Verizon Demands Huge Cuts to Worker Benefits

By Zaid Jilani, ThinkProgress

August 8, 2011 -- As Verizon Demands huge cuts to worker benefits, its profits soar and its CEO gets $18 million in compensation.

Yesterday, 45,000 Verizon employees, represented by the Communications Workers of America, went on strike following the breakdown of negotiations between union representatives and management on Saturday. The workers are battling a long list of concessions that the company is demanding of them, ranging from asking employees to contribute more to their health care plans to halting pension accruals this year.

Cutting workers benefits as a cost-saving measure is a natural part of a market economy when times are bad, but what is particularly outrageous about Verizon's demands is that the company's fiscal health is actually rapidly improving and its profits soaring. The company's quarterly report released in January found that their profits nearly doubled from the same point last year. Then in April, Bloomberg reported that the company's profits "more than tripled" after the company began offering services on Apple's popular iPhone, with net income approaching $1.44 billion:

Verizon Communications Inc. (VZ), the second-largest US phone company, reported earnings that more than tripled as taxes decreased and the carrier attracted new customers after introducing Apple Inc. (AAPL)’s iPhone. Net income rose to $1.44 billion, or 51 cents a share, New York-based Verizon said today in a statement.

Their 2010 annual report shows that their stock returns are actually outperforming the wider market, easily overcoming the S&P 500 index.

"They are outperforming the overall industry," said financial analyst Michael Nelson of their Spring 2011 returns. Meanwhile, one person at Verizon who is not being asked to take any cuts is Ivan Seidenberg, the company’s CEO. His compensation actually rose four percent in 2010 to $18.1 million. The Communications Workers of America note that the "top five executives [at the company] received compensation of $258 million over the past four years."

It appears that Verizon's stockholders and executives are being treated well by the company while it demands sacrifice from its workers. "We are regular folk like most other folk out here trying to pay our mortgages, pay our bills and survive and we don't think that is a lot to ask when the company is making billions of dollars in profits," said one striking worker.

It should be noted that Verizon isn't just trying to skimp on worker benefits — it is also a notorious tax dodger, paying little in taxes in years past and actually netting benefits from the US taxpayer.

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S&P has no business downgrading US bond rating

By Robert B. Reich

When and how America brings down its debt shouldn't matter to Standard & Poor’s. The ratings agency wasn't doing it's job in 2008, when it gave Wall Street's riskiest securities a AAA rating, and it's not doing its job now by hurting the US economy with an unnecessary downgrade.

When and how America brings down its debt shouldn't matter to Standard & Poor’s. The ratings agency wasn't doing it's job in 2008, when it gave Wall Street's riskiest securities a AAA rating, and it's not doing its job now by hurting the US economy with an unnecessary downgrade.

The Standard & Poor’s downgrade of America’s debt couldn’t come at a worse time. The result is likely to be higher borrowing costs for the government at all levels, and higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow.

Why did S&P do it?

Not because America failed to pay its creditors on time. As you may have noticed, we avoided a default.

And not because we might fail to pay our bills at the end of 2012 if tea-party Republicans again hold the nation hostage when their votes will next be needed to raise the debt ceiling. This is a legitimate worry and might have been grounds for a downgrade, but it’s not S&P’s rationale.

S&P has downgraded the US because it doesn’t think we’re on track to reduce the nation’s debt enough to satisfy S&P – and we’re not doing it in a way S&P prefers.

Who gave S&P authority to tell 
US how to shed debt?

Here’s what S&P said: “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” S&P also blames what it considers to be weakened “effectiveness, stability, and predictability” of US policymaking and political institutions.

Pardon me for asking, but who gave Standard & Poor’s the authority to tell America how much debt it has to shed, and how?

If we pay our bills, we’re a good credit risk. If we don’t, or aren’t likely to, we’re a bad credit risk. When, how, and by how much we bring down the long-term debt –- or, more accurately, the ratio of debt to GDP –- is none of S&P’s business.

The irony is that S&P is partly to blame for America's current state

S&P’s intrusion into American politics is also ironic because, as I pointed out recently, much of our current debt is directly or indirectly due to S&P’s failures (along with the failures of the two other major credit-rating agencies (Fitch and Moody’s) to do their jobs before the financial meltdown. Until the eve of the collapse, S&P gave triple-A ratings to some of the Street’s riskiest packages of mortgage-backed securities and collateralized debt obligations.

Had S&P done its job and warned investors how much risk Wall Street was taking on, the housing and debt bubbles wouldn’t have become so large –- and their bursts wouldn’t have brought down much of the economy.

You and I and other taxpayers wouldn’t have had to bail out Wall Street; millions of Americans would now be working instead of collecting unemployment insurance; the government wouldn’t have had to inject the economy with a massive stimulus to save millions of other jobs; and far more tax revenue would now be pouring into the Treasury from individuals and businesses doing better than they are now.

In other words, had Standard & Poor’s done its job over the last decade, today’s budget deficit would be far smaller and the nation’s future debt wouldn’t look so menacing.