Archive for March 8th, 2010

Swelling ranks of Federal government employees owe $3 billion in unpaid taxes … ah, give ’em a break.

March 8, 2010

There were 3 related stories last week that have to make you scratch your head … or scream.

First, the monthly BLS jobs report indicated that 36,000 more jobs were lost (“good news” according to Harry Reid) … job losses in the private sector were offset by more jobs added in government. The federal government now spends about $125 billion annually on compensation for about 2 million civilian employees.
http://www.bls.gov/news.release/empsit.nr0.htm

Second, USA Today reported that Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations and that federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector. The average pay for the same mix of jobs in the private sector was $60,046 — a difference of almost 13%. That doesn’t include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker. So, the total of comp plus benefits is $108,476 for a Federal employee, $69,928 for a private sector grunt — a difference of over 55%.
http://www.usatoday.com/news/nation/2010-03-04-federal-pay_N.htm

Now, the coup de grace: According to Internal Revenue Service documents, 276,300 federal employees and retirees owe $3,042,200,000 in back taxes. Rep. Jason Chaffetz (UT) introduced a bill to collect “seriously delinquent” taxes from federal employees and congressional staffers. The amendment was voted down, ostensibly because it would “overburden the Office of Personnel Management, which would be responsible for administering the provision”. And, oh yeah, government employees’ unions lobbied against the changes.

Keep reading for details …

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Provision to fire tax-delinquent federal employees pulled

A legislative compromise that would have allowed agencies to fire tax-delinquent federal employees fell apart on Thursday.

An amendment to the 2009 Contracting and Tax Accountability Act would have targeted “seriously delinquent” federal employees and congressional staffers.

Democrats raised concerns about whether the amendment would overburden the Office of Personnel Management, which would be responsible for administering the provision.

Govexec.com, March 4, 2010
http://www.govexec.com/dailyfed/0310/030410rb1.htm

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Feds owe Uncle Sam $3B in unpaid taxes

At a time when the White House is projecting the largest deficit in the nation’s history, Uncle Sam is trying to recover billions of dollars in unpaid taxes from its own employees.

Federal workers owe more than $3 billion in income taxes they failed to pay in 2008. According to Internal Revenue Service documents, 276,300 federal employees and retirees owe $3,042,200,000.

The agency with the most tax scofflaws is the U.S. Postal Service, with 28,913 employees who owe $297,933,756.

“We urge our employees to comply with all tax laws and are encouraged that many who have been delinquent have agreed to payment plan with the IRS,” USPS spokesperson Mark Saunders said.

“We remind our employees of this responsibility as part of our mandatory annual ethics training.”

Notable agencies on the list:

Executive Office of the President (includes the White House): 50 employees owe $812,917;

U.S. Senate: 231 employees owe $2,469,026;

U.S. House of Representatives: 447 employees owe $5,809,631;

Wtop.com, December 14, 2009
http://www.wtop.com/?nid=428&sid=1838232

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NY Times: “So Much for Jobs, Jobs, Jobs”

March 8, 2010

You read that right.  Even the NY Times has noticed that the administration’s high emphasis on jobs & unemployment had the the lifespan of a tsetse fly.  One calendar week, to be exact — then back to spend, spend, spend — and, oh yeah, health care.

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Excerpted from NY Times:So Much for Jobs, Jobs, Jobs,  March 5, 2010

The job market may be hitting bottom, but it seems likely to remain mired there.

And despite the insistence that their top three priorities are jobs, jobs, jobs, Congress and the Obama administration aren’t doing enough to create them.

With the latest monthly tally, 8.4 million jobs have been lost since the recession began in December 2007. Another 2.7 million jobs needed to absorb new workers were never created, leaving the economy bereft of 11.1 million jobs. [Ken’s note:  not counting another 10 million or so who are underemployed.]

To keep up with a growing work force, filling the hole would require more than 400,000 new jobs a month for three years — wildly in excess of even the most optimistic projections.

Employers are unlikely to make new hires until they restore current workers to full time. In the private sector, just restoring hours cut during the recession will be like adding 2.8 million jobs, without a single hire.

Over the next several months, the economy will get a temporary job boost from the census, which will hire some one million temporary workers.

The danger is that with stopgap measures boosting the headline job numbers, Congress and the administration will avoid the heavy lifting that is required to clear away the wreckage of the recession.

Layoffs, while waning in the private sector, will shift to the public sector. [Ken’s translation:  bloated government bureaucracies will finally be pared back.]

And as the states tighten, the private sector would be squeezed anew because lower state spending and higher state taxes would mean less consumer spending.

Full article:
http://www.nytimes.com/2010/03/06/opinion/06sat3.html?ref=todayspaper

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Uh Oh: Only 1 in 4 Americans think country is on the right track …

March 8, 2010

Punch line: 25% of Americans Say U.S. Heading In Right Direction, Lowest Since Obama Took Office

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Excerpted from Rasmussen: Right Direction or Wrong Track, March 03, 2010

Just 25% of U.S. voters now say the country is heading in the right direction, the lowest level of voter confidence since early January 2009.

69% believe the nation is heading down the wrong track, the highest level measured in 14 months.

These findings mirror those in a separate survey  that shows views of the country’s short- and long-term economic future are gloomier than they have been at any time since President Obama took office in January of last year.

Leading up to his inauguration a year ago, the number of voters who felt the country was heading in the right direction remained below 20%.

The week of his inauguration, voter confidence rose to 27% and then steadily increased, peaking at 40% in early May 2009. Confidence has declined since.

Full article:
http://www.rasmussenreports.com/public_content/politics/mood_of_america/right_direction_or_wrong_track

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Metrics: Does your EVA have momentum ?

March 8, 2010

My students learn that I’m a big fan of Economic Value Added (EVA) as a profitability. A new measure — called EVA Momentum — takes EVA a step further.  Worth watching.

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Excerpted from Fortune: Value Driven – A new financial checkup, January 11, 2010

ROE? Gross margin? Earnings per share? It’s easy to make any of them look better while damaging the business.

Enter EVA.  Economic Value Added is essentially profit after deducting an appropriate charge for all the capital in the business. Because it accounts for all capital costs, EVA is the best measure of value creation.

A new ratio —  EVA momentum — takes EVA to the next level by being difficult to manipulate.

“It always increases when managers do things that make economic sense.”

EVA momentum is a simple concept: It’s the change in a business’s EVA divided by the prior period’s sales.

So if a company increases its EVA by $10 million and the prior period’s sales were $1 billion, then its EVA momentum is 1%.

For most companies, EVA momentum is zero or negative, and the average for many companies is generally around zero.

Stewart’s firm, EVA Dimensions, has crunched the five-year data for firms with revenues of at least $1 billion. The three top performers by EVA momentum: Gilead Sciences (with an average annual EVA momentum of 24.3%), Google (22.7%), and Apple (12.1%).

Achieving high EVA momentum requires a business to do two difficult things at once. It must grow while at the same time maintaining healthy EVA profit margins or improving poor ones.

While Stern-Stewart (fathers of EVA) have measured EVA momentum in hundreds of companies, real businesses have yet to apply it.

So there’s no telling what will happen when this ratio confronts actual managers trying to make actual profits.

But, it’s a  new idea that just might work.

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EVA momentum: How to get it right

  1.  Don’t obsess about sales. Managers fixate on how to increase their company’s revenues, but if it doesn’t boost EVA, it does nothing to create value.
  2. Bail out of EVA-negative businesses. Ford’s sale of capital-intensive, EVA-sapping Jaguar and Land Rover shrank the company, but in the end increased its value.
  3. Annihilate wasted capital. Cutting working capital, as Wal-Mart did in 2009, and offloading unproductive assets are great opportunities to build EVA when growth is slow.

Full article:
http://money.cnn.com/2010/01/08/news/economy/eva_momentum.fortune/index.htm

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