You Know We Got To Stick Together, Part 2
So DO they feel our pain?
Rep. Jo Ann S. Davis (R-Va.) has introduced a bill that would require the Office of Personnel Management to study options for enhancing dental and vision benefits and produce a report by June 30. Davis, chairman of the House civil service subcommittee, also held a hearing on the issue Tuesday afternoon, the first in years, and appeared to forge a consensus that it's time to rethink coverage in the two areas. "I think it is a black mark against the federal government that its current dental and vision offerings are so meager," Davis said. She added: "Nearly every mid-size or large private sector firm offers fairly generous dental care. Federal employees understand this disparity."
And surely, no one else does?
Reps. Thomas M. Davis III (R-Va.), chairman of the House Government Reform Committee, and Danny K. Davis D-(Ill.), the ranking Democrat on the civil service subcommittee, said they supported the effort to obtain an OPM study. "Let's not be shortsighted," Danny Davis said. "In the long run, preventive care, through periodic examinations and doctor visits, will help keep down the long-term vision and dental costs due to early detection."
Among the experts asked to testify were Edward L. Wristen, president and chief executive of First Health Group Corp., which administers the Mail Handlers Benefit Plan in the FEHBP; Stanley Shapiro, a dentist and vice chairman of CompBenefits Corp.; Jon K. Seltenheim, chairman of the board of the National Association of Dental Plans; and Howard J. Braverman, past president of the American Optometric Association.
Seltenheim and Braverman stressed that providing preventive care is worth the cost. One study, Seltenheim said, found that for every dollar spent on prevention of dental disease, $4 was saved in subsequent treatment costs.
It may just be me, but isn't this the reverse of the attitudes behind the new Medicare bill? But Federal employees, increasingly Republican political patronage workers, aren't going to have to make those tough choices that the Medicare bill dumped onto retirees, valiantly trying to live on the more meager sums calculated under the proposed new Greespan formula for Social Security benefits!
ALAN GREENSPAN said yesterday that future increases in Social Security benefits need to be trimmed to deal with the long-term fiscal problems of the federal government. Greenspan proposes that Congress change the formula by which the annual cost-of-living adjustment is determined. On an average benefit, the last COLA was $19 a month, so any change would seem small. But dollars are precious for those at the bottom of the income ladder. Any changes in the formula should not penalize those eligible for the average benefit or less. The average benefit as of Jan. 1 was $922 a month, and any reduction would harm millions of vulnerable elderly.
Greenspan wants Congress to impose a new formula for the retirement age, which is scheduled to rise from 65 years and four months -- the current standard -- to 67 years for anyone born in 1960 or later. Seventy-five percent of all Social Security recipients opt for early retirement, which is available beginning at age 62 with a reduction of benefits. Many of these people work at physically arduous jobs, and later retirement is no option. The early retirement payout ought to remain unchanged no matter how the age for full benefits is calculated.
The baby boomers' retirement will put stress on the system, but before benefits are cut, President Bush's unfair tax cuts need to be rescinded so Social Security can be protected. Bush skewed his tax cuts to benefit the rich, and they are costing the government $1.7 trillion through 2011, according to the Center on Budget and Policy Priorities. Social Security benefits, while they do rise with income level, are weighted in favor of low-income Americans. The people who gained most from the Bush tax cuts are sure to have ample private retirement incomes. For those not so fortunate, Congress needs to find the money to keep Social Security solvent. Social Security is the most successful antipoverty program in US history, and Congress should put the interests of the poor first.`Have they no refuge or resource?' cried Scrooge.
`Are there no prisons?' said the Spirit, turning on him for the last time with his own words. `Are there no workhouses?'
So tell us, Mr. Scrooge - just how bad is it going to be once we retire? Will we still be able to afford a can of cat food to eat once a month?
A number of factors - including a sobered stock market, deficit pressures, and corporate cutbacks - may be putting the retirement security of baby boomers at greater threat than at any time in a quarter century. This week's provocative call by Federal Reserve chairman Alan Greenspan to scale back future Social Security benefits to help cover a growing federal budget deficit, is just part of the concern. Evidence is mounting that the other two pillars of retirement security - private-sector pensions and personal savings - are no longer adequate to ensure that most Americans will have enough to live on when then retire. "Tens of millions of Americans are seriously underprepared to meet their financial needs in retirement," says Benjamin Stein, of the National Retirement Planning Coalition. As many as 40 percent of Americans have saved almost nothing for retirement, he told a congressional panel.
With Americans living longer, the senior population is growing faster than the number of young workers to cover their needs. Benefit levels are getting harder to sustain. It's a calculus that is as challenging for corporate pension plans as it is for Medicare and Social Security programs. From United Airlines to General Motors Corp., large companies are struggling to meet their obligations to retirees. The federal plan that guarantees these pensions is $11.2 billion in the red. And even as the stock market recovers, experts say that 401(k)s and other personal savings aren't nearly big enough.
The defined retirement benefit, the pension that was once a standard perk in a big firm, is a rapidly disappearing option for many Americans. The number of Fortune 100 companies offering a fixed-benefit pension has dropped from 68 percent in 1998 to 50 percent in 2002, according to Watson Wyatt Worldwide. And federal data show a steady fall in private-sector workers who have pensions: from 38 percent in 1980 to 21 percent in 1998. That decline, in part, reflects the trials of old-line manufacturing industries, airlines, and automakers. Some experts say it also, ironically, stems from a 1978 law intended to keep pensions from going belly up, but which added costs and regulation.
Even those who criticize Greenspan's comments concede that serious adjustments will be needed both on Capitol Hill and in individual saving and spending patterns to prepare for the spike in baby boomer retirements in the next four years. "He's right that social security does need to be reformed, but his prescription for cutting benefits for future retirees is inadvisable," says John Rother, policy director for the senior lobby AARP.
"It is defaulting on our promise to our future retirees to cut their benefits to make up for the higher deficits caused by massive tax cuts for the wealthy," says Reps. Charles Rangel (D) of New York, the ranking Democrat on the House Ways and Means Committee.
Given the decline of traditional pensions, this is of particular concern. Only 15 percent of working age Americans have an individual retirement account (IRA), and only 22 percent contribute to a 401(k) plan, according to the Employee Benefit Research Institute. Barely 1 in 3 working Americans has saved more than $100,000 for retirement. Overall, it means that American retirees will have $45 billion less in retirement income in 2030 than they will need to cover basic expenses, according to the EBRI.
In 2000, with the stock market still seen as strong, and forecasts for a huge federal surplus, the notion of privatizing a portion Social Security appealed to many voters, especially those who viewed themselves as part of a new "investor class." With IRAs and pensions, some two thirds of voters are directly or indirectly invested in the stock market. But with the sharp reversals in the stock market after the election and, especially, more recent fears of outsourcing and a jobless recovery, the average American's stock ownership is shrinking.
"We've seen the group of self-identifiers in the investor class drop from 52 percent a year ago to 32 percent, around October and November," says pollster John Zogby of Zogby International. Curiously, this group stuck through the worst days of the bear market in his poll, but more recent publicity about good, white-collar jobs being shipped overseas has hit this voting group hard. Twenty-one percent say they are afraid of losing their job in the next 12 months, says Mr. Zogby.
"There are going to be a lot of people looking at a bad retirement if they get away with cutting Social Security," says Dean Baker, codirector of the Center for Economic and Policy Research.
This sets up an interesting conundrum: If one is to work all one's life and live frugally so that there is enough money available to survive on once it's too difficult to earn any more, where will the money come from before that time to buy SUVs for taking trips to Disney World to buy T-shirts made in China by prison laborers and keep the domestic economy going strong?
Those managerial types of the top 1% who can't answer that question face the loss of their jobs to foreigners who can - and at a lower costs!
India may still be the world outsourcing king, the great global magnet that's attracting American and European service-industry work such as computer programming, insurance-claims processing, and call-center staffing. But a growing host of countries aims to knock India off its throne.
From South Africa to Russia to Hungary to China, ambitious nations and companies are rushing to build call-center capacity and back-office processing units to claim their share of America's rich outsourcing pie. So, even as US presidential candidates and labor unions bemoan the loss of jobs, there's growing global ability to attract American work. That means it may get even easier and cheaper for US firms to ship jobs overseas.
India's rising challengers
South Africa is in the top echelon of India's IT competitors, according to Gartner. The group also includes Canada, China, Hungary, the Philippines, Poland, Russia, and others. A second tier includes Belarus, Costa Rica, Egypt, Estonia, and Venezuela. Promising rookies include Ghana, Mauritius, Morocco, Nepal, Senegal, and Vietnam. "We're in a global market," says Richard Matlas, a Gartner research director. "Even though some politicians are trying to jump on the bandwagon of keeping jobs in the US, corporations have to look at global delivery of their services to stay competitive."
Critics of outsourcing argue foreign workers are exploited with low pay, or that overseas work conditions are sub-par or even dangerous. The firestorm has spurred some companies to try to hide the fact that their operations are overseas. Some ask their call-center agents to dissemble - to give the firm's home-base city if callers ask where the agent is located.
But it's still a controversial trend. Senators Kerry and Edwards propose various solutions, including corporate tax incentives to keep jobs in the US. A bill introduced by Sen. Christopher Dodd (D) of Connecticut would prevent federal agencies from awarding contracts to firms that employ overseas workers. At least 10 US states are considering similar legislation.
"This Kerry thing bothers us not one tiny jolt," says South African IT manager Ian McLuckie, referring to Sen. John Kerry, who has been sparring with Democratic presidential rival Sen. John Edwards - and President Bush - over how to respond. "Americans can fight this trend with customs fees or export duties or whatever," Mr. McLuckie adds, "but after a while, economics will prevail" - and jobs will continue to emigrate to cheaper places.
EDS Africa, a division of the Texas-based global outsourcing firm EDS, recently became the first in Africa to achieve CMMI Level 2, a technical benchmark that enables them to better compete for IT jobs worldwide. Rookie programmers at EDS Africa make roughly $18,400 a year - and must pay all benefits, including health insurance, themselves. A comparable US worker might get $50,000, not including benefits. Currently just 5 percent of their business is overseas outsource work. In two years, it will be 50 percent.
But given South Africa's 40 percent unemployment, these jobs are bonanzas. South African officials see the trend as a desperately needed economic boon. They envision up to 100,000 new call-center jobs by 2007. Starting salaries are in the $750-per-month range, but can increase rapidly. After 10 months, Ricardo Dyson, a Dialogue Group call-center manager, has doubled his salary. With his big job, he's become "the man of the house," enabling his family - his mother and two sisters - to seek a new, bigger home. "I'll even get my own room," Mr. Dyson says. "That's seriously nice."
To achieve that goal, however, they'll have to compete with India. The South Asian giant has roughly 70 to 80 percent of outsource jobs, says Mr. Matlus, "but as their wages start to go up, you'll see shifts to other countries." China, for instance, can draw on massive manpower.
Maybe so, but India isn't that far behind China in terms of population. In addition, thanks to the British Raj, India is somewhat Anglicized already. But, like China, India has a serious disparity between the rich and the poor, something that has the growing potential of becoming reality here in the United States.
Juice anyone? Just shipped in from Shanghai! Freshly squeezed from the Grapes of Wrath!
After 50 years of Communism China now has the biggest divide between urban rich and rural poor in the world, according to the government's own researchers. A report by the Chinese Academy of Social Sciences, one of the Communist Party's leading research schools, compared the country gloomily with Zimbabwe. It said the earnings of urban residents were now more than three times those of residents of rural areas. In line with this, the booming cities on and near China's coast have had preferential investment treatment, their populations protected from socially dangerous mass migration to the cities by a strict resident permit system. But there was also a growing gap within urban areas, between the ordinary working class and the new middle and super-rich classes.
The report, and its publication in state media, is the latest sign of the government's concern that the country's rapid economic reforms have left most of its population behind, and may even become a threat to social stability. It is torn between the knowledge that only continuing the current rates of growth - more than nine per cent last year - can cure poverty, and the fact that they still rest on former leader Deng Xiaoping's dictum "Let some get rich first". The top five and 10 per cent of earners in China accounted for 19.8 per cent and 31.9 per cent of the country's revenue in 2002, the report found. The survey found almost half the wealth gap in China was accounted for by the urban-rural divide.
If non-cash factors were taken into account - such as the fact that only urban residents receive health care and social security benefits - the difference could be six times. "When comparing with other countries, Zimbabwe's income disparity may be slightly higher than that for China if we only considered nominal income," the report concluded. "But if non-currency factors are taken into consideration, China's rural-urban income gap is the highest in the world."
According to Li Shi, the economist who wrote the report, a programme of tax reduction for rural areas could alone increase farmers' incomes by five per cent. The government should also cover educational, health and social security costs in the countryside, he said. The government is already attempting this, though critics say that they are unlikely to succeed unless they dramatically reduce the number and powers of local officials.
They could take lessons from both George Warmonger Bush and Der Governator Arnold Schwarznegger on dramatically reducing the number and powers of local officials. But I digress.
This job issue must not be very important if we are helping a part of China's population to become become wealthy. Why should something that directly affects only 99% of us matter when things are so economically rosy?
The economy grew at a slightly faster pace in the fourth quarter than initially estimated as robust business investment offset sluggish consumer spending and a wider trade gap. The Commerce Department said gross domestic product (GDP), the broadest measure of the economy, grew at a revised 4.1 percent annual rate in the quarter, compared with its initial estimate of 4 percent. Economists, on average, expected growth to be revised to 3.8 percent, compared with the sizzling 8.2 percent pace in the third quarter. An increase in imports, which subtract from GDP, was expected to drag total GDP lower, but business investment was stronger than most economists expected.
"We ended last year with a good bit more momentum on the capital investment front than we thought," said David Resler, chief economist at Nomura Securities. "We have an optimistic view about this year as a whole." Friday's GDP report was a preliminary number, based on incomplete data. It will be revised at least once, possibly more.
Businesses took up slack from consumers
While higher inventory levels could mean businesses have less need to boost production in the first quarter, analysts nevertheless took heart since shelf restocking is a sign of growing business confidence.
"If companies are willing to step up capital spending and increase the level of inventories they are holding, we have to believe that a rise -- even if it's gradual -- in the pace of hirings cannot be too far away," said Anthony Chan, chief economist at Banc One Investment Advisors.
Hiring, inflation still low
Despite several consecutive quarters of growth, payrolls are still 2.3 million jobs lower than they were in early 2001, when the last recession began, the longest stretch of job market pain since World War II. Many economists believe a job rebound is coming, but some of the recent technology-driven gains in productivity -- a measure of output per worker hour -- could linger, keeping that rebound from being as strong as usual.
"To get faster job growth, we're going to need either faster aggregate demand, which seems hard to fathom, or we're going to need some diminution of the recent extra cyclical pop in productivity," said Deutsche Bank's Feinman, adding, "When will that start? Anybody who says they know is lying."
Call for Mr. Bush! Mr. George Warmonger Bush!
President Bush, attempting to obscure his record as the worst economic steward since Herbert Hoover, has become so desperate that he is exploring ways to manipulate statistics. Just days after Bush reneged on his pledge to create 2.6 million jobs and said with a straight face that "5.6% unemployment is a good national number", the New York Times uncovered a White House report showing that the president is considering re-classifying low-paid fast food jobs as "manufacturing jobs" as a way to hide the massive manufacturing job losses that have occurred during his term.
As CBS News reports, "Since the month President Bush was inaugurated, the economy has lost about 2.7 million manufacturing jobs". But if the president enacts the statistical change he is considering, this number would be purposely obscured because lower-paying fast food jobs would be added to make the real manufacturing losses look smaller. Of course, fast food jobs typically pay much less and have fewer benefits than real manufacturing jobs, meaning the statistical change would also obscure the fact that, under Bush, "in 48 of the 50 states, jobs in higher-paying industries have given way to jobs in lower-paying industries". All told, jobs in growing industries like lower-paid service sector/fast food jobs are paying 21% less than contracting industries like real manufacturing.
The president's efforts to manipulate statistics and mislead Americans are also getting a boost from his allies on Capitol Hill. Earlier this month, Senate Budget Committee Chairman Don Nickles (R-OK) pointed to an optimistic "household" jobs survey as proof that "we're at an all-time high in employment" and that "the employment situation has improved rather substantially." The problem is that Federal Reserve Chairman Alan Greenspan said definitively that "payroll data" - not the household survey - "is the series which you have to follow" in order to be accurate. The payroll data shows "a loss of more than two million jobs since 2001."
This is of no consequence, for the campaign contributions of those truly deserving of the attentions of the Best Federal Government Corporate Money Can Buy aren't about to abate. In fact, they abound!
All told, it was a fabulous year to be very rich. The magazine counted 587 billionaires around the world, up from 476 in 2003. The list includes 53 women and 24 single people. The average billionaire's age is 64, and 27 are under 40. Their total net worth jumped to $1.9 trillion from $1.4 trillion in 2003. "After two years of significantly falling fortunes, we really saw an uptick for just about everybody on the list," said Luisa Kroll, an associate editor who oversaw the project. Only six people dropped off the list, compared with 67 who fell off in 2003 and 83 drop-offs in 2002, according to Kroll. And three were behind bars: Russia's richest man, former Yukos oil chief Mikhail Khodorkovsky ($15 billion), Yukos shareholder Platon Lebedev ($1.8 billion) and Japanese tycoon Yasuo Takei ($6.2 billion).
The strength of the euro currency in comparison to the dollar helped launch 22 new billionaires onto the list, for a total of 164 Europeans. Their net worth as a group surged 47 percent to $578 billion. Rising oil prices helped Russia add eight billionaires, for a total of 25. That puts the country in third place, behind the United States and Germany.
Now we all know that there is only one state to be from if you want to wield power in the United States, so I thought I would weed out those billionaires who are mere Lone Star wannabes and just show you who the real top 1% are:
Associated Press ranking of Texas' richest people as estimated by Forbes magazine. Listings include rank, name, age where known, wealth in billions of dollars and source of the money. A number of billionaires share the same rank because Forbes reported their wealth as being identical with each other.
6. Alice Walton, Texas, 55, $20, Wal-Mart
18. Michael Dell, Texas, 39, $13, Dell Computers
124. Henry (Ross) Perot, Texas, 73, $3.8, computer services, real estate
186. Robert Rowling, Texas, 50, $2.7, oil and gas, hotels, investments
198. Robert Bass, Texas, 56, $2.6, oil, investments
231. Charles Butt, Texas, 65, $2.3, supermarkets
231. Ray Hunt, Texas, 61, $2.3, inheritance, oil, real estate
277. Richard Rainwater, Texas, 59, $2, investments
356. Richard Kinder, Texas, 60, $1.6, pipelines
356. George Mitchell, Texas, 84, $1.6, oil and gas
377. Lee Bass, Texas, 47, $1.5, oil, investments
377. Gerald Ford, Texas, 59, $1.5, banking
[NOT the former President - ed]
377. L. Lowry Mays, Texas, 68, $1.5, Clear Channel
377. Fayez Sarofim, Texas, 75, $1.5, finance
377. Harold Simmons, Texas, 72, $1.5, investments
406. Albert Ueltschi, Texas, 86, $1.4, flight schools
437. Mark Cuban, Texas, 46, $1.3, Broadcast.com
437. E. Marshall, Texas, 65, $1.3, inheritance
437. Robert McNair, Texas, 66, $1.3, energy
472. Christopher Goldsbury, Texas, 61, $1.2, salsa
472. Joseph Jamail Jr., Texas, 78, $1.2, lawsuits
472. Robert McLane Jr., Texas, 67, $1.2, Wal-Mart, Houston Astros
514. Sid Bass, Texas, 61, $1.1, oil, investments
514. Billy Joe "Red" McCombs, Texas, 76, $1.1, cars, radio
514. Kenny Troutt, Texas, 56, $1.1, telecom
514. Henry Zachry Jr., Texas, 69, $1.1, construction
552. Jerral Jones, Texas, 61, $1, football, oil
If you have a stronger Constitution than America now has, you might want to see who else made the Forbes List of the world's 552 richest people.
Since George Warmonger Bush cares more about Mexican nationals coming to the US than he does anything else except being "legitimately" elected this time, I'm ready to give Texas back to Mexico. Are you?
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