Tim Ringo, head of IBM Human Capital Management, the consultancy arm of the IT conglomerate, said the firm would re-hire the workers as contractors for specific projects as and when necessary, a concept dubbed 'crowd sourcing'.
"There would be no buildings costs, no pensions and no healthcare costs, making huge savings," he said. ...
When asked how many permanent people IBM could potentially employ in 2017, Ringo said: "100,000 people. I think crowd sourcing is really important, where you would have a core set of employees but the vast majority are sub-contracted out."
He stressed the firm was only considering the move, and was not about to cut 299,000 jobs, as staff would be re-hired as contractors. ...
Bernard Brown, head of business services at consultancy KPMG, warned firms should be wary of the "enormous" HR issues at stake.
"How do you encourage these people to stay working with you? The retention issues are huge. Staff morale could also be affected."
Other problems included the contractors not always being available when firms needed them, and the quality of work suffering. ...
However, an IBM spokesman denied the firm was about to shrink its permanent workforce by three quarters in seven years.
He said: "The comments are without merit. This was pure speculation about future job movements without any basis in fact. In fact, the comments run counter to IBM's history of growing its global workforce over each of the last eight years."
Reduction in real pay from bonuses earned, lowered rating, increased "results demand" even if you the employee have no way to affect the ratings.
I cannot speak to what other companies are doing but listening to employees in other companies, things are no different. We are commodities and there is another cog waiting to be employed if I don't want to do the work for what they are willing to give.
They joke now, with the $300 million machine running, but in late in 2011, some feared that the Blue Waters project was circling the drain.
A big, $72 million building sat mostly empty waiting to house Blue Waters as IBM, the original builder, pulled out after essentially concluding it couldn't build and maintain the machine and make money doing it. A new builder had to be found, and fast, to stay within the timeline preferred by the primary financier, the National Science Foundation.
"We knew many of those people -- we knew that when they made this announcement that jobs were at risk, their role in national science computing was at risk," said Barry Bolding, vice president of corporate marketing at Cray Inc. The company, known for building supercomputers, took over after IBM backed out. ...
The NSF awarded the contract to the university and IBM, and agreed to provide most of the money, just over $200 million. The university contributed $100 million.
When IBM pulled out, about $160 million had already been spent. And the NSF's deadline to have the computer in the building by the fall of 2012 was still very much in place. "It was very, very dicey," Kramer said.
The manager unhesitatingly answered “No” to both. He hastily added, “But you can be sure that we at IBM work very hard to protect our core intellectual property.”
This episode could occur at any of the many U.S. corporate facilities in China. It highlights an underreported feature of recent cyberattacks: Much of China’s hacking power was Made by the U.S.A.
For decades, U.S.-owned technology giants have set up state-of-the-art factories, laboratories and training programs in China. Their aim was to use a super-cheap, lightly regulated production base to supply Chinese and world markets, and to harness Chinese scientific talent. Greater profits were the top priority, but the companies also claimed that a more computer- and Internet-savvy China would become more peaceful and democratic. ...
IBM also runs a China-based Global Rail Innovation Center that “focuses on every aspect of modern rail systems, such as track surveillance and infrastructure.” Undoubtedly, that knowledge could help disrupt U.S. transportation networks. IBM also has sold a wide range of advanced hardware and software to Huawei Technologies Co., whose reported extensive ties with the Chinese government and military led the House Intelligence Committee to brand it a national security threat.
Finally, U.S.-owned companies have nurtured Chinese talent. As of 2010, Cisco was on track to build 300 of its acclaimed Networking Academies to train 100,000 Chinese students, and planned to use its curriculum to build 35 Model Software Colleges with the Education Ministry. IBM has created partnerships with more than 60 Chinese universities, and Intel is working with Chinese schools to develop their “research program and talent pool.” Texas Instruments Inc (TXN).’s worldwide Leadership University includes two leading Chinese technical institutions. ...
Before China’s cyberoffensive, U.S. companies could legitimately argue that they, and America, would be enriched by technological engagement. The new security threats, however, now trump any plausible economic benefits. Doing business with China can continue. Business as usual can’t.
You may be aware that some large U.S. corporations have chosen to pay billions of dollars to position for voluntary terminations of management pension plans. Companies may pass their plan assets and liabilities on to large financial firms and insurance companies in return for a commitment to pay the accrued full monthly plan benefit as an annuity payment to plan participants. Such plan terminations are called Standard Terminations as opposed to Distress Terminations where the Pension Benefit Guarantee Corporation (PBGC) as the ultimate insurer of defined benefit pension plans ends up paying pension payments, usually less than paid if a plan were not terminated.
In Standard Terminations, plan sponsors are able to reduce future corporate pension plan funding obligations and are able to significantly reduce balance sheet liabilities and thus enhance their ability to borrow funds more cheaply. If a company is weak financially, pension plans could fall prey to a Distress Termination because of a bankruptcy proceeding. Retirees might feel more secure with an annuity payment resulting from a Standard Termination, rather than risk having to take a lower payment in a Distress Termination.
This sounds straightforward and, for some, it is. However, companies are looking for new ways to implement Standard Terminations, encouraged by a number of firms who counsel pension plan sponsors in ways to tailor such terminations that could work against current and future retirees. These annuity guarantors are highly motivated to sell companies new termination ideas, and their payoff comes only if and when a plan is terminated.
The NRLN is concerned about the variable latitude that is being taken by companies in what has become known as "de-risking" of pension plans. Or, as one NRLN member has termed it "risk shifting" to retirees.
General Motors was the first large U.S. corporation to recently de-risk its management pension plan. GM voluntarily terminated its plan but offered a lump sum payment option to a select group of participants and advised all other participants that they had no choice but to accept an annuity payment from Prudential Insurance Company. The GM management pension plan was terminated. GM negotiated added annuity protection in its agreement with Prudential.
At about the same time, Ford offered a lump sum pension buyout but only to select retirees. Ford did not take action to execute a Standard Termination. Most recently Verizon did not terminate its pension plan but instead shifted part of its plan assets and liabilities to Prudential to satisfy its plan obligations but only offered annuities to a select subset of management retirees. It's not clear that Verizon negotiated added protection as did GM.
The Employee Retirement Income Security Act (ERISA), the law that prescribes defined benefit pension plan protections, does allow for Standard (and Distress) Terminations but is vague as to what protections there might be when plan sponsors choose to expand the boundaries of execution of a Standard Termination to include what could be discriminatory selections or exclusions and / or the exhaustion of assets through lump sum payouts that can weaken a plan's asset base over time.
Verizon retirees have filed a lawsuit against the company on a variety of claims. Among them are claims that assert Verizon should not have terminated its obligation to select retirees only, and that the retirees selected lost protection of the Pension Benefits Guaranty Corporation (PBGC) insurance mechanism should Prudential ever fail to make good on annuity payments while others not selected continue to benefit from the PBGC's insurance protection.
It is not clear how long it will take to litigate the Verizon case or what the outcome might be. It is even less clear that the outcome would apply, win or lose, to another case involving another twist or two by the pension plan sponsor. Advocating changes to ERISA that would define Standard Termination protections may be the only solid solution.
At the NRLN's Annual Meeting in Washington, D.C., presentations were made on February 5th about "de-risking" by Michael Calabrese, NRLN legislative adviser and preparer of a number of our Income Security white papers, and Curtis Kennedy, one of the attorneys representing Verizon retirees. After hearing the presentations, the NRLN Board has reached the conclusion that the NRLN should conduct an exhaustive analysis of "de-risking" to determine what, if any, regulatory or legislative actions the NRLN should consider and prepare a white paper with our proposals. Michael has agreed to work with a committee of NRLN Retiree Association leaders and write the white paper.
Our existing white papers have been funded as Special Projects and most of our Retiree Associations and Chapters have agreed once again to provide a one-time special contribution toward funding that will be used to determine what, if any, regulatory or legislative action we should take to begin advocating those reforms with federal agencies and / or members of Congress. Michael has been commissioned to the start the project immediately so that we may complete it by July 1, 2013.
Our objective is to ensure that retirees receiving defined benefit pensions will not be harmed by a conversion to lump sum buyouts or the purchase of annuities. You will be notified when the white paper has been completed and posted on the NRLN website at www.nrln.org.
Bill Kadereit, President, National Retiree Legislative Network
Cons: IBM's senior management and executive staff's focus on the so-called 2015 plan (US$20/EPS), and so-called shareholder value and the policies resulting from that reinforce the view within the engineering community of IBM's lack of care about its employees; 2012's change in (IBM US) 401K policy is merely the latest in a long line of insults to its employees; shareholders love IBM; almost no employee I speak with enjoys working at this company.
What do we (rank-and-file) employees see? We see an executive staff that has increased their options and share ownership (reducing income tax bite) while non-executive staff have not seen the increases in pay (or other compensation) and an increasingly brutal culture that shows blatant disregard for these same employees while paying mere lip service to the idea of a positive culture.
Advice to Senior Management: At least strive for integrity: if you are going to maintain that you are going to be a shareholder-driven company, then stop claiming that you are creating a culture that values employees (and these latest exercises of mandatory "Jams" are so reminiscent of "Office Space" as to consider the executive team that thought them up to be hopelessly out of touch with their workforce).; if, on the other hand, you are going to create a company that values its employees and client relationships, then, that needs to be followed through with finances: increases in resources (i.e., more employees), increases in salaries, returning benefits lost over the past decade, etc.
Cons: Absolutely no opportunities for US employees. Constant layoffs. Constant THREAT of layoffs. Bogus evaluation system to move US employees out of the business and not give raises or bonus. Forced evaluation skews that managers must adhere to or else.
Layoffs every year, sometimes twice a year. I've seen folks get laid off, but are extended to meet customer demand. Threat of no severance if employees don't comply.
HR is totally useless. The employee services center is the go-to place for employees to get HR answers (except for Fidelity Services) The ESC center is of course offshored someplace and give out wrong answers and read from a script. HR Partners in the US are only for management team and to help make a case against employees.
GBS is body shop and once your skills aren't needed, you're out the door. Don't make your utilization target (through no fault of your own), you'll get a 3 performance rating. Get two of those and bye-bye.
Advice to Senior Management: The senior executive team is decimating the U.S workforce. Executives bonus are calculated on profit. Employees on revenue. Executives have 'contracts' and a different retirement. It's a RARE executive that gets laid off. The lower band executives kowtow to the higher bands. The senior executives say Jump! and the lower bands say how high. The senior executive team is decimating the U.S workforce. Executives bonus are calculated on profit. Employees on revenue. Executives have 'contracts' and a different retirement. It's a RARE executive that gets laid off. The lower band executives kowtow to the higher bands. The senior executives say Jump! and the lower bands say how high.
The senior execs are cleaning up like bandits. They won't change until this once great company is beaten into the ground. Read "I, Cringley" take on IBM.
Cons: I have never worked at a company that has so little respect for their employees. Nothing you do is ever enough and as an IT person, we are held accountable to meet expectations from the business, who changes their requirements daily, with no change control and no pushback from IT leadership.
I haven't spoken to the person who I am told is my manager in over 4 months (until I recently SameTimed him to let him know that I cannot work 24 hours a day). At IBM, you have managers on paper, but zero leadership or direction. Any direction you receive is at the project level and not at an HR level. You are just a tool, a soldier, and expected to work harder and harder, for less and less of a reward as the execs continue to line their pockets with bonuses for record profits (which do not trickle down in ANY way to US employees).
I'm sure the reviews are skewed higher by employees from other countries which IBM is heavily investing in.
In addition, you might see lots of jobs out there, so that it appears IBM is hiring. This is NOT true. They are trying to hire people in at lower salaries to do the same work, and will expect you to work from a "delivery center", so that they can lay off a loyal tenured employee who remembers how things used to be. Before considering a job at IBM, search the web for IBM employee comments. There are a few websites out there devoted to it, although I am not sure if I am allowed to list them here.
Advice to Senior Management: It's too late, management has no interest in hearing from their employees. The laughable "JAM" that recently happened (which we were ordered to sign up for) was basically just a pep rally talking about how they can get more business and how great everyone's IBM manager is...and how ethical the company is and how great their values are. It reminded me of some churches I belonged to growing up.
Cons: IBM efforts to reduce expense cost means the staff are increasingly meeting the day to day costs of the business i.e. self funding cell phones, stationary, some client hospitality. Working for IBM costs the employees money. Expenses are difficult to claim and are often rejected even when completely legitimate.
Long work hours are expected. Some offices are in a poor state of repair and require attention (dirty carpets, broken chairs, broken phones, data ports not functioning, leaking ceilings, broken elevators).
Processes are difficult and prohibitive making the working day painful and frustrating. Sales staff are driven in an unacceptable manner to achieve quarterly goals. Clients are now being driven in the same way to do deals.
Corporate Money being diverted to growth markets and mature markets are having most back office functions outsourced to Asia/S America etc. The consequence is day-to-day business operations for USA and Europe is now more projected and onerous having moved out of the host country. Clients are also finding this a challenge too.
Advice to Senior Management: They know what they should be doing.
Yes, retirement savers get a pretty nice carrot to incentivize saving in the form of tax deferral and company matches. But they also get a huge stick alongside it: punitively high fees.
The Wall Street Journal reviewed comparative data and came up with the best characteristics of a well-run, affordable 401(k) plan.
Total expenses, they concluded, should come to less than 1% and hopefully no more than 0.75%. Target-date funds, the kind that automatically change to lower-risk investments as a worker gets older, should cost less than 0.6%.
It is appropriate to judge an industry, including the retirement planning industry, by the results it produces. Any fair assessment must conclude that, as measured by the anemic financial stability it has produced, the retirement planning industry is an utter failure. You can blame workers for not saving enough, or not making the best asset allocation decisions, but the industry has known for decades what it was doing, wasn’t working. The writing was on the wall but, as long as fees were rich, the industry couldn’t have cared less. The band played on. ...
Today there is wide belief that our Social Security system is challenged, or even poised for failure. It seems to be macho to say that one is not counting on Social Security being around in their retirement years. Don’t need it- don’t want it, seems to be the very definition of self-reliance. Hopefully, these financial cowboys who say they don’t need or want Social Security are rightly predicting their financial futures. Chances are they aren’t.
Truth be known, the overwhelming majority of elderly Americans have little but Social Security to depend upon and, like it or not, Social Security is the most certain source of retirement income available at this time. Sure, the U.S. Government may be, or become, insolvent but remember, it was Uncle Sam that bailed out Wall Street five years ago.
If Social Security collapses, given the large number of Americans dependent upon it for basic, minimum sustenance, USA collapses. It’s that simple.
Do Americans want more Wall Street involvement in their retirement plans, as Wall Street and the elected officials it supports would have you believe? Is there really a groundswell of opinion that letting Wall Street get its hands on more of America’s savings is the one solution to any weakness in our limited safety net, Social Security? ...
If we were to allow Americans to pay more into Social Security to enhance their benefits upon retirement, I firmly believe that there would be a run on Wall Street. If you could buy more Social Security income upon retirement, say another $1,000 a month, would you do it– assuming the pricing was fair? I would. Maybe you’d rather trust Goldman Sachs or Merrill Lynch to care for you when you’re old and weak.
The national debate about Social Security and the need to reform our existing retirement system has been framed by special interests that seek ever greater profits from problems they have created or, at a minimum, exacerbated. Building and then playing upon fears about the Social Security system at a time when more Americans than ever are poised to depend upon it is, in my book, the very definition of evil. You shouldn’t be ashamed to say you’re counting on Social Security anymore than saying you’re counting on electricity, water or roads in retirement—they’re all part of our social compact, if you will.
“One of the biggest economic challenges facing our nation is the need for more qualified, highly-skilled professionals, domestic and foreign, who can create jobs and immediately contribute to and improve our economy,” wrote more than 100 technology executives in a letter dated March 14. ...
The letter said four high-tech companies alone – IBM, Intel, Microsoft and Oracle – have combined 10,000 openings in the United States.
Oh sure, there was plenty to do — foursomes of bridge and long weekend fishing trips. Perhaps for the more privileged — a beach house, a houseboat, that long-delayed trip to Mexico City.
No mas. ...
"Today's 60-year-old might reasonably plan to work at least part-time for another 15 years," Hannon says. "That changes the entire definition of retirement today and what it really means. For many retirees, working in retirement is quickly becoming a new stage in career progression."
People grow a lot when they are faced with their own mortality. I learned never to underestimate someone's capacity for growth. Some changes were phenomenal. Each experienced a variety of emotions, as expected: denial, fear, anger, remorse, more denial and eventually acceptance. Yet every single patient found peace before departing. Every one of them.
When questioned about any regrets they had or anything they would do differently, common themes surfaced. Here are the most common five...
I wish I didn't work so hard. This came from every male patient I nursed. They missed their children's youth and their partner's companionship. Women also spoke of this regret. But as most were from an older generation, many of the female patients had not been breadwinners. All of the men I nursed deeply regretted spending so much of their lives on the treadmill of a work existence.
If that is a goal beyond the grasp of the existing system, then it needs to be finally swept aside in favor of something that will meet those needs.
The most valid critique of the law, better known as Obamacare, is that it does not do enough to reduce, or even retard, increases in the cost of health care across the board. That, in furtherance of its humanitarian goal of catching up to every other industrialized nation by providing near-universal health care, it does too much to increase the cost of that coverage to individuals, employers and taxpayers. ...
But this is, or should be, the private health insurance industry’s last chance. If Obamacare fails, a return to the cold-hearted free market is not a realistic or humane choice.
An entity with the chops to bargain down the actual cost of care is necessary. At the very least, a robust public option, an idea President Obama bargained away in the creation of the ACA, must be provided. Better still would be a single-payer plan — Medicare for all.
Despite its modest benefits, the ACA does not resolve these problems. In many ways it exacerbates them. ...
When it comes to health care needs in the United States, we must keep our eye on the prize. The fact remains that nothing short of a public, national single-payer health program will be able to control costs, guarantee access to all, improve the quality of care and protect the vulnerable.
Yes, the movement that wins health care for all will need to draw lessons from the great social movements of the past. Yes, real health reform will give new impetus to our nation's democracy. Peddling private health insurance policies to the working poor will not get us there.
It is, by now, so well known as to be almost a cliche: Obamacare is unpopular even though most of its major provisions are highly popular. But this Kaiser poll adds to our understanding. What you’re seeing in those long blue lines at the bottom is that Obamacare’s least popular elements — the individual mandate, the employer penalty — are also its best known. And some of its most popular elements — closing the Medicare Part D “donut hole,” creating insurance exchanges, extending tax credits to small businesses — are its least well known.
Steven Brill’s recent Time cover story clearly detailed the predatory health care pricing that has been ruinous for many rank-and-file Americans. In Brill’s report, a key mechanism, the hospital chargemaster, with pricing “devoid of any calculation related to cost,” facilitated US health care’s rise to become the nation’s largest and wealthiest industry. His recommendations, like Medicare for all with price controls, seem sensible and compelling. But efforts to implement Brill’s ideas, on their own, would likely fail, just as many others have, because he does not fully acknowledge the deeper roots of health care’s power.
He does not adequately follow the money, question how the industry came to operate a core social function in such a self-interested fashion or pursue why it has been so difficult to dislodge its abuses. For that, we need to turn our attention to a far more intractable and frightening problem: lobbying and the capture of regulation that dictates how American health care works.
It is hardly a coincidence that, in 2009, as Congress cobbled together the Affordable Care Act (ACA), more than 4,500 health industry lobbyists, eight for every member of Congress, delivered more than $1.2 billion in campaign contributions in exchange for influence over the shape of the law. Framed against an annual $2.8 trillion national health care expenditure, this paltry investment will deliver massive returns for decades.
The industry wanted two things in the reform law: to increase the number of Americans with publicly financed health coverage and to neutralize health care cost containment efforts. Its lobbyists, tasked with spinning every relevant legislative bill and regulation to advantage, achieved both to a breathtaking degree.
At the heart of the health insurers’ retelling of the Chicken Little story is a regulation promulgated by the Department of Health and Human Services a few months back limiting what a health insurer can charge a 64 year old to three times what they charge a 21 year old. Currently, the average bump for older participants is typically five times that of the younger customers—although there are examples where the increase can reach ten times what is paid by the young immortals buying coverage. ...
Now, The Urban Institute—an organization so clearly bi-partisan that even the most suspicious partisan would encounter extreme difficulty making a case for bias—is out with a study that states that the ‘rate shock’ argument is “unfounded”, particularly when applied to the millions of Americans in the individual market. ...
While any new law as significant as the Affordable Care Act creates questions and concerns, the false campaign being waged by the health insurance companies is a prime example of an industry using fear as a tool to get the government to change a regulation that they don’t like. ...
As The Urban institute study makes crystal clear, the ‘rate shock’ controversy has far more to do with insurance company lobbying efforts and far less to do with the reality of what health insurance will cost for millions of young Americans.
Shifting to health plans with higher deductibles and savings accounts is supposed to help workers become more cost-conscious in choosing health care. But the extent to which this is occurring is unclear.
An analysis by the Robert Wood Johnson Foundation that synthesized research findings on consumer-driven health plans (another term applied to plans with relatively high deductibles and a consumer spending account) found that, on average, they reduced total health-care spending by 5 to 14 percent.
The reductions were concentrated among healthier enrollees and were mainly due to lower spending on prescription drugs and outpatient care. Results were mixed on whether people in such plans cut back indiscriminately on both necessary and unnecessary care, as earlier research has found.
The IFHP just released the data for 2012. And yes, once again, the numbers are shocking.
This is the fundamental fact of American health care: We pay much, much more than other countries do for the exact same things. For a detailed explanation of why, see this article. But this post isn’t about the why. It’s about the prices, and the graphs.
Editor's note: One of the 21 graphs is shown here:
Consumer Reports compared drug prices for five blockbuster drugs that have recently gone generic, including heart drugs Lipitor and Plavix, finding that Costco offered the lowest retail prices overall and CVS charged the highest. The report is available wherever magazines are sold and online at www.ConsumerReports.org. ...
Some price comparisons:
That’s the whole goal in the world of widget sales — selling more widgets — but it’s not the same aim for the health-care system. At GE, Galvin knew more widgets just meant higher health insurance spending.
GE could go to insurers and demand they change their payment models. It is, after all, the country’s sixth-largest company. That’s not a contract that a health plan wants to lose, but it still doesn’t have the clout of large government programs, like Medicare and Medicaid, which cover millions of Americans. Because of that, both have been able to launch more aggressive programs that require doctors’ performance to factor into their paychecks.
Largely overlooked in these discussions has been the elephant in the room: the extraordinarily high prices Americans pay for health care. However, as a group of us noted in a paper in 2004, “It’s the Prices, Stupid,” it is higher health spending coupled with lower – not higher — use of health services that adds up to much higher prices in the United States than in any other member nation of the Organization for Economic Cooperation and Development. Aside from a few high-tech services, Americans actually use less health care and rely on fewer real health-care resources than do residents of other industrialized countries.
The research letter in the March 28 issue of the journal found this number to vary significantly across the country and to be lower in places with less restrictive eligibility criteria for Medicaid, the federal-state insurance program for low-income citizens.
Authors found that people with incomes between 67 percent and 127 percent of the federal poverty line, which is $23,550 for a family of four, had up to a 16 percent chance of delaying care. The odds went up to 42 percent for those with lower incomes.
The findings come at a time when states are deciding whether to pursue the Affordable Care Act’s Medicaid expansion, which would extend eligibility to adults with incomes at or below 133 percent of the poverty level.
Norfolk, Mass., with a 6.5 percent prevalence of adults delaying care, was at the opposite end of the spectrum from Hidalgo, researchers said. Massachusetts’ adoption of state health reforms since 1990, including Medicaid expansions, and the state’s history of investing in health care were likely reasons, said one of the authors, Dr. Cheryl Clarke from Brigham and Women’s Hospital in Boston.
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
The U.S. is nearly the most wealth-unequal country in the entire world. Out of 141 countries, the U.S. has the 4th-highest degree of wealth inequality in the world, trailing only Russia, Ukraine, and Lebanon. ...
A can of soup for a black or Hispanic woman, a mansion and yacht for the businessman. That's literally true. For every one dollar of assets owned by a single black or Hispanic woman, a member of the Forbes 400 has over forty million dollars.
Solving these and other problems – low and stagnant wages, reduced health care and retirement benefits or no benefits at all, fewer hours, reduced job security, and, if Republicans get their way, substantially less social insurance – won’t be easy. To be successful, we must make jobs our top priority.
Instead, our focus has been on the debt, but all of the hand wringing over the debt and the future of our children is a ruse by Republicans that diverts our attention from the plight of the working class. As I explained a few weeks ago, we can pay our bills. If we have problems, it will be because of the politics surrounding the debt, the political brinksmanship conservatives have used in pursuit of ideological gains, not the economics. If reducing the debt was the true goal of Republicans, then tax increases would be on the table. Republicans see the large debt, much of which was caused by the recession, as a golden opportunity to reduce the size of government and, by extension, to reduce the chance that high-income households will have to pay higher taxes to support social programs, the overriding political goal. ...
But more broadly the indifference of both parties to the problems of the unemployed – the failure to take any real action to help after it became clear the initial stimulus package was far, far from enough – speaks to the lack of political power of the majority of people in the U.S. today. Money talks loudly in Washington, and there was a time when unions gave the working class a voice that could be heard. That voice has faded with the demise of unions, and – as people often complain – Washington is not as responsive to the needs of the vast majority of households as it ought to be. Unless Democrats can remember who they are supposed to represent without the “memory aid” provided by powerful, well-funded unions, it’s hard to see how that will change.
Economist James Galbraith calls this the “predator state,” one in which large corporate interests rig the rules to protect their subsidies, tax dodges and monopolies. This isn’t the free market; it’s a rigged market.
Wall Street is a classic example. The attorney general announces that some banks are too big to prosecute. Despite what the FBI called an “epidemic of fraud,” not one head of a big bank has gone to jail or paid a major personal fine. Bloomberg News estimated that the subsidy they are provided by being too big to fail adds up to an estimated $83 billion a year. ...
But true conservatives are — or should be — offended by corporate welfare as well. Conservative economists Raghuram Rajan and Luigi Zingales argue that it is time to “save capitalism from the capitalists,” urging conservatives to support strong measures to break up monopolies, cartels and the predatory use of political power to distort competition. ...
Camille Moran, president and chief executive of Caramor Industries and Four Seasons Christmas Tree Farm in Natchitoches, La., rails against the “Wall Street wheelers and dealers.” They knew, she argues, that they “ would get no sympathy saying that ending the high-income Bush tax cuts would hurt them, so instead they pretend it would hurt Main Street small business and employment. Don’t fall for it. . . . That’s a trillion dollars less we would have for education, roads, security, small business assistance and all of the other things that actually help our communities.” ...
Polls show these aren’t isolated views. The ASBC, the Main Street Alliance and the Small Business Majority sponsored a poll by Lake Research of small business owners. Ninety percent believe “big corporations use loopholes to avoid taxes that small businesses have to pay,” and three-fourths said their own businesses suffer because of it.
A Washington Post analysis of data compiled by Capital IQ found that in the late 1960s and early 1970s, companies in the current Dow 30 routinely cited U.S. federal tax expenses that were up to half of their worldwide profits. Now, most are reporting less than half that amount.
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.”
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