As Companies Seek Tax Deals, Governments Pay High Price





In the end, the money that towns across America gave General Motors did not matter.




When the automaker released a list of factories it was closing during bankruptcy three years ago, communities that had considered themselves G.M.’s business partners were among the targets.


For years, mayors and governors anxious about local jobs had agreed to G.M.’s demands for cash rewards, free buildings, worker training and lucrative tax breaks. As late as 2007, the company was telling local officials that these sorts of incentives would “further G.M.’s strong relationship” with them and be a “win/win situation,” according to town council notes from one Michigan community.


Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times.


Some officials, desperate to keep G.M., offered more. Ohio was proposing a $56 million deal to save its Moraine plant, and Wisconsin, fighting for its Janesville factory, offered $153 million.


But their overtures were to no avail. G.M. walked away and, thanks to a federal bailout, is once again profitable. The towns have not been so fortunate, having spent scarce funds in exchange for thousands of jobs that no longer exist.


One township, Ypsilanti, Mich., is suing over the automaker’s departure. “You can’t just make these promises and throw them around like they’re spare change in the drawer,” said Doug Winters, the township’s attorney.


Yet across the country, companies have been doing just that. And the giveaways are adding up to a gigantic bill for taxpayers.


A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.


The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.


“How can you even talk about rationalizing what you’re doing when you don’t even know what you’re doing?” said Timothy J. Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.


The Times analyzed more than 150,000 awards and created a searchable database of incentive spending. The survey was supplemented by interviews with more than 100 officials in government and business organizations as well as corporate executives and consultants.


A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States.


Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors.


While some jobs have certainly migrated overseas, many companies receiving incentives were not considering leaving the country, according to interviews and incentive data.


Despite their scale, state and local incentives have barely been part of the national debate on the economic crisis. The budget negotiations under way in Washington have not addressed whether the incentives are worth the cost, even though 20 percent of state and local budgets come from federal spending. Lawmakers in Washington are battling over possible increases in personal taxes, while both parties have said that lower federal taxes on corporations are needed for the country to compete globally.


The Times analysis shows that Texas awards more incentives, over $19 billion a year, than any other state. Alaska, West Virginia and Nebraska give up the most per resident.


For many communities, the payouts add up to a substantial chunk of their overall spending, the analysis found. Oklahoma and West Virginia give up amounts equal to about one-third of their budgets, and Maine allocates nearly a fifth.


In a few states, the cost of incentives is not significant. But several of them have low business taxes — or none at all — which can save companies even more money than tax credits.


Far and away the most incentive money is spent on manufacturing, about $25.5 billion a year, followed by agriculture. The oil, gas and mining industries come in third, and the film business fourth. Technology is not far behind, as companies like Twitter and Facebook increasingly seek tax breaks and many localities bet on the industry’s long-term viability.


Those hopes were once more focused on automakers, which for decades have pushed cities and states to set up incentive programs, blazing a trail that companies of all sorts followed. Even today, G.M. is the top beneficiary, public records indicate. It received at least $1.7 billion in local incentives in the last five years, followed closely by Ford and Chrysler.


A spokesman for General Motors said that almost every major employer applied for incentives because they help keep companies competitive and retain or create jobs.


“There are many reasons why so many Ford, Chrysler and G.M. plants closed over the last few decades,” said the G.M. spokesman, James Cain. “But these factors don’t mean that the companies and communities didn’t benefit while the plants were open, which was often for generations.”


Mr. Cain cited research showing that the company received less money per job than foreign automakers operating in the United States.


Questioned about incentives, officials at dozens of other large corporations said they owed it to shareholders to maximize profits. Many emphasized that they employ thousands of Americans who pay taxes and spend money in the local economy.


For government officials like Bobby Hitt of South Carolina, the incentives are a good investment that will raise tax revenues in the long run.


“I don’t see it as giving up anything,” said Mr. Hitt, who worked at BMW in the 1990s and helped it win $130 million from South Carolina.


Today, Mr. Hitt is the state’s secretary of commerce. South Carolina recently took on a $218 million debt to assist Boeing’s expansion there and offered the company tax breaks for 10 years.


Mr. Hitt, like most political officials, has a short-term mandate. It will take years to see whether the state’s bet on Boeing bears fruit.


In Michigan, Gov. Rick Snyder, a Republican in his first term, has been working to eliminate most business tax credits but is bound by past awards. The state gave General Motors $779 million in credits in 2009, just a month after the company received a $50 billion federal bailout and decided to close seven plants in Michigan.


G.M. can use the credits to offset its state tax bill for up to 20 years. “You don’t know who will take a credit or when,” said Doug Smith, a senior official at the state’s economic development agency. “We may give a credit to G.M., and they might not take it for three years or 10 years or more.”


One corporate executive, Donald J. Hall Jr. of Hallmark, thinks business subsidies are hurting his hometown, Kansas City, Mo., by diverting money from public education. “It’s really not creating new jobs,” Mr. Hall said. “It’s motivated by politicians who want to claim they have brought new jobs into their state.”


For Mr. Hall and others in Kansas City, the futility of free-flowing incentives has been underscored by a border war between Kansas and Missouri.


Soon after Kansas recruited AMC Entertainment with a $36 million award last year, the state cut its education budget by $104 million. AMC was moving only a few miles, across the border from Missouri. Workers saw little change other than in commuting times and office décor. A few months later, Missouri lured Applebee’s headquarters from Kansas.


“I just shake my head every time it happens, it just gives me a sick feeling in the pit of my stomach,” said Sean O’Byrne, the vice president of the Downtown Council of Kansas City. “It sounds like I’m talking myself out of a job, but there ought to be a law against what I’m doing.”


Outgunned by Companies


For local governments, incentives have become the cost of doing business with almost every business. The Times found that the awards go to companies big and small, those gushing in profits and those sinking in losses, American companies and foreign companies, and every industry imaginable.


Workers are a vital ingredient in any business, yet companies and government officials increasingly view the creation of jobs as an expense that should be subsidized by taxpayers, private consultants and local officials said.


Even big retailers and hotels, whose business depends on being in specific locations, bargain for incentives as if they can move anywhere. The same can be said for many movie productions, which almost never come to town without local subsidies.


When Oliver Stone made the 2010 sequel to “Wall Street,” in his mind there was only one place to shoot it: New York City. Nonetheless, the film, a scathing look at bankers’ greed, received $10 million in tax credits, according to 20th Century Fox.


In an interview, Mr. Stone criticized subsidies for industries like banking and agriculture but defended them for Hollywood, saying that many movies can be shot anywhere and that their actors and crew members pay state income taxes. “It’s good,” Mr. Stone said of the film subsidies. “Or like basically the way business is done. I don’t understand what the moral qualm is.”


The practical consequences can be easily seen. The Manhattan Institute for Policy Research, a conservative group, found that the amount New York spends on film credits every year equals the cost of hiring 5,000 public-school teachers.


Nationwide, billions of dollars in incentives are being awarded as state governments face steep deficits. Last year alone, states cut public services and raised taxes by a collective $156 billion, according to the Center on Budget and Policy Priorities, a liberal-leaning advocacy group.


Incentives come in many forms: cash grants and loans; sales tax breaks; income tax credits and exemptions; free services; and property tax abatements. The income tax breaks add up to $18 billion and sales tax relief around $52 billion of the overall $80 billion in incentives.


Collecting data on property tax abatements is the most difficult because only a handful of states track the amounts given by cities and counties. Among them is New York, where businesses save an estimated $1.1 billion a year in property taxes. The American International Group, the insurance company at the center of the 2008 financial crisis, continued to benefit from a $23.8 million abatement from New York City at the same time it was being bailed out with $180 billion in federal money.


Since 2000, The New York Times Company has received more than $24 million from the city and state.


In some places, local officials have little choice but to answer the demands of corporations.


“They dictate their terms, and we’re not really in a position to question their deal terms,” Sarah Eckhardt, a commissioner in Travis County, Tex., said of companies she has dealt with recently, including Apple and Hewlett-Packard. “We don’t have the sophistication or the resources to negotiate with a company that has the wherewithal the size of a country. We are just no match in negotiating with that.”


Local officials can find themselves across the table from conglomerates like Shell Oil and Caterpillar, the world’s largest maker of construction equipment.


Shell has been offered a tax credit worth as much as $1.6 billion over 25 years from Pennsylvania, which competed with West Virginia and Ohio for an energy production facility. Royal Dutch Shell, the parent company, made $31 billion in profits in 2011 — about $3.5 million every hour. The company’s chief executive made $13.1 million last year, according to Equilar, an executive compensation firm. Pennsylvania predicts that the plant will create thousands of long-term jobs, but it did not require them in exchange for the tax credit.


Caterpillar has received more than $196 million in local aid nationwide since 2007, though it has chastised states, particularly its home base, Illinois, for not being business-friendly. This year, Caterpillar announced a new plant in Georgia, which offered $44 million in incentives. Local counties chipped in free land and other aid, including $15 million in tax breaks and $8.2 million in road, water and sewer repairs.


The company, whose profits are soaring, recently froze workers’ pay for six years at several locations, arguing that it needed to remain competitive. A spokesman for the company, Jim Dugan, said it employed more than 50,000 people and invested billions of dollars nationwide.


Local officials typically have scant information about the track record of corporations, like whether they lived up to job assurances elsewhere. And some officials acknowledged that they did not know to what extent incentives were a deciding factor for companies.


“I don’t know that there’s a way to know other than talking to the businesses, and the businesses telling us that that was a factor in creating jobs,” said Ken Striplin, the city manager of Santa Clarita, Calif., which gives tax breaks in a designated enterprise zone. “There’s no box that says ‘I would have created this job without the enterprise zone.’ ”


California is one of the few states that have been cutting back on incentives. But that does not mean its cities are following suit. When Twitter threatened to leave San Francisco last year, officials scrambled to assuage the company.


Twitter was not short on money — it soon received a $300 million investment from a Saudi prince and $800 million from a private consortium. The two received Twitter equity, but San Francisco got a different sort of deal.


The city exempted Twitter from what could total $22 million in payroll taxes, and the company agreed to stay put. The city estimates that Twitter’s work force could grow to 2,600 employees, although the company made no such promise.


A Twitter spokeswoman said the company was “very happy to have been able to stay in San Francisco.” City officials did not respond to inquiries.


Like many places, San Francisco has been cutting its budget. Public parks have lost about $12 million in recent years, though workers at Twitter will not lack for greenery. The company’s plush new office has a rooftop garden with great views and amenities. Enjoying the perks, one employee sent out a tweet: “Tanned on Twitter’s new roof deck this morning as some dude served me smoothie shots. This is real life?”


A Zero-Sum Game


It was the company every state had to have. In 1985, General Motors was looking for a spot to manufacture its Saturn, a new compact car that would compete with Japanese imports and create thousands of American jobs.


Incentives were not in wide use, and several states had only recently begun to allow more of them.


In fact, when G.M. announced the search, its chairman, Roger Smith, said the perks would not be a predominant factor. “Tax breaks can’t make a silk purse out of a sow’s ear,” Mr. Smith told The Detroit Free Press. He said G.M. planned to avoid states that had large debts or lackluster schools.


Undeterred, some 30 states stepped forward in what became a full-out competition. One official, Bill Clinton, then the governor of Arkansas, traveled to Detroit offering income tax credits and sales tax exemptions worth nearly $200 million.


Mr. Smith essentially kept his word and chose Tennessee, which had put together a relatively small package. Reid Rundell, a retired G.M. executive, said in a recent interview that it had come down to geography. “The primary factor was distribution for incoming parts, as well as outgoing vehicles,” Mr. Rundell said.


But the gates had been opened. In 1992, South Carolina lured BMW with a $130 million package; the next year, Alabama got Mercedes-Benz at a price tag that topped $300 million.


“What the auto incentives did back then was really raise the profile of economic incentives both within companies, in government and in the public’s eye,” said Mark Sweeney, who worked for the South Carolina Commerce Department in the 1990s and now advises companies on obtaining government grants.


By 1993, governors were regaling one another at a national conference with stories of deals beyond the auto industry, including a recent bidding war for United Airlines that drew more than 90 cities. The airline had set up negotiations in a hotel, and its representatives ran floor to floor comparing bids, said Jim Edgar, then the governor of Illinois.


Mr. Edgar said he had called for a truce, concerned that the practice was unfair to companies that did not receive incentives. But many states would not sign on, he said, particularly those in the South, where businesses were moving.


“If you’ve got some states doing it, it’s hard for the others not to do it,” Mr. Edgar said. “It’s like unilaterally disarming.”


Soon after, economists at Federal Reserve branches were questioning the use of incentives. One, in Minnesota, used mathematical proofs and game theory to show that competition between states did not increase overall economic value. Several other economists have since called the practice a zero-sum game.


A group of taxpayers in Michigan and Ohio went as far as suing DaimlerChrysler after Ohio and the City of Toledo awarded the automaker $280 million in the late 1990s. The suit argued that it was unfair for one taxpayer to be given a break at the expense of all others.


The suit made its way to the Supreme Court, and G.M. and Ford signed on to briefs supporting Daimler, as did local governments. The National Governors Association warned the court that prohibiting incentives could lead to jobs moving overseas. “This is the economic reality,” the association said in a brief.


The governors offered no hard evidence of the effectiveness of tax credits, but the Supreme Court did not consider whether they worked anyway. In 2006, the court concluded that the taxpayers did not have the legal standing to challenge Ohio’s tax actions in federal court.


The tab for auto incentives has grown to $13.9 billion since 1985, according to the Center for Automotive Research, a nonprofit group in Ann Arbor, Mich. G.M., the top recipient, was awarded $3.3 billion of the aid. Since 1979, automakers also closed more than 267 plants in the United States, about half of which still sit empty, according to the center.


The auto industry and some local officials have long argued that auto companies create so many jobs and draw in so many supporting suppliers that all taxpayers benefit. Even if companies shut down years later, as Saturn did in Tennessee for a few years, the trade-off is worth it, they said.


“I do believe that if a state ever is going to create incentives,” said Lamar Alexander, who was Tennessee’s governor in 1985 when Saturn selected the state, “the auto industry would be by far the No. 1 target, because an auto assembly plant is a money target.”


Still, Mr. Alexander, now a United States senator, said that recruiting a large factory today would be more expensive. “It has changed a lot,” he said. “It’s almost become a sweepstakes.”


G.M. Gets Into the Act


G.M. may have initially minimized the role of local dollars, but as the company’s financial problems grew, incentives became a big part of its math.


The actions of the company were described in more than two dozen in-depth interviews with former company officials, tax consultants and governors and mayors who have dealt with G.M.


The automaker’s real estate division, Argonaut Realty, oversaw the hunt for the most lucrative deals. Up and down the corporate ladder, employees were encouraged to push governments for more, according to transcripts of public meetings and interviews. Even G.M. plant managers knew that the future of their facilities depended in part on their ability to send word of big discounts back to Detroit.


Union representatives were enlisted to attend local hearings, putting a human face on the jobs at stake. G.M.’s regional tax managers often showed up, armed with tax abatement wish lists and highlighting the company’s gifts to local charities.


“We knew what our investment of X amount meant to the community, and we knew we needed to partner with the community to be successful,” said Marilyn P. Nix, who worked as a real estate executive at G.M. for 31 years until retiring in 2005.


At the top of G.M., executives reviewed the proposals from various locations and went where the numbers added up.


“I know people like to blame the industry for taking advantage of the incentives, but you go back to what your fiduciary responsibility is to the stockholders,” Ms. Nix said. “As long as you’ve got people that are willing to better the deals, the management owes it to their stockholders to try to get the best economic deal that they can.”


For towns, it became a game of survival, even if the competition turned out to be a mirage.


Moraine, Ohio, was already home to a G.M. plant in 1997 when the company pushed hard for additional incentives. G.M. said it was looking for a place to accommodate more manufacturing.


Wayne Barfels, the city manager at the time, said a G.M. representative had told officials that Moraine was competing with Shreveport, La., and Linden, N.J. After the local school board approved property tax breaks, The Dayton Daily News reported that the other towns had not been in discussions with G.M.


The school board considered rescinding the deal, but allowed G.M. to keep it after a company official apologized. In 2008, G.M. shut the Moraine facility.


In towns where General Motors remains, local officials praised the company. “I can say they have been a great partner to us,” said Virg Bernero, the mayor of Lansing, Mich. “It would do something to the psyche of this community if they were not here. I mean, I just praise God every day.”


Looking to lure businesses beyond automakers, states have routinely bolstered their incentive tool kits. In 2010 alone, states created or expanded about 40 tax credits and exemptions, according to the National Conference of State Legislatures.


The nature of the credits has also changed. New ones are geared toward attracting technology and green energy companies, but it is hard to know whether 15 years down the road they will thrive or wind up stumbling like the automakers. And many modern companies, like those in digital technology, can easily pack up and leave.


“I don’t see anything that suggests that Twitter and Facebook are better bets in the long run,” said Laura A. Reese, the director of the Global Urban Studies Program at Michigan State University. Ms. Reese advises local governments to invest in residents through education and training rather than in companies where “it’s hard to pick winners.”


Yet states try to do it all the time. In 2010, Rhode Island, which has the nation’s second-highest unemployment rate, recruited Curt Schilling, a former Red Sox pitcher, to move his video game company from Massachusetts. The company, 38 Studios, had never released a game and was not making money, but the governor at the time had the state guarantee $75 million in loans.


The company failed and dismissed all of its roughly 400 workers this May. Rhode Island taxpayers are now on the hook for the loans.


Officials said part of the difficulty was that communities do not get much say in a company’s business strategy.


“We, as communities, stake our futures with these people who are supposed to know what they’re doing, and sometimes they don’t,” said Arthur Walker, a businessman in Shreveport and former chairman of the city’s chamber of commerce.


Mr. Walker and other officials in Shreveport know firsthand. In 2000, they were worried that G.M. would close a plant in their area and responded with a generous proposal: the city would cut the company’s gas bill and provide work force training grants. In addition, G.M. would benefit by a recent increase in one of the state’s income tax credits.


Eager to encourage innovation, Shreveport officials suggested ways the city could assist G.M. in building electric cars. “We wanted to be part of the future,” said Mr. Walker, whose brother worked at the plant.


G.M. took the city’s incentives but not its business advice and began building the giant Hummer there.


“We knew they needed to build green cars — I mean, who builds a Hummer for the 21st century?” Mr. Walker said. “It was a losing proposition that we found ourselves in. We couldn’t win because those people weren’t making the correct business decisions, in my view. When it didn’t work, we’re the ones left holding the bag.”


The Hummer was discontinued in 2010, and the Shreveport factory closed this August, the final victim of G.M.’s bankruptcy.


Ypsilanti’s Losing Battle


For much of the last 20 years, Doug Winters has been agitating for General Motors to be held accountable.


Mr. Winters, the attorney for Ypsilanti Township and several other places around Ann Arbor, has lived in Ypsilanti all his life. His grandmother labored at the local plant, Willow Run, during World War II, when it made bomber planes. People in town still proudly point out that a woman known as Rosie the Riveter worked there as well. After the war, when G.M. moved into the plant to manufacture its automatic transmission system, his father got a job.


Mr. Winters loves the history of Willow Run but hates what he views as corporate hypocrisy: G.M. asked for government help on the one hand and then appealed to free-market rationales for closing shop.


Over the years, Ypsilanti granted G.M. more than $200 million in incentives for two factories at Willow Run, Mr. Winters said. “They had put basically a stranglehold on the entire state of Michigan and other places across the country by just grabbing these tax abatements by the billions,” he said. “They were doing it with a very thinly disguised threat that if you don’t give us these tax abatements, then we’ll have to go somewhere else.”


Ypsilanti first sued G.M. in the 1990s to prevent the company from closing the factory at Willow Run that made the Chevrolet Caprice.


The town had granted the company tax incentives after the factory manager argued that G.M.’s ability to compete with other carmakers was at stake, documents in the lawsuit show. The tax break and “favorable market demand,” said the plant manager, Harvey Williams, would allow the automaker to “maintain continuous employment.”


Nevertheless, G.M. shut the factory. A lower court found in favor of Ypsilanti, but the ruling was reversed on appeal. The judge said that a company’s job assurances “cannot be evidence of a promise.”


In 2010, when the company closed the remaining factory at Willow Run, Mr. Winters sued again. This time, Ypsilanti argued that the automaker should have been forced to close overseas factories instead, especially since American taxpayers had bailed out G.M. In addition, Ypsilanti sought to recover money from G.M., saying the company had agreed to reimburse the town for some incentives if it left.


So far, Ypsilanti’s claims have not been addressed. They were complicated by G.M.’s bankruptcy, which allowed the carmaker to emerge as a new company and leave some of its liabilities and contractual obligations behind.


When asked whether the new G.M. has civic responsibilities to its former factory towns, Mr. Cain, the company spokesman, said: “Our obligation to the communities where we do business is to run a successful business. And when we prosper, it allows us to do more than just turn the lights on and make cars.”


He also said that since the bailout, “G.M. has invested more than $7.3 billion in its U.S. facilities, and we’ve created or retained almost 19,000 jobs in communities all over the country.”


Matthew P. Cullen, who oversaw real estate and economic development for G.M. until he left the company in 2008, said the automaker was aware of its impact on communities. He said that what happened with G.M. was the result of an entire industry changing and that there had been no bad intentions.


“If you go forward in good faith doing everything you can and make the investment, then you’re partners,” Mr. Cullen said. “Sometimes partnerships in business work, and they work for 60 years. And in some cases, they don’t, and it doesn’t make you a bad partner.”


Some towns that are still dealing with the fallout of plant closings might disagree. In Pontiac, Mich., tax revenues have fallen 40 percent since 2009 after the old G.M. knocked down buildings on its property, resulting in lower tax assessments, according to the city’s emergency manager.


In Ypsilanti, an entity set up to sell off G.M. property is marketing the plant as valuable. At the same time, it has been arguing for lower property taxes on the grounds that its plant is not worth much.


Ypsilanti’s supervisor, Brenda Stumbo, said the township would be stung hard by further revenue cuts. Ypsilanti has already slimmed down its Fire Department, and city workers are juggling multiple jobs. There are seven to 10 home foreclosures a week, giving the township the highest foreclosure rate in the county, Ms. Stumbo said.


“Can all of it be traced back to General Motors?” she said, listing auto suppliers that closed after G.M. did. “No, but a great deal of it can.”


Nonetheless, Ms. Stumbo said that if G.M. would bring jobs back to town, she would be willing to grant the company more incentives.


But Mr. Winters is not so sure. He said he would never support more incentives without stronger protections for Ypsilanti. “They’ve done a lot of damage to a lot of people and a lot of communities, and they’ve basically been given a clean slate,” he said. “It’s a ‘get out of jail free’ card.”

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Alarm as China Issues Rules for Disputed Area


Kham/Reuters


Fishing boats off Vietnam’s coast in the South China Sea. One Chinese official said the new rules applied to disputed islands, too.







HAIKOU, China — New rules announced by a Chinese province last week to allow interceptions of ships in the South China Sea are raising concerns in the region, and in Washington, that simmering disputes with Southeast Asian countries over the waters will escalate.




The move by Hainan Province, which administers China’s South China Sea claims, is being seen by some outside analysts as another step in the country’s bid to solidify its claims to much of the sea, which includes crucial international shipping lanes through which more than a third of global trade is carried.


As foreign governments scrambled for clarification of the rules, which appeared vague and open to interpretation, a top Chinese policy maker on matters related to the South China Sea tried to calm worries inspired by the announcement.


Wu Shicun, the director general of the foreign affairs office of Hainan Province, said Saturday that Chinese ships would be allowed to search and repel foreign ships only if they were engaged in illegal activities (though these were not defined) and only if the ships were within the 12-nautical-mile zone surrounding islands that China claims.


The laws, passed by the provincial legislature, come less than a month after China named its new leader, Xi Jinping, and as the country remains embroiled in a serious dispute with Japan in the East China Sea over islands known in China as the Diaoyu and as the Senkaku in Japan.


The laws appear to have little to do with Mr. Xi directly, but they reinforce fears that China, now the owner of an aircraft carrier and a growing navy, is plowing ahead with plans to enforce its claims that it has sovereign rights over much of the sea, which includes dozens of islands that other countries say are theirs. And top Chinese officials have not yet clarified their intent, leaving room for speculation.


If China were to enforce these new rules fully beyond the 12-nautical-mile zones, naval experts say, at stake would be freedom of navigation, a principle that benefits not only the United States and other Western powers but also China, a big importer of Middle East oil.


An incomplete list of the laws passed in Hainan was announced by the state-run news agency, Xinhua, last week.


In an interview here on Saturday, Mr. Wu said the new regulations applied to all of the hundreds of islands scattered across the sea, and their surrounding waters. That includes islands claimed by several other countries, including Vietnam and the Philippines.


“It covers all the land features inside the nine-dash line and adjacent waters,” Mr. Wu said. The nine-dash line refers to a map that China drew up in the late 1940s that demarcates its territorial claims — about 80 percent of the South China Sea, whose seabed is believed to be rich in oil and natural gas.


That map forms the basis for China’s current claims. Some neighboring countries were outraged when China recently placed the nine-dash map on its new passports. Vietnam has refused to place its visa stamps in the passports as they are, insisting a separate piece of paper be added for the stamp.


Mr. Wu, who also heads a government-sponsored institute devoted to the study of the South China Sea, said the immediate intention of the new laws was to deal with what he called illegal Vietnamese fishing vessels that operate in the waters around Yongxing Island, where China recently established an expanded army garrison.


The island, which has a long airstrip, is part of a group known internationally as the Paracels that is also claimed by Vietnam. China is using Yongxing Island as a kind of forward presence in a bid for more control of the South China Sea, neighboring countries say.


The Chinese Foreign Ministry said last week that China was within its rights to allow the coast guard to board vessels in the South China Sea.


The new rules go into effect on Jan. 1. According to a report in an English-language state-run newspaper, China Daily, the police and coast guard will be allowed to board and seize control of foreign ships that “illegally enter” Chinese waters and order them to change course.


Mr. Wu acknowledged that the new rules had aroused alarm in Asia, and the United States, because they could be interpreted as a power grab by China.


“A big worry for neighboring countries and countries outside the region is that China is growing so rapidly, and they see it is possible China taking over the islands by force,” he said. “I think China needs to convince neighboring countries that this is not the case.”  Essentially, he said, countries had to trust that China would not use force in the sea.


The Philippines, an ally of the United States and one of the most vociferous critics of China’s claims in the South China Sea, reacted strongly to the new rules.


Bree Feng contributed reporting from Haikou, and Elisabeth Bumiller from Washington.



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Corner Office | Sandra L. Kurtzig: Sandra Kurtzig of Kenandy, on Keeping Companies Focused



Q. Tell me about your approach to leadership.


A. I think that one of the most important things in working with anybody, whether you’re the boss or the person being managed, is that you have to have mutual respect. I’ve always been very open and down to earth. I’ve never taken myself very seriously. I show self-confidence, and I think that if you don’t show self-confidence, no one is going to buy from you and no one’s going to want to work with you.


I’m transparent, and I ask people on a regular basis what they like about their job and what they don’t like about their job. What can we be doing better? In your previous job, how did you do it? What worked better and what worked worse than what we are doing now? I’m constantly asking people for their opinions.


A key thing is surrounding myself with people that, No. 1, I respect, and No. 2, I like. Then I ask their opinions and really listen to them. Two-way conversations are an important ingredient for building a company. Nowadays, I hear that so many younger people who are starting companies are so used to working on the Internet that they tend to send only e-mails and communicate with their screens more than they communicate with people around them. You need to interact with people and not just your computers.


Q. How has your leadership style evolved over time?


A. I’m more self-confident now, and I make decisions faster. I know what information I need because I’ve been there, done that before. I’m also more willing to change the decisions and modify them so that we get to the end faster.


I don’t run after “shiny objects.” That’s a mistake that a lot of people make in running a company, especially in starting one. They tend to get a lot of opportunities from people who want to partner with them. And these are just shiny objects, because there are very few partners that end up being right for your company. So I’m much more selective. If I hear something, I’m very quick to think, ‘Hey, that’s a shiny object; let’s get back to work.’ I think that’s what’s so distracting to a lot of companies — they see a big customer or some other distraction, and they spend too much time on it and they lose their way.


Q. What else?


A. I’m willing to take risks. If you don’t have some fear of failure, then you’re not taking enough risks. I probably was much more conservative the first time around.


But I am conservative in hiring. I don’t over-hire. The reason is that you can get a lot more work done with fewer people. If you have a lot of people, you have to give them something to do, and you have to give them something to manage, and then you have to manage them. You can get a lot less done. So you want to have a core set of people while you’re really trying to discover your product, your direction, your market. And the more people you have, the more difficult it is to take risks because it affects a lot more people.


I’m also at a point in my life where I like to choose customers I want to work with, because if I don’t like working with them, we’re not going to be very good at it. And we’ve actually fired two customers. That’s something that I think is important and might be very strange and surprising to people. We had some customers when we first started and we were trying to make our way and figure out the market, and not all of them were ultimately right for us.


Q. How do you hire? What questions do you ask?


A. I would certainly ask people: “Why are you here? What do you know about our company that made you want to interview for this job?” If they haven’t done their homework and don’t even know why they’re there, then that’s a real red flag for me.


The second thing I’ll say is: “Why do you want to leave the company you’re at right now? Looks like you’re doing a pretty good job, and you’re doing well. What is it that you don’t like there?”


It’s always very eye-opening to know whether they don’t like it because of politics, because I always think that people can create their own politics to some extent. So that sort of makes me nervous. They’d better have a pretty good answer to those two things. Otherwise, we’re near the end of the interview at that point.


Q. Tell me more about your point that people can create their own politics.


A. If they say they don’t like the politics at their current job, I’ll ask them, “How’s that affecting your ability to do your job?” Then I would evaluate whether I think that they should be able to handle that and get around it, or whether it really is a serious political situation.


I interviewed somebody and he was telling me all about the politics within the company. The longer we talked, the more I thought he was the one creating the politics.


Q. What qualities are you looking for?


A. You hire people in your own style. If you hire people in your own style, they will in turn hire people in their style. So I want somebody who I feel is open and smart. I’m not saying I’m that smart, but maybe I am a little bit smart.


And I want people who are self-deprecating, who don’t take themselves too seriously.


And are they willing to work hard? If they have just too many outside interests that are going to take away from their ability to focus on the job, then I’m probably a little less likely to hire them.


Q. In those cases when someone doesn’t work out, what’s usually the problem?


A. They’re just in over their head. They painted a picture in the interview that they know certain things, but they really aren’t up for the task. And you can never demote somebody. Sometimes the people that you hire are good, but they’re just not good at the job they’re in, and a demotion doesn’t work. So you have to move on.


This interview has been edited and condensed.



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Adderall, a Drug of Increased Focus for N.F.L. Players





The first time Anthony Becht heard about Adderall, he was in the Tampa Bay locker room in 2006. A teammate who had a prescription for the drug shook his pill bottle at Becht.




“ ‘You’ve got to get some of these,’ ” Becht recalled the player saying. “I was like, ‘What the heck is that?’ He definitely needed it. He said it just locks you in, hones you in. He said, ‘When I have to take them, my focus is just raised up to another level.’ ”


Becht said he did not give Adderall another thought until 2009, when he was playing in Arizona and his fellow tight end Ben Patrick was suspended for testing positive for amphetamines. The drug he took, Patrick said, was Adderall. Becht asked Patrick why he took it, and Patrick told Becht, and reporters, that he had needed to stay awake for a long drive.


Those two conversations gave Becht, now a free agent, an early glimpse at a problem that is confounding the N.F.L. this season. Players are taking Adderall, a medication widely prescribed to treat attention deficit hyperactivity disorder, whether they need it or not, and are failing drug tests because of it. And that is almost certainly contributing to a most-troubling result: a record-setting year for N.F.L. drug suspensions.


According to N.F.L. figures, 21 suspensions were announced this calendar year because of failed tests for performance-enhancing drugs, including amphetamines like Adderall. That is a 75 percent increase over the 12 suspensions announced in 2011 and, with a month to go in 2012, it is the most in a year since suspensions for performance-enhancing drugs began in 1989.


At least seven of the players suspended this year have been linked in news media reports to Adderall or have publicly blamed the drug, which acts as a strong stimulant in those without A.D.H.D. The most recent examples were Tampa Bay cornerback Eric Wright and New England defensive lineman Jermaine Cunningham last week.


The N.F.L. is forbidden under the terms of the drug-testing agreement with the players union from announcing what substance players have tested positive for — the urine test does not distinguish among types of amphetamines — and there is some suspicion that at least a few players may claim they took Adderall instead of admitting to steroid use, which carries a far greater stigma. But Adolpho Birch, who oversees drug testing as the N.F.L.’s senior vice president for law and labor, said last week that failed tests for amphetamines were up this year, although he did not provide any specifics. The increase in Adderall use probably accounts for a large part of the overall increase in failed tests.


“If nothing else it probably reflects an uptick in the use of amphetamine and amphetamine-related substances throughout society,” Birch said. “It’s not a secret that it’s a societal trend, and I think we’re starting to see some of the effects of that trend throughout our league.”


Amphetamines have long been used by athletes to provide a boost — think of the stories of “greenies” in baseball clubhouses decades ago. That Adderall use and abuse has made its way to the N.F.L. surprises few, because A.D.H.D. diagnoses and the use of medication to control it have sharply increased in recent years.


According to Dr. Lenard Adler, who runs the adult A.D.H.D. program at New York University Langone Medical Center, 4.4 percent of adults in the general population have the disorder, of which an estimated two-thirds are men. Birch said the number of exemptions the N.F.L. has granted for players who need treatment for A.D.H.D. is “almost certainly fewer” than 4.4 percent of those in the league.


The rates of those with the disorder fall as people get older; it is far more prevalent in children and adolescents. A report from the Centers for Disease Control and Prevention, using input from parents, found that as of 2007, about 9.5 percent or 5.4 million children from ages 4 to 17 had A.D.H.D. at some point. That was an increase of 22 percent from 2003. Boys (13.2 percent) were more likely to have the disorder than girls (5.6 percent).


Of children who currently have A.D.H.D., 66.3 percent are receiving medication, with boys 2.8 times more likely to receive medication. Those 11 to 17 years old are more likely to receive medication than younger children.


But Adderall, categorized by the Drug Enforcement Administration as a Schedule II controlled substance because it is particularly addictive, is also used by college students and even some high school students to provide extra energy and concentration for studying or as a party drug to ward off fatigue.


Dr. Leah Lagos, a New York sports psychologist who has worked with college and professional athletes, said she had seen patients who have used Adderall. She said she believed the rise in its use by professional athletes mimicked the use by college students. Just a few years ago, she said, it was estimated that 1 in 10 college students was abusing stimulants like Adderall and Ritalin. That estimate, Lagos said, has almost doubled.


Read More..

Adderall, a Drug of Increased Focus for N.F.L. Players





The first time Anthony Becht heard about Adderall, he was in the Tampa Bay locker room in 2006. A teammate who had a prescription for the drug shook his pill bottle at Becht.




“ ‘You’ve got to get some of these,’ ” Becht recalled the player saying. “I was like, ‘What the heck is that?’ He definitely needed it. He said it just locks you in, hones you in. He said, ‘When I have to take them, my focus is just raised up to another level.’ ”


Becht said he did not give Adderall another thought until 2009, when he was playing in Arizona and his fellow tight end Ben Patrick was suspended for testing positive for amphetamines. The drug he took, Patrick said, was Adderall. Becht asked Patrick why he took it, and Patrick told Becht, and reporters, that he had needed to stay awake for a long drive.


Those two conversations gave Becht, now a free agent, an early glimpse at a problem that is confounding the N.F.L. this season. Players are taking Adderall, a medication widely prescribed to treat attention deficit hyperactivity disorder, whether they need it or not, and are failing drug tests because of it. And that is almost certainly contributing to a most-troubling result: a record-setting year for N.F.L. drug suspensions.


According to N.F.L. figures, 21 suspensions were announced this calendar year because of failed tests for performance-enhancing drugs, including amphetamines like Adderall. That is a 75 percent increase over the 12 suspensions announced in 2011 and, with a month to go in 2012, it is the most in a year since suspensions for performance-enhancing drugs began in 1989.


At least seven of the players suspended this year have been linked in news media reports to Adderall or have publicly blamed the drug, which acts as a strong stimulant in those without A.D.H.D. The most recent examples were Tampa Bay cornerback Eric Wright and New England defensive lineman Jermaine Cunningham last week.


The N.F.L. is forbidden under the terms of the drug-testing agreement with the players union from announcing what substance players have tested positive for — the urine test does not distinguish among types of amphetamines — and there is some suspicion that at least a few players may claim they took Adderall instead of admitting to steroid use, which carries a far greater stigma. But Adolpho Birch, who oversees drug testing as the N.F.L.’s senior vice president for law and labor, said last week that failed tests for amphetamines were up this year, although he did not provide any specifics. The increase in Adderall use probably accounts for a large part of the overall increase in failed tests.


“If nothing else it probably reflects an uptick in the use of amphetamine and amphetamine-related substances throughout society,” Birch said. “It’s not a secret that it’s a societal trend, and I think we’re starting to see some of the effects of that trend throughout our league.”


Amphetamines have long been used by athletes to provide a boost — think of the stories of “greenies” in baseball clubhouses decades ago. That Adderall use and abuse has made its way to the N.F.L. surprises few, because A.D.H.D. diagnoses and the use of medication to control it have sharply increased in recent years.


According to Dr. Lenard Adler, who runs the adult A.D.H.D. program at New York University Langone Medical Center, 4.4 percent of adults in the general population have the disorder, of which an estimated two-thirds are men. Birch said the number of exemptions the N.F.L. has granted for players who need treatment for A.D.H.D. is “almost certainly fewer” than 4.4 percent of those in the league.


The rates of those with the disorder fall as people get older; it is far more prevalent in children and adolescents. A report from the Centers for Disease Control and Prevention, using input from parents, found that as of 2007, about 9.5 percent or 5.4 million children from ages 4 to 17 had A.D.H.D. at some point. That was an increase of 22 percent from 2003. Boys (13.2 percent) were more likely to have the disorder than girls (5.6 percent).


Of children who currently have A.D.H.D., 66.3 percent are receiving medication, with boys 2.8 times more likely to receive medication. Those 11 to 17 years old are more likely to receive medication than younger children.


But Adderall, categorized by the Drug Enforcement Administration as a Schedule II controlled substance because it is particularly addictive, is also used by college students and even some high school students to provide extra energy and concentration for studying or as a party drug to ward off fatigue.


Dr. Leah Lagos, a New York sports psychologist who has worked with college and professional athletes, said she had seen patients who have used Adderall. She said she believed the rise in its use by professional athletes mimicked the use by college students. Just a few years ago, she said, it was estimated that 1 in 10 college students was abusing stimulants like Adderall and Ritalin. That estimate, Lagos said, has almost doubled.


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Enrique Peña Nieto Takes Office as Mexico’s President





MEXICO CITY — Enrique Peña Nieto became president of Mexico early Saturday, beginning a six-year term in which he has promised to accelerate economic growth, reduce the violence related to the drug war and forge closer, broader ties with the United States.




Mr. Peña Nieto took office at 12:01 a.m. during a short ceremony at the presidential residence with his predecessor, Felipe Calderón. Mr. Peña Nieto is scheduled to take the oath of office before Congress on Saturday morning and then deliver a speech before an audience of domestic and foreign dignitaries, including Vice President Joseph R. Biden Jr., with whom he will also meet privately.


Mr. Peña Nieto, 46, a lawyer who served as governor of Mexico State, has vowed to continue Mr. Calderón’s efforts to work with American law enforcement agencies to quell the violence linked to drug gangs that has killed tens of thousands in the past several years and tarnished Mexico’s image.


In recent weeks, his team has emphasized the need to bolster Mexico’s economy, which rebounded from a recession in 2009 and is now growing faster than the United States’ with an infusion of new manufacturing plants and other investment.


His administration plans more steps to stimulate the economy, arguing that generating better-paying jobs will go a long way toward reducing violence by providing alternatives to crime for the chronically underemployed.


Mr. Peña Nieto also plans to reorganize the federal security forces and intends to form paramilitary units with police duties to combat violence in rural areas and support local and state police departments that are too corrupt or poorly trained to fight crime.


Still, his administration will be watched closely to see whether it is propelling Mexico forward or backward.


Mr. Peña Nieto ushers in a new era for the Institutional Revolutionary Party, known as the PRI, which had ruled Mexico for more than 70 years before the more conservative National Action Party toppled it in 2000 and defeated it again in 2006.


But Mr. Peña Nieto and his associates said they represented a new, chastened party bent on promoting efficiency and economic change and promising to fight the kind of corruption long associated with it.


“It’s a very common misconception to think that the PRI’s return to power means the return of something that is already in history,” Luis Videgaray, who led the president’s transition team and will become the finance minister, said in a recent interview.


“The PRI of today is like any other party: a party that competes in a democracy, that accepts results and understands that only through good government would it be able to compete again in elections,” he said. “So I think that’s the biggest misconception that the PRI is something of the past, and it’s not.”


Mr. Peña Nieto begins his term on a politically shaky foundation. He won 38 percent of the vote in the July election, and for weeks afterward, political opponents complained about what they said were irregularities in the voting. The PRI-led coalition is the largest in Congress, but it does not have an absolute majority and will need alliances to get anything done.


In unveiling his cabinet on Friday, Mr. Peña Nieto relied largely on PRI stalwarts, including five former governors, but placed several young, foreign-educated technocrats from his inner circle, including Mr. Videgaray, in prominent positions to present a fresh face for the old party. Men dominate the cabinet, with only 3 of the 27 positions filled going to women.


The opposition, however, has its own challenges.


The leftist Party of the Democratic Revolution has split into factions, and the National Action Party is rebuilding without a clear leader after losing its 12-year grip on the presidency.


Randal C. Archibold contributed reporting.



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Syria Rebels Find Skype Useful, but Dangers Lurk





In a demonstration of their growing sophistication and organization, Syrian rebels responded to a nationwide shutdown of the Internet by turning to satellite technology to coordinate within the country and to communicate with outside activists.




When Syria’s Internet service disappeared Thursday, government officials first blamed rebel attacks. Activist groups blamed the government and viewed the blackout as a sign that troops would violently clamp down on rebels.


But having dealt with periodic outages for more than a year, the opposition had anticipated a full shutdown of Syria’s Internet service providers. To prepare, they have spent months smuggling communications equipment like mobile handsets and portable satellite phones into the country.


“We’re very well equipped here,” said Albaraa Abdul Rahman, 27, an activist in Saqba, a poor suburb 20 minutes outside Damascus. He said he was in touch with an expert in Homs who helped connect his office and 10 others like it in and around Damascus.


Using the connection, the activists in Saqba talked to rebel fighters on Skype and relayed to overseas activists details about clashes with government forces. A video showed the rebels’ bare-bones room, four battery backups that could power a laptop for eight hours and a generator set up on a balcony.


For months, rebels fighting to overthrow President Bashar al-Assad have used Skype, a peer-to-peer Internet communication system, to organize and talk to outside news organizations and activists. A few days ago, Jad al-Yamani, an activist in Homs, sent a message to rebel fighters that tanks were moving toward a government checkpoint.


He notified the other fighters so that they could go observe the checkpoint. “Through Skype you know how the army moves or can stop it,” Mr. Yamani said.


On Friday, Dawoud Sleiman, 39, a member of the antigovernment Ahrar al-Shamal Battalion, part of the Free Syrian Army, reached out to other members of the rebel group. They were set up at the government’s Wadi Aldaif military base in Idlib, a province near the Turkish border that has seen heavy fighting, and connected to Skype via satellite Internet service.


Mr. Sleiman, who is based in Turkey, said the Free Syrian Army stopped using cellphone networks and land lines months ago and instead relies almost entirely on Skype. “Brigade members communicate through the hand-held devices,” he said.


This week rebels posted an announcement via Skype that called for the arrest of the head of intelligence in Idlib, who is accused of killing five rebels. “A big financial prize will be offered to anyone who brings the head of this guy,” the message read. “One of our brothers abroad has donated the cash.”


If the uprisings in Tunisia and Egypt were Twitter Revolutions, then Syria is becoming the Skype Rebellion. To get around a near-nationwide Internet shutdown, rebels have armed themselves with mobile satellite phones and dial-up modems.


In many cases, relatives and supporters living outside Syria bought the equipment and had it smuggled in, mostly through Lebanon and Turkey.


That equipment has allowed the rebels to continue to communicate almost entirely via Skype with little interruption, despite the blackout. “How the government used its weapons against the revolution, that is how activists use Skype,” Mr. Abdul Rahman said.


“We haven’t seen any interruption in the way Skype is being used,” said David Clinch, an editorial director of Storyful, a group that verifies social media posts for news organizations, including The New York Times (Mr. Clinch has served as a consultant for Skype).


Mr. Assad, who once fashioned himself as a reformer and the father of Syria’s Internet, has largely left the country’s access intact during the 20-month struggle with rebels. The government appeared to abandon that strategy on Thursday, when most citizens lost access. Some Syrians could still get online using service from Turkey. On Friday, Syrian officials blamed technical problems for the cutoff.


The shutdown is only the latest tactic in the escalating technology war waged in Arab Spring countries.


But several technology experts warned that the use of the Internet by rebels in Syria, even those relying on Skype, could leave them vulnerable to government surveillance.


Liam Stack contributed reporting from New York; Hala Droubi from Dubai, United Arab Emirates; and Hwaida Saad from Beirut, Lebanon.



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Fast-Food Workers in New York City Rally for Higher Wages


Michael Nagle for The New York Times


A rally at a McDonald’s near Times Square on Thursday. Organizers said 200 fast-food workers went on strike in New York City.







The biggest wave of job actions in the history of America’s fast-food industry began at 6:30 a.m. on Thursday at a McDonald’s at Madison Avenue and 40th Street, with several dozen protesters chanting: “Hey, hey, what do you say? We demand fair pay.”




That demonstration kicked off a day of walkouts and rallies at dozens of Burger King, Taco Bell, Wendy’s, McDonald’s and other fast-food restaurants in New York City, organizers said. They said 14 of the 17 employees scheduled to work the morning shift at the McDonald’s on Madison Avenue did not — part of what they said were 200 fast-food workers who went on strike in the city.


Raymond Lopez, 21, an aspiring actor who has worked at the McDonald’s for two and a half years, showed up at the daybreak protest on his day off. “In this job, having a union would really be a dream come true,” said Mr. Lopez, who said his pay of $8.75 an hour left him feeling undercompensated. “It really is living in poverty.”


Workplace experts said it was by far the largest series of job actions at fast-food restaurants ever — part of an ambitious plan that seeks to unionize workers and increase wages at fast-food restaurants across the city.


The unionization drive, called Fast Food Forward, is sponsored by community and civil rights groups — including New York Communities for Change, United NY.org and the Black Institute — as well as the Service Employees International Union. The campaign has deployed 40 organizers since January to rally fast-food workers behind unionization, saying the goal is to raise wages to $15 an hour.


Rick Cisneros, the franchisee who operates the McDonald’s at 40th and Madison, said: “I value my employees. I welcome an open dialogue while always encouraging them to express any concerns or to provide feedback so I can continue to be an even better employer.”


Several mayoral candidates — including Christine C. Quinn, the City Council speaker; Bill de Blasio, the public advocate; John C. Liu, the comptroller; and William C. Thompson Jr., a former comptroller — were quick to voice support for the workers. As those candidates vie for the Democratic nomination, they are furiously jockeying for union support.


Mary Kay Henry, the service employees’ president, said the fast-food companies could easily afford to pay their employees more. “People who work for the richest corporations in America should be able to afford at least the basic necessities to support their families,” she said.


Labor leaders say they see an uptick in activism among low-wage workers — including last week’s Walmart protests — as workers grow increasingly frustrated about pay stagnating at $8 or $9 an hour, translating into $16,000 or $18,000 a year for a full-time worker.


Pamela Waldron, who has worked at the KFC in Pennsylvania Station for eight years, complained that she earned just $7.75 an hour and was assigned just 20 hours a week, meaning income of about $8,000 a year. She was picketing outside a Burger King on 34th Street, as several dozen workers and their supporters chanted, “How can we survive on seven twenty-five” — $7.25 an hour is the federal and New York State minimum wage.


“I’m protesting for better pay,” Ms. Waldron, 26, said. “I have two kids under 6, and I don’t earn enough to buy food for them.”


Miguel Piedra, a Burger King spokesman, said its restaurants provide entry-level jobs for millions of Americans, train and invest in workers, and “offer compensation and benefits that are consistent with the quick-service restaurant industry.”


Fast Food Forward said it had filed six complaints with the National Labor Relations Board, asserting that various restaurant managers had threatened to fire workers for striking or supporting a union or had improperly interrogated workers about backing the effort.


The protest on Thursday culminated in a rally with hundreds of fast-food workers and their supporters outside the McDonald’s on 42nd Street west of Times Square. They chanted, “Hey, hey, ho, ho, seven-twenty-five has got to go.”


Inside the McDonald’s on Madison Avenue on Thursday morning, a few workers made funny faces as their friends demonstrated outside. A few patrons, quaffing coffee and gobbling sausage McMuffins, eyeballed the protesters with concern through the restaurant windows.


Jocelyn Horner, 35, a graduate student, said she supported the protesters. “If anybody deserves to unionize, it’s fast-food workers,” she said.


A cashier whose name tag read “Milady” said she chose not to participate in the demonstration.


“At least I have a job,” she said.


Randy Leonard and Nate Schweber contributed reporting.



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Mumbai Journal: Cultivating Vultures to Restore a Mumbai Ritual


Kuni Takahashi for The New York Times


A model of one of the Towers of Silence, top, where in Parsi tradition, dead bodies are placed for disposal by vultures.







MUMBAI, India — Fifteen years after vultures disappeared from Mumbai’s skies, the Parsi community here intends to build two aviaries at one of its most sacred sites so that the giant scavengers can once again devour human corpses.




Construction is scheduled to begin as soon as April, said Dinshaw Rus Mehta, chairman of the Bombay Parsi Punchayet. If all goes as planned, he said, vultures may again consume the Parsi dead by January 2014.


“Without the vultures, more and more Parsis are choosing to be cremated,” Mr. Mehta said. “I have to bring back the vultures so the system is working again, especially during the monsoon.”


The plan is the result of six years of negotiations between Parsi leaders and the Indian government to revive a centuries-old practice that seeks to protect the ancient elements — air, earth, fire and water — from being polluted by either burial or cremation. And along the way, both sides hope the effort will contribute to the revival of two species of vulture that are nearing extinction. The government would provide the initial population of birds.


The cost of building the aviaries and maintaining the vultures is estimated at $5 million spread over 15 years, much less expensive than it would have been without the ready supply of food.


“Most vulture aviaries have to spend huge sums to buy meat, but for us that’s free because the vultures will be feeding on human bodies — on us,” Mr. Mehta said.


Like the vultures on which they once relied, Parsis are disappearing. Their religion, Zoroastrianism, once dominated Iran but was largely displaced by Islam. In the 10th century, a large group of Zoroastrians fled persecution in Iran and settled in India. Fewer than 70,000 remain, most of them concentrated in Mumbai, formerly known as Bombay, where they collectively own prime real estate that was purchased centuries ago.


Among the most valuable of these holdings are 54 acres of trees and winding pathways on Malabar Hill, one of Mumbai’s most exclusive neighborhoods. Tucked into these acres are three Towers of Silence where Parsis have for centuries disposed of their dead.


The stone towers are open-air auditoriums containing three concentric rings of marble slabs — an outer ring for dead men, middle ring for deceased women and inner ring for dead children. For centuries, bodies left on the slabs were consumed within hours by neighborhood vultures, with the bones left in a central catchment to leach into the soil.


Modernity has impinged on this ancient practice in many ways. That includes the construction of nearby skyscrapers where non-Parsis could watch the grisly scenes unfold. But by far the greatest threat has been the ecological disaster visited in recent years on vultures.


India once had as many as 400 million vultures, a vast population that thrived because the nation has one of the largest livestock populations in the world but forbids cattle slaughter. When cows died, they were immediately set upon by flocks of vultures that left behind skin for leather merchants and bones for bone collectors. As recently as the 1980s, even the smallest villages often had thousands of vulture residents.


But then came diclofenac, a common painkiller widely used in hospitals to lessen the pain of the dying. Marketed under names like Voltaren, it is similar to the medicines found in Advil and Aleve; in 1993 its use in India was approved in cattle. Soon after, vultures began dying in huge numbers because the drug causes them to suffer irreversible kidney failure.


Diclofenac’s veterinarian use has since been banned, which may finally be having an effect. A recent study found that for the first time since the drug’s introduction, India’s vulture population did not decline over the past year.


Still, the numbers for three species have shrunk to only a few thousand, a tiny fraction of their former levels. With so few vultures left, the Parsi community set up mirrors around the Towers of Silence to create something akin to solar ovens to accelerate decomposition. But the mirrors are ineffective during monsoon months. So an increasing number of Parsis are opting for cremation, a practice many Parsi priests believe is an abomination since fire is sacred and corpses unclean.


Sruthi Gottipati contributed reporting.



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Barnes & Noble Posts a Profit, but Sales of Digital Content Slows





Barnes & Noble reported a modest profit for its fiscal second quarter on Thursday, but growth in its digital content sales slowed as it faced increased competition from rivals like Amazon and Google.




The company, the largest conventional bookseller, has invested heavily in its Nook e-business as consumers increasingly shop online and read e-books. Barnes & Noble said revenue from its Nook business grew, but revenue from devices fell because of lower average selling prices. Digital content revenue grew 38 percent, but that was down from a 46 percent increase in the fiscal first quarter.


Investors were hoping for higher growth, and shares of Barnes & Noble fell $1.79, or 11 percent, to $14.26.


Barnes & Noble reported net income of $2.2 million for the three months that ended Oct. 27. That translates to a loss of 4 cents a share, however, after the impact of preferred stock dividends. That matched analysts’ expectations, according to FactSet. The results compare with a loss in the same quarter last year of $6.6 million, or 17 cents a share.


Revenue was nearly flat at $1.88 billion. Analysts expected revenue of $1.91 billion.


Revenue from the company’s Nook division rose 6 percent to $160 million. Barnes & Noble introduced two new Nook e-readers, a 7-inch Nook HD and 9-inch Nook HD Plus, during the quarter, and began shipping them just after the quarter closed.


In a call with analysts, William Lynch, the chief executive of Barnes & Noble, said the company expected digital content buying to pick up after the holiday season, when Nooks are expected to be popular gifts.


The company said Nook unit sales doubled over the busy four-day shopping weekend around Thanksgiving as the company increased markdowns at retailers like Target and Wal-Mart Stores.


But the Nook faces tough competition from other new devices this holiday season, including Apple’s iPad Mini, new Amazon Kindles and Google’s Nexus tablet.


“They’re maintaining their market share by way of promoting and discounting,” said Peter Wahlstrom, an analyst at Morningstar. “But it’s a more competitive marketplace.”


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Medicare Is Faulted in Electronic Medical Records Conversion





The conversion to electronic medical records — a critical piece of the Obama administration’s plan for health care reform — is “vulnerable” to fraud and abuse because of the failure of Medicare officials to develop appropriate safeguards, according to a sharply critical report to be issued Thursday by federal investigators.







Mike Spencer/Wilmington Star-News, via Associated Press

Celeste Stephens, a nurse, leads a session on electronic records at New Hanover Regional Medical Center in Wilmington, N.C.







Centers for Medicare and Medicaid Services

Marilyn Tavenner, acting administrator for Medicare.






The use of electronic medical records has been central to the aim of overhauling health care in America. Advocates contend that electronic records systems will improve patient care and lower costs through better coordination of medical services, and the Obama administration is spending billions of dollars to encourage doctors and hospitals to switch to electronic records to track patient care.


But the report says Medicare, which is charged with managing the incentive program that encourages the adoption of electronic records, has failed to put in place adequate safeguards to ensure that information being provided by hospitals and doctors about their electronic records systems is accurate. To qualify for the incentive payments, doctors and hospitals must demonstrate that the systems lead to better patient care, meeting a so-called meaningful use standard by, for example, checking for harmful drug interactions.


Medicare “faces obstacles” in overseeing the electronic records incentive program “that leave the program vulnerable to paying incentives to professionals and hospitals that do not fully meet the meaningful use requirements,” the investigators concluded. The report was prepared by the Office of Inspector General for the Department of Health and Human Services, which oversees Medicare.


The investigators contrasted the looser management of the incentive program with the agency’s pledge to more closely monitor Medicare payments of medical claims. Medicare officials have indicated that the agency intends to move away from a “pay and chase” model, in which it tried to get back any money it has paid in error, to one in which it focuses on trying to avoid making unjustified payments in the first place.


Late Wednesday, a Medicare spokesman said in a statement: “Protecting taxpayer dollars is our top priority and we have implemented aggressive procedures to hold providers accountable. Making a false claim is a serious offense with serious consequences and we believe the overwhelming majority of doctors and hospitals take seriously their responsibility to honestly report their performance.”


The government’s investment in electronic records was authorized under the broader stimulus package passed in 2009. Medicare expects to spend nearly $7 billion over five years as a way of inducing doctors and hospitals to adopt and use electronic records. So far, the report said, the agency has paid 74, 317 health professionals and 1,333 hospitals. By attesting that they meet the criteria established under the program, a doctor can receive as much as $44,000 for adopting electronic records, while a hospital could be paid as much as $2 million in the first year of its adoption. The inspector general’s report follows earlier concerns among regulators and others over whether doctors and hospitals are using electronic records inappropriately to charge more for services, as reported by The New York Times last September, and is likely to fuel the debate over the government’s efforts to promote electronic records. Critics say the push for electronic records may be resulting in higher Medicare spending with little in the way of improvement in patients’ health. Thursday’s report did not address patient care.


Even those within the industry say the speed with which systems are being developed and adopted by hospitals and doctors has led to a lack of clarity over how the records should be used and concerns about their overall accuracy.


“We’ve gone from the horse and buggy to the Model T, and we don’t know the rules of the road. Now we’ve had a big car pileup,” said Lynne Thomas Gordon, the chief executive of the American Health Information Management Association, a trade group in Chicago. The association, which contends more study is needed to determine whether hospitals and doctors actually are abusing electronic records to increase their payments, says it supports more clarity.


Although there is little disagreement over the potential benefits of electronic records in reducing duplicative tests and avoiding medical errors, critics increasingly argue that the federal government has not devoted enough time or resources to making certain the money it is investing is being well spent.


House Republicans echoed these concerns in early October in a letter to Kathleen Sebelius, secretary of health and human services. Citing the Times article, they called for suspending the incentive program until concerns about standardization had been resolved. “The top House policy makers on health care are concerned that H.H.S. is squandering taxpayer dollars by asking little of providers in return for incentive payments,” said a statement issued at the same time by the Republicans, who are likely to seize on the latest inspector general report as further evidence of lax oversight. Republicans have said they will continue to monitor the program.


In her letter in response, which has not been made public, Ms. Sebelius dismissed the idea of suspending the incentive program, arguing that it “would be profoundly unfair to the hospitals and eligible professionals that have invested billions of dollars and devoted countless hours of work to purchase and install systems and educate staff.” She said Medicare was trying to determine whether electronic records had been used in any fraudulent billing but she insisted that the current efforts to certify the systems and address the concerns raised by the Republicans and others were adequate.


This article has been revised to reflect the following correction:

Correction: November 30, 2012

An article on Thursday about a federal report critical of Medicare’s performance in assuring accuracy as doctors and hospitals switch to electronic medical records misstated, in some copies, the timing of a statement from a Medicare spokesman in response to the report. The statement was released late Wednesday, not late Thursday.



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Medicare Is Faulted in Electronic Medical Records Conversion





The conversion to electronic medical records — a critical piece of the Obama administration’s plan for health care reform — is “vulnerable” to fraud and abuse because of the failure of Medicare officials to develop appropriate safeguards, according to a sharply critical report to be issued Thursday by federal investigators.







Mike Spencer/Wilmington Star-News, via Associated Press

Celeste Stephens, a nurse, leads a session on electronic records at New Hanover Regional Medical Center in Wilmington, N.C.







Centers for Medicare and Medicaid Services

Marilyn Tavenner, acting administrator for Medicare.






The use of electronic medical records has been central to the aim of overhauling health care in America. Advocates contend that electronic records systems will improve patient care and lower costs through better coordination of medical services, and the Obama administration is spending billions of dollars to encourage doctors and hospitals to switch to electronic records to track patient care.


But the report says Medicare, which is charged with managing the incentive program that encourages the adoption of electronic records, has failed to put in place adequate safeguards to ensure that information being provided by hospitals and doctors about their electronic records systems is accurate. To qualify for the incentive payments, doctors and hospitals must demonstrate that the systems lead to better patient care, meeting a so-called meaningful use standard by, for example, checking for harmful drug interactions.


Medicare “faces obstacles” in overseeing the electronic records incentive program “that leave the program vulnerable to paying incentives to professionals and hospitals that do not fully meet the meaningful use requirements,” the investigators concluded. The report was prepared by the Office of Inspector General for the Department of Health and Human Services, which oversees Medicare.


The investigators contrasted the looser management of the incentive program with the agency’s pledge to more closely monitor Medicare payments of medical claims. Medicare officials have indicated that the agency intends to move away from a “pay and chase” model, in which it tried to get back any money it has paid in error, to one in which it focuses on trying to avoid making unjustified payments in the first place.


Late Wednesday, a Medicare spokesman said in a statement: “Protecting taxpayer dollars is our top priority and we have implemented aggressive procedures to hold providers accountable. Making a false claim is a serious offense with serious consequences and we believe the overwhelming majority of doctors and hospitals take seriously their responsibility to honestly report their performance.”


The government’s investment in electronic records was authorized under the broader stimulus package passed in 2009. Medicare expects to spend nearly $7 billion over five years as a way of inducing doctors and hospitals to adopt and use electronic records. So far, the report said, the agency has paid 74, 317 health professionals and 1,333 hospitals. By attesting that they meet the criteria established under the program, a doctor can receive as much as $44,000 for adopting electronic records, while a hospital could be paid as much as $2 million in the first year of its adoption. The inspector general’s report follows earlier concerns among regulators and others over whether doctors and hospitals are using electronic records inappropriately to charge more for services, as reported by The New York Times last September, and is likely to fuel the debate over the government’s efforts to promote electronic records. Critics say the push for electronic records may be resulting in higher Medicare spending with little in the way of improvement in patients’ health. Thursday’s report did not address patient care.


Even those within the industry say the speed with which systems are being developed and adopted by hospitals and doctors has led to a lack of clarity over how the records should be used and concerns about their overall accuracy.


“We’ve gone from the horse and buggy to the Model T, and we don’t know the rules of the road. Now we’ve had a big car pileup,” said Lynne Thomas Gordon, the chief executive of the American Health Information Management Association, a trade group in Chicago. The association, which contends more study is needed to determine whether hospitals and doctors actually are abusing electronic records to increase their payments, says it supports more clarity.


Although there is little disagreement over the potential benefits of electronic records in reducing duplicative tests and avoiding medical errors, critics increasingly argue that the federal government has not devoted enough time or resources to making certain the money it is investing is being well spent.


House Republicans echoed these concerns in early October in a letter to Kathleen Sebelius, secretary of health and human services. Citing the Times article, they called for suspending the incentive program until concerns about standardization had been resolved. “The top House policy makers on health care are concerned that H.H.S. is squandering taxpayer dollars by asking little of providers in return for incentive payments,” said a statement issued at the same time by the Republicans, who are likely to seize on the latest inspector general report as further evidence of lax oversight. Republicans have said they will continue to monitor the program.


In her letter in response, which has not been made public, Ms. Sebelius dismissed the idea of suspending the incentive program, arguing that it “would be profoundly unfair to the hospitals and eligible professionals that have invested billions of dollars and devoted countless hours of work to purchase and install systems and educate staff.” She said Medicare was trying to determine whether electronic records had been used in any fraudulent billing but she insisted that the current efforts to certify the systems and address the concerns raised by the Republicans and others were adequate.


This article has been revised to reflect the following correction:

Correction: November 30, 2012

An article on Thursday about a federal report critical of Medicare’s performance in assuring accuracy as doctors and hospitals switch to electronic medical records misstated, in some copies, the timing of a statement from a Medicare spokesman in response to the report. The statement was released late Wednesday, not late Thursday.



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