The Business of Wall Street

by Walter Brasch

     If you don’t mind working hard-and partying even harder-why not get a business degree, take a couple of state and federal tests, and become a Wall Street trader?

     These are the people who are the current crop of Gordon Gekkos-you know, the pretend-fictional character portrayed by Michael Douglas in Wall Street. The men spend thousands of dollars on suits, ties, and cocaine. The women spend thousands just to own a closet of Jimmy Choo shoes.

     But their existence is shrouded by a coop they call an office or cubicle. Their tools are multiple phone lines and computer screens.

     The chase for money-and perhaps the excitement in getting people to give up a chunk of their earned income after hearing a finely-tuned pitch-drives these college graduates.

     But, the rewards are high.

     Last year, Wall Street paid $28.5 billion in bonuses. That’s an average of $172,000 per person. Some got more. Some less. But, overall, those who worked on Wall Street made, just in bonuses, about $172,000. Summer interns in investment banking earned about $6,000 a month for their summer. The salaries and compensation rise significantly after they get their business degrees and begin a career of the search for the holy grail. In their case, the holy grail is nothing less than a pile of luxuries that the rest of us only know about because of ads in Fortune Magazine.

     Why these people earn 6, 7- and 8-figure incomes is because business and the greed for piling up stock options, not service to mankind, dominates the American workforce. More important, they know they can not just enter the gray area of ethics but step over it; almost none of them were fined or jailed for leading the country into the housing crisis and Great Recession that began near the end of the Bush-Cheney administration.

     Now, let’s take a look at the rest of us. The ones who don’t get corporate welfare, government bailouts, and golden retirement bonuses.

     Last year, about one million Americans worked full-time for minimum wage. Their combined earnings were about $8 billion. A full-time worker making the federal minimum wage earns about $7.25 an hour. That’s about $15,080 a year. The nation’s poverty threshold is $11,770. Thus, the worker, if she or he has no dependents, earns only about $12.70 a day more than the poverty guidelines.

     If the worker has one dependent, the poverty guideline is $15,930; thus, the worker is earning less than what the federal government says is a poverty wage.

     Now, let’s pretend the employer is generous and pays $10 an hour-that’s $20,800 a year. Figure rent, utilities, car expenses to get to the job, car and health insurance, and the usual local, state, and federal payroll deductions, and the worker would have to borrow the funds to go to a movie and buy a soda and popcorn.

     But, business owners say they can’t afford to increase minimum wage. It’d ruin the economy they say. It’ll bring down capitalism, they claim. $7.25 an hour-maybe even $10 an hour-is fair. But, a minimum wage of $15 an hour-like what Los Angeles recently passed-and which won’t take effect for five years-well, that’s just unreasonable.

     With the support of the local Chambers of Commerce, employers declare that raising wages would mean an increase in retail prices. What many small business owners don’t fully understand is that their customers are usually from the lower- and middle-classes. When wages are depressed, purchasing is diminished. By paying their own employees sub-standard wages, the owners, no matter how good employers they may be, cause fewer purchases for all community businesses.

     For megacorporation retailers, the situation is slightly different, one based upon a corporate philosophy of “maximizing profits” and paying bigger dividends to investors than wages to the people who actually do the work.

     At Walmart, the six Walton family owners have a combined worth of about $160 billion. Management just raised the minimum wage to $10.10 an hour, and then complained it was costing $65 million a month. Assume even a $1 billion a year increase for Walmart’s workers, that would still leave a net profit of about $15 billion a year.

     McDonald’s CEO Dan Thompson earned $9.5 million last year; his full-time workers earn an average of $16,000-$19,000 a year. A pay increase would affect the owners of 30,000 franchise locations, but increase the price of a double quarter-pounder cheeseburger only pennies. Anyone willing to pay $6.79 for a fast-food burger probably won’t notice a $6.85 charge.

     A study conducted by Dr. Kathleen Maclay of the University of California revealed that American taxpayers contribute about $7 billion a year in welfare payments to the low-paid workers in the fast-foods industry. In contrast, McDonald’s had about $5.7 billion in net profits in 2013.

     Back on Wall Street, brokers and traders would be apoplectic if all corporations improved wages, benefits, and working conditions. There would be less return on investment, and clients might not invest as much. Clients who don’t invest as much also means the Wall Street Zoo will receive less income, since much of their own wages are determined by commissions.

     So, Wall Street needs to make sure they hustle customers and keep them pouring money into corporations.

     It’s just “good business practices.” After all, they and the million-dollar company executives they support deserve it. They studied business in college.

ObamaCare Is Helping Pennsylvanians

The Affordable Care Act, popularly known as ObamaCare, is helping Pennsylvanians as the Supreme Court readies a major decision which could eviscerate the health program.  Congressional Republicans filed suit and SCOTUS is prepared to rule on that litigation before the end of this month.  If it rules that subsidies are illegal millions of people could lose the coverage they’ve now had for a year and a half.

This is such a stupid lawsuit even GOP Sen. John Thune saw fit to condemn and end to the subsidies as he condemned the ACA.  He got pilloried on Twitter for his stupidity but stupidity hasn’t prevented millions of Americans from voting these morons into office.  Perhaps what we really need is a plan which prohibits stupid people from running for office.  With all this talk of bringing literacy tests back for voters we should require one for office seekers.

The White House sent this fact sheet today showing how ObamaCare has helped Pennsylvania:

After Health Reform: Improved Access to Care

·         Gallup recently estimated that the uninsured rate in Pennsylvania in 2014 was 10.3 percent, down from 11.0 percent in 2013.

·         Prohibits coverage denials and reduced benefits, protecting as many as 5,489,162 Pennsylvanians who have some type of pre-existing health condition, including 656,877 children.

·         Eliminates lifetime and annual limits on insurance coverage and establishes annual limits on out-of-pocket spending on essential health benefits, benefiting 4,582,000 people in Pennsylvania, including 1,769,000 women and 1,136,000 children.

·         Expands Medicaid to all non-eligible adults with incomes under 133% of the federal poverty level.  153,468 more people in Pennsylvania have gained Medicaid or CHIP coverage since the beginning of the Health Insurance Marketplace first open enrollment period.

·         Establishes a system of state and federal health insurance exchanges, or marketplaces, to make it easier for individuals and small-business employees to purchase health plans at affordable prices through which 427,454 people in Pennsylvania were covered in March 2015.

·         Created a temporary high-risk pool program to cover uninsured people with pre-existing conditions prior to 2014 reforms which helped more than 7,106 people in Pennsylvania.

·         Creates health plan disclosure requirements and simple, standardized summaries so 7,586,200 people in Pennsylvania can better understand coverage information and compare benefits.

After Health Reform: More Affordable Care


·         Creates a tax credit to help 348,823 people in Pennsylvania who otherwise cannot afford it purchase health coverage through health insurance marketplaces.

·         Requires health insurers to provide consumers with rebates if the amount they spend on health benefits and quality of care, as opposed to advertising and marketing, is too low.  Last year, 90,485 consumers in Pennsylvania received $5,198,874 in rebates.

·         Eliminates out-of-pocket costs for preventive services like immunizations, certain cancer screenings, contraception, reproductive counseling, obesity screening, and behavioral assessments for children.  This coverage is guaranteed for more than 6,127,383 people in Pennsylvania including 2,511,285 women.

·         Eliminates out-of-pocket costs for 1,801,768 Medicare beneficiaries in Pennsylvania for preventive services like cancer screenings, bone-mass measurements, annual physicals, and smoking cessation.

·         Phases out the “donut hole” coverage gap for 297,058 Medicare prescription drug beneficiaries in Pennsylvania, who have saved an average of $948 per beneficiary.

·         Creates Accountable Care Organizations consisting of doctors and other health-care providers who share in savings from keeping patients well while improving quality, helping 289,927 Medicare beneficiaries in Pennsylvania.

·         Phases out overpayments through the Medicare Advantage system, while requiring Medicare Advantage plans to spend at least 85 percent of Medicare revenue on patient care.  Medicare Advantage enrollment has grown by 152,265 to 1,009,759 in Pennsylvania since 2009.

After Health Reform: Improved Quality and Accountability to You

·         Provides incentives to hospitals in Medicare to reduce hospital-acquired infections and avoidable readmissions.  Creates a collaborative health-safety learning network, the Partnership for Patients, that includes 157 hospitals in Pennsylvania to promote best quality practices.

We’re not done.  Other legislation and executive actions are continuing to advance the cause of effective, accountable and affordable health care.
This includes:

·         Incentive payments for doctors, hospitals, and other providers to adopt and use certified electronic health records (EHR).  In Pennsylvania more than 53.2 percent of hospitals and 41.8 percent of providers have electronic health records systems.

·         A new funding pool for Community Health Centers to build, expand and operate health-care facilities in underserved communities.  Health Center grantees in Pennsylvania now serve 680,017 patients and received $189,115,545 under the health care law to offer a broader array of primary care services, extend their hours of operations, hire more providers, and renovate or build new clinical spaces.

·         Health provider training opportunities, with an emphasis on primary care, including a significant expansion of the National Health Service Corps.  As of September 30, 2014, there were 208 Corps clinicians providing primary care services in Pennsylvania, compared to 62 clinicians in 2008.

 

The Politics of Disaster Relief

by Walter Brasch

     More than 150,000 Texans sent a petition to the White House, demanding the union allow Texas to secede.

     This was not 1861 when Texans wanted out of the union. This was two years ago.

     Among those who threw around the idea of secession was conservative Republican governor Rick Perry, who has re-entered the race for president-not of the Confederate States of America, but of the United States of America.

     About a month ago, the U.S. military announced a two-month long large-scale drill, known as Jade Helm 15, to begin July 15. The training exercise will spread over Texas and four other states.

     But that’s not what a large chunk of Texans-and especially a chunk of rabid patriotic right-wing talk show pundits and almost all of the Tea Party believe. They put on their tin foil caps-apparently to stimulate their two brain cells-and determined the military training exercise is a prelude to the U.S. seizing Texas and stripping its citizens of their guns and their Constitutional rights. Not that many of them ever read the Constitution. And, certainly, not federal and Supreme Court decisions.

     They said the military, in civilian clothes, would be blending into the local populations of more than 15 cities in preparation to imposing martial law.

     Normally, when you have paranoia this deep, it’s time to allow open admissions to the psychiatric wings of major hospitals. But, the new governor, Greg Abbott, a conservative Republican, like the governor before him-and the governor before him-ordered the Texas National Guard to monitor the exercises to make sure that the damn Yankees didn’t emasculate Texas statehood. No one knows how much that decision to mobilize the National Guard will cost Texas taxpayers.

     While complaining about the Invasion, Texas suffered from heavy rains and floods. Almost three dozen died. Hundreds have lost their homes. The Red Cross and numerous disaster relief organizations are in Texas to help. They don’t care what the victims’ social, religious, or political beliefs are. They care about helping people who need help.

     Gov. Abbot and U.S. Sens. John Cornyn and Ted Cruz-Texans, Republicans, and on the far right side of conservative politics-have begged for federal assistance, including a large dose of federal funds. Both Cornyn and Cruz had previously voted against giving federal assistance to New Jersey and the victims of Hurricane Sandy.

     President Obama responded quickly, and ordered humanitarian assistance for the people of Texas. That assistance includes significant manpower and federal funds. The President didn’t say-like Cornyn and Cruz had once said about New Jersey-there wasn’t enough money to help Texas. The President didn’t say-like Cornyn and Cruz had once said-that even if there was enough money, they wouldn’t vote for assistance until the President yielded to them on a completely unrelated political matter. The President didn’t even worry about whether Texans liked him or not, even though a majority of that state’s politicians think of him as incompetent, evil, and-horrors!-a firebreathing Muslim who is the anti-Christ deploying forces to take their guns and all their rights. He made sure the people got the help they needed.

     When the people of another state experience tragedy, like the people of New Jersey and Texas did, perhaps Sens. Cornyn and Cruz will remember this is, still, a United States of America, and will not make inane political speeches and block federal disaster funds.

     [Dr. Brasch covered numerous disasters when he was a reporter; after leaving newspapers, he was involved with emergency preparedness and emergency management. His latest book is the critically-acclaimed best-seller Fracking Pennsylvania]

RIP Beau Biden

Delaware bade farewell to one of its own today.  Last weekend Beau Biden, son of VP Joe Biden and a two term Delaware Attorney General, died of brain cancer. The front runner for the Gubernatorial race next year he succumbed to this virulent cancer just short of two years after being diagnosed.  Being a former Delawarean I followed Beau’s career ascent with interest.  I’ve covered his father numerous times as Vice President and Joe was also my U.S. Senator for the 18 years I resided in Newark.  I’ve always had admiration for the Bidens and Beau looked to have an impressive future.  The fact this cancer robbed us all of him so soon, at age 46, is a loss to all of us.

I have to wonder if his service in Iraq caused his illness.  The use of depleted uranium is causing many illnesses in both American service people and Iraqis.  Biden spent 14 months serving in Iraq with the Delaware Air National Guard.  He signed up for service after 9/11.  He leaves a widow and two children.

President Obama eulogized him today at St. Anthony of Padua Roman Catholic Church in Wilmington.  The famous Italian Festival begins this week and the sense of revelry will definitely be muted this year.

Delaware is a small family.  Originally the Lower Three Counties of Penns Woods the First State broke off in colonial times and has had its share of remarkable leaders.  Pennsylvania, with 67 counties has lagged behind IMHO.  In a state where everyone knows everyone I recall a time when I was driving north from Dover and Gov. Ruth Ann Minner’s state car (always identifiable by its license plate Delaware 1) was speeding.  We were going pretty much the same direction and when it pulled into the state Democratic headquarters in Stanton I pulled in behind and commented tot he Governor that her driver (a State Trooper) had been speeding and that it set a bad example.

There aren’t a lot of places where you can do something like that.  Gov. Minner was friendly and apologetic and she knew that in such a small state word of something like that could spread quickly and she reprimanded her driver before I departed.

I recall many times seeing Gov. Pete DuPont’s Lincoln Town Car on its way to Dover from Wilmington when I was frequently driving the same route down Route 13.  In a big state like ours it’s difficult to imagine how intimate politics can be in a place like Delaware.  Joe Biden served the state for 36 years as U.S. Senator and in that time many, many Delawareans were touched by him and his family.  He frequently eats at the Charcoal Chef which also a favorite haunt of my grandparents who lived in Wilmington.  He raised his family after losing his first wife and daughter in a car accident.  I never passed through that intersection (which I did frequently) without thinking about them.

Losing Beau before his time has affected everyone in Delaware and everyone who has lived there for any period of time.  He promised to be someone who might even surpass his father’s accomplishments and was well on his way on his own terms.  Not only will Delawareans miss Beau Biden but we all are at a loss for his passing.

My heart goes out to the Biden family.  May Beau rest in peace.