In an IBM proxy statement dated March 11, the company said it spent $1,033,138 for "personal use of Company autos, retirement items, office payments and administrative support, including space renovation" for the former CEO.
Office space renovation? Yep.
Turns out, IBM treats former executives extremely well. Company spokesman Edward Barbini said the funds were spent to "establish an office for a former CEO off of the IBM campus." He would not say where the office is located or why it cost about a million dollars to staff and renovate. "I have nothing further to say on it," Barbini said. ...
"Does it make any sense at all? Are you kidding me? It's an outrage. Its horrifying," said Nell Minow, a long time CEO compensation expert and board member at the analysis firm GMI Ratings. "If anybody can pay for his own office space, it's the former CEO of IBM." Minow pointed out that shareholders will see very little result from that expenditure. "What is the return on investment for that? It's nothing."
An IBM spokesman also confirmed another perk for Palmisano: A $20,000 per day consulting gig with the company. Here's how the deal is described in the company's proxy statement:
"After Mr. Palmisano's retirement, he may be asked, from time to time, to provide services to the Company as an independent contractor. The fee for such services would be $20,000 per day for each day he provides four or more hours of services and $10,000 per day for each day that he provides less than four hours. As of December 31, 2012, no consulting fees have been paid to Mr. Palmisano." ...
How long will Palmisano, who began work for the company in the early 1970s, continue to have an IBM-financed office? Apparently, as long as he wants it. The proxy statement said, "IBM has agreed to provide furnished office space with administrative support for Mr. Palmisano's use after retirement, until such time that he notifies the Company that he no longer wishes to maintain the office." ...
All told, the website Footnoted.com has estimated that the value of the former executive's total retirement package could be nearly $271 million.
"Andrzej liked to look at pretty girls," one frequent visitor recalled. "There always had to be cigars and good alcohol in his office, mainly well-aged whisky."
Computer sales executives for local companies and global giants like IBM and Hewlett-Packard had good reason to cultivate Machnacz. As senior technology officer for Poland’s national police and, later, the nation’s Interior Ministry, he set the terms for hundreds of millions of dollars in technology contracts and decided which ones should be awarded without competitive bidding. ...
Machnacz, prosecutors say, received more than a $1 million in cash and brand-name gifts in exchange for steering government contracts to the three American companies, as well as to a Polish company called Netline. According to prosecutors, the gifts included a BMW motorcycle, a Nissan SUV, a Harmon Kardon home theater, a Sony 50 inch television, 12 HP laptops, several iPads and a refrigerator.
The bribing of overseas officials is barred under the U.S. Foreign Corrupt Practices Act, and as ProPublica has previously reported, the Justice Department and Securities and Exchange Commission have stepped up enforcement of that statute in recent years. It is unclear whether federal investigators in the U.S. have begun looking at the circumstances of the Polish technology contracts.
IBM and Hewlett-Packard said in statements that they were cooperating with Polish authorities. Hewlett-Packard noted that "no current HP employees are suspects in this case," while IBM pointed out that "press reports” on the case referred to a "former IBM employee." The company said in its statement that it "believes in the highest ethical standards for its employees and is committed to the principles of business ethics and lawful conduct." ...
IBM went some lengths to tout its successful collaboration with Machnacz, featuring a Polish project in a glossy 2009 brochure that spotlighted 16 innovative technology efforts around the world. The brochure included a glowing account of how IBM had worked with Machnacz to create a network of handheld computers that gave Poland’s police instant access to a vast array of data. With a few key strokes, cops could learn whether they were dealing with a stolen car or a wanted man, the brochure said.
The portable computers "practically eliminates errors and incorrect information," the brochure quoted Machnacz as saying. Marcin Figiel, the IBM sales executive in Poland with whom Machnacz worked, proudly asserted that no other country in Europe had deployed such an advanced network. ...
Hewlett-Packard and IBM have been investigated for bribery in government contracts in other countries. ...
A year later, the S.E.C. sued IBM in federal court in Washington, D.C., alleging that the company had provided shopping bags full of cash, gifts and travel expenses to officials in South Korea and China to secure computer contracts. The S.E.C. contended that "despite its extensive international operations, IBM lacked sufficient internal controls designed to prevent or detect these violations of the F.C.P.A.," the anti-bribery law. ...
The S.E.C. and IBM had agreed to settle the case for $10 million, but Richard Leon, the federal judge overseeing the S.E.C.’s action, recently refused to approve that deal. The case is still pending.
Then I get another set of separation papers mailed to my house that say "Retirement Bridge". No mention of TMP/COBRA in these papers. I sign them.
Called the ESC, they transferred me to Fidelity to ask how to sign up for TMP/COBRA and they actually have no record of my retirement date from IBM. Although I have already set up my pension payments and order my gift from Michael C. Fina.
I received 2 booklets from IBM. One is all about my pension the other is about is Medical.
All I am worried about is the subsidized medical from IBM for 12 months under TMP/COBRA. Does IBM have to offer subsidized TMP/COBRA or are they doing this because they are such a great corporation?
Anyone else in the same situation? Thanks, Dotsy
The terms and conditions of your separation from IBM are governed by document number USHR119. One year of TMP subsidy for COBRA medical coverage is a standard feature defined in USHR119. You should be eligible for this benefit unless there was some modification to the standard benefit package in your case. Legally IBM is not required to provide TMP subsidies and they may well revoke that benefit in the future.
Tim Ringo, head of IBM’s consulting arm, IBM Human Capital Management, was quoted by Personnel Today as saying that IT giant could dismiss 75 percent of its global work force, then hire them back as contractors on an as-needed basis – a process known as crowd-sourcing.
"There would be no buildings costs, no pensions and no health care costs, making huge savings,” the magazine quotes Ringo as saying.
IBM spokesman Doug Shelton called Ringo's comments "ludicrous," saying that there are no plans to reduce IBM's head count by 75 percent and that, to Shelton's knowledge, no such plans are under consideration.
"The employee was not speaking on behalf of the company," Shelton said. "In fact, his comments run counter to IBM’s history over the last eight years of investing in its people by expanding its work force. Since 2002, we actually have increased our head count by about 80,000 people worldwide."
Mr. Newman, 27, who joined Google straight from Yale, and Brian Welle, a “people analytics” manager who has a Ph.D. in industrial and organizational psychology from New York University, led me on a brisk and, at times, dizzying excursion through a labyrinth of play areas; cafes, coffee bars and open kitchens; sunny outdoor terraces with chaises; gourmet cafeterias that serve free breakfast, lunch and dinner; Broadway-theme conference rooms with velvet drapes; and conversation areas designed to look like vintage subway cars. ...
Google lets many of its hundreds of software engineers, the core of its intellectual capital, design their own desks or work stations out of what resemble oversize Tinker Toys. Some have standing desks, a few even have attached treadmills so they can walk while working. Employees express themselves by scribbling on walls. The result looks a little chaotic, like some kind of high-tech refugee camp, but Google says that’s how the engineers like it. ...
In keeping with a company built on information, this seeming spontaneity is anything but. Everything has been researched and is backed by data. In one of the open kitchen areas, Dr. Welle pointed to an array of free food, snacks, candy and beverages. “The healthy choices are front-loaded,” he said. “We’re not trying to be mom and dad. Coercion doesn’t work. The choices are there. But we care about our employees’ health, and our research shows that if people cognitively engage with food, they make better choices.”
So the candy (M&Ms, plain and peanut; TCHO brand luxury chocolate bars, chewing gum, Life Savers) is in opaque ceramic jars that sport prominent nutritional labels. Healthier snacks (almonds, peanuts, dried kiwi and dried banana chips) are in transparent glass jars. In coolers, sodas are concealed behind translucent glass. A variety of waters and juices are immediately visible. “Our research shows that people consume 40 percent more water if that’s the first thing they see,” Dr. Welle said. (Note to Mayor Bloomberg: Perhaps New York City should hide supersize sodas rather than ban them.) ...
Allison Mooney, 32, joined Google two years ago from the advertising giant Omnicom Group, and the difference is “night and day,” she said. “I came here from the New York agency model, where you work constantly, 24/7. You answer every e-mail, nights and weekends. Here, you don’t have to show you’re working, or act like you’re working. The culture here is to shut down on weekends. People have a life.”
And the perks, she added, are “amazing.” In the course of our brief conversation, she mentioned subsidized massages (with massage rooms on nearly every floor); free once-a-week eyebrow shaping; free yoga and Pilates classes; a course she took called “Unwind: the art and science of stress management”; a course in advanced negotiation taught by a Wharton professor; a health consultation and follow-up with a personal health counselor; an author series and an appearance by the novelist Toni Morrison; and a live interview of Justin Bieber by Jimmy Fallon in the Google office.
Cons: More and more IBM employees are figuring outing being an "IBMer" stands for: "I'm Below Market." Most salaries seem to be 15-30% below market, (based on the many mid-career folks jumping ship, and peers at other companies.) The performance pay/bonus system is even worse compared to industry. Actually it couldn't get much worse unless you owed them money once a year because undisclosed "goals" weren't met. It's all about nickle and dime cost cutting, and spending a majority of company's cash flow on stock buybacks to boost earnings per share, benefiting execs and shareholders. (Note also few regular Joe IBMers get any stock or options either, also below market standards).
Cons: The staff are mostly contract workers, and the recruiting companies fighting for those jobs are awful. At one point it was CCI vs Kelly and CCI broke laws to win the contract. Kelly completely mishandled the situation, and to make matters worse, the quality of workers CCI provided was so bad, it's only a matter of time before IBM loses the Morgan Stanley contract because of IBM's HR failures. $11.35/hr is half what this job should be paying, and few of the workers on the desks are qualified to work it. The call center's main floor has the same feel and smell as a homeless shelter. The general office ambiance is toxic.
Advice to Senior Management: Resign. You're terrible. I don't care how long you've loitered in your office and done nothing. You would fail at a real company that actually requires work.
Advice to Senior Management:
The “chained CPI” would establish a new means of measuring inflation, “slowing down annual increases in Social Security and other benefits—including those for veterans, the disabled, and low-income children and their families—as well as income tax brackets,” wrote Nicole Woo of the Center for Economic and Policy Research.
Obama would be folding on a central issue of income security despite holding a handful of aces, as evidenced by a recent survey that shows overwhelming public support—across the political spectrum—for exempting Social Security from the budget-cutting games of Washington insiders. ...
This desire for higher benefits is coupled, significantly, with a willingness to pay more for them. NASI found that “Fully 74% of Republicans and 88% of Democrats agree that ‘it is critical to preserve Social Security even if it means increasing Social Security taxes paid by working Americans.’”
When presented with specific proposals, 69 percent of all respondents favored a gradual one percent increase in the Social Security tax paid by workers and employers (from 6.2 percent to 7.2 percent over twenty years), and 68 percent favored eliminating the cap on taxable income over a ten year period.
The cap, set at $113,700 for 2013, includes only wage income and exempts income from capital gains and dividends. Revenue from lifting the cap would serve to nearly wipe out projected shortfalls for Social Security, according to economist John Miller:
Lifting the cap on Social Security taxes would raise a significant amount of revenue: $1.3 trillion dollars over ten years according to the libertarian Cato Institute, and $124 billion a year according to the left-of-center Citizens for Tax Justice. Long term, lifting the payroll tax cap would just about cover the shortfall Social Security will face if economic growth slows to a snail's pace in the decades ahead, as forecast by the Social Security Administration…. According to Stephen Goss, the SSA's chief actuary, lifting the cap while giving commensurate benefit hikes to high-income taxpayers once they retire would cover 93 percent of the SSA's projected shortfall in Social Security revenues over the next 75 years. ...
The drive to begin the dismantling of Social Security—through measures like raising the retirement age to 70 and substituting the chained-CPI for raising benefits—has been led by Republicans like House Majority Leader John Boehner (although he has been backing off a bit lately) and the corporate coalition Fix the Debt, with Goldman Sachs CEO Lloyd Blankfein playing a leading role as a spokesman and member of its “CEO Council.”
The Employee Benefit Research Institute (EBRI) survey found that 10 percent of workers plan to retire between ages 66 and 69, and another 26 percent intend to put off retirement at least until age 70 — far more that planned to work that long when EBRI conducted its first retirement confidence survey in 1991.
Although many Americans are living longer and fewer are in physically demanding jobs, those plans to work longer may be unrealistic. The survey found that 47 percent of retirees left the workforce unexpectedly, largely because of disabilities, other health issues or problems at work.
At present, the largest group of workers leaves the workforce at age 62. That is when they initially qualify for reduced Social Security retirement benefits, which represents a smaller monthly amount for those who take it before hitting their full retirement age. Just 14 percent of the retirees captured in EBRI’s latest survey retired after age 65, and only one in four of them works for pay in retirement.
“The risk is that many workers as they get older cannot work for reasons beyond their control, including disability, ill health, and loss of a job and inability to get another,” said Mathew Greenwald of Mathew Greenwald and Associates, a public opinion firm that performed the survey.
Members voted 4,244-654 to accept the contract offer that includes shutting the plan to new technical workers in the unit hired after March 1, 2013. New employees will enroll in only the existing Boeing 401(k) plan but have an enhanced feature of an automatic company annual contribution of 3%, 4%, or 5%, depending on age as well as the existing 75% company match for the first 8% of pay participants contribute.
Existing SPEEA local members will continue to participate in both the Boeing defined benefit plan and the 401(k). The defined benefit plan had $56.2 billion in assets and $75.9 billion in liabilities, as of Dec. 31, said Charles Bickers, Boeing spokesman. The 401(k) plan had $36.6 billion in assets as of Dec. 31.
Interfaces need improvements. Improved connectivity and compatibility are back-end problems, but many of these same pieces of management and tracking software also involve outdated front-end interfaces. In order for doctors, nurses and lab technicians to enjoy the benefits of electronic record-keeping, they’ll need user interfaces that are clean, fast and intuitive - as well as teams of knowledgeable support staff to walk their health care experts through the initial stages of adoption. ...
In other words, familiarity with legacy systems acts as a barrier to progress - which means that health care software’s user interfaces and design conventions need to fast-forward into the user-friendly plug-and-play world of online applications like Gmail and Facebook; a world whose conventions will already be familiar even to non-expert users.
Thus, if you’re a front-end designer, a UI coder, or even a technician with a talent for learning interfaces quickly, doctors and patients are likely to benefit from your expertise.
That dire prediction, which I wrote two years ago, is already coming true. Our national demographics, coupled with indisputable glaringly insufficient retirement savings and human physiology, suggest that a catastrophic outcome for at least a significant percentage of our elderly population is inevitable. With the average 401(k) balance for 65 year olds estimated at $25,000 by independent experts – $100,000 if you believe the retirement planning industry - the decades many elders will spend in forced or elected “retirement” will be grim. ...
Corporate America and the financial wizards behind the past three decades of so-called retirement innovations, most notably titans of the pension benefits consulting and mutual fund 401(k) industries, are down-playing just how bad things are already and how much worse they are going to get.
Americans today are aware that corporate pensions have been virtually eliminated and that the few remaining private, as well as the nation’s public pensions, are in jeopardy. Even if you are among the lucky few that have a pension, you cannot rest assured that it will be there for all the years you’ll need it. Whether you know it or not, someone is busy trying to figure how to screw you out of your pension.
Americans also know the great 401k experiment of the past 30 years has been a disaster. It is now apparent that 401ks will not provide the retirement security promised to workers. As a former mutual fund legal counsel, when I recall some of the outrageous sales materials the industry came up with to peddle funds to workers, particularly in the 1980s, it’s almost laughable—if the results weren’t so tragic.
There was the “Dial Your Own Return” cardboard wheel of fortune that showed investors which mutual funds they should select for any given level of return. Looking for 12%? Load up on our government plus or option income funds! It was that easy to get the level of income needed in retirement, investors were told.
The signs of the coming retirement crisis are all around you. Who’s bagging your groceries: a young high school kid or an older “retiree” who had to go back to work to supplement his income or qualify for health insurance?
Related article: IBM Leader in Gutting 401(k)s.
As a result, like a growing number of infants, he developed a flattened head, or plagiocephaly. The fix prescribed by Bradley’s doctor — a specially-tailored helmet to coax his soft skull back into symmetry — worked, but wasn’t covered by the family’s health insurance plan.
So Morgan-Barnum, taking advantage of a little known benefit of the Affordable Care Act, is fighting back.
New rules in the health law allow consumers to seek a second opinion on care denied or delayed by their insurance plan. If appeals to their insurer fail, they can request an independent review of their coverage denial.
The reviews are meant to ensure coverage decisions are based on medical need, not just financial considerations, said Deborah Reidy Kelch, a researcher at the California HealthCare Foundation. "People want some confidence that medical professionals have looked at their case and given it a fair, unbiased review."
Only a fraction of the thousands of Utah consumers who file complaints with the state Department of Insurance seek reviews. But those who do have good odds of prevailing.
Regulators commissioned 10 reviews in 2011 and 40 in 2012, finding in favor of the patient in 40 percent and 32 percent of the cases in those years.
As we’ve said here repeatedly, America doesn’t face a Medicare crisis -- we face a national health care crisis. Rather than targeting Medicare for cuts we should be using it as the model to improve out health care system nationwide. As Brill reports:
“Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. They are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.”
Consider Time’s example of Susan S. She was 64, one year away from qualifying for Medicare, when she went to the hospital with chest pains. Her bill for 3 hours of tests and a false alarm was $21,000. If she had Medicare she would have paid less than $500. Compare her costs:
|Without Medicare||With Medicare|
|Troponin Blood Test||$199.50||$13.94|
|Complete Blood Count||$157.61||$11.02|
Time’s survey of this same hospital found that in 2010 its total charges were 11 times its actual costs. And that’s not unusual in our current private profit and even non-profit health care system.
Not only does Medicare manage these outrages costs better than the private market, Medicare’s administrative costs are two-thirds of 1% or less than $3.80 per claim. Private Insurers administrative costs run much higher. Brill reports Aetna’s for example, run 29% or $30 for each claim. ...
The health care industrial complex spends more than three times what the military industrial complex spends for Washington lobbying. Is it any wonder why so many in Congress have chosen to ignore the true system wide health care problem in favor of targeting Medicare for benefit cuts, arbitrary caps, cost-shifting, means-testing and privatization.
They know what the core problem is — lopsided pricing and outsize profits in a market that doesn’t work.
In spite of this, Congress appears ready to protect that broken health care market that is wrecking our economy in favor of targeting the program that works for cuts -- all in the name of deficit reduction. Cutting benefits to seniors in Medicare not only ignores the real challenges we face as a nation but it also threatens the health security of millions of Americans.
The new online marketplace, operated by consulting firm Aon Hewitt, a unit of Aon PLC, was used by more than 100,000 employees of Sears Holdings Corp. and Darden Restaurants Inc. (Olive Garden and Red Lobster), as well as Aon itself, to pick plans for 2013. The employers gave workers a set contribution to use toward health benefits, and they could opt to pay more each month to get richer plans, or choose cheaper ones that might have bigger out-of-pocket fees, such as higher deductibles. ...
Comment: By Don McCanne, M.D. Be prepared. Very shortly you will be hearing from the supporters of consumer-directed health plans (CDHPs) of the phenomenal success of these plans wherein you put consumers in charge of the money to be used for their health plan purchases. In the first year of this program, there has been a massive shift from more traditional preferred provider organizations (PPOs) to these CDHPs. But you have to understand why this is really terrible news.
Under the traditional employer-sponsored defined benefit health plans, the employers purchase plans for their employees, with the employees paying a percentage of the premium. If the employer offers options, the employee will often select the plan that requires a lower contribution - typically a PPO, but with enough benefits to provide some health security.
Under this newer model of employer-sponsored defined contribution health plans, the employers give a fixed amount of money to each employee to be used to select plans from these private insurance exchanges. Since the employees become responsible for 100 percent of the premium costs above the employer defined contribution, the employees have a much greater incentive to choose plans with the premiums that are closest to the amount of the employer defined contribution - typically a cheaper CDHP.
The experience in the first year alone, with this Aon-operated exchange, 23 percent of employees dropped PPOs, and 4 percent dropped HMOs, resulting in increased enrollment in CDHPs from 12 percent in 2012 to an astonishing 39 percent in 2013!
While the CDHP advocates spread the word that giving consumers control of their health insurance dollars will lower health care spending by allowing employees to "buy only the insurance that they need," they will remain silent on what really happened. They shifted risk from the employers and their insurers onto the backs of the employees. ...
Keep in mind that a minority of workers or their family members actually will face major medical events. Should that occur, these individuals, who have quite modest incomes, will be responsible for huge medical bills - bills because of the very high deductibles, high coinsurance, and all costs of out-of-network care in these plans that tend to have more limited networks.
This is a setup for personal bankruptcy. Should these CDHP-enrolled employees lose their bets and end up with major injuries or major medical disorders, a very large percentage of them will face this prospect . This is exactly the opposite of what their health care coverage should be providing. The system should ensure that financial barriers to care are removed so that patients can access the care that they need without having to face severe financial hardship.
So when the CDHP advocates tout the success of empowered health care insurance shoppers, they will be able to claim that it works really well for most workers and their families (only not for those who end up needing health care). We need to keep exposing this con job.
“Could you imagine FedEx saying to you, we’ll get your package there, but it probably would be best if you stayed with it all the way” to the destination, he said.
And he ridiculed the idea that finding the best solutions to skyrocketing health care costs requires getting all “stakeholders” on board.
“I beg you as journalists, every time you hear that, to substitute the idea of inviting a bunch of turkeys to plan your Thanksgiving meal,” he told the AHCJ lunch crowd. “You get absolutely no economic innovation, cost-saving, or disruption by talking to stakeholders. Economic disruption -- true cost-savings -- hurts stakeholders. There’s no way around it.”
Perhaps the most compelling part of his presentation was about his father, who died in 2007 after being hospitalized for pneumonia and acquiring other infections during his hospital stay. “The bill for killing my dad” came to $636,687.75. A couple of excerpts from his presentation:
I asked myself, if I put dad at the most expensive hotel in New York and filled it with hospital equipment, made a doctor spend an hour a day with him – which is about 50 minutes more than he got in the hospital – gave him round the clock nursing, and I also gave him some room service -- and some of you probably are wondering why there’s no television charge. In hotels, they don’t charge separately for television. That’s just in hospitals. The most I could get to was $155,000 and, you know, that’s basically treating dad as if he was king of Saudi Arabia. ...
The important thing is, when looking at prices in health care, remember you are looking at nothing. Fiction. Fantasy. Administered numbers. And the fact that we make decisions and that hospitals themselves often allocate resources on these prices is one of the ways the system is massively broken.
Employees who agree to this testing will see no change in their health insurance rates, but those who refuse will have to pay an extra $50 per month — or $600 per year — for the company’s health insurance program. All employees have until May 1, 2014, to make an appointment with a doctor and record their vitals.
“The approach they’re taking is based on the assumption that somehow these people need a whip, they need to be penalized in order to make themselves healthy,” Patient Privacy Rights founder Dr. Deborah Peel said.
Critics are calling the policy coercion, and worrying that CVS or any other company might start firing sick workers.
“It’s technology-enhanced discrimination on steroids,” Peel said. ...
Brad Seff, a former Broward County, Fla., employee, learned the hard way that it is legal, according to one court. Seff sued the county in April 2011 after it charged him an extra $40 per month for health insurance after he refused health screenings.
In the suit, Seff said the wellness program violated the Americans With Disabilities Act because the county was making medical inquires of its employees. Seff lost his suit. “I’m so disgusted. I moved. I left the state,” Seff told ABC News by phone.
After World War II, the United States moved toward a system of health insurance primarily accessed through employment. Then, under President Reagan in the 1980s, there was an intentional effort to create investor-owned health-care services, turn health insurance into a profit-making sector and privatize the delivery of health care in for-profit hospitals. Creating a for-profit health care system is a thirty-year experiment with clear outcomes: uncontrolled costs, growing health disparities, falling life expectancy and other indicators of poor health status, including high numbers of preventable deaths. If such an experiment were to have been conducted by a research team, ethics would have demanded that the experiment be stopped a long time ago.
The basic flaws of the U.S. system are obvious. When health insurance is tied to employment, the healthiest segment of the population (i.e. essentially those who are working) is covered. Those who cannot work, perhaps because of a serious accident or illness, lose their coverage or struggle to afford it on the individual market where the prices are higher and the coverage is skimpier. When the bottom line is profit, not health, health insurers compete to attract those who are healthy in the first place and then find ways to restrict and deny payment for care through provider networks, authorization processes and out-of-pocket costs.
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"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.
Now Paul Ryan says we can run the federal government at 19 percent of GDP as the massive baby-boom generation retires and when health costs (largely for seniors) have already soared to 18 percent of GDP.
Sorry, but Ryan is either deeply confused or doing his best to snooker us.
In the sandstorm of commentary on what’s wrong with the Wisconsin Republican’s budget, its easy to lose sight of the few central facts that should make people of all political stripes scratch their heads. The most important is that Ryan wants to shrink government precisely when we have an unavoidably costly demographic tsunami bearing down on us and when per capita health costs have spiraled. (These costs must be challenged, but the medical industrial complex’s current level of loot has to be the starting point for the debate.)
In 1989, when President Reagan left office, there were 34 million people on Medicare and 39 million on Social Security. In 2025, according to these programs’ trustees, there will be 73 million on Medicare and 78 million on Social Security.
This is not happening because we’re stringing up the “hammock of dependency” that Ryan often invokes. It’s happening because our famously big postwar birth cohort is getting older.
Ryan obviously knows these facts. This means he’s disingenuously trying to use the aging of America to force a severe cutback in the non-elderly, non-defense portion of government, which is already headed toward historic lows as a share of GDP. ...
An unbalanced budget is math. It means that spending is greater than revenue. We could balance the budget at 19 percent of GDP, or at 15 percent, or at 25 percent. It’s refreshing that after years of make-believe, Ryan has finally decided to take a stab at becoming a fiscal conservative (though even his plan’s magic asterisks have magic asterisks — quite a feat). But the level of spending and taxes at which we fiscal conservatives seek to balance the budget depends on what we want government in an aging America to do.
At 19 percent, Ryan’s vision is an America with 50 million uninsured ... forever. Of infrastructure and R&D investment that trails other advanced nations ... in perpetuity. Of a nation that assigns its least effective teachers to poor children . . . permanently. (Amazingly, Senate Democrats have fallen prey to Ryan’s gravitational pull, with the budget they put out Wednesday coming in at 21.7 percent of GDP in the years ahead, a tad below Reagan-era spending.)
Since then, his budgets have gotten even flimflammier. For example, at this point, Mr. Ryan is claiming that he can slash the top tax rate from 39.6 percent to 25 percent, yet somehow raise 19.1 percent of G.D.P. in revenues — a number we haven’t come close to seeing since the dot-com bubble burst a dozen years ago.
The good news is that Mr. Ryan’s thoroughly unconvincing policy-wonk act seems, finally, to have worn out its welcome. In 2011, his budget was initially treated with worshipful respect, which faded only slightly as critics pointed out the document’s many absurdities. This time around, quite a few pundits and reporters have greeted his release with the derision it deserves.
Banks, including JPMorgan Chase, Goldman Sachs and Morgan Stanley, all have provisions that allow acceleration of payments owed to senior executives if they take government jobs, a new study finds.
Such a benefit was highlighted recently during the confirmation hearing for Jacob J. Lew as Treasury secretary. His previous employer, Citigroup, had guaranteed him preferential financial treatment if he were to leave to take a job in the government. When Mr. Lew left Citigroup he held stock that he could not immediately cash worth as much as $500,000, according to a government filing.
“These companies seem to be giving a special deal to executives who become government officials,” says the study, to be released Thursday by the Project on Government Oversight. “In exchange, the companies may end up with friends in high places who understand their business, sympathize with it, and can craft policies in its favor.” ...
The debate has heated up recently as top officials from the Securities and Exchange Commission leave for new jobs, possibly on Wall Street, while the White House has nominated Mary Jo White, a lawyer who has represented Wall Street firms, to run the S.E.C.
Since 2007, the agency has settled numerous charges of bankster wrongdoing, but agreed to a “no press release” clause in the settlement agreements, so the big banks have avoided public scrutiny. A spokesman for the FDIC said they only announce the settlements “when damage payments are large and media interest [is] intense.” However, the FDIC didn’t announce a $54 million settlement with Deutsche Bank for causing the collapse of of The Independent National Mortgage Corporation, known as IndyMac. ...
It’s time to hold the banksters accountable. If too-big-to-fail means too-big-to-jail, then break up the banks and charge the banksters for their crimes.
Peter Peterson, the Wall Street investment banker, has been most visible in this effort, committing over $1 billion of his fortune for this purpose. Recently he enlisted a group of CEOs in his organization, Fix the Debt, which quite explicitly hopes to divert concerns over income inequality into concerns over generational inequality. It argues that programs like Social Security and Medicare, whose direct beneficiaries are disproportionately elderly, are taking resources from the young.
It is easy to show the absurdity of this position. The amount of money that the young stand to lose from the upward redistribution of income is an order of magnitude larger than whatever hit to their after-tax income they might face due to the continuing drop in the ratio of workers to retirees. Also, older people generally have families. This means that when we cut the Social Security or Medicare benefits of middle and lower income beneficiaries we are often creating a gap that will be filled from the income of their children.” ...
The real problem is this “game plan” will be devastating for America’s young people. The wealthy corporate “generals” of this generational warfare strategy claim to be “saving” the social safety net for future generations. In truth, it’s America’s young people who will face the biggest benefit cuts if they buy into this campaign. The fact is, the Recession Generation will need Social Security and Medicare just as much, if not more than the parents and grandparents these wealthy CEO’s are trying to demonize. ...
Social Security and Medicare aren’t the problems. However, rising income inequality and Washington’s economic policies which have shifted income away from middle-class families (including the young and old alike) to America’s millionaires and corporations are the problems. That’s why groups like Fix the Debt, the Business Roundtable, the Peterson Foundation and the rest of Washington’s massive corporate lobby have made such a huge investment in slick messaging campaigns to convince America’s young people to focus on their grandparents’ $14,000 Social Security benefit rather than the trillion dollars in tax breaks and loopholes enjoyed by our nation’s wealthiest.
This is even before they've started budget negotiations with Republicans -- who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers' "carried interest"), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions.
It's not the first time Democrats have led with a compromise, but these particular pre-concessions are especially unwise.
For over thirty years Republicans have pitted the middle class against the poor, preying on the frustrations and racial biases of average working people who can't get ahead no matter how hard they try. In the Republican narrative, government takes from the hard-working middle and gives to the undeserving and dependent needy.
In reality, average working people have been stymied because almost all the economic gains of the last three decades have gone to the very top. The middle has lost bargaining power as unions have shriveled. American politics has been flooded with campaign contributions from corporations and the wealthy, which have used their clout to reduce marginal tax rates, widen loopholes, loosen regulations, gain subsidies, and obtain government bailouts when their bets turn sour.
Now five years after the worst downturn since the Great Depression and the biggest bailout in history, the stock market has recouped its losses and corporate profits constitute the largest share of the economy since 1929. Yet the real median wage continues to fall -- wages now claim the lowest share of the economy on record -- and inequality is still widening. All the economic gains since the trough of the recession have gone to the wealthiest 1 percent of Americans; the bottom 90 percent continue to lose ground.
What looks like the start of a more buoyant recovery is a sham because the vast majority of Americans have neither the pay nor access to credit that allows them to buy enough to boost the economy. Housing prices and starts are being fueled by investors with easy money rather than would-be home buyers with mortgages. The Fed's low interest rates have pushed other investors into stocks by default, creating an artificial bull market.
However, all of that doesn’t mean the proposal Ryan spearheaded is unimportant, nor does it mean that there are no worthwhile analyses to explain that significance. On the contrary, the proposal is quite important because it endorses an economic war waged by the upper class against everyone else. Two simple studies make this war painfully obvious. ...
As that watchdog group shows, the allegedly “pro-growth” GOP proposes no big cuts to corporate welfare or other subsidies that enrich the already rich. Instead, the party proposes that 66 percent of the cuts come from “programs that serve people of limited means.” Yes, that's right—the “pro-growth” GOP is proposing to primarily cut the programs that reduce economic inequality and, thus, spur economic growth.
Where do much of the savings generated from those cuts go? That gets us to a report by Citizens for Tax Justice. The nonpartisan group discovered that after a decade of trickle-down tax cuts delivered more economic inequality and historically weak macroeconomic growth, the GOP is now proposing a budget whose centerpiece is a proposal to give those with an “income exceeding $1 million (an) average net tax decrease of over $200,000.” ...
Supercharged as it is, that phrase—class war—is appropriate and accurate. As the data prove, the GOP and its financiers are so committed to a class war that the party is willing to put forward a budget proposal that quite clearly preferences fighting that war over doing what’s actually necessary (read: addressing inequality) to fix the economy.
Preacherlike, the president draws the crowd into a call-and-response. "Do you think the millionaire ought to pay more in taxes than the bus driver," he demands, "or less?"
The crowd, sounding every bit like the protesters from Occupy Wall Street, roars back: "MORE!"
The year was 1985. The president was Ronald Wilson Reagan.
Today's Republican Party may revere Reagan as the patron saint of low taxation. But the party of Reagan – which understood that higher taxes on the rich are sometimes required to cure ruinous deficits – is dead and gone. Instead, the modern GOP has undergone a radical transformation, reorganizing itself around a grotesque proposition: that the wealthy should grow wealthier still, whatever the consequences for the rest of us.
Modern-day Republicans have become, quite simply, the Party of the One Percent – the Party of the Rich.
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