gov. Mitt Romney have proposed would preserve seniors’ access to the current Medicare program and would not affect current retirees.

    The Romney-Ryan proposal, which builds on plans passed by House Republicans, would scrap the current Medicare system, which guarantees all seniors access to the government program with a defined set of benefits. Instead, their proposal says that Medicare beneficiaries entering the program after 2022 should get a fixed amount of federal money to buy either a private insurance plan or the traditional Medicare plan.

    Although the Romney-Ryan plan preserves Medicare as an option, the voucher will not necessarily be adequate to pay for it.

    Under the GOP plan, the value of the voucher will be tied to available plans in different areas in the country, assuring that it is sufficient for the two lowest-cost options. If a senior wants a more costly health plan, he or she would have to pay the difference.

    That means that if Medicare is not one of the two low-cost options, the voucher would not be adequate to guarantee Medicare coverage.

  • ThinkProgress: Romney: ‘We Don’t Have People Who Die Because They Don’t Have Insurance’. By Rebecca Leber. Excerpts: Mitt Romney doubled down on his suggestion that uninsured Americans can find the care they need in emergency rooms, telling The Dispatch that people will always receive the treatment they need, and do not die or suffer because they can not pay for care. He pointed to federal law that requires hospitals to admit emergency patients, repeating his advice that patients rely on the most expensive form of care reserved strictly for emergencies. Romney told the Columbus Dispatch:

    “We don’t have a setting across this country where if you don’t have insurance, we just say to you, ‘Tough luck, you’re going to die when you have your heart attack,’  ” he said as he offered more hints as to what he would put in place of “Obamacare,” which he has pledged to repeal.

    “No, you go to the hospital, you get treated, you get care, and it’s paid for, either by charity, the government or by the hospital. We don’t have people that become ill, who die in their apartment because they don’t have insurance.”

    He pointed out that federal law requires hospitals to treat those without health insurance — although hospital officials frequently say that drives up health-care costs.

  • Reuters: Over 26,000 annual deaths for uninsured: report. By David Morgan. Excerpts: The $2.6 trillion U.S. healthcare system, which represents nearly 18 percent of the economy, is accessible to most working-age Americans only through private health insurance. But insurance costs - premiums, deductibles, copays and co-insurance - are unaffordable for many and increasing.

    U.S. Census data show that 50 million Americans lack coverage, and experts say those in such straits forego medical care, doctor visits and preventive tests including cancer and blood pressure screenings.

    "The uninsured get healthcare about half as often as insured Americans, on average," said Dr. Arthur Kellermann, director of the think tank RAND Health and co-chairman of the committee that produced the 2002 IOM study.

    "There is an overwhelming body of evidence that they get less preventive care, less chronic disease care and poorer quality hospital in-patient care," he said.

  • New York Times opinion: Voucher Denial. By Paul Krugman. Excerpts: So, I was airborne during the VP debate, which means no theater criticism. But I do have the transcript. And I thought it was interesting that Ryan was the first to use the word “voucher”, as a preemptive strike to try to stop Biden from using it to characterize his plan.

    Indeed, the official line seems to be that you’re a liar if you call a plan under which people receive a fixed sum to spend on insurance, as opposed to simply getting insurance, a voucher scheme.

    Among the lying liars, then, is the guy who, back in 2009, described the Ryan plan as “converting Medicare into defined contribution sort of voucher system”. Oh, wait: that was Paul Ryan.

  • New York Times op-ed: A Possibly Fatal Mistake. By Nicholas D. Kristof. Excerpts: My wife and I attended my 30-year college reunion a couple of weekends ago, but the partying was bittersweet. My freshman roommate, Scott Androes, was in a Seattle hospital bed, a victim in part of a broken health care system. Strip away the sound and fury of campaign ads and rival spinmeisters, and what’s at stake in this presidential election is, in part, lives like Scott’s. ...

    Yet for all his innate prudence, Scott now, at age 52, is suffering from Stage 4 prostate cancer, in part because he didn’t have health insurance. President Obama’s health care reform came just a bit too late to help Scott, but it will protect others like him — unless Mitt Romney repeals it.

    If you favor gutting “Obamacare,” please listen to Scott’s story. He is willing to recount his embarrassing tale in part so that readers can learn from it. I’ll let Scott take over the narrative:

    It all started in December 2003 when I quit my job as a pension consultant in a fit of midlife crisis. For the next year I did little besides read books I’d always wanted to read and play poker in the local card rooms.

    I didn’t buy health insurance because I knew it would be really expensive in the individual policy market, because many of the people in this market are high risk. I would have bought insurance if there had been any kind of fair-risk pooling. In 2005 I started working seasonally for H&R Block doing tax returns.

    As seasonal work it of course doesn’t provide health benefits, but then lots of full-time jobs don’t either. I knew I was taking a big risk without insurance, but I was foolish.

    In 2011 I began having greater difficulty peeing. I didn’t go see the doctor because that would have been several hundred dollars out of pocket — just enough disincentive to get me to make a bad decision.

    Early this year, I began seeing blood in my urine, and then I got scared. I Googled “blood in urine” and turned up several possible explanations. I remember sitting at my computer and thinking, “Well, I can afford the cost of an infection, but cancer would probably bust my bank and take everything in my I.R.A. So I’m just going to bet on this being an infection.”

    I was extremely busy at work since it was peak tax season, so I figured I’d go after April 15. Then I developed a 102-degree fever and went to one of those urgent care clinics in a strip mall. (I didn’t have a regular physician and hadn’t been getting annual physicals.)

    The doctor there gave me a diagnosis of prostate infection and prescribed antibiotics. That seemed to help, but by April 15 it seemed to be getting worse again. On May 3 I saw a urologist, and he drew blood for tests, but the results weren’t back yet that weekend when my health degenerated rapidly.

    A friend took me to the Swedish Medical Center Emergency Room near my home. Doctors ran blood labs immediately. A normal P.S.A. test for prostate cancer is below 4, and mine was 1,100. They also did a CT scan, which turned up possible signs of cancerous bone lesions. Prostate cancer likes to spread to bones.

    I also had a blood disorder called disseminated intravascular coagulation, which is sometimes brought on by prostate cancer. It basically causes you to destroy your own blood cells, and it’s abbreviated as D.I.C. Medical students joke that it stands for “death is close.”

    Let’s just stipulate up front that Scott blew it. Other people are sometimes too poor to buy health insurance or unschooled about the risks. Scott had no excuse. He could have afforded insurance, and while working in the pension industry he became expert on actuarial statistics; he knew precisely what risks he was taking. He’s the first to admit that he screwed up catastrophically and may die as a result.

    Yet remember also that while Scott was foolish, mostly he was unlucky. He is a bachelor, so he didn’t have a spouse whose insurance he could fall back on in his midlife crisis. In any case, we all take risks, and usually we get away with them. Scott is a usually prudent guy who took a chance, and then everything went wrong.

    The Mitt Romney philosophy, as I understand it, is that this is a tragic but necessary byproduct of requiring Americans to take personal responsibility for their lives. They need to understand that mistakes have consequences. That’s why Romney would repeal Obamacare and leave people like Scott to pay the price for their irresponsibility.

    To me, that seems ineffably harsh. We all make mistakes, and a humane government tries to compensate for our misjudgments. That’s why highways have guardrails, why drivers must wear seat belts, why police officers pull over speeders, why we have fire codes. In other modern countries, Scott would have been insured, and his cancer would have been much more likely to be detected in time for effective treatment.

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.

  • Financial Times: Republicans shift tone on taxing the rich. By Stephanie Kirchgaessner and James Politi. Excerpts: Some Republicans are shifting their tone on the prospect of increasing taxes on the wealthiest Americans, in a move that could ease concerns about the US plunging off the so-called “fiscal cliff” after the November election. A senior Republican aide in the House of Representatives told the Financial Times there was an internal debate within the party, with one side arguing that Republicans would be better off to “give in” to Democratic demands for an increase in taxes for individuals making more than $250,000 if Barack Obama were re-elected. ...

    A top Republican aide in the Senate said that an overhaul of the US tax code was ultimately the most important tax-related goal of the party and that the intense focus on whether or not to increase taxes on the top earners was ultimately irrelevant.

  • Moyers & Company: Full Show: United States of ALEC. Excerpt: Moyers & Company presents “United States of ALEC,” a report on the most influential corporate-funded political force most of America has never heard of — ALEC, the American Legislative Exchange Council. A national consortium of state politicians and powerful corporations, ALEC presents itself as a “nonpartisan public-private partnership”. But behind that mantra lies a vast network of corporate lobbying and political action aimed to increase corporate profits at public expense without public knowledge.

    Using interviews, documents, and field reporting, the episode explores ALEC’s self-serving machine at work, acting in a way one Wisconsin politician describes as “a corporate dating service for lonely legislators and corporate special interests.”

    In state houses around the country, hundreds of pieces of boilerplate ALEC legislation are proposed or enacted that would, among other things, dilute collective bargaining rights, make it harder for some Americans to vote, and limit corporate liability for harm caused to consumers — each accomplished without the public ever knowing who’s behind it.

    “All of us here are very familiar with ALEC and the influence that ALEC has with many of the [legislative] members,” says Arizona State Senator Steve Farley. “Corporations have the right to present their arguments, but they don’t have the right to do it secretly.”

  • Huffington Post: The Biggest Kiss: How Neither Political Party Wants to Break Up the Biggest Banks. By Jeff Connaughton. Excerpts: Neither Mitt Romney and the Republicans nor President Obama and many Democrats favor breaking up the big banks, the best way to prevent another taxpayer bailout after a financial crisis. ...

    In more than twenty years in Washington, I'd never followed a major bill through Congress as closely as I did the Dodd-Frank Act. In that time, I'd never fully grasped the almost absolute power to steer the bill wielded by committee chairs, especially when the leadership delegates all responsibility to them, as Harry Reid did to Chris Dodd. Almost nothing could happen on the Senate floor or get in the bill without Dodd's approval. That was particularly true in this case because Dodd and the Treasury Department wanted a squishy bill, and the Republicans were willing to work with Dodd to weaken it. (In the Senate, it takes unanimous consent for an amendment to come to the floor for a vote. So Dodd and Shelby had a vice grip on what amendments would be considered. They only accepted amendments they both liked.) On this bill, Shelby had never negotiated in good faith with Dodd. Indeed, Shelby had publicly and repeatedly said that he preferred no bill at all. Yet Shelby and the Republicans would cooperate by granting unanimous consent to Dodd's floor strategy, because they trusted that Dodd wanted to pass the weakest possible bill. And then the Republicans would still try to filibuster it.

  • Christian Science Monitor: Presidential debate 101: How much would US save by cutting off Big Bird? Eliminating federal spending for the whole Corporation for Public Broadcasting, not just Big Bird and 'Sesame Street,' would save about $445 million a year. It is less than a speck in overall government spending, but that's not MItt Romney's point. By Peter Grier. Excerpts: How much money would Washington save if it stopped subsidizing Big Bird?

    This question arises, of course, because during the presidential debate that’s what Mitt Romney said he’d do if elected president. Asked what things he’d cut from the federal budget to help curb deficits, Mr. Romney mentioned the tax money that flows into the Public Broadcasting System. Then he got specific with moderator Jim Lehrer, a PBS star.

    “I like PBS. I love Big Bird. I actually like you, too,” he said to Mr. Lehrer. “But I’m not going to ... borrow money from China to pay for it.”

    OK, then. We’ll focus first on Big Bird, then on public TV and radio in general, and their relationship to deficit spending. ...

    Let’s figure that 8 percent of Sesame Workshop’s total budget comes from the government. That’s the figure the company has quoted in recent media reports. Given a $130 million overall budget, that comes in at about $10.4 million.

    Given that this year’s federal deficit is $1.1 trillion, Big Bird is nothing but speck of dust on a mote on a dandelion that Horton the Elephant is trying to save from being boiled in oil.

  • The Fiscal Times: Wall Street Profits Set to Double in 2012. By Yuval Rosenberg. Excerpt: Wall Street is on pace to generate more than $15 billion in profits this year, double last year’s total and in line with pre-recession levels, according to an analysis released Tuesday afternoon by the New York State comptroller. At the same time, the securities industry, which had record earnings in 2009, remains in the midst of a painful evolution five years after the start of the financial crisis and still faces headwinds as a result of a tepid economic recovery and lingering regulatory uncertainty, the report finds.
  • Washington Post: Forget Big Bird. What about the Snuffleupagus in the room? By Dana Milbank. Excerpts: The threat presented by Romney’s budget is not in the few cuts he has specified but in the vastly larger amount of unseen cuts he has yet to identify.

    At the Denver debate, Romney said he would eliminate Obamacare (doing so would actually increase the budget deficit, because of related tax hikes) and the public-broadcasting subsidy, which is $445 million a year — or little more than one one-hundredth of 1 percent of federal spending. But Romney proposes to cut federal spending by trillions of dollars — more than $5 trillion over the next decade, assuming he follows the sort of blueprint laid out by his running mate, Paul Ryan. That threatens much more than Muppets and monsters. Human lives are at stake. ...

    If Romney follows through on the tax cuts he has endorsed, increases defense spending by $2.1 trillion over a decade as promised and maintains Social Security and Medicare as they are for those 55 and older, he’d need to cut everything else government does by nearly a third — or more than $200 billion — in 2016. By 2022, the liberal Center for American Progress calculates, such government functions, including the State Department, would be cut by 53 percent. The $445 million Romney saves by axing PBS will get him less than half of 1 percent of the way toward the budget cuts he would need to make by 2016.

  • Huffington Post: Social Security: President Obama's Biggest Failure in Last Week's Debate. By Dean Baker. Excerpts: President Obama definitely had a bad night when he faced Governor Romney in Denver for the first presidential debate. However, for many listeners the worst moment was not due to his atypical inarticulateness. Rather, the worst moment was when he quite clearly told the country that there was not much difference between his position on Social Security and Governor Romney's. He also expressed his desire to "tweak" Social Security to improve its finances.

    This is very bad news to the tens of millions of people who depend on Social Security now or expect to in the near future. It's also bad news to the hundreds of millions of people who have been counting on the Social Security system to provide a degree of financial security to their retired or disabled family members.

    After all, Governor Romney clearly does not seem to have warm feelings toward the program. His vice-presidential pick, Paul Ryan, has been the most ardent proponent of privatization in the House. If Romney is committed to Social Security, picking Representative Ryan as his running mate would be a strange way of showing it.

    When President Obama links arms with Romney on Social Security, it is not good news for supporters of the program. Nor was the situation made better by the desire to "tweak" the system. In Washington, tweak is a code word used by people who want to cut Social Security but lack the courage to say it explicitly.

    For example, their favorite "tweak" is changing the cost of living adjustment formula in a way that reduces retirees' benefits by 0.3 percentage points annually. This would add up to a 3 percent cut in benefits after 10 years, a 6 percent cut after 20 years and a 9 percent cut after 30 years.

    In other words, this tweak is real money, especially for the oldest beneficiaries who also tend to be the poorest. In fact, this tweak of Social Security is likely to have more impact on the income of most retirees than taking back President Bush's tax cut on the wealthy would have on their income. The other items that are usually part of the tweak package are phasing in a further increase in the age for getting full benefits (beyond the increase to age 67, which is already in current law) and a reduced benefit formula for workers who earned more than $40,000 a year in their working lifetime. ...

    The government has also badly failed workers in pushing them to rely on 401(k)s for retirement instead of traditional pensions. The managers of these tax subsidized accounts can easily siphon off more than one third of annual returns as administrative expenses. While this allows the financial industry to pocket tens of billions annually from these accounts, few workers are able to accumulate substantial savings by the time they reach retirement. ...

    Given all the harm that economic policy has done to the current generation of retirees and near retirees, it is incredible that President Obama would tell us that we have no choice; we have to vote for someone who wants to kick them in the face yet again. ...

    If our politics were not dominated by Wall Street we would be talking about raising Social Security, not lowering it. A renewed commitment to protecting Social Security from the tweakers would at least be a big step to limit further damage.

  • Smirking Chimp: Don't Cut Taxes For Billionaires. Double Them. By Richard Eskow. Excerpts: Forget the "Buffett rule." It's not enough. What's more, "letting the Bush tax cuts expire for the rich" isn't enough either - although it might get us halfway there.

    As for that "Simpson Bowles" so-called "deficit reduction" plan: It's a hoax, another ploy to give the ultra-rich yet another huge tax cut - unless you believe that the lobbying fairy will magically grant a wish that's never been granted before: an end to billionaires' loopholes.

    If you buy that - which I don't - then the plan's just grossly unfair.

    The real moment of truth Washington won't face is this one: It's time to admit that we can't rebuild our economy - or balance the Federal budget - without raising taxes on the very wealthy. That's what Simpson, Bowles, and all their highly-funded friends won't tell you: We need to raise their taxes a lot. ...

    Let's be clear: I'm not talking about imposing sharp increases on incomes over $250,000 or even $500,000, at least not until the economy's healthier. At those levels an expiration of the Bush tax cuts would probably be enough. But once you hit income of a million dollars a year and over, we should go back to the higher tax rates that were in place for millionaires during the Nixon years.

    That's right: When it comes to taxes, Nixon's the One. And Eisenhower was much stronger on these issues than Nixon.

    The public's being bludgeoned by deficit reduction rhetoric from people who clearly couldn't care less about deficits. They certainly don't intend to do anything about them. Ike and Nixon would throw them out of the cabinet room if they walked in with proposals like these.

    Once we get back to their brand of Republicanism, we can revitalize the genuine left and start having a real economic debate in this country.

  • Smirking Chimp: Trickle Down, Tinkle On, What’s the Difference. By "RodgzK". Excerpts: Throughout this election season we have heard a lot about tax cuts for the rich, “trickle down” and marginal tax rates. Nearly all in the mainstream media use these terms without explaining what they mean or what effect they have on the average American. Let me see if I can shed some light on them. Starting with the contentious question of tax cuts, Republicans want to leave in place the“Bush tax cuts enacted in 2001 and 2003 and scheduled to end in 2013. They also want to reduce the marginal tax rate. President Obama wants to leave in place the Bush tax cuts for those taxpayers earning $250,000. He also wants to reduce the marginal tax rate.

    When we speak of the Bush tax cuts it’s helpful to remember that George Bush inherited a budget surplus from his predecessor, Bill Clinton. Bush believe that the government shouldn't hold on to this money and use it to invest in our dangerously outdated national infrastructure, our badly crumbling schools, our critically overloaded power grids or to even pay back money the government has borrowed over the years from the Social Security Insurance Fund. He believed that the money should be given back to the public in the form of a tax cut. In January 2001, at the start of the Bush administration, the Congressional Budget Office, a non-partisan body, projected a fiscal surplus of $5.6 trillion spanning fiscal 2002-11 had the Bush tax cuts not in mandated. Today, with those fiscal years almost completed, the budget is on track to have a deficit of around $6.5 trillion. This drastic reversal is due to a combination of factors including higher government spending and changes in economic conditions, as well as the Bush tax cuts. The CBO estimates indicate that about one-third of the fiscal reversal is directly due to the tax cuts.

    Even though the tax legislation was passed with a highly bi-partisan vote and the cuts were to end, as already noted, in 2013, Republicans, who swore an oath to lobbyist Grover Norquist, pledging they wouldn’t raise taxes, are now claiming that ending the Bush tax cuts would really be a tax increase, because Grover (Norquist, not the one on Sesame Street) told them it would be and so they can’t do it because they promised Grover they wouldn’t and, after all, a man is only as good as his word.

    Who would benefit the most and who would be hurt most varies according to the source of the claim but my experience has been that changes in the tax code seem to always benefit the wealthy more when taxes are cut and hurt the middle income (and below) wage earner when they are increased. That seems to a pretty predicable outcome since the rich have a lot more money to be taxed at a lower rate after a tax cut and after a tax increase the middle and down wage earners are paying a higher rate on a whole lot less money. We also need to keep in mind that the rich do not depend on wages for their income the way the rest of us do. Over the years they have been able to have their personal congressmen (the ones they keep in office through their campaigns contributions and not infrequent bribes) write laws that tax them at lower rates, or exempt them altogether, the often esoteric ways the rich compensate themselves. Mitt Romney provides a great example. Romney received $21.7 million in compensation in 2010 and he pays a relatively low tax rate, just over thirteen percent because most of his earnings in 2010 were derived from investments. Most of Romney's money, known as unearned income versus the earned income most of us get from wages, is taxed as capital gains. And the top marginal capital gains tax rate (for now) on long-term investments is just 15 percent (before deductions).

  • Wall Street Journal: Here's a Way to Cut Business Taxes: Tech Firms Become Real Estate Trusts. By Anton Troianovski. Excerpts: Companies in technology and related fields are testing a way to avoid paying taxes: persuading the government that their real business is real estate.

    American Tower Corp., which operates cellphone towers, will save more than $400 million a year by 2017, analysts estimate, thanks to its new tax status as a real-estate investment company. Equinix Inc, whose warehouses are full of computer servers, is expected to avoid taxes of around $150 million a year. Iron Mountain Inc., which helps clients shred documents and store data, may save nearly as much.

    The key: getting approval from the Internal Revenue Service to convert from a corporation into a real-estate investment trust, a type of company that generally doesn't pay taxes. ...

    Investors typically cheer when companies turn themselves into REITs. But some real-estate executives and analysts worry that the new wave of applicants—including a pair of companies that run private prisons—could spark a political backlash at a time when deficits and taxes are high on Washington's agenda.

    "The real-estate companies correctly are nervous about this phenomenon," says Kenneth T. Rosen, a real-estate economics consultant and former manager of a hedge fund that invested in REITs. "The more it looks like a tax loophole, the more likely it is to affect them negatively."

  • National Journal: Big Oil Getting Nervous About Tax Reform. By Amy Harder. Excerpts: The American Petroleum Institute is in full-throttle defense mode as Washington primes for corporate tax reform next year. In fact, while they won’t say it outright, officials at the powerful oil-industry group seem to indicate they would prefer that tax reform did not happen at all. ...

    API scheduled the press event in the wake of two of Washington’s most prominent Republicans—GOP presidential nominee Mitt Romney and House Energy and Commerce Chairman Fred Upton, R-Mich.—explicitly saying that at least some oil and gas tax breaks would likely be eliminated as part of overall corporate tax reform that Congress hopes to tackle next year. ...

    Defining what exactly is an oil and natural-gas tax break (or subsidy or tax credit) is a moving target and seems to change depending on one’s political motivations. According to an Energy Information Administration report from 2011 — the one Romney cited in the Denver debate — the oil and gas industry gets about $2.8 billion in tax deductions a year. President Obama and environmental groups put that number closer to $4 billion, in large part because they include a manufacturing tax credit that goes to a wide range of industries, including the oil and gas sector. ...

    The oil-industry trade group has spent about $3.44 million lobbying Congress this year (compared to $8.6 million last year), according to data compiled by the Center for Responsive Politics. The top issue API is lobbying on? Taxes.

  • National Journal: Romney Pitches Tax Plan Details That Favor the Wealthy. The GOP nominee says he would end taxes on interest, dividends and capital gains. Excerpts: Republican presidential candidate Mitt Romney told Ohio voters on Wednesday that they can’t afford four more years of President Obama’s economic policies, arguing that while the Democratic president would raise taxes on middle-income households, he would lower them.

    But Romney’s proposal as he described it — eliminating tax on interest, dividends, and capital gains — would largely help those living on investment income, which does not include many people in the middle class. The tax break would likely help senior citizens, however, many of whom do live on investment income.

    At a rally here, Romney told the crowd that Obama would raise taxes on middle-income families by $4,000, a claim that has been debunked by several fact-checking websites. Romney promised to reduce the burden of those making $200,000 a year or less. ...

    According to Romney spokesman Rick Gorka, Romney believes that eliminating taxes on interest, dividends, and capital gains will “encourage investment in savings,” and that more Americans will start to utilize these tax tools to save money.

  • Talking Points Memo: Ryan: I Still Support Social Security Privatization. By Sahil Kapur. Excerpts: In the vice presidential debate Thursday night, Paul Ryan confirmed that he still supports Social Security privatization but demurred that the idea of giving younger Americans the option to move their Social Security benefits into private retirement accounts is not part of the Romney-Ryan platform. ...

    Ryan championed plans in 2004 and 2010 that would shift Social Security funds into the private market. Participants would be permitted to invest one-third of their Social Security taxes in stocks and bonds. Although the plans contained mechanisms to protect payouts to beneficiaries against market fluctuations, nonpartisan studies found that it could destabilize the program’s solvency in the long-term. Bush tried and failed to enact a altered version of the plan at the beginning of his second term.

    While Romney previously supported privatization, his official Social Security platform calls for incrementally raising the eligibility age and lowering benefits for high-income recipients. It does not mention the privatization proposal, but Ryan’s remarks are a reminder of that both members of the ticket previously embraced the idea.

  • New York Times opinion: The Seeds That Federal Money Can Plant. By Steve Lohr. Excerpts: Luis von Ahn, a computer scientist at Carnegie Mellon University, sold one Internet start-up to Google in 2009, and is now on to another. With the new company, Duolingo, he hopes to tap the millions of people learning languages online to create a crowdsourced engine of translation. “We want to translate the whole Web into every major language,” Mr. von Ahn says.

    Ambitious, sure, but Duolingo recently attracted $15 million of venture capital. The investors are betting on Mr. von Ahn, his idea and his growing team of 18 engineers, language experts and Web designers.

    Mr. von Ahn, 33, personifies some of the essential ingredients of America’s innovation culture, when it works well. An immigrant from Guatemala, he has intelligence and entrepreneurial energy to spare. And he has received a helping hand from the federal government. Duolingo began as a university research project financed by the National Science Foundation.

    That pattern has been repeated countless times over the years. Government support plays a vital role in incubating new ideas that are harvested by the private sector, sometimes many years later, creating companies and jobs. A report published this year by the National Research Council, a government advisory group, looked at eight computing technologies, including digital communications, databases, computer architectures and artificial intelligence, tracing government-financed research to commercialization. It calculated the portion of revenue at 30 well-known corporations that could be traced back to the seed research backed by government agencies. The total was nearly $500 billion a year.

    “If you take any major information technology company today, from Google to Intel to Qualcomm to Apple to Microsoft and beyond, you can trace the core technologies to the rich synergy between federally funded universities and industry research and development,” says Peter Lee, a corporate vice president of Microsoft Research. Dr. Lee headed the National Research Council committee that produced the report, titled “Continuing Innovation in Information Technology.”

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