Category: Economics

Under Mitt Romney, Bain Made Millions on Tobacco

Mitt Romney

Mitt Romney’s former company, Bain Capital, may refuse to make public the clients it has served, but now previously-secret tobacco industry documents reveal Bain & Company worked closely with cigarette makers British American Tobacco, Philip Morris and Gallaher, to help them expand their markets and become more profitable at the expense of global public health.  Bain helped British American Tobacco (BAT) crack open the cigarette market in Russia and transform it into a lucrative business at a time when American tobacco companies were under pressure at home and smoking rates in the U.S. were decreasing. By 1993, during the time when Bain worked with cigarette makers, the dangers of smoking were well established. The 1964 Surgeon General’s report had announced that cigarettes caused cancer.  In 1988 the U.S. government warned that nicotine was addictive in a similar manner as heroin and cocaine. In 1989 the Surgeon General announced that most people begin smoking as children and one in every six Americans was dying from smoking. In 1993 the EPA rated secondhand tobacco smoke a Group A Human Carcinogen — the same rating the agency gives to asbestos, radon gas and vinyl chloride. Romney took over Bain in 1990 and stayed until 1995, when this crucial public health information about smoking was public. When Romney took over Bain, the company was in financial distress and seeking new clients. One of the first new clients Bain signed during that time was Philip Morris (PM). Little more than a month after Romney took over, Bain signed a six month contract with Philip Morris estimated to be worth $1 million.

This is Going to Hurt: What Your Doctor Doesn’t Say Can Cost You

Insurance companies are hot targets in the national discussion of skyrocketing medical costs and health care reform. But there is another, little-noticed factor could also be sucking untold health care dollars out of our pockets. It’s one we are also loathe to address: the part that doctors play in pushing up the costs of  medical care. This is an area that is begs for closer scrutiny, and in which patients need more help.

An Examination Day Surprise

My interest in this topic was piqued by a personal experience that brought home the problem of runaway medical costs in a truly shocking way.

Rush on the Ropes in Missoula

Rush Limbaugh

RushOutOfMissoula.com, the grassroots effort to push  Rush Limbaugh off the air in Missoula, Montana, reports making “fabulous headway” this week in their effort. Six more advertisers have opted to pull their advertising from Limbaugh’s show on KGVO radio in just the last week, bringing the total of businesses shunning his show in Missoula to 41.  “They made a good decision, but only because we made our voices heard,” said Dave Chrismon, who organized RushOutOfMissoula.com. Some of the remaining local advertisers include Adair Jewelers, Bagels on Broadway, The BBQ Pit and Big Sky Glass, Montana Republican Party/Denny Rehberg for Senate and Montana Pro Life Coalition. National advertisers include Allegiant Airlines, Blackjack Pizza, and MaxMuscle.

Marx MasterCards Prove Highly Popular in Germany

Karl Marx MasterCard

The Sparkasse Bank in Chemnitz, in eastern Germany, asked customers to vote on images they would most like to see on their MasterCards, and by far the winner was Karl Marx, the German philosopher who predicted the end of capitalism. More than one third of people voting selected Marx’s image. The bank reports that even people in western Germany were calling and asking to open bank accounts to get a MasterCard with Marx’s image on it. Reuters reports that a survey done in 2008 revealed that 52 percent of citizens living in eastern Germany thought the free market economy was “unsuitable” and 43 percent preferred to go back to a socialist system. NPR’s Planet Money, in a report on the Karl Marx MasterCard, asked people to suggest possible slogans to advertise the card. Some of the responses?  “Che Guevara t-shirt: $15. Annotated copy of the Communist Manifesto: $10. Being able to demonstrate your ideological confusion every time you make a purchase: Priceless.,” “I don’t always seize the means of production from the bourgeoisie, but when I do, I prefer the Marx MasterCard,” “A Mastercard for the master race,” and my personal favorite: “Use it when you’re in the red.”

Main sources: National Public Radio, June 15, 2012 and Reuters, June 15, 2012

Big Tobacco’s Ties to Funding of Prop. 29 Opposition Exposed

An NBC investigative team has exposed historical and financial ties between many of the supposedly independent groups actively opposing Proposition 29, a measure to increase California’s tobacco tax by $1.00 per pack, and the tobacco industry. Collectively, groups against the measure have spent $46.7 million so far — over four times more than the amount spent by groups supporting the measure. Much of the money to oppose the measure came from cigarette makers Reynolds American and Philip Morris, laundered through groups that are seemingly independent from the industry, like Americans for Tax Reform, the Small Business Action Committee and the California Taxpayers’ Association. Tobacco industry documents now available on the Internet reveal these groups have historically received significant financial support from Philip Morris, R.J. Reynolds and the Tobacco Institute. Political analyst Larry Gerston commented, “These kinds of transfers of money increasingly take place under a very dark shadow.” The strategy of burying tobacco industry involvement in ballot measure campaigns is revealed in a 1998 proposal by a political consulting group that worked for the Tobacco Institute on another cigarette tax fight.

Cookie-Cutter News Taking Over U.S. Media Market

If your local TV news broadcasts are all starting to sound the same from channel to channel, it’s because they are. A sneaky form of media consolidation is happening all over the country called “covert consolidation” in which different local TV newscasts use the exact same stories, the same video, same scripts and the same viewpoints, but do it under different “brands.” Covert consolidation occurs when a number of TV stations in the same area are owned by a single corporate entity. Broadcasters between the multiple stations will share their news operations to save money. Covert consolidation not only circumvents Federal Communications Commission (FCC) rules regarding ownership of stations, it also eliminates independent local journalism and the competition and diversity between stations that are the basis of a healthy democracy. Covert consolidation has been documented in 83 of the nation’s 210 news communities throughout the U.S. as TV stations across the country quietly merge newsrooms to cut costs — all at a time when broadcasters are already making record profits. Covert consolidation is also a factor blocking  minorities and women from owning and operating TV stations. Big media companies are using loopholes and backroom deals to get around FCC rules prohibiting media consolidation. To draw attention to the problem of covert consolidation, FreePress.org has created an interactive map showing which stations across the U.S. are consolidated, and the severity of the consolidation. FreePress also offers a free “Change the Channels” tool kit (pdf) people can download to document and record media consolidation in their areas, and instructions for  exposing covert consolidation in your own local community.

Main source: FreePress/SaveTheNews.org, May 29, 2012

Tobacco Companies Work in Secret to Defeat California’s Proposition 29

A pitched battle is on over California’s Proposition 29, a measure on the statewide ballot to raise the cigarette tax by one dollar to fund smoking cessation and research on tobacco-related diseases. If enacted, the measure would increase California’s per-pack cigarette tax to $1.87 per pack.  According to Maplight, the biggest donors favoring the tax are the American Cancer Society ($7.42 million), the Lance Armstrong Foundation  ($1.5 million), the American Heart Association ($546,256), the American Lung Association ($412,086) and Michael R. Bloomberg ($500,000). Laurene Powell Jobs, the widow of Steve Jobs, kicked in $25,000 to support Prop. 29. But those amounts pale in comparison to the tidal wave of money tobacco companies and their allies are pouring into defeating the measure. Philip Morris (Altria) alone has given just over $24 million, Reynolds American, Inc. has put in $9.57 million, and U.S. Smokeless (also owned by Altria) has put in $1.5 million. The California Republican Party contributed $1.14 million to defeat the tax. As usual, tobacco companies are trying to hide their role in the campaign by refusing to speak to journalists, running ads without their fingerprints on them and fighting the campaign through a front group, “Californians Against Out-of-Control Taxes and Spending,” which is aligned with right wing, pro-business groups funded by millionaires and billionaires like Americans for Prosperity, FreedomWorks, the Chamber of Commerce and the Petroleum Marketers Association. Californians Against Out-of-Control Taxes and Spending doesn’t even list tobacco companies among the “No” campaign’s endorsers on the group’s website — as if tobacco companies weren’t involved.

“Robin Hood Tax” Proposal Gains Global Support

Nurses rally in Chicago to support the Robin Hood Tax

Nurses led a rally in Chicago May 18 ahead the NATO summit to boost the idea of instituting a “Robin Hood Tax,” a tiny tax on financial institutions’ transactions that would be used to offset drastic cuts in education and social services, and provide health care to Americans. Also called a Financial Speculation Tax, the tax has the support of Warren Buffett and Bill Gates, as well as President Hollande of France, Chancellor Merkel of Germany, Prime Minister Zapatero of Spain and other world leaders, as well as Nobel prize winning economists Joseph Stiglitz and Paul Krugman. The Robin Hood Tax on bankers would be less than one-half of one percent on deals over $100, and would apply to transactions like trades in derivatives, stocks, bonds and foreign currency exchanges. The charge would total less than one half on one cent on every $100 worth of transactions. Most ordinary people worldwide would never feel it, but experts estimate it would generate hundreds of billions of dollars each year to fight poverty and support public services like education and health care. National Nurses United teamed with National Peoples’ Action and local community groups to organize the rally. The were joined by veterans, members of the Occupy Movement, unions and others. The rally was part of a “global week of action” in support of the Robin Hood tax, with rallies also happening in Europe, Africa and on Mount Fuji in Japan.

Health Insurers Shake Down Subscribers for Prescriptions

Big health insurers have found yet another new way to extort customers — by buying up “pharmacy benefit managers,” (companies that supply medications to people) and then forcing subscribers to buy medications exclusively from the drug distributors they own. People are receiving letters from their health insurance companies telling them they must either buy medications from a specific company they own and get medications through the mail, or patronize a retail drug store of their choice and pay a much higher price. Prices may be lower for insurance companies under this kind of arrangement, but policyholders miss out on face-to-face interaction with pharmacists, who verbally counsel customers on drug dosing instructions and dangerous interactions with other drugs. Herding people towards a single option drug supplier is also taking a toll on neighborhood pharmacies who have been serving the same families for generations. The trend towards consolidation in the drug sales market starkly limits consumer choice. Just three major pharmacy benefit management companies dominate the drug delivery market: Express Scripts Holding, which recently bought Medco for $29 billion, CVS Caremark, and OptumRX, a subsidiary that now belongs to the big health insurance company UnitedHealthcare Group.

Source: Los Angeles Times (consumer advocate David Lazarus), May 4, 2012

Female, African-American Doctor Backs Tobacco Industry in New Ad

The tobacco industry’s front group, “Californians Against Out-of-Control Taxes and Spending,” is spending millions to run a 30-second TV ad opposing Proposition 29, a ballot measure to increase in the state’s cigarette tax. The ad features an unlikely ally: a female, African-American doctor named LaDonna Porter, M.D. Prop. 29 would increase California’s 87-cent per pack cigarette tax by an additional $1.00 to fund cancer research, smoking reduction programs and enforcement of tobacco-related laws. In the ad, Porter, stands in an examination room wearing a white lab coat and says she’s against smoking, but she finds Proposition 29 flawed. “Not one penny” of the funds generated by the measure will go towards new funding for cancer treatment, Porter says, and she raises the specter that the money could be spent out of state. The ad is consistent with the tobacco industry’s longtime strategy of getting doctors to endorse their products and back their favored policies. Still, it has generated outrage. The African American Tobacco Control Leadership Council in Oakland, California sent a scathing open letter to Dr. Porter expressing shock and outrage that she is working for Big Tobacco. It’s not the first time Dr. Porter has worked for Big Tobacco. In 2006, as LaDonna White, she starred in a tobacco industry-backed ad opposing Proposition 86, yet another measure to increase taxes on cigarettes and chewing tobacco. Dr. Porter has also lent her credibility to the pharmaceutical industry to fight an initiative that would have put a dent in drug companies’ profits.

Can Wall Street Fund Universal Healthcare in U.S.?

National Nurses United support a tiny financial transaction tax to pay for universal healthcare in the U.S.

Over a thousand activists including members of National Nurses United marched in New York City April 26 to demand the government levy a tiny tax — just 0.5 percent — on speculative financial trades to fund universal health care in the United States. The idea is to add a small sales tax to Wall Street transactions of stocks, dividends and other financial deals, just like the tax ordinary consumers pay when they buy goods at a department store. The proposed tax, just one-half of one percent, would amount to just 50 cents on every $100 worth of financial transactions, but it would add up to a huge amount of money: about $350 billion each year. The tax wouldn’t apply to ordinary consumer transactions like ATM use, debit card purchases or home loans, and traders would be barred from passing the costs of the tax on to consumers. The main targets of the a tax are the big financial firms whose risky trading led to the meltdown of the global economy, like Citibank, JP Morgan, Goldman Sachs and Morgan Stanley. These four firms alone account for almost a quarter of the entire global market volume on trades of currency. The tiny tax would take advantage of a huge increase in speculative financial activity over the past decade to benefit Americans’ access to health care. A financial transaction tax isn’t a new idea. The U.S. had such a tax in place from 1914 to 1966. The idea of a financial transaction tax is gaining acceptance has been endorsed by conservative presidents in France and Germany, as well as former United Nations Secretary General Kofi Annan.

How Many Millionaires Pay a Higher Tax Rate than You?

The White House Buffett Rule calculator

The White House has posted a new online tool people can use to calculate how many millionaires pay a lower effective tax rate than they do. Citizens enter their wages, salary and other income and how much income tax they have paid, click a button and see the estimated number of millionaires who paid a lower effective tax rate than they did in 2009. The calculations demonstrate how under the current U.S. tax system, many millionaires are paying a lower effective income tax rate than most middle class families. In 2009, fully 22,000 American households made over $1 million, but paid the lowest effective tax rate such top earners have paid in 50 years. Of those top-earners, 1,470 paid no federal income tax at all on their million-dollar-plus incomes, according to data supplied by the Internal Revenue Service.

NRC Dings Colorado for Botched Approval of New Uranium Mine

The Nuclear Regulatory Commission says the Colorado Department of Public Health and the Environment (CDPHE) failed to hold proper public hearings before licensing a private energy company to build the first uranium mill in the country in decades. The Colorado Department of Public Health and the Environment (CDPHE) held public meetings, rather than public hearings before licensing the mill, the latter being a formal legal proceeding that involves testimony under oath and cross-examination. Energy Fuels Resources Corporation asked the state to build the Pinion Ridge Uranium Mill in the Paradox Valley near Nucla in western Colorado to supply nuclear power plants and other technological users of radioactive material, but residents of western Colorado are wary. Past uranium mines have left an expensive, long-lasting and toxic legacy of contamination that cost taxpayers over a billion dollars to clean up. Western Colorado has been particularly hard-hit by these environmental disasters. Energy Fuels is enticing local residents to support the new mine by promising it

Map of U.S. uranium mines, showing high concentration in western Colorado

will supply high-paying jobs with health benefits. The Nucla area has fallen on economic hard times in recent years, so some residents are clamoring for the mine to be built to help turn the community around, but others who remember the past aren’t taking the bait. The state ordered Energy Fuels to pay $12 million in surety funds to pay for cleanup in case the mill contaminates water, soil or air, but opponents argue that amount is nowhere near enough, and they’re right. In 2010, the Denver Post found the cost of cleaning up environmental contamination caused by uranium mills in Colorado has ranged from $50 million to $504 per mill.

Main source: Denver Post, March 15, 2012

Goldman Exec Resigns, Blows Whistle on Company’s Loss of Morals

Goldman CEO Lloyd C. Blankfein

If you read just one thing today, it should be the remarkable open resignation letter of Goldman Sachs’ executive Greg Smith, who was head of  the firm’s U.S. equity derivatives business for Europe, the Middle East and Africa. After a highly successful 12 year career with Goldman, Smith — a Rhodes scholar — explains that felt he could no longer tolerate working Goldman because of the severe downward trajectory of its corporate culture, and the company’s loss of moral fiber. “I can honestly say that the environment [at Goldman] now is as toxic and destructive as I have ever seen it,” he wrote, explaining that best interests of clients is now not even on Goldman’s radar screen. The only thing that matters now behind closed doors at Goldman, Smith says, is how to make money off of clients. The clients’ goals, desires and best interests are of absolutely no interest anymore. “It makes me ill how callously people talk about ripping their clients off,” Smith writes, confessing that over the previous 12 months he’s personally witnessed five different managers refer to their own clients as “muppets,” even doing so over corporate email.  He lays the blame for the company’s completely loss of integrity on the current CEO, Lloyd C. Blankfein, and Goldman’s president, Gary D. Cohn. Smith formally resigned the day his open letter was published in the New York Times.

Source: New York Times Op-Ed, March 14, 2012

Prominent Capitalist Says Capitalism “Threatens our Existence”

Jeremy Grantham

Jeremy Grantham is a co-founder and chief investment strategist for GMO, a global investment firm that manages $97 billion in client assets and has more than 500 employees worldwide. CBS news called Grantham a “legendary investor,” and his résumé and business background make Grantham about as dedicated a capitalist as you can find anywhere in the U.S. these days. So when someone like Grantham writes that capitalism “threatens our existence,” people should sit up and take notice. Grantham’s February, 2012 quarterly newsletter] (pdf) is a scathing indictment of American capitalism and where it is leading the country: over a cliff. Grantham writes that “You don’t have to be a PhD mathematician to work out that if the average Chinese and Indian were to catch up with … the average American, then our planet’s goose is cooked, along with most other things. Indeed, scientists calculate that if they caught up, we would need at least three planets to be fully sustainable. But few listen to scientists these days.” Grantham points out that “our collective ability to feed ourselves, through erosion and fertilizer depletion has “received little or no attention,” and that “capitalism and corporations have absolutely no mechanism for dealing with these problems, and seen through a corporate discount rate lens, our grandchildren really do have no value.” He also writes, “Capitalism, by ignoring the finite nature of resources and by neglecting the long-term well-being of the planet and its potentially crucial biodiversity, threatens our existence.”

Source: GMO Quarterly Newsletter, (pdf) February, 2012

The Current High Gas Price Scam

Sixty four percent of all contracts written for bulk oil purchases in the U.S. are made by companies that will never take delivery of even one drop of oil. They are made by speculators positioning themselves to make money off the scare over recent events involving Iran. Recently and American warship was targeted with gunfire in the Strait of Hormuz. Initial reports attributed the attack to Iran, but it turned out to have been made by smugglers — a correction that was buried in the media. Iran also announced it would stop selling oil to Britain and France, but those countries had already stopped buying oil from Iran anyway — a fact less reported than Iran’s announcement.  Decades ago, financial speculators made up only about 30 percent of oil trading markets and refiners and end-users made up about 70 percent. Today those numbers are reversed; now only about 36 percent of all oil contracts are made by producers and end users, while increasing demand for oil in the U.S. is a myth. Demand for oil and gas in the U.S. is down while production of American oil has increased so much that the U.S. has actually started exporting oil to Europe, Asia and Latin America. In fact, now America’s major supplier of oil is Canada, not the middle east. So high gas prices now simply cannot be explained by any shortage or increase in demand, since neither exist. But they can be explained by speculators and their effect on the market, and we are all paying a heavy price for their activity.

Source: McClatchy Newspapers, Febuary 21, 2012

Switch to a Good-Faith Insurer

Everyone who buys insurance should visit the website Fight Bad-Faith Insurance Companies (FBIC), at BadFaithInsurance.org. FBIC lists insurers who chronically screw consumers by discounting, lowballing, fudging and delaying payment of legitimate claims. FBIC  examines formal complaints lodged against insurers and reviews documents obtained through litigation against insurers to sort out good insurers from bad. FBIC finds that many well known insurers frequently act unethically and illegally. Consumers have virtually no recourse against these companies either, because government agencies that regulate the insurance industry are not only toothless and underfunded, but they are also often staffed by former insurance people.

Even worse, bad-faith insurers dominate the market. FBIC’s list of the top 50 bad-faith insurers contains many of the same insurers that advertise constantly on television. The worst company, State Farm (which FBIC rates  “DO NOT BUY” in big, red letters), is followed closely by The Hartford and Allstate, which now owns E-surance. FBIC rates all three with a big, red “DO NOT BUY.” Liberty Mutual, Progressive, Geico, Mercury, UnitedHealth, WellPoint and Blue Cross Blue Shield are close behind. Fortunately, FBIC also lists the top 50 good-faith insurers — a shrinking list of companies that, for the most part, act ethically and responsibly toward customers and conduct business in accordance with the law. The list of good-faith insurers is topped by companies you’ve probably never heard of: Amica, Allianz and Chubb. Maybe these companies don’t carpet-bomb us with ads because their reputations are good enough to provide them with all the business they need.

After reading FBIC’s website, my husband and I switched our homeowner and vehicle insurance from Farmers to Chubb. We were surprised to find Chubb offered much higher quality insurance for about the same money. For example, in the event that you total your car, Chubb pays enough to go out buy a brand new car exactly like the one you had, instead of just giving you blue book for your wrecked one. Rental cars are covered in full under Chubb’s policy, and if you get personal liability coverage, Chubb provides $50,000 worth of identity theft coverage, including paying professionals to help you get your identity back and deal with problems caused by the theft.

Insurance is one area where you can vote with your money. Read Fight Bad Faith Insurance Companies’ reviews and move your business to an insurance company that treats consumers fairly, abides by the law and deals in good faith.