Saturday, January 25, 2020

Robbin' Vos and WisGOPs care about redirecting money. Not saving it.

Interesting article this week from the Capitol Times which showed that Robbin’ Vos’s highly paid, expanded staff main job doesn't seem to be checking up on potholes back in the 63rd Assembly district. Instead, they are using our money to harrass and try to embarrass Governor Evers.
The reporting began after Vos, in early 2019, added new staffers to his office, including three aides to former Republican Gov. Scott Walker. The move was criticized by a top Democratic leader as an attempt to launch a “shadow caucus” to take on the Evers administration.

“I don’t want to just assume whatever the executive branch tells us is automatically accurate," Vos told the Milwaukee Journal Sentinel last January. "I want to have someone double check it.”
By itself, asking for information is no biggie to me, as it’s worthwhile to be doing policy research and figuring out things for yourself no matter who is governor. And you’d want to know what the executive departments are doing with taxpayer dollars and current programs.

But it begs the question why Robbin’ decided he only needed these extra, taxpayer-funded staffers after Evers gave Scott Walker the boot in 2018. And the real answer to that question comes later in the article.
The Cap Times was first made aware of the activity after One Wisconsin Now shared a copy of a February research assistant training presentation assigned by Vos’ office. The 11-slide presentation walked Assembly staffers through the process of “monitoring state agencies” by keeping an eye on recruitment, contracts, grants, lawsuits filed against a department, stakeholder meetings, federal interactions, audits, social media accounts and more...

Two subsequent records requests filed with Vos’ office by the Cap Times uncovered a series of weekly department reports by Assembly staffers, with some dating back to February 2019, as well as emails about the activity between committee clerks and the speaker’s staff.

The length of the documents, which follow a two-and-a-half page template, tend to differ, week-to-week and between agencies. Some staffers regularly included charts or graphs showcasing vacancies, for example, while others listed and linked to every retweet their agency’s Twitter account sent out in a week. Others still submitted five- or six-page reports while different staffers filed two-page summaries, according to the records.

After compiling the reports, staffers emailed them to a corresponding point person or persons in Vos’ office, depending on their policy area or committee division, records show.
Sooooo punchable.

Your tax dollars at work, Wisconsin. And it illustrates yet again that for Robbin’ (Foxconn is in My District) Vos and other Republicans in 2020, “fiscal conservatism” really doesn't have a lot to do with saving money.

Another example of this will come next week, when VP Mike Pence will come to the Capitol for a photo op/BS event to promote Betsy DeVos’s “Jesus Rode a Dinosaur” schools.
Vice President Mike Pence will visit the Wisconsin State Capitol next week to promote private school vouchers and other alternatives to traditional public schools.

Pence will deliver a speech during a noon rally Jan. 28 in the Capitol rotunda recognizing National School Choice Week, an event organized by conservative groups and school choice advocates that is expected to draw as many as 800 people…..

The event was also organized by Hispanics for School Choice, School Choice Wisconsin, Wisconsin Federation for Children, Americans for Prosperity and No Better Friend Corp., which was created by former GOP U.S. Senate candidate Kevin Nicholson.
Oh, so it's nothing more than a taxpayer-funded rally backed by RW grifter organizations that uses kids as human shields. Cool, cool.

By the way, what has happened to taxpayer funding of vouchers in Wisconsin since the Age of Fitzwalkerstan began in 2011? It has nearly tripled, from less than $131 million in 2011, to $386 million next year. This includes increases of 12.5% this year and 13.5% next year. Our public schools sure aren’t getting double-digit percentage boosts in state aid in this budget, and in fact, they are having increasing amounts of money taken from them because of the voucher scam.

That money-funneling happens if the kids in voucher schools have never attended a public school in their home district, and property taxes have been raised to make up the difference for that reduced state aid. In fact, one item Governor Evers might want to look into with our extra tax revenues is reducing the $158.5 million being taken from public schools and use some of that money to reduce property taxes along with allowing those schools a bit more flexibility to use that money. Let's see the WisGOPs have to defend keeping the voucher theft to the Wisconsin voters, because they rarely get asked about it.

This cycle of money going out of publics and into unaccountable vouchers will continue each year that Robbin’ Vos, Mike Pence, and other GOPs use their Dirty DeVos Donations to stay in power. And Dems need to be calling this out as Pence, Vos and the rest of these puppets for RW oligarchs have their fake event at the Capitol on Tuesday.

Dems should also point out what has been obvious throughout the Age of Fitzwalkerstan. Whether it's Robbin' Vos adding political staff at taxpayer expense, adding tens of millions of dollars a year to a voucher program that has done nothing to improve K-12 education, or Fox-cons and other WEDC giveaways, WisGOPs don't really care about saving taxpayer dollars. They just want to use their power to send those dollars to their friends and donors and disadvantage everyone else in the process.

Wisconsin jobs up in December, but so is unemployment

Without much fanfare, we got the Wisconsin jobs report for December, which came out on Thursday. And it shows that we ended the year strong on the job-addition side, but not so good
– The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of December 2019. The data shows that Wisconsin added 9,800 total non-farm and 9,000 private-sector jobs in the month of December. Wisconsin's labor force participation rate in December was 67.0 percent, and the state's unemployment rate was 3.4 percent.
The seasonally-adjusted jump in jobs for December got Wisconsin above 0 for 2019 in these monthly reports, at 7,000 non-farm jobs overall, and 8,600 in the private sector. It was also nice to see jobs come back in manufacturing (+2,900) after the monthly reports had shown Wisconsin lost jobs in that sector for most of 2019 (although those losses come with caveats, which you will see below).

It's worth mentioning that December jobs numbers are often skewed out by the Holiday season, and only last for about six weeks before it and every other month in 2019 gets benchmarked to better match figures from the “gold standard” Quarterly Census on Employment and Wages (QCEW). I point this out because in March 2019, we found out that job growth in Scott Walker’s last year was overstated by more than 17,000, so take these December figures with some salt.

However, these are the figures we have for now, and they are part of the state-by-state jobs report that the Bureau of Labor Statistics put out on Friday. The Associated Press used that report to note Wisconsin’s rise in unemployment along with some other states, many of whom also were in our part of the country.
Though unemployment rates dropped throughout much of the country in 2019, more than a dozen states saw unemployment increases – and many were politically significant states in the Midwest as November's 2020 presidential election approaches.

Minnesota, Wisconsin, Iowa, Nebraska, South Dakota and Missouri are among the 13 states in which unemployment rates rose last year, according to new state employment metrics published Friday by the Bureau of Labor Statistics.

Mississippi saw the biggest annual increase, as the state's unemployment rate rose from 4.7% to 5.7% – well above the national average of 3.5%. But the next-largest increases, relative to each state's unemployment rate at the end of 2018, were in Minnesota, Wisconsin, Iowa, Nebraska and South Dakota.
To be sure, in the 5 states outside of Mississippi that had the largest rises in their unemployment rate, those figures are still under the national rate, ranging from 2.7% (Iowa) to Wisconsin’s 3.4%. But those figures also indicate that perhaps many of those places have already maxed out on available workers and growth, and it’s equally noteworthy that only Nebraska had more than 10,000 jobs added in the payroll surveys for 2019.

It also continued a trend in the household survey where Wisconsin continues to have declining number of people that consider themselves employed, and in the labor force overall.

UW’s Menzie Chinn adds that one reason for the stagnation and higher unemployment in the Midwest is due to the job losses in manufacturing that I referenced earlier, which hit the three closest Obama-to-Trump Midwestern states hard in 2019.

Now to be fair, the manufacturing numbers in these states and other places may look a bit better with the March benchmarking, based on the most recent QCEW. But any manufacturing gains are likely to be offset by losses in retail jobs that have been noted by the QCEW, and have yet to show up as much in the monthly reports.

So while it's a nice payroll figure for Wisconsin for December, the continuing upward creep in unemployment is worth keeping an eye on for 2020. And I'm not sure what changes for these trends this year if there aren't more people coming to Wisconsin, and the GOP Legislature is hell-bent on preventing any significant changes to state policy.

Thursday, January 23, 2020

So what should Wisconsin do with this extra money?

So now what should we do with the $818 million in extra revenues and $620 million in extra funds that we are projected to have for the rest of the 2020-21 biennium? Let's go over some of the ideas from the top people in state government, and then I'll enter a few of my own.

In his State of the State address, Gov Evers called for a special session starting next week that'll try to deal with the conditions that led to more than 800 dairy farms closing last year. And it seems logical that a part of that extra money would go to pay for thes initiatives.
One bill creates a Wisconsin Initiative for Dairy Exports to help boost U.S. dairy exports to 20% of the nation's milk supply by 2024, up from about 16% now.

Evers in his Wednesday address said the bill would increase Wisconsin's dairy exports to 20% of the U.S. milk supply, which would require billions more pounds of milk to accomplish. A spokeswoman clarified Thursday the governor meant the goal was to boost U.S. dairy exports to 20%, not Wisconsin's.

Another bill would provide grants to producers who want to add a new product to their operation. And, under another measure, the state's agriculture department would add five staff positions to provide mental health services for farmers.

Altogether, the bills would spend $8.5 million over two years, Evers told reporters.
Even though I'm generally skeptical of industrial policies that try to pump up exports without dealing with demand for the products or the base problem of overproduction by mega-farms, it seems worthy to at least try something that'll increase farmers' chances of survival.

Of course, Republicans are going to want to use the projected extra money on tax cuts, including the GOP's leader in the Senate, who wants to improve his image ahead of a run for Congress this Fall.
Republican Senate Majority Leader Scott Fitzgerald of Juneau has focused on that idea in recent months. He hasn't released a specific plan but could develop one now that legislators know how much cash is available.

"Once again, Wisconsin’s budget has run a massive surplus," Fitzgerald said in a statement. "After money has been set aside in the rainy-day fund, the Legislature should prioritize giving that money back to Wisconsin families in the form of a property tax cut."
Fitzgerald and other Republicans have extra concern after a Wisconsin Policy Forum report last month which showed property taxes for K-12 schools rose by the largest amount since 2010. Although it's worth noting that statistic is a bit skewed because it does not account for the larger School Levy credits, which offset some of those school property taxes, and gives a bigger benefit among individuals with higher property values and taxes.

Assembly Speaker Robbin' Vos gave a typically obnoxious response, saying he also might lower taxes, and also mentioned the opportunity to cut into the state's debts.
“In this growing economy, we’re not going to grow the size of government. While Democrats will likely try to spend every cent, Republicans will make sound fiscal decisions and return surplus dollars to the people who earn them. I look forward to working with my colleagues on a plan to pay down debt or reduce taxes.”
Do we want to tell Robbin' that most of the extra money has little to do with a "growing economy" but instead is because of corporations shifting around money to get a bigger windfall from the GOP Tax Scam in DC? Nah, let's allow him to cling to his delusions.

Joint Finance Committee co-Chair John Nygren said he wanted some of the extra money to go toward water quality measures.

I'm sure that has nothing to do with Nygren's hometown of Marinette having much of its drinking water affected by PFAS contamination due to activities at a Johnson Controls facility. But hey, if that's what brings them to the table to do the right thing...

Assembly Dem Leader Gordon Hintz thought the extra money would give a good chance to catch up on state needs that were neglected by Robbin' and the rest of the ALEC Crew in the 2010s.
“These new state revenues should be used for areas of urgent need. There has been bipartisan agreement about the issue of school-based mental health care. Governor Evers called for the legislature to act on additional funding in December after incidents at high schools in Oshkosh and Waukesha. There must be urgency to get this done. With this new revenue, it is my hope that Republicans will come back to the table to look at funding critical school-based mental health care programs they cut from Governor Evers’ budget.

“With this news comes opportunity. Shortsighted decisions by Republicans during the state budget debate resulted in cuts that are worth reconsidering at this time. For instance, despite a decade of national revenue growth, the UW system has been decimated by funding cuts since 2011. Legislative Republicans rejected the funding Governor Evers proposed in his budget that would have begun restoring higher education in Wisconsin, like the majority of other states have done during these strong economic times.”
And along those same lines, it would look pretty bad for people to talk up the extra money in the state budget, and then do nothing after seeing this headline on the same day.

My thoughts? Given that we are still projected to spend $442 million more than we take in for 2020-21, I wouldn't do too many permanent things. Here are 3 items I came up with.

1. Actual funding of the UW tuition freeze for one year (estimated at $16.8 million) and some more funding to the individual campuses to give it a cushion against enrollment drops such as the one that victimized UW-Whitewater.

2. General School Aids are already projected to go up by $163.5 million and Special Education Aids are scheduled to rise by $65.8 million next year. Those two increases are far overdue, and indicate that property tax increases for schools might be limited some as a result. So a better option might involve targeting more aid to local governments, as shared revenues have dropped significantly over the last decade, resulting in many more wheel taxes and service cutbacks across the state.

Maybe for every $2 a community gets in extra shared revenue, their levy limit rises by $1, which could give stability of funding that those communities need, while also giving homeowners a bit of property tax relief.

3. The state's new $75 million program for local transportation projects generated nearly $1.47 BILLION in applications. If there are that many unmet needs, it sure seems like you could do another $100 million or $150 million to take care of more of those projects. Alternatively, those funds could go to add to maintenance programs or large highway projects to clear some of the backlog that grew during the Age of Fitzwalkerstan, and lower the deficit of needs that we have in future years.

Now that the extra money is around, there will be a lot of ideas flying fast and furious in the next couple of months (before GOPs adjourn to go on a 10-month paid vacation). Opportunities exist, but we better be smart about them.

More money for Wisconsin....but not because of a strong economy.

Over the weekend, I mentioned that the Legislative Fiscal Bureau was likely to have good revenue projections when those figures were released this week. But what they had to say today exceeded what I was expecting.
Based upon our analysis, we project the closing, net general fund balance at the end of this biennium (June 30, 2021) to be $620.2 million. This is $451.9 million above the balance that was projected at the time of enactment of the 2019-21 biennial budget, as modified to incorporate the 2018-19 ending balance (2019-20 opening balance) as shown in the Annual Fiscal Report for 2018-19.

The $451.9 million is the net result of: (1) an increase of $818.2 million in estimated tax collections; (2) an increase of $20.0 million in departmental revenues (non-tax receipts deposited into the general fund); (3) a decrease of $22.8 million in net appropriations; and (4) a transfer of $409.1 million to the budget stabilization fund.
Wow, that’s pretty good budget news for sure.

So how did we get here with all this extra revenue? As I’ve mentioned before, it’s largely due to a jump in corporate taxes paid to the state, which started in FY 2019, and is projected to continue over the next 2 fiscal years.

Jan 2020 rev projections vs 2019-21 budget

Income taxes +$26.9 million
Sales taxes +$52.7 million
Corp taxes +$329.5 million
Public Utility taxes -$8.0 million
Excise taxes -$3.6 million
Others -$2.0 million

Income taxes +$93.0 million
Sales taxes +$49.5 million
Corp taxes +$299.6 million
Public Utility taxes -$2.0 million
Excise taxes -$12.6 million
Others -$4.7 million

And as I have mentioned before, you shouldn’t feel too bad for Wisconsin corporations, because the LFB notes that the increase in corporate taxes is largely due to the corps and their CEOs reorganizing their companies and moving around tax payments to get a major windfall under the GOP Tax Scam in DC.
Several factors contributed to unprecedented growth in corporate income/franchise tax collections in 2018-2019 and the first half of 2019-20, which are anticipated to moderate in 2020. First, the pass-through election to file under the entity-level tax caused an estimated $193.8 million increase in collections in 2018-19, accounting for 21.7 percentage points of growth in collections compared to 2017-18. As discussed above, pursuant to 2017 Act 368, S corporations, partnerships, and limited liability companies may elect to be taxed at the entity level beginning in tax year 2019, (except that S corporations can make the election beginning in tax year 2018). DOR records these payments under the corporate tax, rather than the individual income tax. As such, these payments reduce individual income tax collections and contribute to substantially higher growth in corporate income/franchise tax collections because the payments would otherwise be made by individual shareholders, partners, and members for tax owed on the income passed through by the entity on their individual returns. If such an election is made, it is likely that the election to pay at the entity level will actually increase the amount of state taxes owed by the taxpayer because: (a) the corporate income/franchise tax rate of 7.9% is higher than the graduated rates for individual income tax brackets in 2019 of 3.86%, 5.04%, 6.27%, or 7.65%; (b) tax credits cannot be claimed by the entity (except for the credit for taxes paid to another state); and (c) the entity cannot claim a net operating loss from another year. Nevertheless, it may be advantageous to make the election because income taxed at the entity level for state tax purposes may be a deductible business expense for federal tax purposes (where under TCJA, beginning in tax year 2018, the federal income tax itemized deduction for state and local taxes is limited to no more than $10,000 per year for individuals).

Overall, the May forecast expected payments from pass-through entities under the corporate tax to decrease in 2019-20. Because Act 368 was enacted in December, 2018, S corporations remitted entity level tax payments for tax year 2018 in March, 2019 (the last month to do so without incurring interest charges). Thus, in addition to receiving estimated payments from pass-through entities for the first half of 2019, collections for 2018-19 were enhanced by a one-time payment of $124.4 million owed by S corporations for tax year 2018. Due to the short amount of time to file and the safe harbor from interest charges, it was expected that pass-through entities would overpay the 2018 entity-level tax owed and later normalize their payments by either seeking refunds or remitting lower estimated payments throughout 2019-20. However, based on collections data, it now appears that in 2019-20 refunds are lower than previously estimated and that entity-level estimated tax payments are higher than previously estimated.
Guess it’s a good thing the state is getting more of those corporate taxes in these years, because there’s a good chance that the large deficits resulting from the GOP Tax Scam will likely mean there will be less money coming from the Feds in the near future, so the states better have money to make up the difference.

The LFB also pointed out that amount of available funds could be even higher than $620 million. And that’s because of the lack of activity at Foxconn.
… 2019 Act 9 [the 2019-21 state budget] estimated the refundable credits at $0 in 2019-20 and $212.0 million in 2020-21. Under the EITM zone tax credit program, the Wisconsin Economic Development Corporation (WEDC) certified three Wisconsin corporations that are affiliated with Foxconn as eligible to claim a payroll tax credit over 15 years for up to an aggregate amount of $1.50 billion and a capital expenditure credit over seven years for up to an aggregate amount of $1.35 billion. The Act 9 estimate assumed that Foxconn would have sufficient payroll and capital expenditures by the end of the 2019 calendar year to receive the $212 million of refundable credits that would be paid in the 2020-21 fiscal year. Based upon reports of the project's progress to date, and assumptions regarding payroll and capital expenditures, preliminary estimates suggest that it is likely that the credits paid to Foxconn in 2020-21 will be in the range of $50 million to $75 million, rather than the amounts contained in Act 9.

Before claiming EITM zone tax credits from the Department of Revenue, the Foxconn entities must receive a verification letter from WEDC. Before issuing such a letter, WEDC must first review Foxconn's annual report and a verification report from a nationally recognized certified public accountant. Pursuant to the contract, the Foxconn entities' next scheduled report is due on April 1, 2020, after which the accountant would have up to 45 days to complete its review before WEDC begins the verification process to calculate the amount of credits the Foxconn entities are eligible to claim. Further, upon receiving a verification letter from WEDC, the Foxconn entities would have up to 14 days to object to the calculation of tax credits. Given these steps, the amount of the credit to be paid in 2020-21 will likely not be known until after the end of this fiscal year.
That’s a nice bit of change that we will likely gain, since the Fox-con project won’t be nearly what was projected at this time (although it’s infuriating to be giving away $50-$75 million for the type of economic development that usually costs taxpayers a fraction of what we have given and will give to Foxconn).

That being said, it’s pretty obvious that the projected increase in tax revenues has little to do with an economic boom - income and sales taxes are each projected are up by less than 1% vs the last projections, and the LFB says the state is on track to collect fewer income taxes in this Fiscal Year than in 2019 due to tax cuts that were part of the state budget (you haven't noticed them yet? Wait till you file).

Instead, the extra money is mostly due to corporate tax tricks that are the result of the GOP Tax Scam that will prevent many Wisconsinites from writing off their own state and local income taxes (which will likely reduce your Federal tax refund). So taxes and refunds from one level of government are likely to go up, while taxes and refunds from another level of government is likely to go down

That being said, having more money in the state’s bank account and its rainy day fund (which is projected to grow by $410 million under this projection) beats being in the red, and it offers some opportunities to put that extra money to use. So what should be done? Let’s examine that in another post.

Wednesday, January 22, 2020

End of the UW tuition freeze? Looks like it's in the pipeline

The UW System has seen its in-state tuition levels frozen for the last 7 years. That might be nice for students and their parents, but the UW System also hasn't received more funding from state taxpayers to make up the difference, and the state's demographics has meant that total enrollment in the System has declined in recent years.

Therefore, the UW System has had to deal with less money from two sources as costs have increased over time, resulting in the System struggling to make ends meet.

And now, even the GOP-friendly outgoing President of the UW System is telling a State Senate committee that in-state tuition is going to have to increase at the campuses in order for it to survive in the 2020s.
The UW System Board of Regents is eyeing a tuition increase in the next budget biennium, University of Wisconsin System President Ray Cross told a legislative committee Wednesday....

The tuition freeze has been in place for in-state undergraduates at four-year campuses since 2013 and in 12 of the last 14 years at the two-year campuses. The state budget passed last summer requires tuition remain frozen through the 2020-21 school year.

"We’re exploring a process, and I probably won’t be here in August, but I believe this process will be embraced by the board where they will put forward a tuition increase a year ahead of the implementation," said Cross, who plans to retire when a new president is expected to begin sometime this summer. "In the coming biennial budget request, you will see the proposed tuition increase as a part of the revenue projections for the coming year."
As Kelley Meyerhoffer noted in the Wisconsin State Journal article about the committee meeting, allowing the Board of Regents to ask for the tuition hike might be a nice way for legislators to end the freeze and allow the UW a better chance to compete, while passing the buck on responsibility for that increase.
[T]he [tuition] freeze pinches campuses’ financial flexibility, particularly when coupled with cuts in state money in some previous budget cycles. The nonpartisan Legislative Fiscal Bureau has estimated the System has been cut by about $1.1 billion since 2011.

Regents have spoken at multiple meetings in recent years about the need to return tuition-setting authority to the board. The appointed body faces less political pressure than elected lawmakers when it comes to voting on tuition increases.
President Cross's comments came as part of a discussion of a different tuition-related bill. That bill will also allow for in-state tuition raises, but in a different way, as it would do what is known as "cohort" tuition. Under cohort tuition, it would be raised for a given year, but would stay at that same level for students over the next 4 years (for example, the students enrolling in Fall 2020 would pay the same tuition as they graduate in 2024).

The UW System said that cohort tuition would allow for more money to come into the schools, but because students would have different tuition bills based on when they entered the UW System, it also would add costs.
A cohort tuition model would significantly increase the complexity of the tuition setup in the campus' Student Information Systems. Costs are related to reconfigurations of the various implementations of the Student Information Systems at each campus to accommodate the cohort tuition model proposed by the bill. Estimated costs for all campuses, except for UW-Madison, is $2.5-3 million for one-time expenses. Estimated costs for UW-Madison are $522,720 for one-time expenses and $243,875 for ongoing operational costs.

There would be increased revenue due to a tuition increase, however the cohort model would impact those revenues compared to an increase in the full base. For example, increasing base tuition for state-supported resident undergraduate students, including differential, by 1 percent would generate an estimated $8.5 million in tuition revenues annually. In the cohort tuition model, any tuition increase would generate approximately 25 percent of the overall amount as tuition would only increase for new, incoming students and remain static for others. The impact of this would most likely be that UW System would continue to have tuition revenue shortfall when considering factors such as pay plan and fringe benefits, which are funded in part with tuition revenue.
Is there extra funding in this bill to help the UW schools pay for the time and adjustments to all of these different tuition bills that students have to pay? OF COURSE NOT. It's yet another unfunded mandate thrown on the UW System to have them carry out another stunt by the ALEC Crew in the Legislature, in order to give the appearance of "controlling costs" to the low-educated, resentful constituencies that many GOPs represent.

It's obvious at this point that even some Republicans see that the UW System and the state's workforce is suffering due to their starving of the System, and that they are not able to compete. And I don't think many voters are fooled these days into thinking that there hasn't been a cost the "tuition freeze without funding stunt", especially as UW-Madison has fallen to its lowest research ranking since 1972, and other campuses have had to lay off staff and reduce majors as resources dry up.

But I wouldn't count on GOPs to make too much of an effort to help the UW recover from the damage imposed on it in the Age of Fitzwalkerstan. After all, if more Wisconsinites can think critically and have experiences beyond their own backyard, it hurts the GOP's chances of staying in power.

EDIT- Sure enough, here's UW-Whitewater having to cut staff and classes next year due to a lack of resources. The starvation has to end.

Tuesday, January 21, 2020

Everyone can see growth slowing in 2020. But by how much?

While people are (understandably) watching the trial in DC today, this seems to be an interesting note from across the water.

Not recession, but basically the same as the last 3 quarters of 2019, which will end up around 2% after 2.5% growth in 2018. And it's a slight downtick from what the Congressional Budget Office projected for GDP growth in August (2.1% in 2020, 1.8% in 2021).

UW's Menzie Chinn also took a step back and looked at where the economy stands today. And Chinn adjusted the job growth to the lower levels signaled by the "gold standard" Quarterly Census of Employment and Wages, which will likely result in a sizable downward revision to job growth in a couple of weeks.

And while the decline in December Industrial Production was largely due to the record warmth around Christmas (which lowered the amount of heat required to be produced), it's still been relatively flat for more than a year. We'll see if it turns around with a colder January, but you're already seeing hints that whatever we signed with China isn't going to make any notable difference for trade...or worse.
[Chad] Bown, who served as a senior economist for international trade in the White House, under Obama’s leadership, said he is “very worried” about what’s in the agreement.

China agreed to buy an additional $200 billion in U.S. goods over the next two years, as part of the deal. President Donald Trump, who addressed the Davos forum earlier on Tuesday, said the number of purchases could end up closer to $300 billion.

“These are unrealistic numbers, which puts the whole viability of the deal into question,” Bown said, adding that the only way to reach these figures is by diverting trade away from other countries, such as soy beans away from Brazil and fish away from Canada.

Among the additional purchases of U.S. goods, China has committed to buy at least $40 billion worth of American farming products. However, a leading commodities expert at Goldman Sachs casted doubts over whether China will manage to do that. Speaking to CNBC earlier this month Jeff Currie said “there is still a lot of uncertainty about how you would achieve $40 (billion) or potentially even $50 billion of agricultural purchases.”
Yeah, it's going to take something else for the US economy to not slow down further in 2020. Maybe the Bubbles in the stock market and the home market somehow pull demand ahead to have things keep growing. But what happens if those Bubbles burst, or even have a normal 10% correction in the coming months? 2.0% might be a generous estimate if that occurs.

EDIT- Here's Prof Chinn with another sign that things aren't so swell in the transport sector.

Monday, January 20, 2020

"Both sides suck" - the GOP's strategy in DC

This is all you need to know about the Senate trial.

That's it. GOPs can't deny the facts about this crooked, compromised president. Likely because it would implicate how crooked and compromised they are, and how Russians helped THEM get into power. So they're going to just make political speeches and lie and deceive, and not allow for witnesses to confirm or deny what the evidence is.

The idea is that the average dope won't know the difference, and will turn off saying "They both suck," and ignore what is happening. Don't let that disgust and cynicism take over.

It's so tiring, but saying "Screw it", and letting the lawbreaking evildoers win is worse. And Dems better start calling for Impeachment Round 2...and this time make GOP Senators and House members testify to what they know, and the efforts they have made to obstruct and distract from the facts.

GOPs don't play fair, so why should Dems play nice?

EDIT- Here's another way to describe the GOP's Impeachment Trial strategy....along with the words "cover up."