GDP report shows no major changes

Last Friday's release of the 1st Quarter GDP report featured a return to decent growth after Q4's drop to 0.4%. Quarterly growth for January-March 2013 was estimated at 2.5%, and a lot of the patterns we've seen over the last 11 quarters of growth continued with this report.

First, inventories added just over 1% to GDP after taking away 1.5% at the end of 2012. This more than made up for the 2.1% overall difference in GDP from Q4 to Q1, as Q4 growth without inventories was just over 1.9% and Q1 actually fell to just under 1.5%. That being said, that 1.47% number isn't out of the ordinary for recent time, as GDP-final sales has remained consistently in the 1.5% to 2.5% range for the last 2 years.



Another repeating pattern was strong private sector GDP that was somewhat muted by cutbacks in the public sector. Private sector GDP stayed at a year-over-year growth rate of just below 2.7%, but the goverment side had a drop in real GDP of a shade under 0.9%, so overall year-over-year growth is stuck at a decent-but-not-great 1.8%. These next two pictures will show how we've had a steady climb in private sector output in contrast with the drop over the last 2 1/2 years for government. In fact, government GDP is at its lowest level in the last 5 years.





On the down side is another continuing trend- where the rising GDP hasn't translated into increases in income and wages. In fact, real personal income and real disposable income fell in Q1 2013- personal income by 1.5% and disposable income by 1.3%. Yes, some of that is a one-quarter fluke, in a bounce-back from huge increases that resulted at the end of 2012 due to many people and corporations cashing in dividends and stocks to avoid the chance of higher tax rates as the fiscal cliff neared. But the year-over-year numbers still lag GDP growth.

Inflation-adjusted change, Q1 2012- Q1 2013
Private GDP +2.67%
Overall GDP +1.80%
Personal income +1.08%
Disposable income +0.88%

It illustrates again that our real economic problem is the fact that growth has not (and will not) trickled down to increases in income and wages. That and government budget cuts continue to keep a lid on our growth, making the recovery a slow and steady one instead of a noticeable boom. Why we continue with this fallacy of austerity is foolishness, and not just because of how Colbert clowned the Reinhary-Rogoff paper last week and took the dishonesty of austerity to the masses.

Look at these headlines from the last couple of days.

U.S to pay down debt for first time since 2007.

5-year Treasury note under 0.70%, 10-year closes at 1.67%

So explain to me why we're worried about deficits and debt over raising economic growth? The markets sure aren't worried about debt-fueled inflation, so instead of worrying about bond vigiliantes that don't exist, why not try to get even more people back to work and getting paid. Yes, we're much better off than we were 4 years ago, but there's still a long way to go, and we need the gains to go to the 93% of us who haven't been getting it so far.

DOT deficit means the UW System raid's a-coming

It took a couple of days, but it looks like the Journal-Sentinel has finally caught onto the memo released Thursday from the LFB showing that Gov. Walker's budget now has a $63 million deficit in the Transportation Fund. This is even with the hundreds of millions of dollars in extra borrowing that the Transportation Fund is taking on as part of Gov. Walker's payback to the Road Builders in exchange for years of major support through donations.

What caused the deficit to blow up, when Walker's original budget didn't have one? The LFB says it was a rosy scenario from the Walker boys on gas tax revenues, combined with the bad Wisconsin economy in the Age of Fitzwalkerstan.

Compared to the amounts in the bill, motor vehicle fuel tax revenues are estimated to be $42.5 million lower in 2013-14 and $42.8 million lower in 2014-15. In addition, the base year fuel consumption estimate in 2012-13 decreased from the earlier estimate due to lower than estimated actual gasoline and diesel fuel consumption through December, 2012, and lower forecasted consumption for the remainder of the year. Overall, compared to the amounts in the bill, motor vehicle fuel tax revenues are estimated to be $107.4 million lower over the three-year period from 2012-13 through 2014-15 compared to earlier estimates.

For the three-year period, fuel consumption is estimated to be 347.7 million gallons lower than earlier estimates. Overall fuel consumption in 2012-13 is now estimated to drop by 1.4% from the 2011-12 level and then is projected to increase over the prior year by 0.2% in 2013-14 and 1.0% in 2014-15. The decline in 2012-13 reflects actual consumption being notably lower than earlier projections, due to actual fuel prices being higher and Wisconsin disposable income being lower than projected.

The scary part is that the deficit may grow larger in the Transportation Fund, due to a few items in the last 2 budgets. This is related to previous borrowing that now has to be paid back, and payments that may have to come due with the recent floods and snowstorms that this state has been plagued with.

the [2011 budget's] debt service estimates assumed an earlier issuance of bonds than has actually occurred in the 2011-13 biennium. The later issuance of bonds in each fiscal year delayed the start of the amortized schedule of payments on the bonds, which lowered the principal and interest amounts that needed to be repaid in the biennium. Second, the bonds issued in the biennium were generally sold at a premium. Bonds are sold at a premium when the coupon rates on the bonds exceed the market rates, at the time of sale, for the same maturity. The premiums were proceeds in excess of the bond principal, which were used in the biennium to offset a portion of the annual debt service payments on bonds sold for the same purpose. However, it should be noted that while bond premiums can offset debt service payments in the near term, a tradeoff occurs because payments in the later years of the bond issue are somewhat higher than otherwise would be the case due to the higher coupon rate...

One additional factor should be considered in evaluating the implications of the revised fund condition statement. AB 40 [the current budget bill] includes a proposal to expand the current flood damage aids program to include other disasters and costs incurred in response to a disaster..The proposal would also extend aid retroactively for costs incurred in response to any disaster that occurred on or after July 1, 2011. Based on preliminary damage estimates related to timber salvage operations occurring after major storms in the summer of 2011 in Burnett, Douglas, and Washburn counties, this proposal could result in payments of up to $10 million. The sum sufficient appropriation estimate in AB 40 ($1,000,000 annually) does not reflect this potential cost, but that estimate is not limiting. Any aid paid in excess of the AB 40 estimate would further reduce the transportation fund balance.

So that's at least another $9 million down the drain, and more probably to follow.

But there's a way out for Walker and the WisGOPs, and they showed their hand with that dog and pony show this week where Republican after Republican deingrated UW System President Kevin Reilly for the large surplus the System had in its Program Revenue account. I went over earlier that this alleged "surplus" comes from non-tax funds such as tuition and people buying beers at the Union, and that much of it is set aside for items such as financial aid, the new "flexible option" program and future building needs. It also is worth noting that $165 million in tuition hikes are figured into the UW System budget. With legislators from both parties and Gov Walker now calling for a tuition freeze, there goes that $165 million, unless the universities greatly increase enrollment these next 2 years.

I also mentioned that GPR tax revenue toward the UW system has basically been flat for the last 11 years, and has dropped from 1st to 3rd in leading sources of UW System funds. Gov. Walker's latest budget actually was slated to give a boost of $181 million in GPR to the UW System, or a little over 8% over the next 2 years. It doesn't take a math major to figure out that WisGOPs in the Legislature would be more than willing to continue their misdirection play, take that added money slated for the UW System, and dump it into the Transportation Fund to clear this large and growing deficit. Walker's Transportation budget already takes tens of millions from the General Fund and dumps it into highways, so any UW System raid would be on top of these numbers.

Transfers from General Fund to Transportation Fund, Walker 2013-15 budget
2013-14 $58.1 million
2014-15 $36.3 million
TOTAL FOR BUDGET $94.4 million

Raiding the UW System budget would have the double-bonus of calming fears from some GOP legislators about the increase of over $300 million in borrowing for roads and related purposes in Walker's budget. By raiding the UW System of GPR and the PR surplus, this enables this borrowing to be drastically reduced.

Lastly, right-wing media may say "Well, Jim Doyle raided Transportation funds and sent it to fill gaps in the General Fund, so this is just payback." Except there's a flaw in this argument. Doyle (and GOP legislators in most of these years, by the way) agreed to these shifts because there was a surplus in the Transportation Fund, much like there is currently a surplus in the PR fund for the UW System. So why is the GOP all up in arms about Doyle moving funds out of the Transportation Fund when they chose not to spend money in it, but when the UW System DOESN'T spend their extra money and saves it, they have a cow? Couldn't have anything to do with the GOP playing to get donations from the Road Builders vs. trying to dump on the smarty-pants intellectuals at the UW, could it? Especially how the smarty-pants types see through Republican BS and usually back Dems.

And THAT'S where these two items come together. The GOP is playing partisan politics with the UW System surplus, and want to move funds away from education and into highway-building in order to grab political gain, and the opportunity to raid the UW System's budget to help their buddies at the Road Builders would be a great way to kill two birds with one stone. It should make for an interesting sidelight when Joint Finance takes up the Transportation Fund budget on Tuesday.

Colbert, others expose the austerity FAIL

As usual, the comics tell the truth what paid-off and economically illiterate media will not. Brilliance from Colbert!



Love the "high five" palm that shows up under the desk around 3:40!

And by the way, maybe the reason some places have debt around 90% of GDP is BECAUSE THEIR ECONOMIES ARE DEPRESSED TO BEGIN WITH. When people are losing their jobs, they tend not to be making money and contributing revenues, and they tend to need unemployment and other types of spending. So no shitr, their economies might be growing slower than other economies that have lower debts. And the difference is so small, it almost doesn't matter.

Econbrowser has had some good breakdowns on the Reinhart-Rogoff report the last few days, and I'd recommend giving that a look as well.

Now debt may not necessarily slow down an economy and risk recession, but you know what does? AUSTERITY! Heck, just ask the British, who are barely staying above 0%, with joblessness back on the rise, in no small part due to austerity measures approved by the Tory-Lib Dem government.

Compare that to what we'll probably see from U.S. GDP tomorrow, which'll be in the 2.5- 3.0% range, and ask which situation you'd rather have? And with the 10-year note staying around 1.7%, why in the world would you want to slam the brakes on an economy that still hasn't nearly recovered to the wage and unemployment levels that we had before?

With all of the evidence to the contrary, what kind of fool would still believe in the "debt tipping point" thesis of Reinhart-Rogoff that has been disproven time and again over the last 80 years? Probably someone clueless enough to think this shot looks cool.

Here's more money slushing around

Hidden late today was this request from Scott Walker's DOA Secretary Mike Huebsch, which asks for a number of adjustments to the governor's budget, based on recent developments. Here are a few of the requests in this letter.

1. Fringe rate calculation
Due to a formula error in the agency fring rate calculation, agency prior service obligation rates need to be adjusted. An additional $6,046,200 GPR per year is required. This error can be partially offset by using an additional $6.2 million of Targeted Case Management funds identified by the Department of Health Services. The remainder can be offset by the next item.

2. Debt Service Reestimates
The debt service estimates included the bondng for the Stillwater Bridge project...as GPR-supported debt service...., whereas it should be SEG-supported debt service (meaning the Transportation Fund).... GPR expenditures should be reduced by $625,000 GPR in fiscal year 2013-12 and by $5,262,100 GPR in fiscal year 2014-15. SEG expenditures should be increased in an equal amount respectively....

So wait, we're just going to shift millions of dollars from the General Fund to the Transportation Fund to pay for a bridge, and instead use that General Fund money to help pay for benefit costs that the DOA didn't account for? How is that not a "slush fund"? Also, we're borrowing hudreds of millions with the Transportation Fund budget as it is, and now we're adding almost another $6 million to it? Where's that coming from?

Oh, and here's another.

3. TANF Ending Balance
The Department of Children and Families has reestimated revenues and expenditures in the Temporary Assistance to Needy Families (TANF) program, resulting in a reestimated TANF ending balance of $8.2 million by the end of fiscal year 2014-15. The Governor recommends that approximately $4.4 million be used to expand transitional jobs to other high need urban areas in the state, potentially update the W-2 benefits estimate in light of additional caseload data and provide additional funding for child care rates.

In other words, the state now says it'll have an $8.2 million SURPLUS in TANF funds, and will use that money to pay for other underfunded parts of the state's DHS budget. Obviously the scope is smaller, but how is this different from the UW System carrying over its funds to cushion against unforeseen circumstances and then tapping it later on? Is it because GOPs just like to go after the smart folks at the UW while they leave their boy Scotty alone?

Lastly, here's a follow-up from something I had a couple of weeks ago.on the state's Universal Services Fund. The USF is a user fee on communication technologies, and is a non-tax source, much like the non-tax funds that the UW System's surplus came from.

7. Broadband Grant Program
In the budget bill, $4.7 million SEG is appropriated in fiscal year 2013-14 from the universal service fund to fund a new broadband expansion grant program for underserved areas. The intent was to use the unencumbered balance of the fund (i.e. a SURPLUS) , which has subsequently been reestimated to $500,000, and to not increase utility assessment or impact current law programs supported by the fund.

So wait, using a "rainy day fund" for excess fee revenue for a program Walker wanted was apparently OK for WisGOP, since I don't remember any hearings showing outrage about how the USF gained a multi-million dollar balance at the same time that fee-supported library funding was cut. And now that surplus is $4 million less for this Broadband Program, which is apparently the type of "spend-first" move the Legislative GOPs wanted the UW System to do instead of saving their fee-generated revenues.

Now I don't necessarily think the Walker Administration is bad for shifting around this money to fit needs- you do what you have to do to keep things afloat. And fund shifts and changes have been common in the state for decades. If the Legislature wants to remove Walker's proposed boost in GPR for the UW System and/or put in a tuition freeze to conserve resources and help college affordability for Wisconsinites, those are defendable responses to the good fiscal situation in the System's PR accounts.

But spare me the suspense about how the high UW surpluses are some kind of scandal worthy of major air time on right-wing media. It's not. In fact, the silence the Legislative GOP has continued in the fact of numerous similar budget shell games makes their "tell" even more obvious.

The right-wing "outrage" about the UW System's surplus is nothing more than a misdirection play to get the public's eye off of WisGOP's horrible record on jobs, and the many budget holes that still exist. And our media is so lame and bought-off that they went along with the GOP's shiny object" strategy, and fell for this hook, line and sinker. Let's see if those guys in the papers and on TV pay 1/10th of that attention to the budget shifts we see here, or to any of the additional ones that are sure to follow in the next 8 weeks.

What's the problem with UW's left-over funds?

Apparently the right-wing squawk brigade has decided to deflect from their failures by complaining over the UW System having a little over a billion dollars left over in one of their accounts as of the end of June 2012. They're quite admirable in how they're able to all make the same complaint at once, almost like the words are coming from Robin Vos's centralized communications office at the Capitol. On its face, I can see where these guys might be upset, since the UW System has consistently complained that the Legislature has put cuts onto the universities that it can't handle. It doesn't exactly square with having a lot of money left over if you're being "slashed to the bone," so I can see some element of "Were you lying to us?" existing in legislators' minds.

Page 2 of the LFB report issued Friday explains where the surpluses come from. It's based on "Program Revenue" (PR) funds, which means they are not paid by general taxes (GPR), but other sources like tuition, fees, licensing, and related "business-type" operations. And the largest sources of this surplus PR revenue come from people who attend the UW System schools, and from the UW facilities themselves.

Sources of accumulated UW Program Revenue surplus
Tuition and fees $414.1 million
Aux. Enterprises (i.e. Housing, food service, student unions) $184.0 million
General Operations Recceipts $138.0 million
Federal Aid/ Indirect Costs $119.9 million
Gifts and Non-federal grants and contracts $93.1 million
Student Fees UW Extension $45.4 million
Other $50.6 million

If you look at the UW System's budget over the years, you'll see that taxpayer funded GPR has been lowered as a share of total revenues throughout the years, and Program Revenue has often been the place the UW System has utilized to make up the difference. On Page 19 of the LFB's budget paper on the UW System, it shows that UW System enrollment has gone up by 10% since 2002, but GPR has only been increased by barely more than 5% (just under $55 million). That's before inflation is taken into account, and that includes a cut in the last budget that put GPR back to 2008 levels.

By comparison, Federal Grants and contracts are now the largest source of UW System revenues, increasing by more than $1 billion and nearly tripling in the last 11 years. Total tuition paid has more than doubled, which is well beyond the 10% increase in enrollment, and even the aux. revenues are up nearly 50% since 2002. The LFB notes that the UW System's strategy of relying on tuition increases and auxiliary revenues to make up for cuts from the Legislature means students have been paying much more of the actual costs of instruction and school attendance.

In 2002-03, students paid between 30% and 42% of their instructional costs while in 2012-13 students pay between 49% and 88% of their instructional costs.

In addition to tuition charges, all students are assessed segregated fees to finance a wide variety of student activities including parking and transportation services, student activities, student unions and student centers, and intramural and intercollegiate athletics. Unlike tuition rates, segregated fees are determined by institution. In 2012- 13, segregated fees at the four-year campuses range from $859 at Whitewater to $1,363 at Superior, while fees at the UW Colleges range from $267 to $402.

So a lot of this excess PR balance comes directly back from choices made in the Legislature to not fund the UW, and the UW's attempt to maintain quality and a similar level of investment in the face of these choices. As the UW System and LFB both point out, much of this alleged surplus in PR is actually money being set aside for specific purposes and future expenses. The LFB says

Substantially all of the unrestricted net assets have been designated by the Board of Regents for purposes to fulfill the University of Wisconsin System's fiduciary responsibility, including academic and research programs and capital projects." LFB and LAB staff requested that UW System identify the purposes for which these funds have been designated by appropriation. Of the $648.2 million balance as of June 30, 2012 [in categories other than auxiliary revenues, Federal Aids and gifts]... the UW System Administration has identified expenditure purposes that would utilize $441.2 million of the balance.

Among those set-aside expenditures include over $144 million for the UW System's "growth agenda/ strategic funds", $48.7 million for capital building an other large-cost items, over $44 million for financial aid (since Fall Semester starts in September, this wouldn't be disbursed by June 30), $27.7 million for veterans remissions (again, could be based on academic year), and $20 million in matching funds for incentive grants. It also includes $13.3 million for the new "flexible option" program, which was announced in June 2012 and backed by Governor Walker, in an initiative to give adult students a "self-paced" program that makes it easier for them to pick up degrees in high-need fields like nursing and IT.

So it sounds like the UW System followed the advice of what right-wing legislators have asked for when they say government should be "run like a business." They've looked for other revenue sources outside of general taxpayer dollars by relying more on tuition and other user fees. They've spent conservatively, and set funds aside in a way that prepares for any further cutbacks that may come. So what does the UW System get for running things more like a for-profit business? They get bitched out by GOP members of the Legislature and accused of using the extra PR money as a "slush fund."

I'm not saying the legislators don't have any argument to give. They're right to ask that the UW System have a policy in place that gives guidance on a proper amount of reserves, allowing them to budget accordingly (since apparently the legislators think that having $1 billion in reserve on a $5.9 billion system is excessive). And since they find the PR balance to be excessive, they have a right to adjust the funding of the UW for the next 2 years accordingly- especially given that we already know that this Walker budget has large built-in deficits, especially with the sequester and new NEMT contract raising costs beyond the original budget. We also know there are major borrowing and asset sell-offs in the transportation budget that will cost the state millions down the road.

Now if the Legislature wants to use this surplus to make the UW System not raise in-state tuition for the next year or two because of these extra funds, I'd approve, because in-state tuition at the four-year UW schools has more than doubled since 2002, making college unaffordable for many, and helping to lead to the obscene explosion of student loan debt. One Wisconsin Now's excellent report on student debt shows how the increased amount graduates owe are hampering our economy due to depressed demand after they get out of school. But like many things in GOP-world, it's their own previous actions that helped cause this problem, due to their anti-education stance and budget-cutting over the last decade-plus. These same politicians also have the nerve to hold a bitch session when the UW System reacts to solve that problem, apparently because the UW System chose to do so in a manner that's not to their liking.

I find that part of today's hearing pathetic, and it also illustrates why we need to be very skeptical of the motives behind this coordinated attack on the UW System. This situation allows redneck Republicans to go after "them smarty-pants eju-kated types" that run the UW System (always a good way to get the "vote against your own economic interests" crowd on your side). And given the horrible state jobs numbers, reports showing once again that voucher schools don't measure up to public schools, and the soon-to-explode redistricting scandal, it seems like now would be a good time for WisGOP to try to do a misdirection play. And the LFB revealing the UW System's big PR suplus was an inviting target to allow WisGOPs to do just that.

Added edit- UW-Madison Chancellor David Ward also spoke yesterday in an interesting interview with the Milwaukee Business Journal. He had this to say about the UW System's hearing.

“It was a very difficult morning and I’m not sure everything is cool [at the Capitol],” he mused. “They have a 15 percent equity interest, but they think they own UW-Madison and are the only shareholder. Fortunately, (many) understand that we are a partnership and we have multiple revenue flows.

“We are really a public-private (institution) and not just a public utility. I’ve been trying to convey that in the two years I’ve been back, but it’s not been easy.” ...

Ward -- a native of England -- said it is remarkable that this state is home to one of the nation’s top research universities. He said this is due in no small part to funding from the Wisconsin Alumni Research Foundation, which licenses UW-Madison intellectual property, and the federal government’s support of pure research.

But he said there is anxiety over the future of UW-Madison, which has many new “remarkable” scientific facilities built largely with private funding (around 80 percent).

“The only hang-up we have now is (federal) sequestration, which will cut research funding,” he said. “For us, this could be a very big deal.”

Gee, another TeaBag budget cut that endangers the UW's ability to compete. Funny how that works.

MacIver's no-good month of April

Not a good week to be in the MacIver Institute in Wisconsin, as this part of the right-wing lie machine was exposed in embarrassing fashion a couple of times recently.

The first was when MacIver and GOP front man Rick Esenberg were denied the ability to smear everyday public sector workers when a Grant County judge agreed with State Senator John Erpenbach that names of people who sent emails to him during the Act 10 controversy do not have to be revealed. This MacIver stunt, and the fact that Sen. Erpenbach had to get outside counsel (since Erpie figured correctly that Attorney General J-B Van Hollen wouldn't give him the best advice against a Bradley-funded organization), cost taxpayers $140,000.

And to what end was this suit filed? Not for keeping up sunshine laws, because Esenberg and MacIver have approved of Gov Walker and GOP redistricting crooks going to great lengths to avoid producing open records (proving again that the 21st Century GOP motto is "Our rules don't apply to us"). This was simply an attempt to intimidate and disparage public employees , and trying to continue this Administration's "Divide and Conquer" strategy. It makes you wonder who was the one who really gave these guys the order tom try to get the names on those emails, because we know MacIver does nothing on its own.

The other MacIver fail reared its head again in relation to their intentionally-deceptive claim of "137,000 jobs" created. Not only was this called out by Politi-fact as a "Pants on fire" lie, but the excuse MacIver slugs gave for trying to pull it over was especially lame.

But state experts and the governor’s own staff have long said that while the quarterly census is more accurate than monthly measures, the census data should only be viewed in one-year blocks. That is, January to January, or July to July. In other words, you can’t combine partial years of census data with full years to create a running total, due to major seasonal fluctuations in the workforce.

Here is what Walker spokesman Cullen Werwie told us when we asked about job numbers in the summer of 2012: "Please don’t, as John Koskinen, an economist at DOR would say, compare February temperatures to July."

When we asked MacIver to show us their math, spokesman Nick Novak (a former Walker staffer and campaign hack for the RNC and GOP Senate candidate Eric Hovde) responded:

"We used Bureau of Labor Statistics QCEW figures for each month from January 2011 to September 2012 (the most recent month available). To get to the number of 137,372, we simply subtracted the January 2011 jobs number from the September 2012 jobs number.

How dumb does MacIver think the average rightie is that they could throw that easily-debunked crap out in public, and expect it to take hold? If I was a rightie with pride or a media member with self-respect, I'd be outraged that someone thought so little of me. But then again, if I was a rightie with prid or a political media member with self-respect tends not to exist.

And with Friday's release of the state-by-state jobs numbers, MacIver continues to look foolish. By their own measure, let's see how many jobs we have now compared to Sept. 2012.

Non-seasonally adjusted pvt. sector jobs
QCEW Sept 2012 2,342,956
BLS March 2013 2,330,500

Holy crap! We've lost 12,456 jobs in the last 6 months! Where are the headlines?

Fortunately, I understand that seasonal hiring (usually) doesn't pick up until April and May in Wisconsin, so I don't think too much of it on its face. (but if MacIver wants to play this game, then let's play, kids).

Now what the non-seasonal jobs number does foreshadow is a very bad trend for future QCEW stats. Unlike the warm March 2012, the cold March 2013 had a drop in job growth by more than 70%, in a time when seasonal hiring usually starts ramping up.

Wisconsin hiring, non-seasonally adjusted Feb-March 2012-2013
Feb - March 2012 +32,800
Feb - March 2013 +9,300

Which helps explain the drop in Wisconsin jobs numbers on a "seasonally-adjusted" basis for March 2013. A lot of Wisconsin's Midwestern neighbors also lost jobs on this measure last month, which indicates a seasonal trend that Wisconsin is a part of. But that doesn't explain why Wisconsin still trails 5 of its 6 neighbors for job growth over the last 12 months, with the country growing 3 times faster.

Private sector job growth, Midwest Mar 2012-Mar 2013
Minn +1.96%
U.S. +1.78%
Mich +1.66%
Ind. +1.31%
Iowa +0.81%
Ill. +0.79%
Wis. +0.62%
Ohio +0.38%

This slow private sector growth lands Wisconsin 42nd in the nation over the last 12 months - right in line with the 44th we have in the QCEW that ran through Sept 2012. And it ain't turning around anytime soon.

But please MacIver, keep trying to tell us "It's working" (like you and fellow Astrotrufers at AFP have tried since 2011), because no one outside of your little bubble-world is buying your crap, especially after these last 10 days.

The redistricting scandal deepens

Not setting up to be a good month in the world of WisGOP. In addition to awful jobs numbers continuing, Wisconsin's redistricting scandal once again illustrates loudly the pattern of deception, back-room dealings and corruption that has been a hallmark of the Age of Fitzwalkerstan.

The first was revealed in a court filing on Thursday indicating that Republican staffers had deleted hundreds of thousands of files relating to the 2011 redistricting of Wisconsin. The accusation by Wisconsin Democrats was backed up by forensics expert Mark Lanterman, who has been tasked with trying to restore the information that was withheld from the original redistricting suit that allowed most of the GOP's shenanigans to remain in place. Lanterman's report shows that this wasn't a random boo-boo.

The largest volume of deletions occurred on “Sen Republican WRK 32864”. Hundreds of thousands of files (but likely less than one million) were deleted from “Sen Republican WRK 32864”on July 25, 2012. The deletions were performed by a user logged into the system as “tottman.” The files deleted include indexes, data tables, database files, and other files that appear to be associated with mapping software. The database files appear to have been created in June 2011. Among the deletions were files in folders titled “AB9Backup,” “AB9Plan,” “LegendBMPs,” “Plan Backups,” “Matrix Backups,” “Reports,” and “Saved Matrix.” These deletions do not appear to be related to any routine maintenance of the computer, because folders containing similar data but with different names were not targeted for deletion.

8. Evidence of deletions in 2012 also appears on “ASM Republican WRK 32586,” although the number of files deleted is less than that of “Sen Republican WRK 32864.” Among the items deleted was a folder titled “Draft Plans for Printing,” as well as its subfolder titled “Hispanic amendment” and all of the folders’ contents. This folder was created on January 6, 2012, and then deleted less than one minute later, by a user logged into the system as “afoltz.”

9. I have recovered a sample of ten of these deleted documents. The documents appear to be the same or similar to non-deleted documents that I located in a folder called “Projects,” located on the desktop of the afoltz user account....

10. On that same computer, “ASM Republican WRK 32586,” I have recovered four million deleted master file table (“MFT”) entries. The MFT is like a table of contents for the hard drive, tracking files by name, date, and location. When a file is deleted, the MFT entry associated with that file is also deleted. Thus, my recovery of four million deleted MFT entries would ordinarily signal the deletion of four million files. However, some of the deleted MFT entries reference files that still exist on the hard drive. In my experience, this is unusual. The only other time I have seen such a pattern is when data were deleted and then restored from a backup; the restoration brings back the file itself, leaving the deleted MFT entry.

Well, Mark Lanterman won't say it, so I will. It's obvious that these files were being used by Republicans in their redistricting scheme, but they didn't want the courts to see what they were thinking, so they're trying to to hide them and avoid court orders to turn them over. You wouldn't delete the files in one place and save them in another if you weren't trying to do that.

It's also worth remembering that the redistricting scheme was cooked up outside of the Capitol grounds, in the Madison offices of Michael, Best and Friedrich, with the idea that the GOPs "believed the process they used granted them attorney-client privilege that would keep their communications from being disclosed publicly." That argument went down in flames in January 2012, and the Republicans were ordered to turn over their communications related to the new maps. And among the key Legislative aides that were involved in the map-making at MBF were "afoltz" - Adam Foltz, an aide to then-Assembly Speaker Jeff Fitzgerald - and "tottman" - Tad Ottman, and aide to then-Senate Majority Leader Scott Fitzgerald.

And the Democrats who made their own filing to coincide with Lanterman's findings note that the dates Foltz and Ottman had their deletion party was not coincidental.

On January 3, more than a month before trial, the Court granted Plaintiffs’ request to reconvene the depositions of Messrs. Ottman and Foltz and Joseph Handrick. It again ordered those witnesses to “produce documents in their possession that have been requested by the plaintiffs.” Order (Dkt. 104) at 10. Plaintiffs’ counsel conferred with the legislature’s counsel on January 6, and the legislature produced additional documents on January 10 and 11. The January 6 deletions occurred just after the Court’s order and just before the legislature’s supplemental production. And they occurred on computers in Michael Best’s offices.

Questions about the legislature’s document productions arose immediately after the close of trial. See Mem. in Support of Post-Trial Mot. for Remedial Discovery (Dkt. 253) at 8-11. On July 18, 2012, after majority control of the state senate shifted, the new majority leader requested Michael Best’s redistricting file. The following day (July 19), Michael Best agreed that it would make its redistricting file available for review. One week later (July 25), a user logged into the account of Tad Ottman, aide to state Senator Scott Fitzgerald—who just had been replaced as majority leader—deleted hundreds of thousands of redistricting files. The following week, Michael Best turned over its redistricting file to the new senate majority leader.

Ruh roh. And did I mention that Foltz has already testified that the new maps didn't take political implications in mind when they were done? I already said last year that this guy's looking at prison time for that perjury, but this refusing to comply with court orders and deletion of evidence is a whole 'nother level of law-breaking. Hope THAT was worth it, Foltzie.

But as I like to say about WisGOP, not a lot of things with these guys are coincidental, and they come from the top. I mean, if you know what youngster GOP leggie aides are like these days, they are some of the biggest toolbags you can find, and are remote-controlled dopes who need an instructional manual to figure out what words to use on a press release. With that in mind, did I mention that former Wisconsin GOP Chair and current RNC Chair Reince Priebus is a former Michael, Best and Friedrich lawyer, and wanted to make sure Sean "from the Real World" Duffy and other WisGOP Congress members could be protected. And did I also mention that his college roomate Robin Vos was very interested in what the maps would say, since it was probable that Jeff Fitzgerald and Vos had worked out an agreement that Jeff Fitzgerald would run for U.S. Senate, and Vos would move up to Speaker if the GOPs maintained their majority after the 2012 elections (which they did)?

Hilariously, Vos is quoted in the State Journal article on the latest developments as saying "he was not in leadership during the time in question and referred questions to attorneys handling the case." RIIIIGHT. The guy known around the Capitol as "Boss Vos" with the newly-installed spiral staircase in his office to have a centralized office of WisGOP communcations and "policy research" had no hand in what was going on in a redistricting that would help him cement power. If you believe this, then....you probably believe that Scott Walker had 5 personally-hired aides breaking the law in Milwaukee County without his knowledge, either. Give me a fucking break.

Given what Lanterman describes in his filing, he's definitely been able to get back a lot of these files that Foltz and Ottman thought they'd gotten rid of, and given that the findings are due on May 10, we'll find out what's in those soon enough. But given that the only thing that Republican socipaths seem to understand is power and money, the only suitable punishment to stop these people are to THROW THE MAPS OUT (to take away their undeserved power) and make the aides and the bosses who gave the orders GO TO JAIL for such flagrant defiance of court orders and state open records laws.

This is definitely going to blow up. It's just a question of how high up it'll go.

Thank you Boston-area union thugs!

An amazing performance by Boston's first responders, police and emergency officials. And got the bad guy alive, so we can find out how this all went down.

Next time someone asks what their taxes pay for, think of tonight in Massachusetts.

March jobs- DWD can't hide the fail

  I had guessed that March's Wisconsin job picture didn't have much of a chance of being good. The weather had been awful, the U.S. only created 88,000 jobs that month, and there's been no indication we're going to break out of our "44th in the nation"-type performance any time soon.  But I saw the DWD release, and immediately was...confused.

   The press release starts out talking about large upward revisions in February and a number of other non-sequitirs. Check it out.

The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) revisions for February and preliminary estimates for March, covering unemployment and employment statistics for the state of Wisconsin. In brief, the estimates showed:

Place of work data: Upward revision to seasonally adjusted total job number in February by 2,900 to show an estimated gain of 15,000. Upward revision to seasonally adjusted private-sector job number in February by 3,000 to show an estimated gain of 700.

A preliminary seasonally adjusted unemployment rate of 7.1 percent in March, reflecting a decline from the preliminary rate of 7.2 percent in February, which was revised to 7.1 percent.

The rate is up from 6.9 percent in March 2012 and below the national unemployment rate of 7.6 percent.

The BLS monthly place of work data is based on a monthly survey of approximately 5,500 Wisconsin employers(3.5 percent), called the Current Employment Statistics (CES). BLS monthly place of residence data, based on Unemployment Insurance claims and a monthly survey of 1,450 Wisconsin households (0.1 percent), are calledthe Local Area Unemployment Statistics (LAUS). Preliminary March totals for CES and LAUS will undergorevisions in the weeks ahead.

The most accurate count of jobs data, the Quarterly Census of Employment and Wages (QCEW), is based on a census of approximately 95-96 percent of Wisconsin employers. QCEW data for all of 2012 will be available later this year. Recently, the U.S. Bureau of Labor Statistics released data showing Wisconsin added 20,479 privatesector jobs from September 2011 to September 2012. From December 2010 to December 2011, Wisconsin added 29,800 jobs, according to BLS.

That's all fine to let us know about, and the release goes on to discuss income tax revenues and a few other stats. BUT WHAT ABOUT THE MARCH 2013 FIGURES? I looked at Page 2, and realized they were sending me "Non-seasonally adjusted" numbers where they'd usually show the seasonally-adjusted ones that everyone reports.

Logisticare fail rolls on

   Haven't had a lot of time to write this week (and won't), but apparently I won't be able to call it the "Logisticare" fail much longer, as it'll now be MTM running the state's Non-Emergency Medical Transportation under the Medicaid program.

  Cognitive Dissidence has a good rundown on the Logisticare/ NEMT mess, and I encourage you to read it.

   I'll also add that the new contract with MTM will cost an additional $15 million a year and $30 million for the biennium vs. what was projected with Logisticare.  The Journal-Sentinel article on the NEMT contract  notes that 60% of this will be offset by the feds (apparently when it comes to handing out contracts to private businesess, this administration doesn't mind getting federal help If it's expanding health care coverage through Obamacare, well, THEN it's too uncertain and we can't do it), but 40% won't be, and neither of these figures were included in the state budget. So there's another $12 million in general funds we have to come up with, and we don't even know if MTM will be able to do the job well.

  Oh, and it sure doesn't seem like we'll be getting that $12 million through added growth. March's revenue numbers reflected the bad weather with below-average numbers,  including a DROP in sales taxes of 1.8% vs. March 2012. Good times.

  

MKE airport decline traces right back to Walker

Noticed the Journal-Sentinel article on the lower amount of flights and competition at Mitchell Airport. What we thought was going to be a growing site, between high needs in Milwaukee and the desire for a third airport to serve the north suburbs of Chicago, is now shriveling up, and becoming dominated by one airline.

A total of 7.5 million passengers passed through Mitchell in 2012, compared with 9.5 million in 2011 and nearly 10 million in 2010, when AirTran and Frontier had hubs here and Southwest was operating its first full year at the airport.

Barring, say, Delta deciding to pick a fight with market share leader Southwest here - and no one is saying that is anything more than hypothetical - the commercial air service we have now is probably what we're going to have for the foreseeable future, market watchers say.

Now some of this is due to consolidation in the industry, and Milwaukee was especially affected by the merger of Southwest and AirTran in early 2011, as both airlines were competing against each other in Milwaukee at the time. Since the merger went through, the article says that merged Southwest now has more than half of the flights in Milwaukee, with Delta a solid second, and Frontier all but packing up from town after the airline formerly known as Midwest decided not to keep Milwaukee as a hub last May, cutting an estimated 450 jobs in the process.

Things are a whole lot different at Mitchell than they were in Sept. 2010, when then-County Executive Scott Walker was bragging about overseeing "the fastest-growing airport in America." And it was trademark Walker policies and cronyism that can help explain this boom-and-bust at Mitchell. Remember, it was Walker's County Executive's office that signed off on allowing AirTran to expand its footprint in Milwaukee in the first place, right around the time AirTran announced its sponsorship of Walker's campaign promotion
Harley Ride around Wisconsin. Sure makes you wonder if the same kind of deal was offered to Frontier, and they either turned it down, or they didn't offer enough cash.

We do know this, Walker was sure glad to act like an AirTran shill when out on the road on his bike. And look who's part of the pit crew! None other than convicted criminal Tim ("He Worked for Scotty but Chose to Break the Law on His Own") Russell!

By allowing the airline that sponsored his little campaign stunt, Walker let AirTran have a better chance at expansion and survival, and hurt Frontier's chances at the same time. It also made AirTran a much more inviting prospect for Southwest to buy, with more assets to gain, and the ability to dominate the Milwaukee market. As a result, the J-S story says 3/4 of the passengers at Mitchell Field in December 2012 flew either Southwest or Delta, and while Milwaukee's fares are still competitive, this type of oligopoly here and in the rest of the nation has led to higher fares.

The average domestic round-trip fare at Mitchell in the third quarter of 2012 was $317, according to the most recent government figures available. That compares with a national average of $367. In a ranking of the top 100 airports in the nation, Milwaukee's airfares were 82nd-lowest in the third quarter.  

At the start of 2010, Mitchell's average round-trip fare was $250, according to U.S. Department of Transportation data.     

"Back when we had 12 airlines, competition was great and the airfares were lower," [Airport Director Barry] Bateman said. "What was a $250 round trip fare is now $400 round trip."

And oh yeah, being 44th in the U.S. for job growth and 47th in wage growth isn't exactly going to make people want to dig in their pockets and take trips, either for business or pleasure. In fact, the only thing I could see helping Mitchell's numbers in the near future is that this February, March and April has had such crappy weather that people might be hopping flights out of town just to escape this gloom and cold. It sure won't be our economy doing it. So the decline at Mitchell is yet another example of how Scott Walker's short-term, "do everything for the gain of me and my campaign contributors" mentality has hurt Milwaukee and the state of Wisconsin long-term. There's no question in my mind that Walker signed off on AirTran's expansion as a quid pro quo kickback, and to show that he stood for "pro-growth" policies in preparation for his 2010 governor's run. After he was elected, he couldn't care less what happened to the airport's prospects or the effect on services for Milwaukee-area fliers, because he was off to his next job in Madison, where he could get even bigger contributions and get even bigger kickbacks from corporations.

And now the same pattern is repeating in Wisconsin, with the same failing results, and with Walker already caring more about his next job (running for president and/or being a Sarah Palin-style professional grifter) than performing his current one. We've already seen some of this manifest itself in the mining bill giveaway and the budget provisions funneling taxpayer money to voucher schools, and you can bet it will continue. Because the failure of Walker's management in Milwaukee over Mitchell Field should be Exhibit A on why you need to keep an eye on any deals this guy is trying to push through in his last 21 months in office.

Why Chained CPI is so incredibly stupid- Social Security

Like most people that live outside of the DC Beltway, I also think President Obama's plans to include Chained CPI in federal payments for programs such as Social Security is foolish economically, and politically idiotic. On an economic level Social Security HAS WORKED when it comes to keeping the elderly out of poverty. As the Center on Budget and Policy Priorities estimated in 2010, the numbers of elders in poverty would be 5 times higher if not for Social Security.

Reducing these benefits, even with the "haircut" that Chained CPI would allow for, puts seniors in even more danger, when they're already at great peril when it comes to their financial security. The Washington Post's Harold Meyerson did a great breakdown a month ago explaining how many of the former comforts older people had in retirement have diminished, or gone away entirely.

A 2011 survey by the Society of Actuaries reported that 55 percent of working seniors said they had stayed employed because they wanted to stay active and involved. But the same survey showed that 51 percent were working because they needed the money.

What advocates for reducing Social Security adjustments fail to consider is that corporate America’s shift away from defined-benefit pensions to defined-contribution 401(k) plans — or to no retirement plans at all — has diminished seniors’ non-Social Security income and made the very idea of retirement a far more risky prospect. Today, more than half of U.S. workers have no workplace retirement plan. Of those who do, just 35 percent still have defined-benefit pensions. In 1975, 88 percent of workers with workplace retirement plans had defined-benefit pensions.

The shift from traditional pensions to 401(k)s is one of the main reasons most seniors aren’t able to set aside enough income to guarantee a secure retirement. A 2010 survey by the Federal Reserve found that the median amount saved through 401(k)s by households approaching retirement was $100,000 — not nearly enough to support those households through retirement years, as seniors’ life expectancy increases. And as most Americans’ wages continue to stagnate or decline, their ability to direct more of their income to 401(k)s diminishes even more.

With this in mind, it shows Social Security benefits are needed more than ever for our seniors, and should be the last place to cut if you have any concerns over our deficit. Especially when you consider Boomers and Gen Xers have worked in a time where wages have declined as a percentage of GDP for the last 40 years.



THAT'S one of your main problems with Social Security funding- fewer people working (especially in the last 5 years) and getting less pay for their work, both of which rob Social Security of needed revenues. Add to that the cap on earnings in a time where the income of 1%ers have exploded (you aren't taxed another dime for Social Security after $113,700 in income for 2013, and you pay nothing on capital gains or dividend income), and you can see where there are issues on the revenue side.

So if we're concerned about the long-term viability of Social Security, why aren't we asking about a fairer tax system that would increase the revenues available to pay benefits? And why aren't we concentrating on job and wage growth that would increase Social Security's availability of funds? Instead the DC Bubble (Obama included) is fixated on the deficit.

This is especially stupid when THE DEFICIT ISN'T A MAJOR PROBLEM RIGHT NOW. It's been nearly cut in half from the last Bush budget that ended in September 2009, and we already have had deficit-cutting moves this year with the increase in employees' Social Security taxes back to 6.2%, higher taxes on the rich, and the sequester in March. The Congressional Budget Office has indicated those moves would cut the deficit in half again over the next 2 years, down to $430 billion. And the markets sure don't seem to think we have a debt problem. The U.S. 10-year note is on its lowest interest rates in the 5 years that we've had these large deficit.



If our deficits were a real economic problem, and we truly had a debt crisis, this chart would be reversed, because the U.S. would have to offer higher interest rates to entice investors to buy. This is clearly not happening, and it screams out for added investment to get people back to work over cutting benefits and slowing the economy down.

Lastly from the economic side, SOCIAL SECURITY IS NOT CAUSING OUR DEFICITS. Even in the relatively gloomy pictures given that the Social Security Administration tends to give, they admit that Social Security is still reducing our current deficit, not adding to it, and that if we did absolutely nothing for 20 years, there would be enough money to keep things as they are, because there are literally trillions of dollars available in the Social Security trust fund, and that the fund will keep growing for several years.

In 2011, Social Security’s cost continued to exceed both the program’s tax income and its non-interest income, a trend that the Trustees project to continue throughout the short-range period and beyond. The 2011 deficit of tax income relative to cost was $148 billion and the projected 2012 deficit is $165 billion. The sizes of these deficits are largely due to a temporary reduction in the Social Security payroll tax for 2011 and 2012. (this reduction is now over, and we are again taking in more money to Social Security vs. payouts). The legislation establishing the payroll tax reduction also provided for transfers of revenues from the General Fund of the Treasury to the trust funds to "replicate to the extent possible" revenues that would have occurred in the absence of the payroll tax reduction. Including these general revenue reimbursements, the 2011 deficit of non-interest income relative to cost was $45 billion and the projected 2012 deficit is $53 billion.

The combined Social Security trust funds continue to grow because projected interest earnings ($110 billion in 2012) still substantially exceed the non-interest income deficit. The report indicates that annual OASDI income, including payments of interest to the trust funds from the General Fund, will exceed annual cost every year until 2021, increasing the nominal value of combined OASDI trust fund assets. As noted earlier, however, the trust fund ratio (the ratio of projected assets to costs) will gradually decline despite this nominal balance increase, as it has since 2008.

Beginning in 2021, net redemptions of trust fund assets with General Fund payments will be required until exhaustion of these assets in 2033. After OASDI trust fund exhaustion, continuing tax income would be sufficient to pay 75 percent of scheduled benefits in 2033 and 73 percent in 2086.

OOOOH! We might have to reduce benefits by 25 percent in 20 years if we don't adjust revenues or increase the amount of Americans working. Well, maybe we can do something about that, can't we? How about having an extremely small percentage of the huge corporate profits or capital gains we've been seeing go toward those who worked their ass off for 40 years to earn Social Security? And how about changing our tax system to encourage hiring and wage growth over profit hoarding and gambling on Wall Street? Whaddya say?

And oh yeah, in addition to being dumb, DC bubble-world economics, it's also politically stupid for Obama to ask for Chained CPI. Why in the world would you want to give Republicans any opening to cut the bedrock program that is one of the defining positions of the Democratic Party, and a huge reason why Democrats have been able to position themselves in the minds of some voters as the party that still tries to care for the little guy? Instead, including chained CPI forces Democrats in Congress to choose between backing a Democratic president or staying true to the prinicples of the party and opposing the President (and still possibly being brought down in a "guiilt by association" GOP attack). Especially with the Congressional GOP being about as popular as dog food right now, with a clueless, incoherent economic policy of "never raise tax revenues for anything but never name what you're going to cut," why give these guys any cover?

Sure, I've heard the "11-dimensional chess" theory that this forces Republicans to go further with cuts, or sputter about and look foolish, leaving the Democrats in Congress to be the ones to save the day and keep Social Security from being cut, helping Dems in the future. But the cynicism of that type of thinking is disgusting to begin with, and I'm betting the average citizen doesn't really care about the political game-playing as much as they're worried that they're going to have less to live on in their golden years because of Chained CPI. And since "Democrat Obama" is the guy who proposed cutting Social Security benefits in his budget, that'll be what a lot of them remember, even if it never becomes law because of the efforts of Dems in Congress (which hopefully it never does).

Then again, given this moves and others (including AG Eric Holder admitting that his department finds some banks "too big to jail"), it seems likely that Obama isn't working for the Dems or the Republicans, but instead the 1%-ers. After all, the 1%-ers stand to gain from cutting Social Security, as it leaves the working classes even more destitute and dependent on the largess of the ruling class, allowing the cycle of increasing inequality to continue. Which means we have to oppose this stupid economic policy as loudly and outwardly as we can. Not only to send the message that any gutless Dem that goes along with this crap will have their career ended as a serious player in the party, but also to stem the tide that has screwed the vast majority of Americans for the last 40 years. It has to end now.

Very odd Wisconsin revenue numbers

I was interested in seeing the Census Bureau's release on state tax collections, which indicated that revenues had increased by nearly $800 billion in states during Fiscal Year 2012. This is a rebound from the revenue losses that resulted from the Great Recession, which put major pressure on state budgets throughout the country, including Wisconsin.

I also wanted to see how Wisconsin fared compared to the rest of the nation, and those numbers in the Census Bureau report shocked me. Page 8 of that report shows Wisconsin was the only state in the nation that had drops in both sales and income tax revenues in Fiscal Year 2012 - the first year of Scott Walker's budget.

This is especially odd, because the Walker Administration claimed revenue INCREASES in both of these statistics for FY2012, both in September's Department of Revenue report, and in the state's CAFR that was released in October. These higher revenues are a basis for the Administration's alleged "surplus" that the upcoming budget builds many of its assumptions on, but the numbers from the Census Bureau are a whole lot different than what the Walker DOR is saying...and it wasn't nearly that different in 2011.

Census Bureau vs. Wisconsin DOR, revenue figures 2011-2012
2011 Income taxes- Census $6.43 billion, DOR- $6.70 billion ($270 mil difference)
2012 Income taxes- Census $6.26 billion, DOR- $7.04 billion ($780 mil difference)

2011 Sales taxes- Census $4.11 billion, DOR $4.11 billion (same)
2012 Sales taxes- Census $3.87 billion, DOR $4.29 billion ($420 mil difference)

Now I don't know if the Census Bureau or the DOR is wrong about the numbers, and it does seem that some revenues are categorized differently between the 2 agencies. But the gaps are extremely different in FY2012 vs. FY2011, and that is extremely odd.

There's definitely a story here, because those numbers should not be that different. Stay tuned for the next revenue numbers from the LFB, and with the Journal-Sentinel reporting the Census numbers today, there should be some follow-up on this.

P.S. Now it looks like the Walker Administration is saying that DOA didn't send over the right numbers to the Census Bureau. Could be true, but if so, someone in DOA doesn't have a clue on how to find data. But given who this administration hires, I can't be shocked by that. Maybe that'll be Cullen Werwie's new job.

Lose $6,500, get $9 back. What a deal!

Wisconsin's Legislative Fiscal Bureau sent out their estimations of property taxes under the Governor's budget today. The toplines are bad, but the story buried inside is worse.

First, the LFB estimates that property taxes will increase in Wisconsin for the two years of Governor Walker's budget, as a result of shared revenues and school aids staying low. And this increase will be slightly above what it was last year.

Based on nearly complete reports filed with DOR, gross property tax levies are estimated to total $10,471.3 million on a statewide basis for 2012(13). This represents a 0.8% increase relative to the 2011(12) statewide total of $10,384.8 million. After applying state tax credits, net property tax levies are estimated at $9,436.5 million, an increase of 0.8% over the 2012(13) total of $9,357.7 million. Under provisions in AB 40, as proposed by the Governor, gross property tax levies would increase on a statewide basis by an estimated 1.5% in 2013(14) and 1.4% in 2014(15). Increases in net levies of 1.5% in 2013(14) and 1.6% in 2014(15) are estimated.

On the face of it, it's a pretty tame increase, but it is one, contrary to a lot of the Walker supporters who claim Act 10 and Scotty's tools dropped property taxes statewide.

But that doesn't mean Walker policies didn't drop property taxes. In fact, the LFB report says the average homeowner saved $9 on their property taxes in Wisconsn this year (don't spend it all in one place, folks). However, it's not for the reason you'd want to see your taxes go down.

Median home value, Wisconsin
2011 (12) $157,692
2012 (13) $151,148 ($6,544 DROP)
2013 (14) $152,400 (+1,252)
2014 (15) $154,800 (+2,400)

Gee, you think taking millions of dollars out of the pockets of Wisconsin workers and denigrating public education is going to hurt home values in our communities? Well I am just Jake's lack of surprise right there.

And the tepid price increases for the future are happening while the rest of the country is having prices go up by more than 10%, the fastest jump in values in 7 years. It's a stark reflection of Wisconsin's subpar economy and bottom-10 standings in job and wage growth, and is another example of how policies in the Age of Fitzwalkerstan keep costing Wisconsinites major money.

Oh, but you Baggers did save $9 this year on your (deductible) property-tax bill, while you were losing $6,500 in wealth. Hope THAT was worth it.

MacIver not really getting that seasonal job thing

The fittingly-named MacIver news service (because they can maneuver any stat or piece of information into right-wing propaganda) clearly got the word that Wisconsin's bad jobs numbers are hurting Scott Walker's election prospects. So they decided to send out a pile of crap to the dupes who take them seriously titled "Gov. Scott Walker more than halfway to 250,000 job goal."

Well that's quite a change from what we've been covering here for the last 2 years. And the reason it's different is BECAUSE IT'S A LIE BY OMISSION.

MacIver is using the numbers from the most recent Quarterly Census of Employment and Wages, which says that total jobs in Wisconsin were 2,205,584 in January 2011 (when Walker took office) and was 2,342,956 in September 2012, a difference of 137,372. Of course, there's always more jobs in September than there are in January in Wisconsin, because of weather-related jobs such as construction, landscaping and tourist-related industries. Using the raw numbers without keeping seasonality in complex is the mark of a stupid analyst, or a pathetic liar. It's the same BS that Gov. Walker tried to pull a few months back, and the Journal-Sentinel's Politifact called him a pants-on-fire liar for doing so.

And when you compare those figures with previous years, they don't show success for Scott Walker's policies. They show we often did as well if not better under Jim Doyle when the economy was growing nationwide (as it was from 2003-2007 under Doyle), and the job growth for the 21-month period MacIver is trying to prop Walker up on is a 13.4% DROP FROM THE YEAR BEFORE.

21 month job changes, Wisconsin (QCEW)
Jan 2011-Sept. 2012 +137,372 (+6.23%)
Jan 2010- Sept. 2011 +155,820 (+7.19%)
Jan 2005- Sept. 2006 +139,747 (+6.12%)
Jan 2004- Sept. 2005 +154,895 (+6.88%)
Jan. 2003- Sept. 2004 +128,287 (+5.71%)

So these numbers aren't really anything special, and in fact show a slowing from the previous year. But that doesn't come close with illustrating the amount of fail that's already happened in FitzWalkerstan, with more bad months in the QCEW to come.

If you take a look at Wisconsin's last 10 years or so, you'll see where this cycle of adding and subtracting seasonal jobs happens. Even including the recession year of 2009, when we were losing 150,000 jobs on a year-over-year basis, we added jobs in the Summer.



What's so dishonest about the MacIver story is they take the number that bottoms out at the start of 2011, but doesn't take into account that the number will drop again in the last 3 months of 2012, and is on track to fall again in the first 3 months of 2013. They're not going to be coming back in 6 months saying "Oh my God! We've lost 80,000 jobs in the last 6 months, and we're 200,000 jobs away from Walker meeting his goal!" But saying after the March report "80,000 jobs lost in last 6 months" would be just as true as their "It's Working" propaganda piece that they sent out today...and just as dishonest. Which is why the BLS uses year-over-year numbers when it's measuring the states against each other, and in looking for trends.

And that trend is not in Scott Walker's favor over the last year when it comes to private sector job growth-with barely half the jobs being added in the last report compared to what the state was doing when he took over.



In fact, I'd anticipate the upcoming year-over-year QCEW reports to show a performance as bad as the meager increase of less than 21,000 private sector jobs from Sept. 2011-Sept. 2012 - if not worse. The recently-benchmarked 2012 numbers released done by the BLS and released by the DWD used QCEW data to match up the data with the other surveys used. It showed that October-December 2012 jobs numbers barely nudged up on a seasonally-adjusted basis, while the U.S. as a whole was adding over 200,000 jobs a month in that time period.

Then look at the March 2012 increase in the QCEW, and see that 19,000 more people were working in that month than they were in February, which is the largest March increase in any of the 12 years the QCEW has measured. And it's no surprise why, because March 2012 featured numerous days in the 70s and 80s, accelerating the seasonal hiring that would usually happen in April, as Wisconsinites had green grass and bloomed trees this time last year. By comparison, the last 2 months of 2013 have had temperatures below normal (it hasn't broken 65 once, and we're supposed to get MORE SNOW on Thursday of this week after 2 days of downpours), and there's no outside lawn or landscaping work to be had. So replace the above-normal hiring in March 2012 with what will probably be low hiring in March 2013, and that means another bad 12 months on the list in the QCEW report that'll be out this September.

So don't be tricked by Walker supporters trying to MacIver their way into convincing you that Scotty's going to fulfill his prediction of 250,000 private sector jobs. He's nowhere close to it today, and won't be hitting it anytime in 2014, even with the huge seasonal increases in jobs that we get every Summer in Wisconsin.

March job slowdown- signal or noise?

Friday's job report showed a slowing of the strong growth we'd seen in the last few months, with only 88,000 more jobs created, (95,000 in the private sector). Granted, strong revisions to the previous 2 months left us up nearly 150,000 from where we thought we were last month, so it's really not that bad, but after averaging over 187,000 jobs a month since June, 88,000 jobs isn't even half that.

So why did it happen? Is it related to the budget sequester that took place on March 1 and was kept in place with the late-March budget deal? The numbers would certainly add up, because the CBO paper on the sequester's effects estimated it would lower job creation by about 750,000 in the last 10 months of the year, or 75,000 jobs a month. Add 75,000 to 88,000, and you get to 163,000, which is in line with the job growth since last Summer.

But it's also worthy to remember that many of the furloughs and other sequester-related events have yet to take full effect, so let's take a look inside the March job stats to see if we find anything else. First, let's look at the sectors that gained the most in March.

Biggest job gains, March
Health care- 23,400
Temporary help services- 20,300
Construction- 18,000
Food service/ drinking places- 13,000
Accounting services- 10,700

Nothing out of the ordinary with the first 2- they've been steadily growing at this rate for the last year. Same for bars and restuarants. Construction is worth noting, especially since the big gains were in "specialty trade contractors." This matches up with data that shows the U.S. housing market keeps coming back, with rising home values in most U.S. cities, and a 27.7% year-over-year increase in housing starts reported for February 2013. So that tells me at least that element of the economy didn't slow in March.

Let's go to the other side - which areas lost jobs in March.

Biggest job losers, March
Clothing and clothing stores -15,300
Postal service -11,700
Building + garden supply stores -10,100
Heavy and civil engineer construction -8,800
Truck transportation -6,900

The clothing and garden supply store reductions could certainly be related to the crappy weather much of the country was stuck in for March. Kinda hard to shop for summer clothes and lawn care items when it's 25 and snowing. But it also could portend for slower consumer spending in March, and with the sequester reducing incomes for a large amount of workers, this may be the start of a trend. The Postal Service reductions are probably workers heading to the exits before looming cutbacks hit that area, which is largely the result of GOP-led measures in 2006 that led to pre-funding of all of the Post Office's retirement obligations, helping cause a multi-billion dollar deficit today. Heavy construction is an odd one, but it reflects lower-than-normal March increases instead of layoffs, which also seems to point to bad weather as the reason, reducing the need to hire for road construction.

So maybe the slow March job numbers are a blip reflecting a short-term slowdown in consumer spending which reduced the need to hire for industries who usually have to add staff once the Spring flowers start blooming. We'll see if this turns around in April when it warms up and people start wanting to be outside spending money and being recreational (well, IF it warms up in April. Those of you up North that are dealing with another 3-5 inches of snow may be waiting a while).

I'll deal with the unemployment rate drop to 7.6% another time (it's mostly related to a lower amount of people in the work force, could be an aging Boomer thing). But until I see more evidence that consumer spending is really slowing down or once unemployment claims start picking up consistently (they were up on a seasonally-adjusted basis last week, but had the same numbers as the previous week on a raw number basis), I'll just chalk up these low March figures to bad weather, which puts it in the "noise" category, instead of as a signal of a slower economy.

The bigger concern for me is buried at the bottom of the report, where average weekly wages were up only 2.1% for the last 12 months, barely above inflation. In an economy that's still got 70% of it based on consumer spending, it's going to be hard to have any kind of major expansion as long as people aren't taking home any extra money. That's where you'll need to stay tuned, because that's exactly where these austerity measures are going to be reflected if they really do start slamming the brakes on what was a solidly-growing economy for most of the 1st Quarter of 2013.

Not a surprise- "Competition" leads to cheating in schools

This week is the opening of the MLB season, and I saw my first Brewer game of the season last night (a depressing 3-1 loss where Aramis Ramirez got hurt and the team found a way to lose). It also was "back to school" time in many Wisconsin School Districts after Spring Break. These two events don't seem connected, but as you will see, having high-stakes and big-money associated with performance can lead to corruption of these two things.

The way schools get corrupted through competition came through loud and clear as 35 Atlanta-area educators and school administrators were charged with fraud related to cheating on standardized tests. The ringleader is former Superintendent Bev Hall, who will now have her picture up for reasons other than "school excellence".



Hall was named the U.S.'s Superintendent of the Year for overseeing a "remarkable improvement" in test scores for Atlanta-area public schools, and adhered to the Michelle Rhee-influenced method of paying bonuses to teachers who had students show improvement in test scores and got rid of "underperforming" teachers and principals who didn't have their students do better. Well, it turns out that offering those kinds of incentives and punishments led to other sorts of behaviors that weren't exactly related to excellent teaching or student knowledge.

According to the indictment, Hall placed unreasonable goals on educators and "protected and rewarded those who achieved targets by cheating." It also alleges she fired principals who failed to achieve goals and "ignored suspicious" test score gains throughout the school system....

Investigations into the remarkable improvements on standardized tests were first reported by The Atlanta Journal-Constitution newspaper. A state review determined that some cheating had occurred in more than half the district's elementary and middle schools. About 180 teachers were implicated initially. Cheating is believed to date back to early 2001, when standardized testing scores began to turn around in the 50,000-student school district, according to the indictment.

For at least four years, between 2005 and 2009, test answers were altered, fabricated and falsely certified, the indictment said.

"We've had cheating all up and down the line. It was absolutely amazing," said Michael Bowers, a former Georgia attorney general who investigated the cheating scandal.

Bowers said there were cheating parties, erasures in and out of classrooms, and teachers were told to make changes to tests. "Anything that you can imagine that could involve cheating, it was done."

If this type of behavior sounds familiar, it should, because it reminds you of the "unbelievable" results in Rhee's schools when she was the D.C. Superintendent.



As someone who's taught high school, you don't get answers changed to the right one a whole lot more than they get changed to the wrong one. It's random and largely 50-50 (as you'd expect). It doesn't take a rocket scientist to think that a self-promoter like Rhee would at the very least be OK with teachers going rogue to improve test scores, if not outright ordering it herself.

But Jake, a federal investigation said they couldn't find direct evidence that there was widespread cheating in D.C. under Rhee. True, and Roger Clemens was never officially suspended for steroids either- he just pitched at a higher level in his late- 30s and 40s than he did as a sore-armed guy of 30 in his last years in Boston. And Sammy Sosa never was suspended for roids either, despite having his body and stats completely change in the mid-90s, and then completely "slim down" and fall off the map when steroid testing began after 2002.

Chris Hayes did an excellent job linking the incentives to "enhance performance" and cheat in high-stakes school testing and MLB in his book Twilight of the Elites. Hayes points out that MLB players who roided up often were rewarded with huge contracts, and the MLB attendance grew during the height of the steroid era in the 1990s and 2000s, which encouraged owners to look the other way when it came to PEDs, and pressured other players who weren't juicing, and seeing their performance (and salaries) suffer as a result.

In twenty-first century America we fetishsize the athletic model of ceaseless competition and meriotcratic ascent. Every two-minute biographical package during the Olympics tells the story of some hardworking athlete from the middle of nowhere who woke up early, trained late, and bested her peers to rise to be the best in the world. But what the baseball steroids scandal shows is that it's rather difficult to design a competitive system that heavily rewards performance and doesn't also reward cheating.

In one of the papers that made his reputation for ingenious economic analysis, Freakonomics' Steven Levitt used test score fluctuations in Chicago public schools to conclude that teachers were cheating in at least 4 percent of the classrooms. What prompted the outbreak of deception was an incentive structure put in place by Chicago Public Schools to push the system in a more meriotcratic direction and demand performance from its teachers.

By the way, the Chicago Public Schools' Superintendent that time that Levitt describes? None other than current Secretary of Education Arne Duncan, who has worked with President Obama to set aside billions in "Race to the Top" funding that is based partially on test scores and other performance measures.

Hayes' book also mentions Rhee's sketchy reign in D.C., and has an early rundown of the Atlanta testing scandal that led to all the charges that recently came out. When you see that a "pay-for-performance" system in public schools inevitably leads to corruption and cheating, it seems like if you valued integrity in public schools, you'd run away from this type of system as quickly as possible. But instead, more places want to put this in place as a method to judge, reward, and punish public school teachers and districts. This includes Wisconsin, where Gov. Walker's voucher-expansion plan is directly listed to test scores in certain districts. Is it a shocker that the Rhees and Duncans and the Walkers of the world also discourage strong teachers' unions, so teachers are less likely to call out this abuse? It shouldn't be. (Walker's plan is even worse because it wants public schools to be accountable to test scores, while exempting voucher and charter schools from the same rules. It's a blatant attempt to make public schools look bad and appear to "fail")

This is not to say that using test scores as a method of evaluating how a school is doing is all bad. We deserve to know how our schools measure up, and should use as much information as we can to see where we may be falling short (such as low scores in a particular subject), and possibly use that to change curriculum and emphasis in class. But to base teacher pay and school funding in a Darwinist "Survival of the Fittest" method will inevitably end up with some schools cheating and "teaching to the test", as they did in Atlanta. And while that may make these districts' numbers look good, they don't do much when it comes to long-term growth or necessarily preparing students for their future careers, and may in fact set those students back. Worse, it could encourage a desperate or greedy district to funnel some low-performing students out of the district and leave them permanently behind, like private schools do all the time.

But much like MLB players that juiced in the steroid era, does that matter to people who are looking for short-term adulation and payoffs, even if it leaves a major black mark on their profession? And I'm a lot more forgiving of MLB players that juiced when it was legal (and believe the best players of the steroid era should be in the Hall of Fame, regardless of whether or not they used PEDs). Teachers who knowingly lie on tests are portraying something that is not true, and even though the system encourages this type of deception and cheating, it is still criminally and professionally ILLEGAL, unlike using roids before they were banned in MLB.

The trend of tying school compensation to school performance is a recipe for deception and failure, and will not make us better off in the long term. Even worse, it can penalize teachers and districts who may try to "do the right thing", teaching honestly and trying to meet a student's and class's individual needs, because they will be pushed out over teachers who encourage mindless regurgitation and worse, cheating on tests.