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Protect Our Vital Public Services! Vote Yes On The Nashua Charter Amendment!

Written by Gary HoffmanIMG_20141009_144920_306

On November 4th, the voters of Nashua will have an opportunity to vote on a charter amendment that would change the formula used to calculate the City’s 20 year-old spending cap.  In case you were unaware, a spending cap limits what an entity (in our case, a city) can spend in a given period of time.   One problem with Nashua’s spending cap is that it has not been adjusted to meet the needs of the City in almost 20 years.  The City’s spending cap is measured by CPI-U, or the Consumer Price Index-Urban.  CPI-U measures inflation for the basket of goods that a typical urban consumer would purchase, goods like clothing, food, electronics, and housing costs.  The City of Nashua doesn’t really buy these things.  Instead, the City of Nashua purchases things like your child’s education, the asphalt to pave your roads, the plow trucks to remove the snow from your street in the winter, and the bulletproof vests that protect our City’s bravest.

So, is there another way to measure the rate of inflation for the cost of the items that the City of Nashua actually buys?  There is!  The Implicit Price Deflator for State and Local Government Services, or, the S&L IPD.

Simply put, the S&L IPD measures inflation for state and local government services.  So when the price of our firemen’s protective gear goes up, or the cost of your child’s school textbooks increase, this measure of inflation would show that.  This would be far more accurate than using a measure of inflation that tracks increases in the price of eggs and jeans.

Essentially, the only thing the new formula for the spending cap would do is give the City the opportunity to increase its spending at the same pace as other city and town governments in this country.  The mayor would still have the opportunity to create an operating budget lower than that average, and the Board of Aldermen would have the opportunity to have the final say as to whether or not the taxpayers could afford that budget.  We would still have a restrictive cap on city spending.  In fact, for the last 20 years, the S&L IPD has only averaged half a percent higher than the northeast region of CPI-U.  The new cap would still significantly restrict city spending, but it would provide a little more “breathing room” than the current CPI-based cap does.

And we’re going to need that “breathing room” because of the most recent CPI-U projections released by the International Monetary Fund (IMF).  The IMF’s most recent projection for CPI-U is that it will not rise above 2% until at least 2019.  Since its adoption 20 years ago, Nashua’s spending cap has generally averaged between 2-3.5%.   Can we effectively run our City on annual increases in our operating budget of 1-2% for five, six or even seven years in a row?  I doubt it.  This City has never had to do that before.  If the spending cap formula remains unchanged, how many firefighters, police officers, teachers, and other city workers will Nashua have to let go?  What will happen if Nashua gets the reputation of being a city that doesn’t value public safety and education?  Will younger middle class families want to buy homes here?  What will that do to the value of our homes?  What type of community will Nashua be in ten years if we keep the CPI-based spending cap and destroy our public services?  I don’t think we want to find out, especially since we’ve already had to cut back on our public services in recent years.

Let’s not go down that road.  Let’s pass this charter amendment and give the City a little leeway under a new, more realistic cap.  The S&L IPD is projected to be only slightly higher than the CPI-U, at most, a few tenths of a percent each year until 2017.  But with a $250 million dollar budget, that could be hundreds of thousands of dollars in extra cap space that our city government is going to need to provide services to its citizens.  The charter amendment does not get rid of the spending cap.  It is a compromise between the needs of public services and the needs of taxpayers.  Please vote “YES” for the charter amendment.  The future of our City is in your hands.

Gary is a Nashua school teacher and member of the Nashua Teachers Union (AFT)

Do You Frequent A Place That Is Rife With Sexual Harassment? The Answer Will Surprise You

 

Do you support an industry that objectifies women, opening them up to unwanted sexual advances and harassment?   The obvious answer is no, but according to a new report from Restaurant Employment Opportunity Centers United (ROC United) you would be wrong.

The restaurant industry is rife with sexual harassment and actively promotes the objectification of women. Some are obvious, like Hooters, where women are hired not because they are good servers, but how they look in jogging shorts and low cut t-shirts. This type of objectification does not only happen at Hooters. Women in restaurants across the country are told to “dress sexier” to make more tips. Research from ROC shows that women who work at the tipped minimum wage are three times more likely to be told by their manager to dress ‘sexier’ than those who work in states where all workers are paid the full minimum wage.

Unfortunately many states have a tipped minimum wage that allows employers to pay workers as low as $2.13 per hour. Most of their paycheck goes directly to paying taxes and that means workers must rely solely on tips to survive. This disproportionately effects women who make up over 66% of tipped restaurant workers. Of the women who work for tips over 20% are living below the poverty line, forcing them to do anything to preserve their tips.

“Women restaurant workers living off tips in states where the sub-minimum wage for tipped workers is $2.13 per hour are twice as likely to experience sexual harassment as women in states that pay the same minimum wage to all workers,” stated ROC United.

Sexual harassment has the potential to happen in every job, however sexual harassment is significantly higher in the restaurant industry. “While seven percent of American women work in the restaurant industry, more than a third (an eye-opening 37%) of all sexual harassment claims to the Equal Employment Opportunity Commission (EEOC) come from the restaurant industry,” listed ROC United.

“The highly sexualized environment in which restaurant workers labor impacts every major workplace relationship, with restaurant workers reporting high levels of harassing behaviors from restaurant management (66%), co-workers (80%), and customers (78%).” ROC also found that over 60% of all women working on the tipped minimum wage reported being sexually harassed.

Being completely dependent on tips opens the doors to harassment from employers. A whopping two-thirds (66%) of women who reported being sexually harassed said their manager, on a monthly basis, sexually harassed them. If a worker speaks out against an unwanted advancement from their boss, they could end up being scheduled to work shifts where tips are lower in retaliation further discouraging workers from speaking out.

Sexual harassment in the restaurant does not only happen in the back of the house. Workers are afraid to speak out against unwanted advances in fear of losing any tips. As one New York server explained, “There is a lot of sexual harassment [but] you just kind of brush it off…I just want my tip, I don’t want anything to mess up my tip.” ROC United’s research shows that one-third (33%) of women working in the restaurant industry reported being sexually harassed by customers on a weekly basis.

“Depending on customers’ tips for wages discourages workers who might otherwise stand up for their rights and report unwanted sexual behaviors,” wrote ROC.

Do we want our daughters to learn that accepting this type of sexual harassment is part of working in the restaurant industry?

Do we want to teach our daughters that they should sell their bodies to get better tips?

ROC United offers one solution to this problem. Eliminating the tipped minimum wage and raising the minimum wage to a level where workers are less dependent on the tips they receive.

“In order to reduce the pressures that increase sexual harassment, we must eliminate the sub-minimum wage for tipped workers while implementing and strengthening policies to educate workers on their rights and reduce rates of sexual harassment. Legislating one fair wage, so all workers are ensured a minimum wage sufficient to cover their basic needs, and eliminating a sub-minimum wage for tipped workers, can give all workers greater personal agency, creating a safer and more equitable workplace.”

The Middle Class Needs A Real Representative

Like many of you, I consider myself part of the middle class.

I work hard at my job. I have a house, with a huge mortgage that is upside down, and it requires constant care and attention. I am married with three amazing children who bring great joy to our lives but also strain our family finances.

My wife and I decided that it would be better for us if she stayed home to take care of our children, rather than pay for full-time daycare for three children. We know how lucky we are, to be able to make this work.  We know that most families are not so lucky.

Many families have both parents working, some couples have three or four jobs between them, yet they are still struggling every month to pay their bills.

Over the last four decades, workers have greatly increased our productivity – yet our wages have stagnated.  But CEO compensation has skyrocketed: CEOs now earn 350 times what their average employee makes.

Marilinda Garcia says she wants to go to Congress to fight for the middle class. She talks like she is part of the struggling middle class, herself.

Despite her campaign rhetoric, she is anything but a middle class American. She is in her early thirties, yet still lives at home with her parents.  Her main occupation is State Representative, which we all know pays a whopping $100 a year. She also has a side job giving harp lessons, and has done some consulting in the past.

According to Garcia’s campaign financial disclosure statement, she made a little more than $6,000 total last year.

She admits that she would qualify for reduced-cost health insurance through the Affordable Care Act exchange.  Based on her financial disclosure, she would qualify for Medicaid, because her income is well below the poverty line.

But Garcia says she doesn’t buy her health insurance through the exchange – instead, her campaign is focused on getting rid of the Affordable Care Act.  Even though the Affordable Care Act has lowered healthcare costs for millions of middle class Americans, and tens of thousands of Granite Staters.

Garcia also wants to destroy the Department of Education, and essentially eliminate the federal student loan program – another program that the middle class depends on, so their children can go to college.  According to her financial disclosure, she herself owes between $15,000 and $50,000 in student loan debt to Sallie Mae – but she doesn’t want other families to have access to the program.  As a State Representative, Garcia voted to slash the budget, cutting $95 million from the New Hampshire University system, forcing tuition increases and massive layoffs.  That hurt thousands of middle class families.

Garcia opposes the Paycheck Fairness Act, which would shrink the wage gap between men and women.  Giving working women a little more in their paychecks would help middle class families – but Garcia is opposed to it.

Garcia even boasted on a local radio show that she voted against raising New Hampshire’s minimum wage.  Raising the minimum wage would help lift more than 100,000 Granite Staters out of poverty.  A recent Gallup showed that more than 75% of Americans support raising the wage.  Yet Garcia said it was nothing more than a “petty, short-sighted type of little issue.”  Voters who support raising the wage, workers who depend on the minimum wage – these are real people, the same people Garcia wants to represent.

She may be a candidate for Congress, but she’s not a member of the middle class.  Fight for middle class families?  I can’t see it.  Garcia doesn’t even bother to show any respect for us.

She is living at her parents’ house and earning about $6,000 a year.  How is she paying for her student loan and whatever health insurance she bought, wherever she bought it?  Maybe Garcia’s parents could be considered middle class – with two adult children living back at home – but Marilinda herself hardly qualifies.

Granite Staters need a Congresswoman who understands what real middle class Americans are going through – someone who will vote to help us, not hurt us.

Garcia has a proven track record of voting against the middle class.

The middle class needs a real representative, like Annie Kuster.

(Sharing and re-publishing of this post is welcomed and encouraged. Please link to this page and give full credit to Matt Murray of the NH Labor News.) 

End The Pay Gap, Be A Part Of The Building Trades Unions

The Carpenter’s Union is looking for a few good women.

Are you tired of working for $.23 cents less than a man? Are you bored working in that office,  retail shop, or restaurant?  Do you like working outside? Do you like working with your hands?

Do you want to be a part of something that is working to help build a better community?

If you answered yes to these questions, then a career in the build trades just might be right for you.  No more working for less, as a worker covered by a union contract, everyone gets paid equally regardless of sex.

Working in the building trades gives you a sense of accomplishment knowing at the end of the day you can look back and say, “I helped to build that.”

Are you Woman enough to take on the challenge of
working in the construction industry? 

If you think you are ready to see if you have what it takes to work in the construction industry, then contact Joe or Liz at buildingpathwaysnh@gmail.com.  The Building Pathways program is designed to help women test their skills before they join an apprentice program. After completing the Building Pathways 5-week program you can choose the trade that fits you the best.

Program information can also be found on Facebook at www.facebook.com/buildingpathwaysnh.

You can also go to the Carpenters website http://www.nercc.org/sib for more information.

Frank Guinta’s New Ad A Desperate Attempt to Fool Granite State Women Voters

Frank Guinta (Image by Mark Nassal)

Frank Guinta (Image by Mark Nassal)

Deceptive Ad at Odds with Guinta’s Anti-Woman Agenda

Manchester, NH —Frank Guinta’s new ad distorts his disastrous record on women’s health and economic priorities in an attempt to reverse his poor polling performance among New Hampshire women.

“Frank Guinta’s new ad is a desperate attempt to reverse his miserable polling numbers with women and cover up his record in Congress of voting against women’s health priorities, women’s safety against domestic violence, and a woman’s right to choose, even in cases of rape or when the mother’s life is in danger,” said New Hampshire Democratic Party Communications Director Julie McClain. “Guinta’s sudden claim to care about fair pay and childcare is laughable in the face of his anti-woman, Tea Party voting record, and New Hampshire women and families will not be fooled.”

In the ad, Guinta claims—without citation—to support fair pay and childcare. In fact, Guinta skipped the 112th Congress’s single vote on fair pay and never supported a single policy or bill to address the wage gap. In addition, he voted for the destructive sequester cuts that took away childcare options for New Hampshire families and closed Newmarket’s Head Start program.

Background

In 2012, Guinta Skipped Vote on Fair Pay (H.Res. 667)
“ … to amend the Fair Labor Standards Act of 1938 to provide more effective remedies to victims of discrimination in the payment of wages on the basis of sex, and for other purposes.” (roll call 5/31/12, amendment to H.Res. 667)

Sequestration Cuts Guinta Voted for Caused Closure of Newmarket Head Start Program
“The closing of Newmarket’s nearly 20-year-old Head Start Program in June — caused by the federal sequestration — has forced the parents of more than a dozen children to either drive to a nearby community for the program or to just stay home.” (roll call on S. 365, Foster’s 7/13/13)

Marilinda Garcia Is A Member Of ALEC, And Why That Is Important To YOU!

ALEC

Right now State Rep. Marilinda Garcia is attempting to move up the political ranks from State Rep. to US Congresswoman. She has been out on the campaign trail talking about how she wants to fight for the middle class and that she speaks for the “millennial” generation.

Other than the fact that Marilinda is still living with her parents at age 32, she is just another politician who has been bought and paid for by corporate lobbyists and big money donors like the Koch Brothers.

Hopefully by now you have heard about ALEC, the American Legislative Exchange Council, but just to make sure we are all on the same page, I will go over a few highlights.

ALEC brings in state legislators from across the country to luxurious five-star hotels, where corporate lobbyists wine-and-dine legislators.

While enjoying their all expense paid vacation junkets, legislators are courted by corporations into submitting model legislation back in their home states. This model legislation usually benefits the corporation like reducing pollution standards (RGGI), increasing profit margins by pushing Right To Work laws, and hundreds of other pieces of legislation.

Marilinda Garcia (Gage Skidmore CC FLIKR)

Marilinda Garcia (Gage Skidmore CC FLIKR)

Even though Rep. Garcia told the Union Leader [1/27/12] that, “there was nothing wrong with lobbyist taking legislators out for dinner,” these legislators are meeting with corporate lobbyists in secret. Legislators are skirting ethics laws by submitting legislation — on behalf of the corporate special interests — as if they wrote it, even thought they received the model legislation on a junket paid for by ALEC’s corporate backers.

Some legislators are proud of their connection to ALEC, like New Hampshire’s State Rep. Jordan Ullery, (State Senate candidate and) State Rep. Gary Daniels, and former Speaker of the House William O’Brien.

Others are not as forthcoming about their connection to the controversial lobbying group. “Members of ALEC from New Hampshire include 2nd Congressional District candidate Marilinda Garcia,” the Telegraph reported. [Nashua Telegraph, 12/08/13] 

As a member of ALEC, legislators are expected to submit the ALEC model legislation, created for and by corporate special interests, or face the wrath of the Americans For Prosperity political action fund. Americans for Prosperity was created and is heavily funded by ultra-conservative millionaires and billionaires like the Koch Brothers, to push candidates to do their bidding or face an AFP primary challenger for their seat.

After these junkets, politicians vow to support their new corporate sponsors over the people who elected them. Some would even say this is legalized corporate bribery.

State Rep. Marilinda Garcia has been called out for this type of activity before, when she was flown down to Philadelphia for an all expense paid trip to view a for-profit cancer treatment center. The Cancer Treatment Centers of America spent hundreds of dollars per person to fly out Garcia and four other legislators, in hopes they would support legislation, submitted by Rep. Garcia, which provided monetary incentives to CTCA to build a new center in New Hampshire.

In response to criticism that she is taking campaign contributions from CTCA in trade for submitting this legislation Rep. Garcia told the Union Leader [1/27/12],   “There have been no campaign contributions or junkets offered by the Illinois-based company. But Garcia said she doesn’t see anything wrong with lobbyists taking legislators out for dinner.”

I don’t know about you, but I do see something wrong with corporate lobbyists bribing our state legislators with expensive trips and fancy dinners.

This makes me wonder, what would Congresswoman Marilinda Garcia be like? Would she be a true representative of New Hampshire’s Second Congressional District or will she continue to do the bidding of her corporate sponsors?

I want someone in Washington who is there to represent me, not a bought and paid for puppet for the millionaire and billionaires who fund her campaign and the corporate special interests who shower her with lavish vacations and all expense paid junkets.

Millennials Play A Key Part In Our Elections. Why Is Fosters Trying To Scare Them?

Money ('PT Money' ptmoney-com)

Image via ‘PT Money’ at ptmoney.com

Republicans and Democrats are actively trying to court “millennials” to vote for them. Of course the Republicans are at a big disadvantage in this fight because they are stigmatized by the fact that many feel the GOP is nothing but a party of old rich white guys.

It does not help when you see editorials like this one (Another day older and deeper in debt) from the ultra-conservative editors at Fosters Daily Democrat. They are trying to push millennials into voting against Senator Shaheen because she wants to help reduce their student loan debt, and they say that could raise taxes on, “your parents”. Say what?

“Democrats such as U.S. Sen. Jeanne Shaheen would like to offer you lower interest rates, at the expense of raising taxes on, perhaps, your parents.”

This is complete garbage. Senator Shaheen is pushing for a bill authored by Senator Elizabeth Warren, which would allow students to refinance their student loans from interest rates of 6-8% to less than 1%.

Fosters does get a few things right:

  • The average college graduate in New Hampshire leaves school with $33,000 in student loan debt.
  • The federal government is making money off of your student loans.

These are absolute true, and I think it is appalling. The federal government made upwards of $66 billion dollars in profit off of student loans between 2007 and 2012. Senator Elizabeth Warren essentially said that if banks can borrow from the government at .75% then our students should be given the same deal as the big banks.

So what would happen to the federal budget if they cut out the $66 billion dollars in profits from student loans? Fosters wants you to believe that this will result in a tax increase on your parents. This is completely untrue. None of these changes would increase taxes on the middle class families of New Hampshire.

The tax increase that Senator Warren suggested has been dubbed “the Buffet rule” after billionaire Warren Buffet. The tax increase would only effect the ultra-wealthy 1% of America. Warren Buffet has said in many different ways that it is absolutely wrong that he pays a lower effective tax rate than his own secretary. He suggested that the ultra-wealthy 1% could, and should, be paying a higher tax rate.

I agree with Fosters that the national debt is a problem. We must find a way to reduce our national debt that helps to build a stronger economy and a better community. The editors at Fosters and I disagree on the ways we need to address this problem. They want to follow the GOP rhetoric that we must reduce the size of government and force draconian cuts to all federal programs (except for anything surrounding the DOD). I disagree with this. If you look back at history, it was government investment through work programs (building roads and bridges), increasing the minimum wage, a strong manufacturing base and strong unions that pulled us out of the Great Depression. At the same time we created “Social Security” to help our seniors retire with dignity.

Next we need to raise our gross domestic product. We need to increase manufacturing here at home and start reducing our debt by changing our trade deficit to a trade surplus. The more we make right here at home, the more people have jobs. The more jobs we have, the more money is spent in our local communities. It starts by looking for the “made in the USA” label!

Next to reduce government spending and reduce our national debt, we must start by increasing the minimum wage. Too many Americans are working one, two or even three jobs and can barely afford to pay their rent and feed their children. By increasing the minimum wage, to a real living wage, full time workers would be making enough to take care of their family without any assistance from the government.

Of course there are other solutions that none of the “Tea Party” conservatives want to talk about. One is placing a .5% tax on Wall Street. The tax would take a fraction of a penny on every transaction. This “Robin Hood Tax” would generate upwards of $350 billion dollars a year. $350 billion would cover the loss in revenue from the student loan interest, restore some of the cuts made to social programs, and still have plenty more to begin to repay our national debt. This would also have the added benefit of slowing down Wall Street and encouraging corporations to invest more of their profits in workers and the longevity of their company, not inflating their stock prices.

Ultimately it is about ensuring that corporations and the millionaires and billionaires are paying their fair share in taxes.

 __________________________________________

One last thing, Fosters tossed in this line about Social Security which is another attempt to scare millennials into believing that Social Security will be extinct by the time they reach retirement.

“According to Pew Research, 90 percent believe Social Security benefits will be reduced (39%) by the time you become eligible or won’t exist at all (51%).” (Emphasis added)

This statement is nothing more than proof that the majority of Americans do not understand what is really happening to Social Security. These numbers are the results of a poll where people believe that Social Security will completely fall apart.

As the AFL-CIO laid it out, “Social Security is not going broke. It will always be able to collect payroll tax revenue to fund benefits. According to the Trustees, Social Security can pay 100% of promised benefits until 2033. Without any changes at all, Social Security can pay three-fourths of promised benefits indefinitely after that.

The Social Security Trust Fund collects money from payroll taxes. By increasing the minimum wage, it would automatically increase the revenues collected through the payroll tax therefor strengthening Social Security, and adding to its fully funded longevity.

Many elected leaders like Sen. Elizabeth Warren and Sen. Bernie Sanders think that minor adjustment to the Payroll Tax would strengthen Social Security and would allow for higher benefits for retirees. They just want to remove the Social Security cap forcing the ultra-wealthy to pay into Social Security Trust Fund like all the rest of us. Problem completely solved!

 

Nightmare on Wall Street? Are Stock Buybacks Creating Another ‘Financial Bubble?’

An American flag festooned with dollar bills and corporate logos flies in front of the Supreme Court during oral arguments in the case of McCutcheon v. Federal Election Commission.  Image by JayMallin.com

Image by JayMallin.com

Some blog posts are easy to forget. But the one I wrote last week is beginning to give me nightmares.

Here’s why: the stock market keeps hitting record highs. But the so-called “economic recovery” – which started in June 2009 – is just beginning to “trickle down” to us average Americans.

And oh, such a sloooooow trickle! “Although the economic recovery officially began in June 2009, the recovery in household income did not begin to emerge until after August 2011. …Median income in February 2014 [was only] 3.8 percent higher than in August 2011.”

And we’re not anywhere near “recovered” from the damage caused by the last two recessions. “The February 2014 median was [still] 6.2 percent lower than the median of $56,586 in January 2000.”

So in last week’s blog post, I took a look at the research UMass Professor Bill Lazonick and his team have done, about how top US corporations have been distributing their net income to shareholders rather than reinvesting money in their business (or workers).

What Professor Lazonick found: since 2004, the surveyed companies have returned 86% of net income to stockholders through dividends and stock buybacks. In 2013, those companies spent an average of $945 million just buying back their own stock. Repeat: $945 million is the average. That’s per company. In one year.

So I took a closer look at that, using a couple of companies as case studies. I keep hoping that I’m completely wrong. I’m not an economist, I’m not an expert. I’m just a blogger who looks at things from my own personal perspective.  And when I looked, here’s what I found:

FedEx:

  • CEO Fred Smith owns more than 15 million shares of FedEx (not counting shares held by his wife, his family holding company or his retirement plan.)
  • Last October, FedEx announced plans to buy back 32 million shares – more than 10% of its stock.
  • FedEx borrowed $2 billion to help pay for that stock repurchasing program. Those bonds run from 10 to 30 years.
  • In the past year, FedEx stock has gained over 44 percent. That translates into a huge increase in net worth for Mr. Smith… somewhere between a half-billion dollars (as of my post last week) and $600 million (the stock price kept going up). Yeah… FedEx borrowed $2 billion… and its CEO personally benefited by a half-billion-plus.
  • But maybe there’s a reason why FedEx stock soared by 44%? Let’s see… according to the International Business Times, its ground shipping business grew by 13% and it is trimming employee benefit costs by 13%; and so the overall corporate profits grew by 24%.
  • Corporate profits grew by 24%… but the stock price grew by 44% (benefiting “company executives who receive stock-based compensation”).
  • But of course there are fewer shares of stock now than there were last year, because of the buyback program. So I looked at the company’s “market cap” – or, the total value of all the outstanding shares. And that also grew: from $39.03 billion when the stock buyback was announced last October… to $50.35 billion as of Friday. So the market cap grew by $11.32 billion – or about 29% – during roughly the same time that profits grew by only 24%.
  • Let me recap: The company grew its business a bit, while at the same time cutting employee costs. It borrowed to buy back stock, enriching its CEO. And Wall Street rewarded this behavior. Stock value grew – at a much faster rate than the company’s profits were rising.

wall_streetThat difference between 24% growth in profits and 29% growth in market value? Isn’t that just a “Wall Street bonus” for taking part in this borrow-and-buyback scheme?  But why is Wall Street is rewarding FedEx for moving toward a “loot the company” model of business behavior?

It’s not just FedEx.

One analysis, from June 2014:

Since the end of 2012, using the DOW (NYSEARCA:DIA) companies as a large cap company market proxy, share buybacks in dollar volume have exceeded the actual level of after tax profits recorded by the 30 companies in the index. What this means is that somewhere in the DOW there must be more than a handful of companies, which are either borrowing money or deferring capital expenditures in a potentially harmful manner for the sole purpose of buying their shares back in the market to boost share price.

From last week’s Wall Street Journal:

Companies are buying their own shares at the briskest clip since the financial crisis, helping fuel a stock rally amid a broad trading slowdown.

Corporations bought back $338.3 billion of stock in the first half of the year, the most for any six-month period since 2007, according to research firm Birinyi Associates. Through August, 740 firms have authorized repurchase programs, the most since 2008.

No, it’s not just FedEx.

Cisco:

Back in February, Cisco announced an $8 billion bond issue “to help finance stock buybacks after the shares lost almost 6 percent over six months.”

  • Cisco CEO John Chambers owns about 2 million shares of Cisco stock.
  • Cisco stock was trading at $22.12 when that bond issue/buyback was announced. Now, it’s trading at $25.20. Do the math: that’s about a 14% increase in per-share price; and more than a $6 million increase in Mr. Chambers’ net worth.
  • Cisco’s market cap was $113.95 billion when the bond issue/buyback was announced.   Now, it’s $128.7 billion. Do the math: that’s about a 13% increase in Wall Street’s assessment of the company’s total value.
  • But what’s going on with the actual company?   Last month, Cisco released an earnings statement “that illustrated its troubles as one of the tech industry’s giants competing in a rapidly changing environment.”  Profits are down, compared to last year. And it is planning to eliminate 6,000 jobs.
  • Let me recap: Profits are down, layoffs are pending. But the company borrowed $billions to buy back stock, enriching its CEO and other executives.   And Wall Street rewarded this behavior.

Want to know what worries me most about Cisco? It looks like Cisco’s CEO is selling his stock. According to the filings, he owns a lot less Cisco stock now than he did when the bond issue/buyback was announced. Doesn’t he have any faith in his corporation’s long-term prospects?

It’s not just Cisco.

Bloomberg News:

American companies have seldom spent more money than they are now buying back shares. The same can’t be said for their executives. … While companies are pouring money into their own stock because they have nothing better to do with it, officers and directors aren’t… Insiders buying stock have dropped 8 percent from a year ago, poised for the fewest in more than a decade.

wall street bullAnd even worse? That perspective that companies “have nothing better to do” with their money than buy back stock.

As of a couple of weeks ago:

In total, US companies have announced USD309bn worth of share repurchases year-to-date, up from USD259bn for the same period a year ago, according to Thomson Reuters data.

Do the math. Nine months of stock buybacks equals about 6 million median-wage American jobs.

Let me rephrase that.

The money that US corporations are spending buying back their own stock “because they have nothing better to do with it” could give a $52,000-a-year job to two-thirds of unemployed Americans.  

Or: a job paying more than twice minimum wage to all unemployed Americans.

Instead… Cisco’s cutting 6,000 jobs. FedEx is cutting employee benefits. And who knows what all the other companies in Professor Lazonick’s survey are doing?

Here’s the thing: buying back stock doesn’t add any intrinsic value to a company. It’s not a new product line, it’s not a new factory, it’s not any kind of investment in the company’s future. All it does is concentrate the stock ownership. Same everything else – just fewer shares of stock. (Sort of like ultra-concentrated dish soap… same basic thing, just in a smaller bottle.)

So, aren’t these rising market caps at least somewhat artificial? Why should a company be worth more, just because it has fewer shares of stock?

Cisco may have declining profits… but its market cap is growing. FedEx may be growing, but its market cap is growing faster. Why?

Here’s the other thing: To accomplish this concentration of stock ownership… corporations are bonding untold billions of dollars. (Yes, that’s another thing I couldn’t find tracked anywhere.)

So yeah, they’re borrowing against the future… to improve stock prices today.

soap bubbleAnd Wall Street is encouraging this.

There’s a technical term for those sorts of artificial increases: they’re called “bubbles.”

And that’s why I’m starting to have nightmares.

I’m wondering when this latest Wall Street bubble is going to burst.

Walt Havenstein’s Campaign Full Of Controversy And Has A Record of Failed Leadership

The battle lines for the corner office are now official. Walt Havenstein was overwhelmingly selected as the GOP candidate for Governor of New Hampshire.

Lets start with a few facts about Walt:

  • Walt is a graduate of the US Naval Academy, and served in the US Marines and Marine Corp reserves for a combined 28 years.
  • Walt was the CEO of BAE System, a government defense contractor.
  • Walt was also CEO of Science Applications International Corp. (SAIC), a science, engineering, and technology firm that worked closely with federal agencies like the NSA, the DOD, and the Department of Homeland Security.

Isn’t it strange that the same man – who has made massive amounts of wealth working for and contracting with the federal government – is now going around saying we need “limited government” and “fiscal responsibility”?

So far, that fundamental inconsistency hasn’t been discussed much. Havenstein’s background and campaign is too full of other controversies.

There were questions about Havenstein’s residency and eligibility to run for Governor of New Hampshire.

After retiring from BAE, Havenstien became the CEO of SAIC, based in Maryland. Havenstein moved to Maryland where he owned a home and used tax exemptions that are only available to Maryland residents. After deciding to run for office in New Hampshire, Havenstein fought to prove his eligibility with the NH Ballot Law Commission; and they sided with Havenstein. However, after Havenstein’s residency was confirmed by the State of New Hampshire, the State of Maryland came after Havenstein for tax fraud.

“Havenstein will be billed for several years of back taxes after officials in Maryland said he accepted tax breaks he shouldn’t have. In 2007, Havenstein signed a pair of affidavits pledging that his primary residence at the time was in Maryland, and for four years, he received tax credits known as the homestead exemption. But upon entering the race for governor, Havenstein asserted that he has always lived in New Hampshire, and the state Ballot Law Commission ruled in his favor. Revenue officials in Maryland told News 9 that Havenstein shouldn’t have accepted benefits in that state.” [WMUR, August 20, 2014]

Then there is Havenstein’s “economic plan” to spur growth and create 25,000 new jobs.

“My economic plan commits the state to helping create 25,000 jobs over 2.5 years by changing the culture in Concord to focus on the private sector. That’s the same approach I successfully took at BAE Systems, where we created 1,500 new high-tech jobs right here in New Hampshire” (Union Leader Op-Ed, Sept 3, 2014)

The funny thing is that Havenstein is trying to tap into the current economic growth that Governor Hassan spurred. The Bureau of Labor Statistics reports that between June 2013 and June 2014, New Hampshire created over 10,000 new jobs. Included in the 10,000 new jobs are 2,500 new jobs in the hospitality and leisure industry – strong signs that the New Hampshire economy is already rebounding.   The BLS also shows an increase of over 1,000 new jobs in manufacturing, which would be the closest calculator for “high tech” jobs in New Hampshire.

As CEO of BAE Systems, Havenstien did create jobs but he did it by using our tax dollars. In 2008, BAE was the 5th largest contractor with the federal government receiving over $15.2 Billion dollars. This is more than have of their 2008 revenue, and this does not include the revenue from the governments of the United Kingdom and Saudi Arabia.

Havenstein is attempting to portray himself as a leader by citing his work as the CEO of two massive corporations. What Havenstein is neglecting to tell you is that as the CEO of SAIC, Havenstein collected his $20 million dollar salary while the company shed thousands of jobs and the company’s stock plummeted 32%.

SAIC has had other problems, too. In Oakland, California SAIC came under fire for being selected to design a city-wide “surveillance hub” that some said would infringe on their civil liberties and violate their rights to privacy. Civil liberty issues aside, the people of Oakland took issue with SAIC being selected to design this “surveillance hub” due to the company’s history.

“In recent years, SAIC has been accused of defrauding municipal governments, bribing foreign officials, and delivering shoddy products. And when the company does deliver the goods at cost and on time, it’s often for militarized projects linked to human rights abuses. Among SAIC’s recent contracts: training the Egyptian military, operating drones used to kill foreign citizens, building and operating portions of the NSA’s internet spying system used on Americans, and more.” (East Bay Express, Aug. 2013)

What the East Bay Express was referring to: in 2011, SAIC was forced to remove three high-level executives for work relating to New York City’s “CityTime” employment timekeeping system.

“The U.S. Attorney’s Office for the Southern District of New York has alleged that “a massive and elaborate scheme to defraud the city” corrupted the program, and it charged Gerard Denault, SAIC’s lead project manager on the program, with receiving at least $5 million in illegal kickbacks.” (Washington Post Oct. 2011)

The project was an attempt for the City of New York to move municipal employees from paper punch cards to new digital palm scanners.

“The project’s initial budget was $68 million. But after SAIC acquired the company that had won the competitive bidding process for the work, CityTime’s cost mushroomed to more than $740 million in ten years.” (East Bay Express, Aug. 2013)

U.S. Attorney Preet Bahara said, “virtually the entirety of the more than $600 million that was paid to SAIC was tainted directly or indirectly by fraud.” (NY Daily News, June 2011)

NYC Mayor Bloomberg called for SAIC to refund $600 million dollars to the city.

And just before SAIC agreed to pay a $500 million settlement to NYC, Havenstein announced that he would be retiring for “personal reasons”.

At least Havenstein knows when to jump off the sinking ship.

The Washington Post was very critical of Havenstein and his leadership of SAIC.

“The company struggled under the strategy, watching its profit and revenue decline.” (Washington Post, Aug. 2012)

What’s next for a failed CEO? Politics, of course!

The people of New Hampshire should look closely at Havenstein’s record of failed leadership.   Havenstein is not what we need in the corner office. We do not need a Governor who is good at padding his bank account while others get shafted.

Havenstein has already stated that he will repeal the bi-partisan Medicaid Expansion bill that opened access to healthcare for 50,000 Granite Staters. I wonder how Walt would feel if we took away his healthcare?

Havenstein is also vehemently opposed to raising the minimum wage.

“I’m not in favor of raising the minimum wage because, I’m not in favor of raising the minimum wage, period.” [Havenstein Interview with WBKB, 15:03 min]

Havenstein does not know what it is like to be one of the tens of thousands of struggling middle class Granite Staters. With millions in his pockets, he has never had to choose whether to buy food or pay the heating bill. The fact that he would not even consider an increase in the minimum wage shows just how out of touch Havenstein is with real Granite Staters.

WMUR TV Fabricates A Story Promoting Scott Brown, Attacking Billy Shaheen

Say goodbye to news coverage with integrity on WMUR TV.

Many NHLN readers already think WMUR TV has been biased toward Republican candidates and causes for years – but they have reached a new low.

This past weekend, WMUR TV decided to try to gain some ratings points by completely misrepresenting a quote from Senate candidate Scott Brown. Instead of just bending the facts to make a mediocre story more appealing, WMUR completely twisted them to build a news angle that didn’t actually exist.

Here’s what really happened: Last Wednesday, Scott Brown visited the Red Arrow Diner in Manchester. He met many voters, both supporters and opponents, as you would expect in any public campaign stop. Among the people he met was Manchester resident Wayne Alterisio. Wayne is a popular figure in the city and is the NH State Association of Letter Carrier State President.  Wayne and I have been friends for decades.

I don’t remember when I first told Wayne that Scott Brown and I went to high school together in Wakefield, MA. Actually, Scott and I were pretty good friends until Scott went off to college. We sort of lost touch after that. However, Wayne never forgot that Scott and I had once been good friends.

Last Wednesday, while Wayne was eating his breakfast in the Red Arrow Diner, Scott Brown walked in and they engaged in a conversation.

As Wayne told me later, Wayne greeted the candidate cordially, “Hi Senator Brown … I know a very good friend of yours, Bill Brickley.Wayne and Senator Brown then had a discussion on the Minimum Wage as that is a significant issue for many working class families.  As Senator Brown was ending their conversation, Brown said, “Say hi to Billy for me.

WMUR did not have their own camera crew following Senator Brown, so who knows where they got their information about what was said that day. But incredibly, in their coverage of the Red Arrow Diner visit, WMUR cited Senator Brown’s “Say hi to Billy” comment as a reference to Senator Jeanne Shaheen’s husband, William “Billy” Shaheen.

There are probably hundreds, if not thousands, of people in New Hampshire named “Billy.” So what reason would WMUR TV have, to think that Senator Brown’s “Say Hi to Billy” comment referred to Senator Shaheen’s husband?

WMUR then built an entire segment around the comment. WMUR Political Director Josh McElveen was the reporter (or should I say creator?) of the story, making it even more egregious. The almost 3 minute piece has been widely circulated, both when it was originally shown and then when it was highlighted on weekend news recaps.

The only thing worse than a fake news story is a widespread fake news story.

WMUR did not see that the real new story in the conversation between Wayne and Senator Brown was growing income inequality and the stagnant Minimum Wage.

Evidently there isn’t much appetite for that. Instead, WMUR took a one-sentence remembrance, completely out of context, and pushed it to attack Senator Shaheen and her husband Billy.

It’s easy to connect this pro-Scott Brown coverage to the $74,545 that the Scott Brown campaign has paid WMUR this week for just one particular ad that is to be shown 148 times. I would imagine this saturation is already conveying Senator Brown’s message sufficiently. Feeling the need to manufacture fake anti-Shaheen “news” angles seems to me to hint at overkill.

Incidentally, WMUR is in a bitter dispute with its own 13 IBEW photographers, as the company continues to deny them pension benefits that are afforded to other WMUR employees. Since 2005, these 13 union employees have been singled out and denied pension benefits. This is unconscionable when you consider the fact that WMUR parent corporation Hearst has made $10 billion in revenue. They are the only 13 employees at the station denied these benefits.   This may be the reason that WMUR had to rely on a NECN video crew to get a news feed of Senator Brown’s Red Arrow visit that took place one mile from WMUR studios.

WMUR TV owes an apology for this fabrication.

The first victim of this malicious lie is NH Letter Carrier State President Wayne Alterisio. Wayne was falsely accused of being there on the instruction of Billy Shaheen. Wayne should be commended for being cordial to Senator Brown and for bringing up the minimum wage issue. Minimum Wage is directly related to the income inequality that has become one of our nation’s biggest problems. Though they disagreed on that subject, it was a respectful conversation.

Also due an apology is the campaign of Senator Jeanne Shaheen. She had absolutely nothing to do with Wayne choosing to have breakfast at the Red Arrow.

The biggest apology should go to the viewers and advertisers of WMUR.  Though the station portrays itself as a credible news organization, the actions related to this story show otherwise. Viewers and advertisers expect WMUR to report the news factually – and not act like tabloid journalism by completely fabricating news.  This wasn’t an accident or a typo. This was clear fabrication and WMUR TV must be held responsible.

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