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Highlights—December 1, 2012

  • Computerworld: In a symbolic shift, IBM's India workforce likely exceeds U.S. IT salaries in India for all firms close to minimum wage in America. By Patrick Thibodeau. Excerpts: There is a difference in the way U.S. and Indian IT firms report their headcounts, and it tells a lot about globalization.

    Indian firms diligently report hiring quarter-to-quarter. It's a key metric and a source of pride. Among those providing detailed data is India IT services firm Tata Consultancy Services. It employs about quarter of a million people, with about 90% of their workforce counted as Indian.

    In the U.S. it's different story. The big IT firms, Hewlett-Packard, Dell, Oracle and most others, with the exception of Microsoft, only provide global headcounts, and not country breakouts.

    When HP, for instance, announced global layoffs earlier this year, it did not detail how many U.S. workers were getting cut.

    For years, IBM was an exception to this industry practice. It reported its U.S. employment until 2010, when it released its annual report without a U.S. headcount breakout.

    The last time that IBM made a public statement about its U.S. workforce was in congressional testimony in the fall of 2009, when it put its U.S. workforce at 105,000. It was at 121,000 at the end of 2007, and more in previous years.

    At the time that IBM stopped reporting its U.S. headcount, it was beginning to appear that India was on trajectory to surpass its U.S. workforce. Crossing such a threshold is a symbolic shift more than anything else -- a globalization footnote. With a global workforce of 430,000, less than a fourth of IBM's employees are in the U.S.

    According to an internal document obtained by Computerworld, IBM has 112,000 workers in India, up from 6,000 in 2002. IBM won't comment on this document or authenticate it, so this information has an asterisk next to it. ...

    The only source today of IBM U.S. employment data is from the Alliance@IBM/CWA Local 1701, which puts the U.S. headcount today at about 92,000. ...

    The average pay for all IBM workers in India was at $17,000, according to the document. That may seem shockingly low to U.S. IT workers, but it is in alignment with IT wages in India.

    The Everest Group said the annual wages generally in India for a software engineer range from $8,000 to $10,000; for a senior software engineer, $12,000 to $15,000, and between $18,000 and $20,000 for a team lead. A project manager may make as much as $31,000. ...

    Ron Hira, a public policy professor at the Rochester Institute of Technology, believes the impact of IBM's outsourcing model on the company's bottom line shows up in the cost of goods sold, which includes labor costs, which went from 57% in 2003 to 47% in 2011.

    IBM is a "good microcosm for the American economy," said Hira, "with increasing corporate profits, higher stock prices, and a weak U.S. labor market."

    Selected reader comments follow:

    • In the U.S. it's different story. The big IT firms, Hewlett-Packard, Dell, Oracle and most others, with the exception of Microsoft, only provide global headcounts, and not country breakouts. In the US it should be a requirement for a company to disclose its head count by country instead of globally. Companies that fail to comply should not receive any tax breaks or incentives whatsoever.
    • So let's see, IBM world headcount in 2002 was about 319,000 with 160,000 in the US (http://money.cnn.com/2002/08/13/technology/ibm/index.htm). Today they're up to 430,000 worldwide, and down to 92,000 in the US.

      So in 10 years IBM grew by 49,000 jobs, and killed 68,000 jobs in the US - effectively hiring 117,000 people in other countries in the process. These are high paying jobs that helped fuel our economy, and you can be sure other large companies are doing the same thing.

      You need to look no further to see why the US economy is in such bad shape - it is its large corporations who have effectively abandoned the US and the government encourages them to move these high paying, high skilled jobs to other countries with its policies.

    • The problems with IBM has nothing to do with hiring policies other than labor costs. IBM technology and innovation can no longer sustain software innovation.

      IBM has had to abandon the PC business and other high tech business. The product line that is now sustaining IBM is the legacy technology developed during the days of the 360/370 technology, developed by US STEM workers at least five decades ago.

      IBM like many other companies including HP, Cisco, Microsoft, are having to reduce labor costs to the bare bone by moving their operations to India and Communist China.

      The H-1B visa allowed these companies to do that by bringing the visa holders into the US on work visas, training the visa holders, dismantling US operations after training completion, and reassembling their operations in India.

    • Pay peanuts, get monkeys...

      There are now shockingly large numbers of IBM staff using mainframe forum sites to ask questions that are so elementary that even I could answer them as a trainee in the Netherlands more than 20 years ago.

      When a former employer outsourced its entire IT department to an even cheaper location (the Philippines) the five people who were allowed to stay for first line support collectively handed in their resignations a few months later because they were doing the bulk of the work.

      An Indian IBM'er runs one of the above mentioned internet forums. When at some stage he told another newbie that this newbie had to use a function that is rarely used by anyone other than systems programmers to print a floating point number (which can easily be done with normal code), and I pointed him out that he should not discuss matters he obviously didn't know anything about, rather than admitting his mistake, he just deleted my posts and revoked my access.

      Another former employer, in the time of Y2K, brought some of their Indian staff to the UK, so that we could train them to help with changing code. They were supposed to stay for three months, but sometime at the halfway stage one of them announced that he was leaving at the end of the week. His father had found him a wife... We already knew from the business side that some people would sometimes lost their colleagues in Mumbai overnight!

    • As an IBM Retiree (20 years, Software) this makes total sense and does not seem out of line with any corporate philosophy, anywhere in the world. Cut costs, raise profits. Even as an American IBM'er working in the 70s, 80s, and 90s, we were getting paid percentage points less than other companies doing the same work. However, IBM rationalized this to its non-union workers by emphasizing benefits. Once that rationalization was seen through as a scam, the only way left for IBM was to get new / different employees to work for lower wages, was to go to other countries. As noted below, this is corporate globalization. These are the protocols of the current game... the upside for me now is that IBM stock is rock solid, and my retirement payoff is somewhat decent.
  • The Channel (United Kingdom): IBM outsources UK desktop support operation lock+stock to Phoenix. 180 engineers get new business cards for Xmas. By Paul Kunert. Excerpts: IBM is the Global Services Provider (GSP) that is outsourcing desktop support to Phoenix IT Group, The Channel can reveal. Yesterday Phoenix confirmed it has penned a five-year £40m contract with an unnamed GSP to provide desk-side services for the firm's employees as well as its customers.

    Around 180 IBM staffers are to be moved across to the Northampton-based company under a Transfer Of Undertakings (TUPE) regulation early next month, say sources.

    Selected reader comments follow:

    • I assume the reason Phoenix can do this and others cannot and they say they can make a money of this type of outsource deal / contact work is because they pay their Own Engineers and staff so badly at £13.000 not passing 16,000k starting rates and cut costs to the detriment of the own staff i.e. ( no pay rises in 5 years etc.) , while the Directors and Mangers reap the short term rewards while the figures look good!!! I read that Phoenix themselves have Outsourced most of their contracts and staff under TUPE in favour of cloud services!!

      I doubt somehow they will get there returns they hope for having seen how badly all previous outsourcing deals have been handled by Phoenix and other companies which so far have left them all at a loss.

      It strikes me as funny that all the most recent directors taken on at Phoenix seem to have a background in TUPE! and then seem to bail with large bonus’s the moment there is a hint of irregularity!! or loss!!

      When will they realise that outsourcing is rarely is cost effective in the long term for all concerned due to mounting logistic costs and external vendors costs and the service to the customer and quality suffers greatly due to increased time delays by third parties and limited resource to save money think on Phoenix. (The future is cloud? is that not just the internet?)

    • The question one must ask is why IBM have elected to outsource this particular desk top support function. Normally, outsourcing is to achieve reduction in costs, more so when a service does not deliver the required return. Phoenix saw a drop in revenue in the year end to March and its operating profit dropped from 29.6m to 7.9m. Profit before tax was 3.8m compared to 25.3m in the prior year. Not unlike many that have grown through acquisition, its asset structure is heavily laden with intangibles and the balance sheet carries a fair measure of significant long term debt. Let's see if Phoenix can make a profit out of this deal.
    • Shuffle the sheep AKA: Oh the more it changes. The more it stays the same. The hand just re-arranges the pieces in the game. Definitions of Outsourcing: 1) Well known pretense at cost saving. 2) Creator of wealthy people who profit from the deal. 3) Almost inevitable degradation of service.
  • The Register (United Kingdom) IBM insider: How I caught my wife while bug-hunting on OS/2. No wonder that chkdsk flaw was never fixed. By Dominic Connor. Excerpt: Part one. The unholy alliance of IBM and Microsoft unleashed OS/2 25 years ago with a mission to replace Windows, Unix and DOS. Back then, I was a foot-soldier in that war: a contract bug hunter at Big Blue. Here’s how I remember it.
  • The Register: Where were the bullet holes on OS/2's corpse? Its head ... or foot? Ex-IBM insider Dom Connor reveals what went wrong. By Dominic Connor. Excerpt: Part two. My last piece on OS/2 was in part a mea culpa, a history of my part in its downfall. However, I can't claim all the credit. In fact, if I'm honest, there were hundreds of reasons why OS/2 failed, and most of them had nothing to do with me. So, here are some of the real corkers.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Blue view vision plan" by "exitasap". Full excerpt: We were forced to drop the Vision plan for 2013, as you must have a optometrist that works with Blue View Vision. Mine does not, as the plan reimburses him so little, that he cannot run his business. Reimbursements for out-of-network in 2013 would break even, at best, with several family members all needing glasses or contacts.

    Consider than his basic eye exam takes 30-45 minutes, and BVV would reimburse only $70, its easy to see why. He needs to pay for office stay shared with another optometrist, i.e. receptionist, two fitters, accountant, general admin, etc. The prior plan reimbursed $100, which is marginal, unless you keep exams short. With BVV, he says optometrists have to limit eye exams to <15 minutes -- just like your primary care doctor. So his rate for 2013 goes to $150.

    I would much rather pay the higher monthly premium for VSP, which has agreements with quality optometrists. Being the vision plan is a break-even affair for ibm, why'd they change to low-cost BVV. Were people complaining about high premiums? Realize that vision plan premiums have barely gone up the last 10 years, same for dental plus, and compare that with major medical premiums (which go up and up and up)

  • Glassdoor IBM reviews. Selected reviews follow:
    • Great experience, doesn't treat employees that well” Former Account Manager in London, England (United Kingdom). Pros: Great training and lots of opportunities if you do well. Cons: Money is good, but you can earn more in other IT companies; bureaucratic; you're a number, not a person; awful work life balance.
    • Good entry level job” Current Employee. Pros: Starting salary was alright. A lot of free time during the week. 20 days vacation after 1-2 years. Cons: People you depend on don't answer emails. Work doesn't really impact the company. Too much pointless meetings.
    • Completely negative” Former Employee. Pros: Depth of products and cutting edge research. Cons: This is a company that is only concerned with sales. Their concern for their clients is minimal. All they care about is sales. If you are a well educated exec used to delivering creative solutions to clients this is not the place for you. This is a blue collar organization littered with people from unheard of schools who resent anyone who comes in from the outside with a strong set of skills. I would not recommend it to a good friend. Advice to Senior Management: Think more about the client and less about selling into the client. Hire people who are well educated and can bring new ideas for improving customer satisfaction.
    • A Soul Destroying Experience” Current Technical in London, England (United Kingdom). Pros: Great people to work with day to day and some interesting projects to get involved in, if you know the right people in the right places. Cons: The usual mess when a company has got too big. The head has no idea what the hands are doing. The staff appraisal system is awful, leaving all but the most efficient suck up feeling unvalued. Advice to Senior Management: Thin some managers! You cannot deliver with chiefs only.
    • IBM has bought into off-shoring, hook line and sinker” Former Operations Lead in Boulder, CO. Pros: None any more for US employees. Only good news is jobs for IBM India or Poland, China, Hungary etc. Cons: Used to be a good place to work, with good benefits and smart people, but that's all changed; they are now all about cutting costs and the US employee base at all costs...without regard to impact to service. End result: laying off (offshoring) more US jobs every quarter and declining customer service/satisfaction; and high turnover rate at the off-shored locations creating more dissatisfaction. Advice to Senior Management: Get a clue; this strategy is going to bite you eventually
    • Working at IBM was OK.” Former Lead Automation Engineer in Philadelphia, PA. Pros: 401k. Nice company if you can be a manager. Cons: A new company is acquired every two weeks. There is no innovation, just a desire to keep pushing the same products to customers. No interest in new or open source technology, every tool you use for software development must be built by IBM. Advice to Senior Management: Try to encourage innovation, build something new instead of trying to buy others software to resell them.
    • There's never time to do it right but always time to do it over” Current Employee. Pros: Exposure to leading technologies especially as a result of many IBM acquisitions. Cons: Delivery quality to customers is suffering badly as managers drive time & cost to the exclusion of technical excellence. Moving heavily to off-shore labor and eliminating US technical personnel. Advice to Senior Management: Senior management needs to ensure that the annual performance review process is executed carefully and objectively. There is a tendency to flatten ratings by inflating ratings of mediocre performers and underrating strong performers.
    • Good Place to work. Awesome benefits.” Former Employee. Pros: Good place to work. Awesome benefits. Cons: Politics. too many old people. innovation takes forever.
    • IBM left me wanting a lot and providing very little to their employees and staff they are trying to keep.” Former Employee. Pros: Company has great vision and can be sustained over the long term however they need to reinvest back into the US Work Force. Cons: Poor environment, poor pay, poor training. Most Managers need actual HR training. Great place to work if you are straight out of college but if you are looking for a career go somewhere else they will walk all over you.
    • The compensation provided in India is very low” Current IT Specialist in Gurgaon, Haryana (India). Pros: Work life balance since the company provided you with an option to work from home. Cons: The compensation structure doesn't align with the band structure and the number of experience.
  • Alliance for Retired Americans: Friday Alert. This week's articles include:
    • Obama Administration, Sen. Durbin Fight for Social Security in ‘Fiscal Cliff’ Debate
    • Alliance Closing in on Goal of 10,000 Letters to Congress!
    • AFL-CIO Reports on Social Security, Medicare, Medicaid by State
    • Chained CPI: Really a Social Security Cut
    • CEOs Lobby to Cut Social Security, Medicare and Medicaid in Fiscal Cliff Talks
    • Conservative Financier Pete Peterson also weighs in on Fiscal Cliff Negotiations
  • Forbes: Wake up CEOs: You're about to Lose Your Best Employees. By Elaine Pofeldt. Excerpts: Most employees face such dismal work environments today that working for bosses like the Davises–who’ve embraced “core values like “do the right thing,” “learn and thrive” and “appreciate everyone”– isn’t even conceivable. A 2012 survey by Towers Watson found that just over one-third of workers today are “highly engaged.” Most of the others were various shades of miserable–”unsupported,” “detached” or “disengaged.”

    “Employees everywhere–in recessionary as well as growth economies–express some level of their concern about their financial and professional security, their stress on the job, their trust in their company’s leadership, the support that they receive from their managers, and their ability to build their careers,” the report explains. “Many have been doing more with less–for less–for over half a decade, and that reality doesn’t seem likely to change soon, if ever.”

    Why? The relationship between companies and their employees is in tremendous flux, thanks to pressures like globalization and slow economic growth. Many corporate bosses now live a life that’s dictated by short-term concerns alone, as I see it. Essentially, they’ve got to “make their numbers” every quarter or they’re out of a job. When that’s your true focus (despite the brown bag lunches HR plans for your direct reports about achieving work-life balance) you don’t have the luxury of thinking about the bigger picture, like whether you have alienated most of your team along the way or that you’ve created an office culture that no one can endure without taking Prozac. Because workers correctly feel like they are treated like a commodity, and not human beings, productivity and customer service suffers–and it gets harder and harder for the company to achieve its goals. ...

    If the health reform actually does result in affordable premiums (and that’s still a huge “if”) it’s going to be easier for talented people who are tired of shabby treatment by corporate employers to quit and set up shop on their own. I co-founded a site for independent professionals called the $200KFreelancer, and I can’t tell you how many people have told me they’d like to go out on their own but can’t afford to buy health insurance–or have had to take a job with benefits after freelancing for a while because they can’t pay insurance premiums. (It’s a big ticket item: My family now pays $36,000 a year in New Jersey).

  • Forbes: What To Do If Your Pension Is Frozen Or You're Offered A Lump Sum. By Ashlea Ebeling. Excerpt: Do you now or have you ever participated in a “defined benefit” pension plan–the kind where a private sector employer promises a set monthly check based on your salary, years of service and retirement age? Are you now retired and receiving a monthly pension check?

    If you’re one of the estimated 44 million Americans who can answer yes to either question, be on the alert for an e-mail or letter announcing “Important Changes to Your Retirement Benefits.”

    There are three types of changes you might be confronted with, all part of an effort by older companies to reduce the risk on their balance sheets of guaranteeing employees’ retirement security.

    The first, which has been spreading for a decade, is a pension “freeze”: Workers currently covered by defined benefit plans are told they won’t accrue any additional pension benefits.

    The other two are just starting to catch fire this year. In one, a company offers to pay current retirees and former employees lump sums in lieu of promised monthly pension payments. In the other, it replaces former employees’ pensions with equivalent annuities purchased from Prudential or another insurer. General Motors and Ford have combined the two–offering some former nonunion employees the choice of taking a lump or being dumped on an insurer. Here’s what you need to know.

New on the Alliance@IBM Site
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  • Message from OUR Walmart: With your support, hundreds of us bravely stood up to Walmart on Black Friday and went on strike. Despite the retail giant's illegal threats and scare tactics, we were inspired to take action like never before.

    In addition to the stores where we had planned strikes, we heard about other coworkers in Atlanta, GA, Ocean City, MD, Tupelo, MS, and even Paducah, KY-who were inspired to strike by the incredible outpour of support by community members like you!

    Unsurprisingly, Walmart's high-priced PR team is doing everything they can to downplay these historic events and ignore its employees. Deciding to go on strike on Black Friday was never about boycotting or affecting Walmart's bottom line. It was about changing the national debate about workers in this country. With more than 2,000 news stories covering the historic strikes, we are making our voices heard.

    With tens of thousands of supporters on our side, we will continue to grow more support and build more alliances. Rest assured, if Walmart does not stop its retaliation against workers who speak out for change, we will strike again. We know change will not happen overnight, especially in the face of Walmart's fierce opposition and illegal threats. But the truth is out-and we will not back down. We will continue to raise our voices, and we will continue to bring on new supporters every day.

    We are not afraid to stand up and speak out, because with your support, we all see that change is possible.

    In Solidarity, Strikers from OUR Walmart.

  • Job Cut Reports
    • Comment 11/26/12: We have been told that most folks should not expect a 2+ this time. I guess its employee contribution to roadkill with less SIPs next year. -Anon-
    • Comment 11/26/12: Heard from a manager today, rumor has it another big round of layoffs 1Q13 in GBS My manager has hinted also that he expects layoffs 1Q (our whole dept will be wiped out) -Toolate4me- Alliance reply: It is never too late to resist. Get your co-workers together and do some kind of action. Raise your voices! Contact the Alliance for help on this.
    • Comment 11/26/12: Record profits for 2012 = no more than a PBC 2 for top performers and likely RAs to follow. -IBMtwistedLogic-
    • Comment 11/26/12: Look at every link such as turn over rate, pay, job growth,layoffs... http://money.cnn.com/magazines/fortune/best-companies/2012/size/ IBM used to be in the top 5 in every "best" listing but now doesn't even make in in the top 100. And on it goes. -RoadKilledagain-
    • Comment 11/26/12: -IBMtwistedLogic- Oh, if you're a second line or director or above you at least can count on your PBC 2+ or 1 no matter what you do or have done. And so it goes.. and you go.. and continue to go. -anonymous-
    • Comment 11/26/12: SWG is required to submit PBCs early this year (deadline is 11/30)... So, it will very likely be part of the 1Q13 big RA! -Still_IBMer-
    • Comment 11/26/12: It never ceases to amaze me. People come here to lament its too late for me now. Has it been too late since 1999? Others seem almost frantic in their hopes that somehow IBM's business practices will cause the company to fail. Why would you want the company you work for to fail? I want them to be insanely successful so they can pay me my fair share as negotiated in the contract I hope they are forced to sign one day by us organizing. I do not accept them being successful at MY expense and you should not either. I am sick of living my life from rumor to rumor and worrying about whispers down some long dark hallway. I want a contract. I want to KNOW what my compensation is, what it will be and what severance I can expect if I am laid off. I want to know if I will be recalled from a layoff or if I should start looking for a new job. I want to KNOW what my job responsibility is, clearly defined, not other duties as assigned so I can be screwed by ambiguous rhetoric come appraisal time. If a manager is out to get me I want a shop steward to help me face him down. I see people rightfully complain year after year about record profits and nothing for me. But what did they do to make sure they got a piece? Nothing. Didn't join Alliance. Didn't show up at protests. Didn't talk up the union on coffee breaks with coworkers. So how can they expect different results year to year with the same non actions? It amazes me. -Exodus2007-
    • Comment 11/26/12: "best" listing but now doesn't even make in in the top 100. That's right because ibm is trying to reduce overall employment, not attract people. Why would they want to make to make it look like a good place to work. The ship is not sinking, it's done sunk. The remaining employees are too late and screwed. -blueboatanchor-
    • Comment 11/27/12: I will be recording my PBC call with my manager this year. I would suggest we all do the same. If you work at home as most of us do, take the call on your home phone on speaker, and have your iPhone recording the conversation. If the PBC rating is lower than expected, challenge the reasons behind the rating. Have your ammunition ready to support your questions. -DontGiveUpEasily-
    • Comment 11/27/12: I like what Walmart workers did. They drew some attention to their cause. For IBMers that are PBC 3 or gonna be a PBC for this cycle or have gotten RA notice: what do you have to lose by picketing IBM by just walking of the job, just for a day? Who know the attention drawn might start IBM to backpedal just like they did in 1999 with the pension change. -WhyNot?-
    • Comment 11/27/12: We have been told that most folks should not expect a 2+ this time. I guess its employee contribution to roadkill with less SIPs next year. -Anon- This is what happened last year, I don't understand why IBM'ers tolerate this abuse? -Do-I-Hear-An-ECHO-
    • Comment 11/27/12: if you choose to record your calls, do it legally. Unless you have a court order to bypass the law, you have to either verbally tell the party you're recording the call or play an audible beep every, 5 or 10 seconds (or something like that). -anonymous-
    • Comment 11/27/12: @Do-I-Hear-An-ECHO- I hear it seems you did not understand the 2+ rating when it was introduced. There was a period where the management knew the 1st lines would overload the 2+ workers. Then the %'s started to go down. The next goal is to bring it down to 10% kind of like a 1- just to make some feel better. That would make the 2 performer just the average Joe. Get the picture now as it lowers the raise pool. @Exodus2007- I'm impressed on how you keep beating your drum. Sometimes I wonder if anyone is hearing it. Keep it up. -benthere-
    • Comment 11/28/12: I was recently told to "go find a job" because of "budget cuts" and our group in IBM is "not important anymore". When I asked if there was a severance package I was told "NO" because "this is not an official resource action"...anybody hearing something similar? What new ploy is this? -still scared- Alliance reply: Please contact the Alliance at ibmunionalliance@gmail.com Please send us more information on your situation.
    • Comment 11/28/12: "I will be recording my PBC call with my manager this year...challenge the reasons behind the rating." None of this will do you any good. First, you will not win the PBC rating battle. In the very unlikely case you win the battle, you will lose the war (will become a target for the next RA). Your energy would be better spent in finding another job or joining/promoting the union. -BlueRobin-
    • Comment 11/28/12: @DontGiveUpEasily-- Your frustrations are totally understood, but not very fruitful. It is not legal or you cannot legally use a recorded conversation without the consent of the person(s) being recorded. The only thing this would do for you is self satisfaction. I very much doubt the manager would concede to being recording if you ask them. Think about some conference calls when they tell you "this call is being recorded, if you have any objections you can hang up now". This is meant for the question/answers at the end, thus YOU consent to the recording. Non-consented phone recordings are only admissible if there is a very serious felony, (your being employed is not in this category), and/or this is a smoking gun. The Alliance can provide much better guidance than this. -Joining-Alliance-would-be-more-functional-
    • Comment 11/28/12: Do U work @ 1 of IBM's delivery centers or GDF? Let the Alliance know what's happening at Ur site. Post Ur info here: http://bit.ly/UsnOui -@Allianceibm on Twitter-
    • Comment 11/28/12: I believe it is illegal to record a conversation without the other person's approval. You would risk immediate termination for cause, possible legal and maybe even civil repercussions. Best think would be to make sure you document thoroughly your accomplishments based on the worthless goals established at the beginning of the year and show how you exceed them in all categories. It's all about relative contribution and how you have gone above and beyond your expected duties to the point where you contributed to drive department and regional projects. The message being communicated is that if you just did your job and did it extremely well, that's great you are a solid performer. If you demonstrated exemplary leadership and drove organizational goals to completion, then you may have justification for a 2+ Key is to document all of your accomplishments starting from the beginning of the year.

      By now technically you should have a rough draft of your PBC completed needing only a few tweaks to add your accomplishments from the last 30 days. (A good manager would have explained this to you at the beginning of the year. It's up to you to follow through on the mentoring and coaching info when given)

      Moreover, Even after you have done all of this, when the decision has to be made on whom to cut, none of that will really matter. It's a crap shot where the best logic is not always being used. Your motivation for doing this has to be sourced from within as you know it's the way to professionally govern yourself and to manage your career.

      Lastly, if you are not monitoring the market and working to keep your skills current, you are setting yourself up for a long post IBM mountain to climb. I was out of work for only 2 months. Some of this was due to the timing as hiring in the technology sector had picked up. But other reasons are because I didn't let my skills become obsolete and I didn't let the IBM Sweat shop atmosphere tarnish my attitude or enthusiasm.

      Hang in there and remember there is life after IBM. Just have a plan on how you are going to transition in mind and ready to invoke. (This by the way assumes that your resume is current and hot ready to be released at a moments notice - if not what are you waiting on?) -GladToBeGone-

    • Comment 11/28/12: @benthere-- I know exactly what lowering the rates means because it is all a numbers game, the lower the rating, the lower the raises, and much easier to manipulate the masses. My point is that people are still taking the abuse, and hardly anyone will stand up for themselves. The "echo" means the same abuse and same lack of reaction. -Do-I-Hear-An-ECHO-
    • Comment 11/29/12: IBM Corp. officials have encouraged companies to bring them their toughest problems, as they announced plans for an analytics center in Ohio focused on data crunching and consulting services How many of these will end up being foreign workers brought here. Would doubt that these will be IBM employees as they can hire and lay off contract people easier. Also no benefits...... -VA172-
    • Comment 11/29/12: I had 27 years with IBM. The PBC you will receive has already been given at the beginning of each year by a second line manager. It gives IBM a way to RA employees who received a PBC of three. -ANA-
    • Comment 11/29/12: Not sure what is up with the deal with Phoenix 40mill to support IBM staff but Phoenix took a loss of 63mill and is in trouble. Something doesn't add up. Plus there is an all hand meeting for GTS on Dec 13th -whatever-
    • Comment 11/30/12: I don't believe that PBC ratings are determined by 2nd lines a year in advance. Unless you can provide evidence of this, stop spreading rumors. IBM simply isn't going to require 2nd lines to deal with the peons on an individual basis - i.e. have a 2nd line come up with a PBC rating for everybody below them. That's what first lines are for (first lines are nothing more than supervisors, really) What I do believe is that levels above 2nd line dictate how many of each PBC rating level can be given within a department. I also believe that if you are above age 40 and/or been with IBM for, say, 15-20+ years, you will get no better than a 2. IBM does not want old-timers around. You cost too much. Join the union or leave IBM. I left IBM for a job with much better pay and a rating system where you're rating on YOUR contributions, not your manager's perception of your contributions compared to your co-workers. -Glad-I-Left-
    • Comment 11/30/12: This just in: Our fabulous USA congress (some lame duckers) approved more H1B tech visas. More RAs for IBM no less. So much for the past USA election and the "change" that people want to take place. So how is the USA tech unemployment gonna gown DOWN now? The USA has got to be the only country on this planet that cares less for its citizens' job opportunities than any other fly by night rogue regime country. -that's_all_folks_from_porky_pig- Alliance reply: As we have said before, we need to hold both parties accountable. We also need a mass outcry and action from IBM workers and other IT workers.
    • Comment 12/01/12: Today is inn-o-vation jam! The only thing "innovative" that IBM has done is the recycling of 19th century labor practices into the 21st. -Bee Jammin-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
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  • Consumer's Union Health Policy Report: The Evidence Is Clear: Too Many Health Insurance Choices Can Impair, Not Help, Consumer Decision Making (PDF). Summary: A key question confronting policymakers is whether consumers are better or worse off when provided with as many health insurance choices as possible. Consumers Union reviewed the substantial literature in this area and the evidence is clear. While a few choices are good, too much choice undermines consumer decision making, particularly high stakes decisions involving health insurance. Cognitive limits with respect to decoding and analyzing data lead individuals to take decision making short-cuts or avoid choosing altogether

    Policymakers should explicitly consider limiting consumers’ health plan choices in the new health insurance exchanges to a manageable number. Furthermore, they should provide robust decision making aids to improve consumers’ ability to navigate the resulting choice set. Such interventions include standardizing benefit design, direct assistance, summary data about plans, and more to help consumers organize and evaluate their options.

  • Washington Post: As drug industry’s influence over research grows, so does the potential for bias. By Peter Whoriskey. Excerpts: For drugmaker GlaxoSmithKline, the 17-page article in the New England Journal of Medicine represented a coup.

    The 2006 report described a trial that compared three diabetes drugs and concluded that Avandia, the company’s new drug, performed best.

    “We now have clear evidence from a large international study that the initial use of [Avandia] is more effective than standard therapies,” a senior vice president of GlaxoSmithKline, Lawson Macartney, said in a news release.

    What only careful readers of the article would have gleaned is the extent of the financial connections between the drugmaker and the research. The trial had been funded by GlaxoSmithKline, and each of the 11 authors had received money from the company. Four were employees and held company stock. The other seven were academic experts who had received grants or consultant fees from the firm.

    Whether these ties altered the report on Avandia may be impossible for readers to know. But while sorting through the data from more than 4,000 patients, the investigators missed hints of a danger that, when fully realized four years later, would lead to Avandia’s virtual disappearance from the United States...

    Arguably the most prestigious medical journal in the world, the New England Journal of Medicine regularly features articles over which pharmaceutical companies and their employees can exert significant influence. Over a year-long period ending in August, NEJM published 73 articles on original studies of new drugs, encompassing drugs approved by the FDA since 2000 and experimental drugs, according to a review by The Washington Post.

    Of those articles, 60 were funded by a pharmaceutical company, 50 were co-written by drug company employees and 37 had a lead author, typically an academic, who had previously accepted outside compensation from the sponsoring drug company in the form of consultant pay, grants or speaker fees.

  • New York Times: Health Insurance Exchanges May Be Too Small to Succeed. By Dana P. Goldman, Michael Chernew and Anupam Jena. Excerpts: The evidence is mixed, but some of it points to a counterintuitive result: more competition among insurers may lead to higher reimbursements and health care spending, particularly when the provider market – physicians, hospitals, pharmaceuticals and medical device suppliers – is not very competitive.

    In imperfect health care markets, competition can be counterproductive. The larger an insurer’s share of the market, the more aggressively it can negotiate prices with providers, hospitals and drug manufacturers. Smaller hospitals and provider groups, known as “price takers” by economists, either accept the big insurer’s reimbursement rates or forgo the opportunity to offer competing services. The monopsony power of a single or a few large insurers can thus lead to lower prices. For example, Glenn Melnick and Vivian Wu have shown that hospital prices in markets with the most powerful insurers are 12 percent lower than in more competitive insurance markets.

    So health insurance exchanges are probably welcome news for hospitals, physicians, and pharmaceutical and medical device companies throughout the United States. If health insurance exchanges divide up the market among many insurers, thereby diluting their power, reimbursement rates may actually increase, which could lead to higher premiums for consumers.

  • Associated Press, courtesy of the New York Times: Brewer Rejects State-Run Health Exchange for Ariz. Excerpts: Arizona Gov. Jan Brewer has decided against creating a state-run health insurance exchange to implement a key part of President Barack Obama's federal health care law.

    Brewer's decision announced Wednesday means the federal government will set up an online marketplace for the state, offering subsidized private health coverage to the middle class. The governor reiterated her unwavering opposition to the health care overhaul, and said there were too many costs and questions associated with a state-run exchange. ...

    Brewer joins other Republican governors in such states as Texas and Maine who have balked at creating state-run exchanges, although others in Nevada and New Mexico have opted to proceed. She sent a federal official a one-page letter conveying her decision. ...

    An alliance of hospitals, insurance companies and business groups wanted Arizona to have a state-run exchange, arguing that it would increase coverage while giving the state flexibility in designing a program to its liking.

    Conservative advocacy groups such as the Goldwater Institute stood in opposition. They said Arizona shouldn't help implement a law that could foist new expenses on the state and raise health insurance prices for residents.

  • American Health Insurance Plans (AHIP) Coverage: ICYMI: Prescription Drug Prices Continue to Soar. Excerpts: Brand-name prescription drug prices continue to escalate, at more than six times the overall price inflation of consumer goods, according to a new report released yesterday by Express Scripts. Prescription drug spending is projected to account for 11.1% of national health expenditures in 2020. Highlights from the report include:
    • Brand-name drugs which cost $100 in January 2008 would now cost $163.08 in 2008 dollars;
    • Generic drugs which cost $100 in January 2008 would now cost $60.96 in 2008 dollars;
    • The trend in specialty drug prices (22.6 percent YTD) continues to outpace the trend of traditional drug prices (-0.6 percent YTD), and is primarily driven by cost increases;
    • In the first nine months of 2012, specialty drug prices consumed 20.8 percent of PMPM pharmacy spend;
    • Medications commonly used to treat hepatitis C continue to have the largest spend increase at 117.3 percent—a trend that is driven primarily by increased utilization;
    • Spending on medications used to treat respiratory conditions increased more than 35 percent compared to the first nine months of 2011; and,
    • All but one of the medications approved in the third quarter are second- and third-line drugs indicated to treat advanced cancers. Each is expected to cost between $5,000-$10,000 a month.
  • Brookings Institution Press: Affordable Excellence: The Singapore Health Care System. Excerpt: Since achieving independence, Singapore undertook the monumental task of transforming itself to a modern, prosperous, secure city-state. Many institutions needed to be erected to reach this goal, but one that stands out and is the subject of this book was the need for a world class health care system. Affordable Excellence examines how Singapore succeeded in its efforts, setting up a health system that has become one of the best in the world, delivering high quality care at a fraction of the cost of most First World systems. Ranked 6th globally on performance, Singapore spends less than 4% of GDP on health care (in contrast to the U.S., for example, which spends over 17% of GDP).
  • New York Times: A Hospital War Reflects a Bind for Doctors in the U.S. By Julie Creswell and Reed Abelson. Excerpts: For decades, doctors in picturesque Boise, Idaho, were part of a tight-knit community, freely referring patients to the specialists or hospitals of their choice and exchanging information about the latest medical treatments.

    But that began to change a few years ago, when the city’s largest hospital, St. Luke’s Health System, began rapidly buying physician practices all over town, from general practitioners to cardiologists to orthopedic surgeons.

    Today, Boise is a medical battleground.

    A little over half of the 1,400 doctors in southwestern Idaho are employed by St. Luke’s or its smaller competitor, St. Alphonsus Regional Medical Center.

    Many of the independent doctors complain that both hospitals, but especially St. Luke’s, have too much power over every aspect of the medical pipeline, dictating which tests and procedures to perform, how much to charge and which patients to admit.

    In interviews, they said their referrals from doctors now employed by St. Luke’s had dropped sharply, while patients, in many cases, were paying more there for the same level of treatment.

    Boise’s experience reflects a growing national trend toward consolidation. Across the country, doctors who sold their practices and signed on as employees have similar criticisms. In lawsuits and interviews, they describe growing pressure to meet the financial goals of their new employers — often by performing unnecessary tests and procedures or by admitting patients who do not need a hospital stay.

    In Boise, just a few weeks ago, even the hospitals were at war. St. Alphonsus went to court seeking an injunction to stop St. Luke’s from buying another physician practice group, arguing that the hospital’s dominance in the market was enabling it to drive up prices and to demand exclusive or preferential agreements with insurers. The price of a colonoscopy has quadrupled in some instances, and in other cases St. Luke’s charges nearly three times as much for laboratory work as nearby facilities, according to the St. Alphonsus complaint.

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 op-ed: A Minimum Tax for the Wealthy. By Warren E. Buffett. Excerpts: Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

    Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.

    Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.

    Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip. The middle class and the rich alike gained ground.

    So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities.

    And, wow, do we have plenty to invest. The Forbes 400, the wealthiest individuals in America, hit a new group record for wealth this year: $1.7 trillion. That’s more than five times the $300 billion total in 1992. In recent years, my gang has been leaving the middle class in the dust.

    A huge tail wind from tax cuts has pushed us along. In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent. It’s nice to have friends in high places.

    The group’s average income in 2009 was $202 million — which works out to a “wage” of $97,000 per hour, based on a 40-hour workweek. (I’m assuming they’re paid during lunch hours.) Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And — brace yourself — a few actually paid nothing.

  • Huffington Post: CEO Council Demands Cuts To Poor, Elderly While Reaping Billions In Government Contracts, Tax Breaks. By Christina Wilkie and Ryan Grim. Excerpts: The corporate CEOs who have made a high-profile foray into deficit negotiations have themselves been substantially responsible for the size of the deficit they now want closed.

    The companies represented by executives working with the Campaign To Fix The Debt have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies' tax bills.

    The CEOs are part of a campaign run by the Peter Peterson-backed Center for a Responsible Federal Budget, which plans to spend at least $30 million pushing for a deficit reduction deal in the lame-duck session and beyond.

    During the past few days, CEOs belonging to what the campaign calls its CEO Fiscal Leadership Council -- most visibly, Goldman Sachs' Lloyd Blankfein and Honeywell's David Cote -- have barnstormed the media, making the case that the only way to cut the deficit is to severely scale back social safety-net programs -- Medicare, Medicaid, and Social Security -- which would disproportionately impact the poor and the elderly.

    As part of their push, they are advocating a "territorial tax system" that would exempt their companies' foreign profits from taxation, netting them about $134 billion in tax savings, according to a new report from the Institute for Policy Studies titled "The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks" -- money that could help pay off the federal budget deficit.

    Yet the CEOs are not offering to forgo federal money or pay a higher tax rate, on their personal income or corporate profits. Instead, council recommendations include cutting "entitlement" programs, as well as what they call "low-priority spending."

    Many of the companies recommending austerity would be out of business without the heavy federal support they get, including Goldman Sachs and JPMorgan Chase, which both received billions in direct bailout cash, plus billions more indirectly through AIG and other companies taxpayers rescued.

  • Huffington Post: Paul Krugman: Republicans Seem Ready To Throw Upper Middle Class 'Overboard'. By Bonnie Kavoussi. Excerpts: Paul Krugman says that the Republican Party may throw the modestly rich "overboard" to protect the fortunes of multi-millionaires.

    In a blog post on Tuesday, Krugman focuses on one tax proposal floated by Congressional Republicans that would essentially create a "tax bubble," disproportionately hurting the upper middle class. (Nate Silver has an explanation and a chart here.) Krugman writes that taking this tack would let the GOP protect the super-rich at the expense of the working rich (using the decades-old language of Oliver Stone's Wall Street) who make six-figure salaries.

    "When push comes to shove, the GOP seems ready to throw the bottom 90 percent of the top 1 percent overboard, in order to protect its real patrons, the superelite," Krugman writes.

  • New York Times opinion: The Stiffs and the Players. By Paul Krugman. Excerpts: The contortions Republicans are going through in an attempt to avoid raising tax rates are quite something, and they pose something of a puzzle: why are they making noises about raising revenue by limiting deductions, while still screaming bloody murder at any hint of a rise in tax rates?

    One possible answer is that they’re still imagining that they can pull a fast one — that they can sell supposed revenue raisers that don’t actually raise much revenue, or that they can find a way to renege on whatever agreement might be reached by appealing to the various interests with a stake in particular deductions. ...

    But there’s a third possibility, which Nate Silver and Josh Marshall both raise in slightly different ways: they may be trying to protect the players at the expense of the $400,000 a year working stiffs.

    The terms, in case you’re wondering, come from the original Wall Street:

    I’m not talking a $400,000 a year working Wall Street stiff flying first class and being comfortable, I’m talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player, or nothing. ...

    Under this particular proposal, everyone making more than 250K would pay more — but as a percentage of income, it would be significant for those making 400K, trivial for the Masters of the Universe making $10 million or more. And this is basically going to be true of any proposal that doesn’t actually raise rates.

    The point, as Josh says, is that when push comes to shove, the GOP seems ready to throw the bottom 90 percent of the top 1 percent overboard, in order to protect its real patrons, the superelite.

  • Washington Post: Wal-Mart’s strategy of deniability for workers’ safety. By Harold Meyerson. Excerpts: Bangladesh is half a world away from Bentonville, the Arkansas city where Wal-Mart is headquartered. This week, Wal-Mart surely wishes it were farther away than that.

    Over the weekend, a horrific fire swept through a Bangladesh clothing factory, killing more than 100 workers, many of whose bodies were burnt so badly that they could not be identified. In its gruesome particulars — locked doors, no emergency exits, workers leaping to their deaths — the blaze seems a ghastly centennial reenactment of the Triangle Shirtwaist fire of 1911, when 146 workers similarly jumped to their deaths or were incinerated after they found the exit doors were locked.

    The signal difference between the two fires is location. The Triangle building was located directly off New York’s Washington Square. Thousands watched the appalling spectacle of young workers leaping to the sidewalks 10 stories down; reporters and photographers were quickly on the scene. It’s not likely, however, that the Bangladesh disaster was witnessed by anyone from either the United States or Europe — the two markets for which the clothes made inside that factory were destined. For that, at least, Wal-Mart should consider itself fortunate. ...

    If this were an isolated incident of Wal-Mart denying responsibility for the conditions under which the people who make and move its products labor, then the Bangladeshi disaster wouldn’t reflect quite so badly on the company. But the very essence of the Wal-Mart system is to employ thousands upon thousands of workers through contractors and subcontractors and sub-subcontractors, who are compelled by Wal-Mart’s market power and its demand for low prices to cut corners and skimp on safety. And because Wal-Mart isn’t the employer of record for these workers, the company can disavow responsibility for their conditions of work.

    This system isn’t reserved just for workers in faraway lands: Tens of thousands of American workers labor under similar arrangements. Many are employed at little more than the minimum wage in the massive warehouses in the inland exurbs of Los Angeles, where Wal-Mart’s imports from Asia are trucked from the city’s harbor to be sorted and packaged and put on the trucks and trains that take them to Wal-Mart stores for a thousand miles around.

    The warehouses are run by logistics companies with which Wal-Mart contracts, and most of the workers are employed by some of the 200-plus temporary employment companies that have sprung up in the area — even though many of the workers have worked in the same warehouses for close to a decade. Last year, the California Department of Industrial Relations, suspecting that many of these workers were being cheated, charged one logistics company that runs a warehouse for Wal-Mart with failing to provide its employees with pay stubs and other information on their pay rates. Wal-Mart itself was not cited. That’s the beauty of its chain of deniability.

  • Washington Post: The SEC, from lapdog to watchdog. By Dana Milbank. Excerpt: In the early days of the Obama administration, I sat in a Capitol Hill hearing room and listened to Harry Markopolos, the whistle-blower in the Bernie Madoff scandal, bemoan the toothless Securities and Exchange Commission.

    The SEC, which ignored his warnings about Madoff, is “captive to the industry it regulates, and it is afraid of bringing big cases against the largest, most powerful firms,” he said. “The SEC continues to roar like a mouse and fight like a flea. . . . I gift-wrapped and delivered the largest Ponzi scheme in history to them, and somehow they couldn’t be bothered to conduct a thorough and proper investigation.”

    But since then, the private investigator has come upon a rather different trail of evidence. “There’s a total sea change at the agency,” Markopolos told me Tuesday. “They are aggressive. There’s no more free passes on Wall Street. They eagerly seek out big cases. . . . They used to be industry’s lapdog and now they’re actually an investor’s watchdog.”

    The difference, he said, is Mary Schapiro, who announced Monday that she will step down as SEC chairman after four tumultuous years on the job. It’s not a stretch to say she has saved the regulatory body from irrelevance, if not outright extinction, and she has rebuilt it into a powerful presence on Wall Street. When she took over the agency, there were voices inside and outside the administration calling for carving up the agency, which missed the Madoff scandal.

  • Accounting Web: Uncertain Fate for Sports Lovers' Tax Break. By Teresa Ambord. Excerpts: College football fans probably call it the ultimate win/win. Schools need massive amounts of money. Some season ticket holders are willing to pay hefty prices to ensure those tickets. The high prices aren't optional, but because they're treated as donations, ticket holders get whopping tax deductions. Win/win/win . . . lose.

    Bloomberg news reports that based on their calculations, those tax deductions cost the rest of us more than $105 million a year in tax revenue that the Treasury can't get its hands on. Yet.

    Today's deduction - which originated with the Revenue Act of 1950 - is partly credited to the work of Theodore L. Jones, a Baton Rouge attorney and die-hard fan of the Louisiana State University Tigers. Jones has been a season ticket holder (on the forty-third yard line) for nearly twenty years. When the Tax Reform Act of 1986 was being hammered out, the beloved sports ticket tax deduction became a target. That's when the LSU athletic director enlisted the help of Jones. Thanks to Jones' relentless lobbying of Congress, the tax break survived. ...

    Not all schools set donation levels, but those with the most popular teams capitalize on the public's desire for prime seats at the games by jacking up season ticket prices. They establish the face value and then expect donations totaling hundreds of thousands of additional dollars. Of course "donation" implies voluntary, but the extra money is actually conditional to the availability of tickets. Even so, by law, fans who pay enough are able to write off 80 percent of the donation, provided they itemize their tax returns.

  • Huffington Post: Tax Those Dividends. By David Callahan. Excerpts: If you follow the stock market, you'll notice that big public companies are paying out all sorts of special dividends early to avoid a dreaded tax hike on such earnings. If the Bush tax cuts lapse, the top dividend tax rate will rise from 15 percent today to 39.6 percent on January 1. Or, if President Obama gets his way, dividend tax rates will go up only for the top 2 percent of earners, while remaining unchanged for everyone else.

    In other words, dividends may once more be taxed as regular income -- and that's how it should be.

    Thanks to the 2003 tax cuts enacted under President Bush, dividend tax rates are now extremely low. They were higher in both the 1980s and the 1990s. Extremely affluent households have been the main winners from that 2003 tax cut because the wealthy own the vast majority of all stock. It's been estimated that in 2012, the top 1 percent of households will receive a stunning 71 percent of all capital gains. What's more, because dividends paid on stocks in 401(k)s are not taxed (they are reinvested), more ordinary Americans who own modest amounts of stock saw virtually no benefit from the cut to dividend taxes enacted by Bush.

    Rarely has any tax cut cut in history shoveled more money to wealthy households than the 2003 tax cut for both dividends and capital gains. That law -- along with a previous tax cut for capital gains in 1997 -- is a big reason that tax rates on the very richest Americans have declined in the past 20 years. As the Center for Budget and Policy Priorities has noted:

    The top 400 households paid 16.6 percent of their income in federal individual income taxes in 2007, down from 30 percent in 1995. This decline works out to a tax cut of $46 million per filer in 2007, or a total of $18 billion in tax cuts for these households per year.

    According to the Congressional Research Service "changes in capital gains and dividends were the largest contributor to the increase in the overall income inequality," between 1996 and 2006. In other words, even as inequality is routinely depicted as some inevitable and unavoidable economic fact of life, it turns out that the biggest driver of inequality in recent times have been intentional changes in tax policy.

  • New York Times op-ed: Class Wars of 2012. By Paul Krugman. Excerpts: On Election Day, The Boston Globe reported, Logan International Airport in Boston was running short of parking spaces. Not for cars — for private jets. Big donors were flooding into the city to attend Mitt Romney’s victory party.

    They were, it turned out, misinformed about political reality. But the disappointed plutocrats weren’t wrong about who was on their side. This was very much an election pitting the interests of the very rich against those of the middle class and the poor.

    And the Obama campaign won largely by disregarding the warnings of squeamish “centrists” and embracing that reality, stressing the class-war aspect of the confrontation. This ensured not only that President Obama won by huge margins among lower-income voters, but that those voters turned out in large numbers, sealing his victory.

    The important thing to understand now is that while the election is over, the class war isn’t. The same people who bet big on Mr. Romney, and lost, are now trying to win by stealth — in the name of fiscal responsibility — the ground they failed to gain in an open election. ...

    The answer, as I have already suggested, is to rely on stealth — to smuggle in plutocrat-friendly policies under the pretense that they’re just sensible responses to the budget deficit.

    Consider, as a prime example, the push to raise the retirement age, the age of eligibility for Medicare, or both. This is only reasonable, we’re told — after all, life expectancy has risen, so shouldn’t we all retire later? In reality, however, it would be a hugely regressive policy change, imposing severe burdens on lower- and middle-income Americans while barely affecting the wealthy. Why? First of all, the increase in life expectancy is concentrated among the affluent; why should janitors have to retire later because lawyers are living longer? Second, both Social Security and Medicare are much more important, relative to income, to less-affluent Americans, so delaying their availability would be a far more severe hit to ordinary families than to the top 1 percent.

    Or take a subtler example, the insistence that any revenue increases should come from limiting deductions rather than from higher tax rates. The key thing to realize here is that the math just doesn’t work; there is, in fact, no way limits on deductions can raise as much revenue from the wealthy as you can get simply by letting the relevant parts of the Bush-era tax cuts expire. So any proposal to avoid a rate increase is, whatever its proponents may say, a proposal that we let the 1 percent off the hook and shift the burden, one way or another, to the middle class or the poor. ...

    So keep your eyes open as the fiscal game of chicken continues. It’s an uncomfortable but real truth that we are not all in this together; America’s top-down class warriors lost big in the election, but now they’re trying to use the pretense of concern about the deficit to snatch victory from the jaws of defeat. Let’s not let them pull it off.

  • Smirking Chimp: Will Job Creators Really Not Hire If They Have To Pay Taxes? By Dave Johnson. Excerpts: House Speaker Boehner and Senate Minority leader each claimed this week that higher taxes on the wealthy will cause the “job creators” to cut jobs and “hurt growth.” The Heritage Foundation makes specific claims about how this will happen. Let’s take a look. ...

    Businesses want to keep costs down and that means they don’t hire people unless they really, really need to. They hire people when doing so will make them more money, they lay people off when it will save them money. Employees are only hired or kept on the payroll if they are needed, and not hiring one necessary person would therefore hurt the business that was successful enough for the owner to make at least $794,000 after all deductions.

    So assuming the business owner knew what he or she was doing, and only had the number of employees that were needed, the following year the business would do worse without that needed employee, and the owner would make less. Would an employer really do this? Of course not.

    Let me ask another question. How come every time I closely examine a conservative economic claim it falls apart, and was really about fooling people into giving more money to rich people, not making things better for all of us?

  • Smirking Chimp: Austerity — the 1%’s Global Battle Cry. by Mark Vorpahl. Excerpts: Whether we are left with the Fiscal Cliff or a Grand Bargain, workers in the U.S. face massive cuts to programs such as Medicare, Medicaid, Social Security, unemployment insurance, Food Stamp assistance and other needed social safety nets. This is an example of "austerity" which has largely been pursued in the U.S. until now, on a statewide and local level. ...

    What are the policies of austerity? They involve the cutting of public investment and services such as education, health care, and retirement insurance. In addition they also include the privatizing of existing government assets. Public employees suffer wage freezes or cuts and mass layoffs as part of austerity measures. Labor laws are revised to empower employers at the expense of employees' job security, wages, benefits, and voice on the job. And austerity also involves increased taxes and fees on working class people.

    Austerity is sold as the only available means of reducing the debt. However, there is plenty of money to take care of these financial imbalances. It is in the pockets of the wealthy and big business elites whose think tanks and politicians are, not coincidentally, the architects of austerity. They want nations' economies to be run more like the corporations and banks, prioritizing that their shareholders get paid first and foremost at the expense of everyone else. ...

    What are the results of austerity? They depress the economy in the countries in which they are enacted and reduce the government's revenue while fattening the big business elites' financial reserves. With the January 1st Fiscal Cliff deadline in the U.S., the Economist Intelligence Unit cut its expectations for growth. According to the International Monetary Fund (IMF), Spain’s economy will contract by 1.5 percent, Italy’s by 2.3 percent, Portugal’s by 3 percent, Greece’s by 5.2 percent, Britain’s by 0.6 percent, Germany’s by 0.9 percent, and France’s by 0.1 percent. ...

    The truth is that the world economy is not in crisis because of debt. It is because too many have too little to buy what has been created. Without a stronger consumer base the capitalists have no reason to invest in making more commodities and creating more jobs. How are they going to realize a profit if few can afford to buy what is produced?

    Before the Great Recession the big business elites of the world had gotten around this problem by indulging in an orgy of financial speculation, especially in the U.S. This extra cash, created out of nothing, enabled them to continue handing out dicey loans while repackaging and selling these toxic assets as good investments. As long as the cash spigot was flowing today, why worry about tomorrow, was the line of reasoning for the 1%. This created massive financial bubbles in, for instance, housing in the U.S. and several European nations.

  • Bloomberg: Hostess Seeks to Cut Retiree Benefits by $1.1 Million. By Phil Milford. Excerpt: Hostess Brands Inc., the defunct maker of Twinkies and Wonder Bread, told a bankruptcy court that it must cut $1.1 million a month in retiree benefits as part of its liquidation plan.

    U.S. Bankruptcy Judge Robert Drain in White Plains, New York, today approved formation of a committee of retired employees to defend their rights in connection with the intended cuts. Drain is also being asked to consider Hostess’s request to close and its bid to pay as much as $1.75 million in incentive bonuses to 19 senior managers during the company’s wind-down.

  • New York Times: Tax Burden for Most Americans Is Lower Than in the 1980s. By Binyamin Appelbaum and Robert Gebeloff. Excerpts: Alan Hicks divides long days between the insurance business he started in the late 1970s and the barbecue restaurant he opened with his sons three years ago. He earned more than $250,000 last year and said taxes took more than 40 percent. What’s worse, in his view, is that others — the wealthy, hiding in loopholes; the poor, living on government benefits — are not paying their fair share.

    “It feels like the harder we work, the more they take from us,” said Mr. Hicks, 55, as he waited for a meat truck one recent afternoon. “And it seems like there’s an awful lot of people in the United States who don’t pay any taxes.”

    These are common sentiments in the eastern suburbs of St. Louis, a region of fading factory towns fringed by new subdivisions. Here, as across the country, people like Mr. Hicks are pained by the conviction that they are paying ever more to finance the expansion of government.

    But in fact, most Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid 30 years ago. According to an analysis by The New York Times, the combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980.

    Households earning more than $200,000 benefited from the largest percentage declines in total taxation as a share of income. Middle-income households benefited, too. More than 85 percent of households with earnings above $25,000 paid less in total taxes than comparable households in 1980.

    Lower-income households, however, saved little or nothing. Many pay no federal income taxes, but they do pay a range of other levies, like federal payroll taxes, state sales taxes and local property taxes. Only about half of taxpaying households with incomes below $25,000 paid less in 2010.

  • Washington Post opinion: The GOP and its urge to purge. By Dana Milbank. Excerpts: It seems the Republicans have run out of squishy moderates to purge. Now they’re starting to run conservatives out of town for being insufficiently doctrinaire.

    Exhibit A: The defenestration of Tom Cole.

    Cole, a deeply conservative congressman from deeply Republican Oklahoma, is not to be confused with a RINO: Republican in name only. But when the lawmaker, who has been part of House GOP leadership, floated a perfectly sensible notion this week — that Republicans should accept President Obama’s offer to extend tax cuts for the 98 percent of Americans who earn less than $250,000 a year — he was treated as if he had been caught reading Marx in the Republican cloakroom.

    “I think he’s wrong, and I think most of the conference thinks that he’s wrong,” declared rookie Rep. Raul Labrador (R-Idaho). Cole, he said, is “a man who has voted for a lot of the increased spending in Washington, D.C., and that’s the problem. We have a lot of Republicans who are, you know, catching their hair on fire right now, but they’re the ones who were here for 10 or 20 years causing all the problems that we’re now facing.”

    Rep. Scott Garrett (R-N.J.) called Cole’s position “absurd.” House Speaker John Boehner went before the cameras to deliver Cole a rare public rebuke.

    Cole, who enjoys a lifetime rating of 92 percent from the American Conservative Union as he enters his sixth term, isn’t worried about a putsch. “I think I’m going to be hard to sell as a dangerous liberal,” he told me with a chuckle. The outrage, he said, “surprised me a little bit, because I think the politics of this are blindingly clear.” ...

    The Republicans’ negotiating position is morally indefensible. They are holding 98 percent of Americans hostage by refusing to spare them a tax hike unless the wealthiest 2 percent are included.

    “Some people seem to think this is leverage. I think that’s wrong,” Cole said. “You don’t consider people’s lives as leverage. I live in a blue-collar neighborhood. I’ve got a retired master sergeant as my next-door neighbor, police officer across the street. These are working folks, they’re great people, and the idea that I would ever use them as leverage is just wrong.”

    In defying the party purists, Cole is taking a novel approach: doing what his constituents want him to do. His staff reports that calls and e-mails to his Washington office are running 70 percent favorable, and calls to his south-central Oklahoma offices are 90 percent positive. ...

    Cole’s stand is a refreshing reminder that being conservative doesn’t mean you have to be unreasonable. “Both sides, I think, need to be a lot more clear-eyed,” he told me. “We’re going to be living in this house together for four years in all likelihood. Let’s get some things done that we can agree on.”

  • Washington Post: Companies quietly push for tax break on foreign profits in ‘fiscal cliff’ debate. By Jia Lynn Yang and Suzy Khimm. Excerpts: Amid the tumult over looming tax hikes and spending cuts, a massive change to the corporate tax code is quietly gathering steam.

    U.S. multinationals have spent years pushing for a change to the tax code that would eliminate taxes on business profits overseas, just as these firms are banking their futures on growth abroad.

    Now, with the debate over the country’s fiscal future in the spotlight, executives, lobbyists and some on Capitol Hill are latching onto the “fiscal cliff” as a potential springboard for their cause.

    To the companies, no other tax issue matters more. ...

    Some tax experts warn, however, that such a change could radically alter how companies behave and have broad implications for the economy. Without the right safeguards, they say, eliminating taxes on foreign profits and switching to what is known as a “territorial” system would blow a hole in tax revenue, give multinationals more leeway to exploit tax havens and drive jobs overseas.

    “The territorial tax system they envision would gut the entire U.S. corporate tax code,” said Edward D. Kleinbard, a professor of tax policy at the University of Southern California. “It would lose gigantic sums of money every year.” ...

    Democrats are largely opposed to a territorial tax system, often contending that it would encourage firms to move more operations overseas, as Obama frequently argued on the campaign trail. The Obama administration has instead proposed a “global minimum tax” that would apply to income earned in any country.

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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