Health insurers protecting their own paychecks?

I'm startled that any portion of a CEO salary can be subsidized by tax payer dollars, let alone having a debate about whether or not to reduce it by $500k.

Mike Madden, Salon.com, October 16, 2009

WASHINGTON -- You can change the regulations, order them to stop dropping patients from the rolls, even mess with health insurance companies' profit margins. Just don't try to cut the pay of their top executives.

That, at least, seems to be the point of some recent objections reportedly raised by Karen Ignagni, the CEO of America's Health Insurance Plans, to the healthcare reform bill the Senate Finance Committee approved this week. Time's Michael Scherer reports on a phone call between Ignagni, Nancy-Ann DeParle, the White House's top healthcare official, and a senior Senate Finance staffer a few weeks ago. DeParle tells Scherer the health insurance lobbying group was particularly nonplussed by provisions in the legislation that would lower the amount of executive pay that insurance firms can deduct from their taxable corporate income. A Senate source gave Salon the same account of the call.

The insurers had been on board, shakily, with healthcare reform plans all year, but broke with the White House and Democrats in Congress earlier this week by issuing a widely mocked study saying the proposals would actually raise costs. (The accounting firm that wrote the study, PriceWaterhouseCoopers, later put out a statement distancing itself from its own work.)

Might an industry that makes money by refusing to pay for its customers' healthcare have been driven to the split by a more personal form of greed? The provision on pay was added to the legislation by Sen. Blanche Lincoln, D-Ark., during the Finance panel's debate in the last few weeks. It would lower, from $1 million to $500,000, the amount of executive salary that can be written off as a business expense. The effect would be either to raise taxes on insurance companies, by as much as $60 million a year over the next decade, or -- worse! -- force them to cut pay for their executives to avoid the tax hike. A Lincoln aide said "she didn't think it was right" to require millions of Americans to buy health insurance, providing the insurance companies with new revenue, and also continue to give tax breaks for high salaries at the firms.

Ignagni tells Scherer she never raised the issue of executive compensation, in any form, with DeParle. "I'm very sure about having no discussions about executive compensation," she says. "I'm not saying that they are lying. I'm saying that maybe they are mistaken in confusing me with some other person in our industry. But I very clear about what I raised and what I didn't." That doesn't mean, of course, that she's happy about the potential pay cut for her association's members.

White House and Senate staffers will work through the weekend trying to merge the Finance Committee's bill with a more liberal one passed earlier in the year by the Senate Health, Education, Labor and Pensions Committee. Now that the insurers have decided to oppose reform, though, don't expect the merged bill to go particularly easy on them -- or on their executives' paychecks.

― Mike Madden

Miracles Take Time

By BOB HERBERT

Barack Obama has only been president for six weeks, but there is a surprising amount of ire, anger, even outrage that he hasn’t yet solved the problems of the U.S. economy, that he hasn’t saved us from the increasingly tragic devastation wrought by the clownish ideas of right-wing conservatives and the many long years of radical Republican misrule.

This intense, impatient, often self-righteous, frequently wrongheaded and at times willfully destructive criticism has come in waves, and not just from the right. Mr. Obama is as legitimate a target for criticism as any president. But there is a weird hysterical quality to some of the recent attacks that suggests an underlying fear or barely suppressed rage. It’s a quality that seems not just unhelpful but unhealthy.

Mr. Obama is being hammered — depending on the point of view of the critics — for the continuing collapse of the stock market, for not moving fast enough to revive the suicidal financial industry, for trying to stem the flood tide of home foreclosures, for trying to bring health insurance coverage to some of the millions of Americans who don’t have any, for running up huge budget deficits as he tries to fend off the worst economic emergency since World War II and for not taking time out from all of the above to deal with — get this — earmarks.

Earmarks.

More than 4.4 million jobs have been lost since this monster recession officially got under way in December 2007, and we’ve got people wigging out over earmarks. Folks, get a grip. Some earmarks are good, some are not, but collectively they account for a tiny, tiny portion of the national budget — less than 1 percent.

Freaking out over earmarks is like watching a neighborhood that is being consumed by flames and complaining that there is crabgrass on some of the lawns.

In the midst of the craziness, conservatives are busy trying to blame this epic economic catastrophe — a conflagration of their own making — on the new president. Forget Ronald Reagan and George Herbert Walker Bush and George Herbert Hoover Bush and the Heritage Foundation and the Club for Growth and Phil Gramm and Newt Gingrich and all the rest. The right-wingers would have you believe this is Obama’s downturn.

The bear market would no doubt have magically turned around by now, and those failing geniuses at the helm of our flat-lined megacorporations would no doubt be busy manufacturing new profits and putting people back to work — if only Mr. Obama had solved the banking crisis, had lowered taxes on the rich, had refused to consider running up those giant deficits (a difficult thing to do at the same time that you are saving banks and lowering taxes), and had abandoned any inclination that he might have had to reform health care and make it a little easier for ordinary American kids to get a better education.

As the columnist Charles Krauthammer was kind enough to inform us: “The markets’ recent precipitous decline is a reaction not just to the absence of any plausible bank rescue plan, but also to the suspicion that Obama sees the continuing financial crisis as usefully creating the psychological conditions — the sense of crisis bordering on fear-itself panic — for enacting his ‘big-bang’ agenda to federalize and/or socialize health care, education and energy, the commanding heights of post-industrial society.”

That’s a more genteel version of the sentiment expressed a couple of weeks ago by the perpetually hysterical Alan Keyes, a Republican who was beaten by Mr. Obama in the Illinois Senate race in 2004. “Obama is a radical communist,” said Mr. Keyes, “and I think it is becoming clear. That is what I told people in Illinois, and now everybody realizes it’s true.”

I don’t know whether President Obama’s ultimate rescue plan for the financial industry will work. He is a thoughtful man running a thoughtful administration and the plan, a staggeringly complex and difficult work in progress, hasn’t been revealed yet.

What I know is that the renegade clowns who ruined this economy, the Republican right in alliance with big business and a fair number of feckless Democrats — all working in opposition to the interests of working families — have no credible basis for waging war against serious efforts to get us out of their mess.

Maybe the markets are down because demand has dried up, because many of the nation’s biggest firms have imploded and because Americans are losing their jobs and their homes by the millions. Maybe a dose of reality is in order, as opposed to the childish desire for yet another stock market bubble.

Maybe the nuns in grammar school were right when they counseled that patience is a virtue. The man has been president for six weeks.

I Ponied Up for Sheryl Crow?

By MAUREEN DOWD, NY Times

LOS ANGELES

Talk about being teed off.

The economy is croaking and bankers are still partying at a golf tournament here on our dime.

It’s a good argument for nationalization, or better yet, internationalization. Outsource the jobs of these perfidious, oblivious bank executives to Bangalore; Bollywood bashes have to cost less than Hollywood ones.

The entertainment Web site TMZ broke the story Tuesday that Northern Trust of Chicago, which got $1.5 billion in bailout money and then laid off 450 workers, flew hundreds of clients and employees to Los Angeles last week and treated them to four days of posh hotel rooms, salmon and filet mignon dinners, music concerts, a PGA golf tournament at the Riviera Country Club with Mercedes shuttle rides and Tiffany swag bags.

“A rep from the PGA told us Northern Trust wrote one big, fat check in order to sponsor the event,” TMZ reported.

Northern No Trust had a lavish dinner at the Ritz Carlton on Wednesday with a concert by Chicago (at a $100,000 fee); rented a private hangar at the Santa Monica Airport on Thursday for another big dinner with a gig by Earth, Wind & Fire, and closed down the House of Blues on Sunset Strip on Saturday (at a cost of $50,000) for a dinner and serenade by Sheryl Crow.

In the ignoble tradition of rockers who sing for huge sums to sketchy people when we’re not looking, Crow — in her stint as a federal employee — warbled these lyrics to the oblivious revelers:

“Slow down, you’re gonna crash,
Baby, you’re a-screaming it’s a blast, blast, blast
Look out babe, you’ve got your blinders on ...
But there’s a new cat in town
He’s got high payin’ friends
Thinks he’s gonna change history.”

Northern Untrustworthy even offered junketeers the chance to attend a seminar on the credit crunch where they could no doubt learn that the U.S. government is just the latest way to finance your deals and keep your office swathed in $87,000 area rugs.

In what is now an established idiotic ritual of rationalization, the bank put out a letter noting that it “did not seek the government’s investment” even though it took it, and that it had raised $3 million for the Los Angeles Junior Chamber of Commerce Charity Foundation and other nonprofits. They riposted that they have a contract to do it every year for five years; but this isn’t every year.

The bank cloaks itself in a philanthropic glow while wasting our money, acting like the American Cancer Society when in fact it’s a cancer on American society.

It asserted that it earned an operating net income of $641 million last year and acted as though it did Americans a favor by taking federal cash.

I would ask Northern No Trust: If you’re totally solvent, why are you taking my tax dollars? If you’re not totally solvent, why are you giving my tax dollars to Sheryl Crow?

Coming in a moment when skeptical and angry Americans watched A.I.G., Citigroup, General Motors and Chrysler — firms that had already been given a federal steroid injection — get back in line for more billions, the golf scandal was just one more sign that the bailed-out rich are different from you and me: their appetites are unquenchable and their culture is uneducable.

President Obama served them notice on Tuesday night in his Congressional address, saying: “This time, C.E.O.’s won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.”

But will they notice?

John “Antique Commode” Thain had to be ordered by a judge to tell Andrew Cuomo’s investigators which Merrill Lynch employees got those $3.6 billion in bonuses that Thain illicitly shoved through as his firm was failing and being taken over by Bank of America with the help of a $45 billion bailout. Kenneth Lewis, the Bank of America C.E.O., made the absurd assertion to Congress that his bank had “no authority” to stop the bonuses, even though he knew about them beforehand.

“They find out they’re $7 billion off on the estimate of losses for the fourth quarter and they never think maybe we should go back and adjust these bonuses?” Cuomo told me, as Thain was finally responding to investigators on Tuesday at the New York attorney general’s office. “He refused to answer questions on the basis that ‘the Bank of America didn’t want me to.’ You can take the Fifth Amendment or you can answer questions. But there’s no Bank of America privilege. The Bank of America doesn’t substitute for the Constitution. And who’s the Bank of America, by the way?”

He gets incensed about how ingrained, indoctrinated and insensitive the ex-masters of the universe are. “They think of themselves as kings and queens,” he said. And they’re not ready to abdicate.

Putting a Face on Big Auto

Note from Greetings: The problem is not the unions. The current $70/hour salary being quoted is manufactured by those wishing to blame it on Amercian workers (who they previously "touted" during the elections), rather than put this on the backs of the CEO's and management. The people who flew in on their SEPARATE private jets to testify before Congress.

The real hourly rate of autoworkers? (The American working person, to put it properly... not "the unions".) $14-16/hour, which translates to, at best $32,000/year and on the lower end, $28,000/year.

What is the goal of those criticizing American workers trying to earn a livable income? Perhaps to get them down to $10/hour, like Walmart employees... without health care and retirement benefits. And where will that leave all American workers? Growing poorer while management and their cronies in the political parties grow richer.

by Bob Herbert

If we were interested in making the best possible decisions with regard to the U.S. auto industry, someone like Rich Breen would be seen as the face of the industry, not the chief executives of General Motors, Ford and Chrysler.

Mr. Breen is a 55-year-old member of the Teamsters union, a car hauler who delivers new vehicles for the Big Three automakers. He lives in Clinton Township, a suburb of Detroit, and he is horrified by the steady erosion of the American standard of living that he sees each day as he makes his rounds.

“I see the tool and die industry dying in the light industrial areas,” he told me in an interview just before Thanksgiving. “I see the clientele decreasing in the local barbershops, the hardware stores and the restaurants. That’s all happening from the first phase of the downsizing in the auto industry, the cutbacks and layoffs that have already occurred. It’s not from the current crisis.

“The community around me is deteriorating before my eyes. I hear people saying if G.M., Ford or Chrysler shuts down it wouldn’t affect them. They have no idea. It would have a domino effect that we’ve never had before in the United States.

“The bottom would fall out and the ripple effects would go all over the country.”

The bottom is already falling out. The question for Congress and the incoming Obama administration is whether to risk allowing the industry to collapse completely. The number of people working for the Big Three automakers has already been cut drastically, perhaps in half since 2000, and more cuts are to come, even with a government rescue effort.

The United Automobile Workers agreed to extraordinary contract concessions in negotiations that took place in 2005 and 2007. Not only will there be no raises for the four-year life of the most recent contract, but the starting pay for new hires at the Big Three has been cut by 50 percent — to $14 to $16 an hour. Benefits have also been slashed.

“Ripple effect” is too mild a term for the impact that a bankruptcy among the Big Three would have on other manufacturers, suppliers, dealers, insurance companies and thousands of businesses that at first glance would not seem to be related to the auto industry. The industry supports, in one way or another, one in every 10 jobs in the nation.

A bankruptcy would be like a hurricane blowing through the U.S. economy.

Those winds are already taking a fierce toll. Darin Gilley is a 45-year-old father of two young girls who lives in Pacific, Mo., about 30 miles southwest of St. Louis. He worked in a plant that made seats for Chrysler vehicles until he was laid off at the end of October. He’s also president of a U.A.W. local that represents employees in a plant that makes dashboards for Chrysler.

Both plants are closing.

“You can’t let this industry go down,” Mr. Gilley said. “It would be catastrophic. I’ll tell you an interesting fact: auto parts supply is the number one industrial employer in seven states, including Missouri. And it’s a top five employer in 12 other states.”

The auto industry is embedded in the very heart and soul of the United States, a nation in which people travel by car with the natural ease of birds flying. Think of service stations, body shops, tire distributorships, car washes. ...

Some analysts have suggested that even if the Big Three were to disappear, the foreign carmakers would fill the vacuum, as if the cornerstone of American manufacturing — and everything it has meant and still could mean to American life and culture — were somehow disposable, like a worn-out paper bag.

Get real.

Mr. Gilley mentioned a number of close friends and associates who have already succumbed to the crisis. “This one fellow and his wife lost their house,” he said. “It was foreclosed on. They had to send back their truck. And they’ve got two kids, younger than mine. The kids don’t stop growing just because you’ve lost your job.”

Mr. Breen, the car hauler, told me about an aunt, Lee Jones, who was the owner of Diversified Industries, a company that painted grille assemblies for the Big Three.

“It employed about 75 people on the day and night shift,” he said. “She got caught in the industry’s downsizing within the last year and a half and had to close her doors. So the jobs in her shop are just gone.”

The auto industry problem is an enormous one, with implications for every American. We can rescue and reshape the industry in a way that makes sense, economically and otherwise. Or we can close our eyes to reality, as we have so many times in recent years, and suffer the inevitable devastating consequences.

Wall Street's Man in Washington

By Harold MeyersonThursday, September 25, 2008;

This past winter, when American banks were already scrambling for capital, foreign investors came to their rescue. Last November, the Abu Dhabi Investment Authority put $7.5 billion into Citigroup. One month later, Merrill Lynch sold $4.4 billion worth of new stock to Temasek Holdings of Singapore, and Morgan Stanley sold a $5 billion stake to China Investment Corp. In January, Merrill Lynch issued $6.6 billion of preferred stock to Korea Investment Corp. and the Kuwait Investment Authority, among others.

These far-flung buyers had one thing in common: They aren't private concerns. Each is a sovereign wealth fund, investing its national treasury's money -- its citizens' money -- in an effort to help out the hemorrhaging banks of Wall Street.

But these were not charitable outlays. The citizens of Abu Dhabi, Singapore, China, Korea and Kuwait got something in return for their treasuries' aid packages to American finance. They got stock. They got an equity interest in those banks.

These may not, just now, seem like the shrewdest investments ever made. Still, all those East Asian and petro-state citizens will probably reap some long-term profits if their treasuries hang on to those shares in Bank of America-Merrill, or Citigroup, or Morgan Stanley and Whomever It Merges With.

Which, sadly, is more than can be said for American citizens in the deal that Treasury Secretary Hank Paulson brought down from his Mount Sinai penthouse over the weekend. In Paulson's plan, the American public pours at least $700 billion of its money into purchasing the bad loans on Wall Street's books and gets -- well, it gets the thanks of a grateful Wall Street. It does not get any equity in return. To receive a return for their investment, Americans would have to become Chinese or Kuwaiti or Abu Dhabian; they would have to move to some country that accords a little more respect to the public's claim over its money.

During past financial crises, Americans did get something in return for the assistance their government proffered to Wall Street. As my American Prospect colleague Robert Kuttner has noted, when the Depression-era Reconstruction Finance Corp. (a bipartisan creation -- Herbert Hoover started it and Franklin Roosevelt continued it) poured $35 billion into American banks and corporations, it often became a preferred shareholder in those concerns and appointed members to those companies' boards to oversee their operations. Other quids offset the quos of the Resolution Trust Corp., which handled the savings and loan meltdown in the 1980s.

In Paulson's original proposal, by contrast, the Treasury secretary would write plenty of checks, unconstrained by any balances. Not surprisingly, Democrats in Congress have countered with a set of proposals to subject Treasury to stricter oversight and congressional accountability, to provide more direct relief to beleaguered homeowners, to restrict the pay of executives at companies that dump their bad deals on the Treasury, and to provide the public with an equity interest in the companies that taxpayers bail out. Paulson has reportedly acceded to more oversight and some more help for homeowners but is still defending the rights of CEOs to pay themselves astronomical sums and opposing efforts to give Americans a share of the companies whose bad loans they are assuming.

On one Sunday talk show, Paulson dismissed the idea of reining in top executives' pay. "If we design [the bailout] so it's punitive and so institutions aren't going to participate," he said, "this won't work the way we need it to work."

That depends on your definition of "we," does it not? In recent years, Wall Street salaries and bonuses have soared as investment banks peddled ever more profitable schemes that enabled Americans to take on debt -- an activity of no discernable social utility and, in fact, of some peril, but one that attracted a disproportionate share of our smartest college graduates, who clearly understood where the big money was. Reducing Wall Street's outsized incomes is not only a moral necessity, now that it's the public that will be putting up the funds but a national opportunity to redirect our best and brightest into actual productive enterprise.

There's no indication that Hank Paulson understands that. He is less Washington's man on Wall Street than he is Wall Street's man in Washington. And having endorsed the Street's version of socialism -- the American public picks up the tab for the financial sector's mistakes, no questions asked -- Paulson and the administration and the Republicans remain opposed to the more democratically socialist, or democratically capitalist, proposition that the public should get something for its investment. China, Singapore and the oil emirates cut a deal for their people. Why won't Hank Paulson cut one for his?

meyersonh@washpost.com