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Defense Workers Union Objects to More Base Closures

AFGE: Costly new BRAC round would disrupt military readiness, harm communities

WASHINGTON – The American Federation of Government Employees, which represents 300,000 civilian employees in the Department of Defense, is urging lawmakers to reject efforts to launch a new round of military base closures.

An amendment to the Senate’s version of the 2017 National Defense Authorization Act (NDAA) would require the Pentagon to develop a list of military base closures that would be presented to Congress for action. The amendment, from Sens. John McCain of Arizona and Jack Reed of Rhode Island, would in effect launch another Base Realignment and Closure (BRAC) round.

“In this age of military uncertainty, it is not the time to authorize a new BRAC round,” AFGE Legislative Affairs Director Thomas Kahn said in a Sept. 11 letter to members of the Senate. “A precipitous BRAC action at this time would have serious consequences and the toll on military readiness is not worth the risk.”

A new round of BRAC would incur significant upfront costs, at a time when DoD and other federal agencies have been forced to cut spending under the 2011 Budget Control Act. Much of the promised savings from previous base closures never came to pass.

“Previous BRAC rounds have not always resulted in the initially projected longer-term savings. To the extent that savings were realized, the impact frequently occurred much later than anticipated and the amount was lower than promised when bases were closed,” Kahn wrote.

The House rejected efforts to include a BRAC in its version of the NDAA, which passed overwhelmingly in July. AFGE is calling on members of the Senate to follow the House’s lead.

“Military bases are critical to our nation’s defense, to millions of military and civilian employees who work at defense bases, and to local communities that depend on bases for their economic survival,” AFGE National President J. David Cox Sr. said. “We must not repeat the mistakes of the past, where the Base Realignment and Closure process increased our national debt in the short term and disrupted the lives of hardworking civilians and service members for promised savings that never materialized to the extent promised.”

DoD Union Applauds House Vote to Protect Civilian Jobs from Outsourcing

Amendment to Defense appropriations bill retains department-wide ban on conducting privatization studies

WASHINGTON – The American Federation of Government Employees is praising the U.S. House of Representatives for including a bipartisan measure in next year’s Department of Defense appropriations bill that will protect civilian jobs from being outsourced.

AFGE Sunders“The Armed Forces rely on civilian employees for a range of services that are vital to military readiness, from training warfighters and maintaining equipment to treating the wounded and sustaining facilities,” AFGE National President J. David Cox Sr. said. “The House action ensures that these jobs cannot be outsourced, since the current privatization process is biased against federal workers.”

The House on June 15 included a provision in the fiscal 2017 DoD Appropriations Bill that bans conducting public-private contracting studies under Office of Management and Budget Circular A-76.

The provision was added as a bipartisan amendment offered by Reps. Matt Cartwright of Pennsylvania, Walter Jones of North Carolina, Don Beyer of Virginia, and Rob Bishop of Utah. The House approved the amendment by voice vote.

“A ban has been in place since fiscal 2010 because of systemic problems with the contracting out process and DoD’s failure to produce a full and meaningful inventory of its contractor workforce,” Cox said. “Some lawmakers have proposed lifting this ban, even though these well-documented problems remain in place. I extend my heartfelt gratitude to the four members of Congress who pushed to include a DoD-wide ban in the Defense appropriations bill.”

The Senate dropped the moratorium from its version of the fiscal 2017 National Defense Authorization Act and failed to consider a bipartisan amendment that would have restored the ban. This is the first time a DoD-wide ban has been included in the Defense appropriations bill.

“Civilian employees are the backbone of our military and no effort to outsource their jobs should move forward until DoD can show it has an unbiased process in place for conducting privatization studies,” Cox said.

AFGE represents more than 270,000 DoD civilian employees nationwide and overseas.

Pfizer Jacks Up Drug Costs, Pays Billions to Stockholders

Prescription Prices Ver5

Photo by Chris Potter via Flickr

Ever wonder why prescription drug costs are so high? Take a few minutes and read Bill Lazonick’s piece on Pfizer.

From January 2001 through September 2015, Pfizer paid out [to stockholders] $95.5 billion in buybacks and $87.1 billion in dividends.

That’s $182.6 billion paid to stockholders… compared to $37.1 billion paid in corporate taxes over the same time frame. Do the math. That’s almost five times more money paid to stockholders than paid in taxes.

Now, stop and think about this. Why are stockholders getting all that money? When shares are bought and sold on the stock exchange, none of that money goes back to the corporation. Instead, the money goes to the previous owner of the stock – who may have owned that stock for less than a second. (Read more about “high frequency trading” here.)

And yet, most corporations pay lots of money to their stockholders. For what? Passing stock from one owner to another isn’t investing in the corporation’s future. So far in 2015, Pfizer has paid more than twice as much to stockholders as it has invested in R&D.

Why are stockholders getting all that money?

— — — —

tieby Unsplash via PixabayPaying money to stockholders benefits corporate executives who are “paid for performance.” (How this works, using Verizon as a case study, is a previous NHLN post.) In the case of Pfizer’s CEO, “75% of his long-term equity awards are earned based on relative and absolute total shareholder return.” In other words, the CEO’s compensation depends on Pfizer paying money to shareholders. If stockholders don’t get enough money, the CEO doesn’t get that compensation. And it’s not just the CEO. All of Pfizer’s top corporate executives are paid according to whether they meet “shareholder return” targets.

Back to Bill Lazonick’s piece:

In 2014, [Ian C.] Read as [Pfizer] CEO had total direct compensation of $22.6 million, of which 27 percent came from exercising stock options and 50 percent from the vesting of stock awards. The other four highest-paid executives named on Pfizer’s 2015 proxy statement averaged $8.0 million, with 24 percent from stock options and 41 percent from stock awards.

Remember, a good chunk of that compensation was based on the amount of money paid to stockholders. Which probably explains why Pfizer is paying so much more to stockholders than it’s spending on R&D.

— — — —

dollar by TBIT via PixabayWhere does all that money come from, anyway?

From Bloomberg:

Pfizer Inc., the nation’s biggest drugmaker, has raised prices on 133 of its brand-name products in the U.S. this year, according to research from UBS, more than three-quarters of which added up to hikes of 10 percent or more. … In a note Friday, analysts at Morgan Stanley said Pfizer’s net prices grew 11 percent a year on average from 2012 to 2014.

The Wall Street Journal documented Pfizer’s three-year market research campaign to decide the price of a new breast cancer drug.

“[I]ts process yielded a price that bore little relation to the drug industry’s oft-cited justification for its prices, the cost of research and development. … Staff members put together a chart estimating the revenue and prescription numbers at various prices… The chart showed a 25% drop in doctors’ willingness to prescribe the new drug if it cost more than $10,000 a month.”

Two years ago, AARP investigated the pricing strategy for another Pfizer drug, with an expiring patent:

[T]he manufacturer of the popular anti-cholesterol drug Lipitor employed an unusually aggressive strategy — including a pay-for-delay agreement, a coupon program, and a substantial price increase — to try to maintain revenue and market share after Lipitor’s patent expired. … Several major U.S. retailers have filed lawsuits against Pfizer and Ranbaxy that accuse them of violating antitrust laws by striking a deal that kept generic versions of Lipitor off the market… Pfizer’s chief executive reported that they maintained three times more market share than what is traditionally seen when blockbusters lose patent protection, “add(ing) hundreds of millions of dollars of profitability to the company.”

And a bunch of Pfizer’s profits come from government spending. There isn’t a lot of available research into government spending on pharmaceuticals, but what I’ve found is enlightening. As of 2010, Pfizer’s Lipitor – in varying strengths – represented three of the top-20 drugs prescribed under both Medicare and Department of Defense health programs. As of 2003, Medicaid was spending almost $650 million a year just on Lipitor.

That’s a lot of taxpayer money going to Pfizer.  While the corporation is paying twice as much to shareholders as it’s spending on R&D. While it’s paying five times as much to shareholders as it’s spending on corporate taxes. While Pfizer is trying to use the US corporate tax rate to justify off-shoring profits through a merger with Allergan.

While Pfizer’s CEO is receiving millions in compensation based on the amount of money the corporation pays to stockholders.

— — — —

hands by Gaertringen via PixabayAnd where else does that money come from?

If you have family or friends on Medicare, you probably know that the price of prescription drug coverage is going up significantly next year – even though there will be no Social Security COLA.

If you’re a State of New Hampshire retiree, you know that your cost of drug coverage is going up significantly next year – even though there hasn’t been a retirement COLA for the past six years.

The billions being paid to Pfizer stockholders are coming out of a lot of pockets… including the pockets of people who are spending their “golden years” choosing between medicine and food.

One more time: why are stockholders getting all that money? What have they done to deserve it?

Union Blasts DoD Action to Slash One-Fourth of Workforce

Lexington Veterans Affairs Medical Center (WikiCommon)

Lexington Veterans Affairs Medical Center (WikiCommon)

Across-the-board cuts target civilian workers, fail to reduce actual workloads

WASHINGTON – The American Federation of Government Employees, which represents more than 250,000 civilian employees within the Department of Defense, is strongly opposed to the Pentagon’s plan to slash headquarters funding and staffing by 25%.

The cuts were spelled out in an Aug. 24 memorandum to DoD leaders from Defense Deputy Secretary Robert Work that has just been made public.

“We strongly oppose the Department of Defense’s plan to slash its headquarters funding by 25 percent through fiscal 2020,” AFGE National President J. David Cox Sr. said. “These arbitrary staffing cuts will affect many of our members who are considered headquarters employees, while likely failing to enforce cuts in the more expensive contractor workforce in headquarters.”

DoD previously ordered a 20% cut in headquarters funding, but Work’s memo claims the Pentagon needs additional savings to fund higher priority requirements. 

AFGE opposes all across-the-board staffing cuts, since by their very nature they are carried out indiscriminately, without regard to how vital work will continue to be performed with fewer staff. 

“Even more distressing, these so-called headquarters cuts could serve as a terrible precedent for arbitrary cuts to the civilian workforce, which is the least costly of the department’s three workforces but the one that is already scheduled to be cut the most through 2019,” Cox said.

The Army already is planning to slash the civilian workforce by 30% at 30 installations nationwide. 

“Who will perform the work when a fourth or more of the workforce is obliterated? If DoD is intent on slashing personnel, then it needs to start deciding what work simply cannot be performed any longer and cut staff accordingly,” Cox said. “If cutting expenses is the number one priority, then the first place DoD should target is the vast bureaucracy of contractor personnel who cost more than federal workers and are less accountable to taxpayers.”

The American Federation of Government Employees (AFGE) is the largest federal employee union, representing 670,000 workers in the federal government and the government of the District of Columbia.

Brigadier General Adams’s And Sen. Murphy Says ‘Our National Security Is At Risk From Outsourcing’

Chris Murphy And The Alliance For America Manufacturing

Senator Chris Murphy (D-CT), Congressman Mo Brooks (R-Ala.), Congressman Tim Ryan (D-Ohio), Brigadier General Adams’s, and Scott Paul. (Credit Kaylie Hanson)

As if loosing our good jobs to China was not bad enough now our national security is at risk because of the policies set forth in Washington.  We are at risk of being forced into a position where the United States could be called into war and we cannot supply our troops. Why, because we do not produce the materials needed to create our weapons of war.

For many years we have been talking about the decline of American Manufacturing.  Now that decline in manufacturing and mining is starting to come back to bite us again.

Have you ever heard of lanthanum?  Well let me tell what lanthanum is used for.  Lanthanum is one of the main ingredients needed to create night vision goggles.  Ring a bell yet? No me either.   The reason why I am talking about lanthanum is because lanthanum is one of the rare elements that we need to supply our troops, but we do not mine it.   In fact 91% of all lanthanum comes from China.  Add that to the fact that 90% of all rare elements come from China that puts us in a tight spot.

Let me give you another example.  Have you ever heard of butanetriol? Um no.  What if I told you that butanetriol is the fuel that is used to propel the Hellfire missile.  I am sure you remember hearing our how we have used Hellfire missiles in recent conflicts.  The Hellfire is one of our military’s most powerful weapons.  Now how would you feel if I were to tell you that we get our butanetriol from one supplier.  The only supplier who produces butanetriol and they are based in China.

Are you seeing the problem yet? Some of the tools we need to supply our military is being produced by Chinese manufactures.  What happens if we were to ever enter into a conflict with China? Or if we enter into a conflict that China opposes? They could close our supply chain and effectively take us out of the conflict.    Remember how the North defeated the South in the civil war?  Your right, they destroyed their supply chains.

These are only two of the dozens of examples that were cited in a new report from Brigadier General John Adams and the Alliance for American Manufacturing.

America is always on the verge of war.  We train hundreds of thousands of military personnel to be ready to fight at any moment.  We stockpile weapons, just in case we need them. Right now we are on the verge of getting involved in yet another conflict with Syria.  What would happen if we jumped into that conflict without the ability to supply our troops?

This is why Senator Chris Murphy (D-CT), Congressman Mo Brooks (R-Ala.) and Congressman Tim Ryan (D-Ohio) are pushing for an increase in American Defense Manufacturing.     I have been following the ‘Buy America” campaign and have talked about Senator Murphy’s proposals before. The campaign is simple, rebuild our economy by investing in American manufacturing.  Put people to work, and now protect our supply lines to our troops.  Senator Murphy said  “we should not be solely relying on out-of-state suppliers”.

Currency manipulation is one of the biggest problems in trading with China. “Due to currency manipulation the raw materials costs in the United States are the same as final price of Chinese steel” said Congressman Tim Ryan.  Bills to fix the currency manipulation from China have been introduced to Congress for many years. The problem is that they cannot get the bill through both houses in one Congressional term, therefore the bill dies.

Congressman Mo Brooks continued by saying that outsourcing effect the our country in two ways.  It “weakens families incomes (job losses) and weakens the country’s ability to pay to protect our country (loss in revenue)”.

Senator Murphy continued by highlighting some of the key points from the new report, Recommendations to Strengthen America’s Defense Industrial Base and Ensure National Security.  The major points include:

  • fixing the Chinese currency manipulation problem;
  • increase long-term federal investment in high-technology industries;
  • develop domestic sources for important natural resources;

The report refers to seven other recommendation that will help to mitigate this potential risk to our National Security.  Now we need Congress to take swift action to pass this common sense solution to rebuild our manufacturing base and protect our troops.  

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