Weekend escape from the Cheddarsphere

Busy weekend in my real life. Checked out my first Bucks game in a few years, and found myself impressed by the modernizing in the Bradley Center, and even didn't mind the NBA style, which kind of surprised me.

Did some home shopping and modifications on Saturday after I got back. Then we took care of breakfast and meeting with family for post-Christmas catchup.

Then I got to see Bucky pull out a grinder at Illinois, and maybe this season isn't so lost any more. At least they're in a position to make this last 6 weeks of the year count.

Back to business tomorrow, in more ways than one. And let's see what the folks in Iowa have to say (although those events are really overrated in the big picture, it does affect what media tells others what to think.)

Walker's campaign financing is sketchy for two offices

Four months after the implosion of Scott Walker’s presidential campaign, there is still lots of information coming out that show just how seamy and incompetent Scotty’s campaign was….and possibly still is. A top headline in the state's newspapers this morning is the result of Walker's filing with the Federal Election Commission regarding his 10-week run, and apparently Walker's campaign finances were handled as well as his joke of a run for the White House.

Gov. Scott Walker’s short-lived presidential campaign ended 2015 with more than $1.2 million in outstanding bills, according to a federal campaign finance report filed Friday.

Walker’s campaign ended the year with about $153,000 cash on hand after spending $7.3 million out of $7.4 million in contributions over the course of the year, leaving his campaign about $1 million in the red.

Campaign spokesman Joe Fadness remained optimistic that Walker will be able to pay off the debt in short order based on his ability to raise nearly $600,000 in the fourth quarter of last year after he dropped out of the race....

When Walker ended his campaign on Sept. 21 after only 71 days, he reportedly still held more than $1 million in debt. In the fourth quarter, he spent about $1.4 million, but about $400,000 of that was returned contributions. More than $300,000 paid for telemarketing and data services and the rest paid largely for consultants, mailers, event staging and campaign travel costs.

Now maybe some of those 4th Quarter costs are paying off invoices from the time Walker was a candidate, but what's with the "telemarketing and data services" part? It couldn't have been gathering items for a dead presidential campaign.

And that leads to the part I want to focus in on- where Walker's campaign apparatus seems to have used his presidential and governor's campaign interchangeably, using both sources of funds to improperly pay for items, and potentially skirt campaign finance laws. This includes the use of Walker’s campaign account for Governor as a way to get around the $2,700 direct donation limits for a presidential candidate, the use of that Governor’s account to pay for expenses that clearly were intended for that presidential campaign, and an allegedly pro-Walker superPAC defrauding donors to pay for the lifestyle of the grifter that ran it.

A quick look at the Wisconsin Democracy Campaign’s database shows 16 different donations were made to Walker’s campaign for the then-maximum amount of $10,000 between Walker’s 2014 re-election in Wisconsin, and his official entry into the presidential race in July. All of these donations were made before Walker officially entered the presidential race on, 6 were from California, 4 from Florida, and only 2 were from Wisconsin (the Reimans, who head up a private investment company called Hexagon Investments). Now other than the Reimans (meh, probably them too), do you think those other 14 people were even considering that their donations wouldn’t be used by Walker’s campaign until an election 3 ½ years later? C’MON MAN!

In addition, a check of Walker’s most recent report to Wisconsin's (soon-to-be-disbanded) Government Accountability Board shows that nearly $120,000 was funneled into Walker’s Governor’s account from “Scott Walker Inc.” over the course of Walker’s 71-day run to infamy. Scott Walker Inc. seems to be the same organization that set up the “Scott Walker for America” presidential website. It could just be some version of in-kind donation for work done on Walker’s governor’s campaign (although a check of Walker’s expenses shows less than $15,000 went to “Scott Walker Inc.”, for the Purchase of Campaign assets” in October after Walker dropped out of the presidential race), but it sure doesn’t seem like a legitimate way to do business.

Related to that, there’s a $21,000 contribution on September 2 from “Penguin Books”, who were the same people who published Walker’s absurdly-titled book Unintimidated. Now, maybe you can use book royalties to directly fund your own campaign (weren't they giving the book away to donors?), and maybe these things are par for the course these days, but it certainly could be construed as a way to launder funds and go around campaign finance limits.

On the superPAC side, there was a least one other misuse of Scott Walker donation funds going on, as detailed by Tim Mak in the Daily Beast this week regarding an allegedly pro-Walker organization called “Go Big Go Bold”.

‘Go Big Go Bold’ was a super PAC formed by Republican operative Robert Adams in Washington, D.C., purportedly to support the presidential ambitions of Gov. Scott Walker. Over four months, he capitalized on the fervor of conservative grassroots activists that supported the Wisconsin politician, raising six figures—and then redirecting the lion’s share back to an operation he himself runs….

Adams’s scheme was…paying for access to email lists, his super PAC sent 50 million emails out to known conservatives over four months, claiming to be raising cash to support Walker’s presidential bid. He raised $161,553 through this method last year.

Of this, the super PAC only spent $5,637 to directly support Walker’s campaign, all on lapel pins from a company called GOP Swag in Florida.

On the other hand, close to $70,000 went to Opinion Strategies, an organization registered in West Virginia to… you guessed it, Robert Adams. The money went to “PAC management,” “email list rental,” and “travel/meals.

Wonder what the suckers who shelled out to “Go Big Go Bold” think about giving funds to allegedly help Scott Walker? I bet at least some of those marks won’t want to make that mistake again if Scotty ever tries to face the voters in the future.

We definitely know Scotty didn’t save any funds for a future Governor’s campaign, since there were barely more than $20,000 of those dollars left by December 31, 2015, after spending $463,505 more than the “Governor’s” campaign took in over those six months. Walker’s “Governor” campaign blew through nearly $1 million in that time period, including more than $240,000 on web advertising and website development. And those websites Walker were advertising on weren’t the hate radio stations of Milwaukee or the many right-wing propaganda web and print outlets based in the state, but instead were on nationally-based nutjob sites like Breitbart and Townhall, in addition online-based ads through social media like Twitter and Pandora.

There is one item that does seem to have been adequately separated in that time period when Walker was running for president. Between his July 13 announcement and late-September withdrawal, there are no line items for “Wages- Campaign staff.” But they do show up in the first half of July, and after October 14. Same generally goes for “Consulting fees”, which only start to be spent out of the Guv Campaign account after Walker bowed out of the race. The flip side of that is that these expenses will continue in 2016, which makes it likely that Walker’s campaign will be in debt in the next report barring a massive influx of direct donations.

And Walker’s failure of a presidential run sure didn’t help him if he was thinking of a 2018 Governor’s campaign as a fallback. Walker’s approval rating fell from around 50% earlier in the year down to the high 30s by his withdrawal in September, and it hasn’t bounced back since, with his approval mired at 38% in the Marquette University Law School Poll released on Thursday.

To review- in addition to being a potential fraudster, Scott Walker and his campaign couldn’t even run the grift of laundering funds between his campaign accounts very well. Those campaigns are now broke on the state side, his presidential account is $1.2 million in debt, and Walker is disliked by pretty much anyone outside of a dwindling bubble of right-wing Wisconsinites. In addition, many potential donors are going to be limited in how much they can give to Scotty for the next 3 years. Yes, the GOP Legislature agreed recently to double contribution limits to $20,000 for a Governor’s campaign, but those $10,000 donations all count towards that $20K. So if anything, Walker’s failed money-laundering operation puts him at a DISadvantage for fundraising for 2018. And I doubt think Scotty’s impending home sale (where he’s asking for less than assessed value!) will allow his 27% credit card-having self to fund his own campaign after the Kochs and other right-wing oligarchs cut him off.

So Scott Walker's campaign has no cash, he has no support, and he soon will have no permanent home. What makes you think he’ll run again and face a public that can’t stand him? It ain’t happening, folks. The only question is whether Walker will be making that decision by himself, or will be forced into it by “outside forces” (be that the puppetmasters that he takes his orders from…or from law enforcement due to this scheme, or other Walker corruption).

2015 marked a major slowdown for Wisconsin job growth

The Bureau of Labor Statistics released data this week showing how a bad last couple of months have caused Wisconsin to slip badly in the month-to-month jobs numbers, in comparison with the rest of the country. As the Cap Times’ Todd Milewski points out, the most recent figures left Wisconsin 38th in the nation for job growth in 2015, and the state had a much larger slowdown of job growth vs to what happened in the rest of the country.

Private sector job growth, BLS monthly survey
2014 +2.63% U.S., +1.86% Wis.
2015 +2.15% U.S., +0.96% Wis.

Milewski goes on to point out that Wisconsin continues to lag behind most of our Midwestern neighbors, and the only thing that kept Wisconsin out of the cellar among our Midwestern neighbors was the dysfunctional budget standoff in Illinois. And as UW’s Menzie Chinn at Econbrowser notes, not only was Wisconsin's low growth in 2015 well below the U.S. rate, that 0.96% also was well below the already-lagging amount of growth that we saw throughout Scott Walker’s and WisGOP’s first term in power. It was also well less than the allegedly struggling economy that they claimed they would turn around if they were put into office in 2010.



Obviously, these numbers are subject to revision, and we will have a sizable benchmarking coming up in about 6 weeks with the next monthly jobs report that could change the numbers for all months of 2015. But the Quarterly Census on Employment and Wages reports (which the benchmarks are based on) also show Wisconsin lagging the rest of the country, with figures similar to what we’re seeing from the monthly reports. So don’t expect a major boost in employment from those new benchmarks, and expect Wisconsin to continue to stay down in the rankings for the coming months.

And with a tight budget and a slowing national economy, does anyone see Wisconsin’s job growth coming out of the ditch anytime soon? Yeah, me neither.

The voucher slime never stops

Take a look at this bill, that the WisGOP voucher crowd is trying to sneak through with a rushed public hearing tomorrow.

If a child who has been determined to be ineligible under subd. 1. continues to attend the private school he or she attended under a scholarship awarded under par. (a), for each school year the child attends the private school beginning with the school year following the determination under subd. 1 (which indicates the child no longer has a disability that must be attended to) ., the department [of Public Instruction] shall pay, from the appropriation under s. 20.255 (2) (az), to the private school, on behalf of the child's parent or guardian, an amount equal to the appropriate per pupil amount paid to a private school participating in a parental choice program under s. 118.60 or 119.23 in that school year. The department shall make scholarship payments under this paragraph in accordance with the payment schedule specified in s. 119.23 (4) (c).

In other words, even if the child is found to not need Special Education services, that kid still gets to attend the voucher school, and the voucher school continues to receive a state taxpayer subsidy. The only difference is that the amount is equal to all other non-special ed voucher students, but it’s paid out of the special needs voucher account- in other paying for students that this program is not intended to pay for. Nice sneaky way of hiding the true costs of the voucher program, isn’t it? No wonder the Scott Jensen voucher lobbyist group AFC supports it.

Oh, and here’s a nice reduction of reporting that the voucher schools will get that public schools won’t- the lack of a requirement to tell the local school board about how a child with special needs is doing.

Within 5 days of receiving a request from the resident school board of a child with a disability attending the private school under this section, provide all records relating to the implementation of the child's individualized education program or services plan by the private school, as required under subd. 1., including an evaluation of the child's progress, to the school board of the school district in which the child resides in the form and manner prescribed by the department.

Notice the strike-out part. Not a bad way to cut costs and operate on a different level than the public schools, isn’t it?

These puppets of the voucher lobby never stop in their quest to play by different rules and defund Wisconsin's previously-great public schools. Which is why we must never stop watching, and reporting any of these back-door attempts to expand the program and allow it to play by different rules than public schools.

WisGOP jobs, budget failures, make passing good bills today much harder

There are a series of bills that got hearings in the State Assembly’s Jobs and Economy Committee this afternoon. Most seem to be related to offering up incentives to improve on Wisconsin’s “Worst in the Nation” standing for entrepreneurship, and being in the bottom third of the nation for job growth in 2015. These bills in themselves seem to be good ideas in isolation, but given the wrecked state of Wisconsin’s budget and how it tacitly admits the failure of past pro-corporate GOP policies, I’d file them under “Too little, far too late.”

The main bill that caught my eye was one that will give $10 million to the Wisconsin Economic Development Corportion (WEDC) in the next 2 years to give out grants and contracts to organizations known as “industry cluster partnerships” (ICPs). An ICP is defined in the bill as the following:

1. Will strongly support the further development of existing regional concentrations of industry-specific businesses in this state.

2. Has raised funding or funding commitments from sources other than the corporation and the state that equal at least 10 percent of the annual amount the industry cluster partnership is requesting from the corporation.

3. Is headquartered in this state.

4. Has contractual relationships or memoranda of understanding with institutions of higher education, including technical colleges, for the purpose of promoting the commercialization of technology developed at those institutions, promoting entrepreneurship, conducting industry-specific research, or developing the workforce within the applicable industry.

5. Is governed by a board of directors with members from the public and private sectors who represent the businesses within the applicable industry, including businesses in the industry cluster partnership, and who represent the interests necessary to ensure a collaborative, strategic approach to supporting economic development, job growth, and the development of marketable products and services in the applicable industry.

Not a bad plan in itself, because God knows this state has been slow to the game in using the great research and innovations from the UW System to grow and promote businesses in knowledge-based fields. But again, why has it taken this many years to get this off the ground, and why is it being brought up after a large amount of funds have been squandered on tax cuts to corporations and WEDC handouts to campaign contributors who added next to NOTHING in terms of jobs?

And the fact that this is going through WEDC should be cause for alarm, because other than the criteria listed above, there is no other type of “scorecard” set up to determine the organization and projects best suited to use this $10 million of taxpayer money. There clearly are some organizations slated to become ICPs in order to receive these funds, which leads to the obvious question of who these organizations are and why are they being targeted. WEDC has been shown that it cannot be trusted with taxpayer dollars in these types of situations, no matter how honest the organization receiving the money may be, and I’d argue that another department such as DOA (which isn’t much better, but at least has to deal with open records), or higher educational systems like the UW or Wisconsin Technical College Board would be a better source to handle that funding.

In addition, the state budget only has $64 million (at most) in breathing room left for this budget cycle after Gov Walker signs the civil service bill in the coming days, with a legitimate possibility that revenues will be revised down further with the recent slowdown in the U.S. economy. Is it worth it to add in another $10 million in funding with no means of offsetting those extra dollars somewhere else? By the same note, a companion bill is asking for a tax credit “equal to 25 percent of a taxpayer's qualified research expenses for research conducted in this state, if the research is approved by an industry cluster partnership.” That price tag is estimated to be a little over $6 million in this budget, and $10.6 million in the next budget.

So do we have the ability to pay for it? It’s interesting to note that a sponsor of both of these this ICP bill is State Sen. Alberta Darling, who shed doubts last week on Gov Walker’s proposals on college affordability and student loans due to the tightness of the state’s budget. The price tag of Walker’s bills is estimated at somewhere around $6 million for this budget, and that’s a concern, but these two bills totaling over $16 million are OK in Bertie DAHHH-ling’s world? That seems odd.

It is obvious that the WisGOPs are finding themselves in a pickle. Their “give it away to the corporations and cut workers’ wages” policies have led to horribly lagging job growth, and a deficit-ridden state budget that has had unpopular cuts put into it. Now that the 2016 elections are coming near, they realize they have to be seen as doing something “moderate and reasonable” in order to try to soothe the angry feelings of an electorate that realizes they have been had, so they crank out proposals like the ICP bill and the half-assed “college affordability” package and underfunded rural broadband expansion to try to distract the public.

But the problem is that Wisconsin’s budget is so messed up due to their prior decisions that they are going to have a hard time being able to pass these bills into law, or in maintaining the funding in these proposals. This means either nothing gets done, and these bills will die before the end of the session, or they will get passed, causing future budgets to be even more FUBARed due to the extra spending. Funny how this tends to happen in places that follow trickle-down policies, isn’t it?

Don't be fooled by this last-minute desperation to put lipstick on this piggish GOP behavior, folks. They put all of us into the economically stagnant mess we're in now, and they don't deserve any credit for waiting 5 years to realize their self-inflicted mistakes.

Pocan "hates" DC, like any decent person should

Good stuff here from my Congressman, U.S. Rep. Mark Pocan. This story generates from Rep. Pocan’s interview with Mike Gousha over the weekend, where Mark admitted he “hates Congress” like the rest of us, and blames the self-absorbed, idiotic priorities that D.C. and many of its lawmakers have. Pocan says this mentality reflects in the shoddy process that passes for “lawmaking” these days.

"Well, what do we get done right now? People should be mad at us. Since 2010, we haven't done a budget process at all like it's supposed to happen. We don't do the appropriation bills like we should. We don't have full debates like we should so that public action can have scrutiny."

"Instead, I get an omnibus bill to look at with 48 hours notice that's full of everything, plus what you can't imagine is also in there. it's not even related to the subject matter. And I'm supposed to vote on it intelligently in 48 hours? People should be mad at us. We're not addressing the concerns of people when they sit at that kitchen table and are worried about their futures."

Pocan also told Gousha that stagnant wages and increasing economic inequality are what's causing the anger on both sides of the electorate, and he thinks that Sanders has tapped into that reality that people are feeling.

Pocan, who's in his second term in Congress from Wisconsin's 2nd congressional district, was initially responding to a question about whether Bernie Sanders could be elected president after having labeled himself a socialist.

"I think those labels, real people get beyond what the political class likes to talk about," Pocan said. "They don't worry so much about a label, but they worry about what are you going to do for them so that they can finally see that bump in their paychecks, so they can take care of their family? That's what real people care about."

And this conflict between the wants of everyday people and the game the political class plays is playing out in the presidential race for both Democrats and Republicans, where the average citizen does not see Congress and corporate America working for them, and they are turning against those candidates that are likely to be OK with a status quo that's not working for most people. The overriding question on both sides of the aisle seems to be this- Can this country's many problems be fixed incrementally through the current system, or are things so far gone that the game itself has to be changed, and that can be only be done by electing politicians that will work to change the game. Those that are wrapped up inside the Acela Corridor think things are still fine...and therefore seem way out of touch with the rest of the country, who aren't buying what a lot of people in power and in the media are trying to sell us.

At least some politicians like Mark Pocan still care enough about their constituents to understand why the average American is concerned and angry. We need to elect more people that do, and get rid of the ones who think “DC World” and working for Big Money is a more important than listening to the people that elect them (cough- PAUL RYAN - cough).

Urban Milwaukee shows how ALEC, Koch state policies don't work

For Sunday reading, wanted to direct you part 1 of a series of articles by Urban Milwaukee's Bruce Thompson that will look at the state of Wisconsin's economic performance in the five years that Scott Walker has been governor. The first part of this analysis is looking at how right-wing organizations gave Wisconsin and other GOP-run states high marks for their policies, but that the actual results haven't been so good.

Thompson starts with the American Legislative Exchange Council (ALEC), who ranks all 50 states for their "business favorability" and related right-wing metrics. As Thompson notes, while Wisconsin may rank higher in ALEC's ratings under Walker, it's performance hasn't gotten any better at all.

Walker entered office with the slogan “Wisconsin, open for business.” Early surveys of members of Wisconsin Manufacturers and Commerce showed a marked improvement in the perceived business climate. Whenever the Journal Sentinel reported on a business expansion, among the comments were several who nvariably said, “Thank you, Governor Walker.”

Many organizations on the right were enthusiastic about the changes in policy under Walker. The conservative American Legislative Exchange Council (ALEC) raised Wisconsin from 32nd place to 13th among the states on its “Outlook” scale, based on Walker’s policies, and the graph shows.

Unfortunately, Wisconsin’s actual performance did not match its enthusiastic reviews. Job growth came in at about half the promised numbers, well behind that of all its neighbors except for Illinois which is suffering from the worst-funded public pensions in the nation. Despite ALEC’s enthusiastic Outlook rating, Wisconsin remains mired near the bottom — anywhere from 41st to 44th place among the states — when it comes to the same group’s “Performance” rating

Thompson points out a similar contrast between right-wing rankings and reality when it comes to the Charles Koch-founded Cato Institute's approval of state policies. Thompson provides these two graphs showing how the "best" states under Cato's "Fiscal Policy Report Card for America's Governors" generally have done worse for job growth in the last 5 years than Cato's "worst" states.





By the way, if you put Wisconsin on this list, we'd mired around Alabama and Kansas in the top graph, at 5.8% job growth, and that doesn't count the job losses that the state saw in December. Thompson said Wisconsin just ended up off Cato's "top states" list due to allegedly spending too much (apparently Cato doesn't differentiate between higher amounts of road building and WEDC giveaways vs cutting education funding).

But then again, you shouldn't be too surprised by what Bruce Thompson found in this analysis, because right-wing bubble-worlders like ALEC and Cato (and state-level tools like WMC) don't really care about growing jobs or improving the economic well-being of most people. All they care about is increasing profit, whether that's by reducing the wages and bargaining power of workers, or through privatization that gives their corporations large state contracts.

This part isn't surprising- it's the nature of corporatism to favor greed and self-interest over things that help the public good. But what is alarming is that it means the puppet politicians that these organizations buy off also don't care about the well-being of the very people who voted for them, and who pay their salaries and benefits. Which means anyone who uses Cato, ALEC, or WMC as a legitimate campaign resource or policy influence should be removed from office as soon as possible, before Wisconsin slips any further down the abyss of economic failure.

Why I think WIsconsin's revenue shortfall will only get bigger

I wanted to jump back to yesterday’s revenue estimates from the Wisconsin Legislative Fiscal Bureau, because I think there are a few assumptions in that document that may not quite work out. And it if they don’t work out, we will likely have much worse to worry about than yesterday’s revenue shortfall (detailed in this post).

The first item of concern comes from the LFB’s national economic data, which already was downgraded from what was assumed in last year’s estimates.

Economic growth in 2015 was somewhat slower than projected last January. Real (inflation-adjusted) growth in U.S. gross domestic product (GDP) is now estimated at 2.4% in 2015, which is lower than the projection of 3.1% for that year.

The LFB also estimated 2016’s GDP growth at 2.7% and 2017 at 2.9%. This helped lead to some of the reasons behind the downgrade in revenues, as future income growth was estimated down as well. However, I even find those subdued expectations of GDP growth to be questionable, as the Congressional Budget Office came out with lower estimates when it gave its federal budget projections earlier this week.

CBO expects that the economy will grow more quickly in 2016 and 2017 than it did in 2015, when real (that is, inflation-adjusted) GDP grew by an estimated 2.0 percent. The agency anticipates moderate economic growth in subsequent years, constrained by relatively slow growth in the labor force.

The Economic Outlook for 2016 Through 2020
If current laws governing federal taxes and spending generally remained in place, by CBO’s projections, real GDP would grow by 2.7 percent this calendar year and by 2.5 percent in 2017, as measured by the change from the fourth quarter of the previous year…

Now you may say that a 0.4% difference in the first year isn’t much, or that another shortfall in GDP in 2017 wouldn’t be a big deal. But you put all 3 of those years together, and you end up at $136 billion in lowered real GDP. Wisconsin’s share of that would be just over $2 billion of that reduced activity, and obviously that would work its way down into lowered revenues.

The LFB also noted that IHS Global Insight (who they rely on for their estimates) had reduced their profit growth estimates from last year’s forecast. But those figures still counted on profits to spring back for this year and next year.

Global Insight corporate profit projections
2015 -1.6%
2016 +4.0%
2017 +2.8%

But even those mediocre numbers for 2015 and 2016 may be too high. Take a look at what this article out today from Reuters has to say on the subject.

Fourth-quarter 2015 earnings for S&P 500 companies are projected to have fallen 4.5 percent from a year ago, with a decline of 3.5 percent in revenue expected. Earnings fell 0.8 percent in the third quarter of 2015, Thomson Reuters data shows.

In the past week, first-quarter 2016 earnings estimates have fallen by more than 1 percentage point, flipping the year-over-year outlook for the quarter to a decline of 0.4 percent from a gain of 0.8 percent.

It would take quite a bounce-back in corporate profits in the second half of this year to reach those 4.0% estimates of annual profit growth, let alone the questionable nature of a decline of only 1.6% for 2015.

Those are the macro threats to fulfilling the LFB’s revenue estimates, but there are also concerns about the LFB’s assumptions of revenue growth being strong for the first half of 2016. The first deals with income tax collections, which LFB already revised down by nearly $46 million in this Fiscal Year and over $188 million in 2016-17. But the scary part is that these lower figures still include a fiscally positive assumption for the next 6 months.

Based on preliminary collection information through December, 2015, individual income tax revenues for the current fiscal year are 5.1% higher than such revenues through the same period in 2014-15. A higher rate of increase (7.9%) is anticipated over the next six months largely because fewer refunds are expected for 2015 tax returns than were processed for 2014 tax returns. A lower level of refunds will occur this year because the withholding table change that took effect in tax year 2014 affected withholding levels for nine months in the 2014 tax year, but all 12 months in the 2015 tax year. Because withholding changes do not affect individuals’ tax liabilities, lower withholding levels result in lower tax refunds.

But what if that presumption of a lower amount of refunds doesn’t hold, and income tax collections stay at the 5.1% (actually 5.07%) rate of increase that we’re at right now? We end up $113 million below the projections that just came out. That type of shortfall wouldn’t necessarily trigger a budget repair bill, but eliminates the miniscule cushion we have, and would require using all $726 million in lapses built into our budget, which likely means furloughs and in-year cuts.

In addition, the lower amount of tax refunds makes me skeptical that the state of Wisconsin can reach the LFB projections on another type of revenue.

….Sales tax collections through December, 2015 are 2.3% higher than the same period in 2014 and are projected to accelerate to 3.9% for the remainder of the 2015-16 fiscal year.

So the LFB is counting on sales taxes to pick up in the next 6 months? Despite the fact that Wisconsinites will be seeing fewer tax refunds, and have less money in their pockets to spend on items that generate sales tax revenue, the LFB thinks the rate of growth will pick up?

That’s not the direction that was indicated in December’s report from the Wisconsin Department of Revenue. In a month where a lot of shopping takes place, Wisconsin sales taxes went up all of 0.1%, and since gasoline isn’t susceptible to Wisconsin sales taxes, the drop in gas prices didn’t reduce that total at all (in fact, it should have driven it higher, since people would have had more money to spend on sales tax-generating items). Yesterday’s awful Wisconsin jobs report said that the retail sector dropped 4,500 seasonally-adjusted jobs last month, which indicates that the state’s stores aren’t counting on more spending coming. So I’d be very surprised if we see that nearly 4% increase in sales tax collections that we need to cover that projection.

Lastly, the stock market dive of the last few months may put a damper on Wisconsin revenues. 2015 was the S&P 500’s first down year since 2008, and it’s dropped another 6.7% in the first 3 weeks of 2016. Selling stocks at a loss reduces overall incomes, which means there could be another hit to revenues coming in the near future. The LFB admitted at the end of their revenue report that the 2016 declines in the stock market were not taken into account, and if that decline continues, it seems quite possible that this becomes another source of a revenue shortfall.

Now, don’t take this as criticism of the LFB themselves- they’re probably the best agency around when it comes to analysis and giving information, which is why it is critical for them to remain as the independent organization that it has always been (with the eradication of civil service by the ALEC crew in the Capitol, we need as much independent analysis as we can get). But I am saying that recent state data and the declining national outlook on the economy may prove their estimates to be too rosy vs what we could see over these next 18 months. Which means that an already-bad budget situation stands a strong chance of becoming much worse. 

A presidential choice, and presidential mocking

Happy Friday evening, all. Figured I'd end on somewhat thoughtful and fun notes for you on the 2016 presidential race.

First of all, I want to lead you to an excellent analysis by a rare DC journalist that isn't clueless about life west of I-95- the Washington Post's Greg Sargent. He gets to the heart of the choice that Democratic voters will make between their two candidates, and starts by taking a look at Bernie Sanders' new "America" ad.

The Sanders argument, to put it simply, has essentially been that America is in deep, deep trouble — it faces structural challenges so pressing and urgent, from climate change to soaring inequality, that the failure to meet them with proportionately outsize solutions risks a slow motion slide into disaster that could prove irreversible. Sanders’ message has been that the version of progressive change that we’ve seen during the Obama years — from Dodd Frank to Obamacare to the global climate deal — is basically small beer compared to the epic problems we face. That’s what makes this new ad so striking: it doesn’t detail these challenges, instead suggesting vaguely that inspiration and mobilization can secure America’s future....

Sanders has also said: “The major political, strategic difference I have with Obama, is it’s too late to do anything inside the Beltway. You gotta take your case to the American people, mobilize them, and organize them at the grassroots level in a way that we have never done before.”...

This theory of change is perhaps unrealistic, given the structural realities of how our political system works and of the GOP grip on the House of Representatives. It may not be sufficiently nuanced to do justice to the lessons of our history: major change has arguably been won both from the outside and the inside. It has sometimes been the product, in part, of very ugly exercises of inside manipulation, dealmaking, logrolling, bullying, and ethical corner-cutting, and has required not just inspiration, but fighting, bloodshed, and death.

To be clear, it’s indisputably a good thing that Sanders is setting the policy bar very high. That’s great for the debate, and has made the Democratic primary deeply substantive and has forced Clinton to be a better candidate and offer more ambitious proposals than she otherwise might have if she had followed only her own instincts. And Sanders’ success in energizing young people and, hopefully, engaging them more deeply in the process is a big positive and should alarm Clinton and get her to take notice.

Still, it’s worth noting that the differences between Sanders and Clinton go beyond policy, to the very core of how change can be secured. Clinton has come to see politics as essentially a form of trench warfare. Clinton’s closing ad in Iowa vows to “stop the Republicans from ripping all our progress away,” an implicit acknowledgment that a new Democratic president (whoever it might be) would be deeply constrained from realizing his or her agenda, meaning the 2016 election is mostly about whether Dems can prevent total Republican rule from rolling back the gains of the Obama years. Clinton acknowledges the true nature of the structural impediments to change; that the country is deeply divided ideologically; and that we will probably remain stuck in a grueling holding pattern for years — meaning legislative advances will be ground out on the margins, thorough difficult, painstaking efforts to peel off Republicans and forge compromises that will look dirty and will really, really suck.

That sums it up quite well, and it goes to the deeper question of "Is the status quo in 2015 acceptable, and should we work within that to improve things, or do we think things are unacceptable, and that a large amount of change is necessary to return the country to greatness?"

If you're a Dem, and you think things are going well and want to "stay the course," and that there's only so much that can be changed within the current system anyway, you're probably more likely to vote for Clinton. If you think things in America are messed up and that President Obama hasn't gone far enough in making the change from 30 years of trickle-down failure and increasing corporate influence over all segments of society, you're probably more likely to Feel the Bern. You can guess which direction I take.


But it could be a lot worse than to choose between Clinton and Sanders. And Stephen Colbert illustrated why in this awesome segment from this week, discussing the "Original Material Girl." Colbert's "impersonation" starting around 4:20 is absolutely epic.



Time for more beer to drink, although even if I had a dozen of these high-quality beers, I'm guessing I still wouldn't sound that incoherent....or high.

More Wisconsin jobs lost in December, and DWD Sec also out of work

The revenue report wasn't the only big economic news in Wisconsin today, as this was the 3rd Thursday of the month, which meant the monthly jobs report was slated to come out. However, it took a while for it to be released the public, and once you read this report, it wasn't a shock as to why the Walker Administration took its own sweet time to do so.

The first tipoff that something was up happened with this surprise press release from late morning.

Today, Governor Scott Walker announced the following administrative appointments:

•Ray Allen – Secretary, Department of Workforce Development (DWD)​
•Lon Roberts – Secretary, Department of Financial Institutions (DFI)

“Our congratulations to Reggie Newson for his outstanding leadership and commitment to supporting and strengthening Wisconsin’s workforce,” Governor Walker said. “We are grateful for Reggie’s dedication to the great state of Wisconsin and sincerely wish him the best in his future endeavors. Ray and Lon are both exceptional leaders, and we welcome them to their new roles and thank them for their service to the people of Wisconsin.

I hadn't heard former DWD Secretary (and obnoxious Walker cheerleader) Reggie Newson was on his way out. And amazingly, our media has just kind of shrugged this story off- take a look at the Journal-Sentinel or Madison.com sites, and you'll find the story buried down by the bottom of the page (if you can find it at all).

That raised my antennae to see if the report was bad, and if Newson's "resignation" was related to that, so I waited for the DWD to release the December report around Noon.....And was still waiting at 2....And was still waiting at 4. They released it so late it isn't even in tonight's Wheeler Report (a go-to repository of Wisconsin politics information. Bookmark it if you haven't already), or in the Wispolitics.com website.

Fortunately, I wandered over to the DWD site, and finally got the numbers after 5pm. And yes, there was a reason they dumped this report late in the day. I'll skip over the spin, and give you the key stat.

The estimates show a decline of 5,000 private sector jobs from November 2015 to December 2015, which is within the margin of error for the data series.

ANOTHER 5,000 JOBS LOST IN DECEMBER? Sure, November was revised up by 600 private-sector jobs and 400 overall, but that month also had job losses, even with those revisions. It means there was a combined 8,200 private sector jobs lost in the last 2 months of 2015, and 6,000 overall.



And what's scarier is that the state was lucky to only lose that much. Construction "gained" a seasonally-adjusted 2,000 jobs in December, which is a reflection of the record-warm weather leading to fewer seasonal layoffs than normal. Obviously, that boost will go away in January's report, given that the survey month was last week, when a below-zero cold snap was spreading over the state. Take that out, and 7,000 private-sector jobs were lost.

In addition, every single private-sector services area failed to gain jobs last month, with consumer-driven sectors doing the worst. This includes 1,900 jobs lost in the Leisure and Hospitality Sector (bars, restaurants and lodging) abd 4,500 jobs lost in the "Trade" Sector (which includes retail and related store-type positions). These areas were losing jobs at Christmas time, a peak time for those areas of the economy, and it goes along with the paltry 0.1% year-over-year gain in sales taxes for December that the Wisconsin DOR released today. That is a horrible sign going forward, and you have to wonder how many stores in Wisconsin might close as Year-end figures come in.

And to add insult to the injury of Wisconsin job losses, take a look at what happened to the blue state across the St. Croix.

Minnesota employers added 9,100 jobs in December, boosting the state’s job gains for 2015 to over 42,000.

The Department of Employment and Economic Development reported Thursday that the state’s unemployment rate fell to a seasonally adjusted 3.5 percent in December from a revised rate of 3.6 percent in November. That’s better than the nationwide unemployment rate in December of 5 percent.

Minnesota's 42,000 jobs gained is nearly DOUBLE what Wisconsin added for 2015. And Gov Walker can't even brag about Wisconsin's lower unemployment rate this month, as that went up by 0.1%, from 4.24% to 4.34%. One rare positive in this report is that the Wisconsin labor force finally went back up by 10,500, but even that is still 13,000 below the seasonally-adjusted labor force that existed at the start of 2015. Would anyone in their right mind in Minnesota trade their state's economy and government for ours right now?

With these preliminary numbers, the Walker jobs gap has ballooned well past 110,000 jobs, with 30,000 of that gap coming in the last year.



So in light of yet another awful Wisconsin jobs report, I'd love to find out just who answers next week's Marquette Law School poll by saying "Yes, things are just fine in Wisconsin." They probably are as clueless and self-absorbed as Del Griffith on a late night in November.

Revenue shortfalls and why Wisconsin has another one

Obviously, today's big Wisconsin budget news is the release of today’s new revenue projections by the Legislative Fiscal Bureau. Honestly, the topline projections weren’t as bad as I feared they might be, even though they are by no means good.

Based upon our analysis, we project the closing, net general fund balance at the end of this biennium (June 30, 2017) to be $70.2 million. This is $94.3 below the $164.5 million balance that was estimated prior to our review. The $164.5 million balance includes all bills enacted to date in this legislative session (through 2015 Act 126).

The $94.3 million reduction is the net result of: (1) a decrease of $158.2 million in estimated tax collections; (2) an increase in departmental revenues of $6.3 million; (3) a decrease of $87.1 million in sum sufficient appropriation expenditures; and (4) a $29.5 million decrease in estimated lapses to the general fund.

That $70.2 million left over at the end of the budget means that for now there is no need for a budget repair bill (even if Year 2 of the budget has a deficit of around $149 million). When I saw GOP Senate Leader Fitzgerald say that revenues were looking to be off $150 million, I thought he meant THIS year,which would have likely triggered a future budget repair bill. This is not the case.

I want to speak a second on the expense side of this report. The LFB gives 3 “significant factors” for the $87 million decrease in sum sufficients (generally unknown amounts for mandatory spending and tax write-offs whose totals can be spent above or below this amount without extra legislation being required)

1. $18.8 million in lowered debt payments (thanks to the Fed delaying a rise in interest rates until December).
2. $19.5 million in lower-than-expected Homestead credits
3. $4.9 million in lower-than-expected Earned Income Tax Credits (EITC)

The Homestead and EITC credits overwhelmingly go to the working-class Wisconsinites, were notoriously reduced in Scott Walker’s first budget in 2011, and as the Wisconsin Budget Project notes, have not been increased for inflation since then, causing more of their value to be eroded. So this $24.4 million in “savings” is really $24.4 million that isn’t going to low-income workers, causing them to slip further behind.

The $29.5 million in reduced lapses still isn’t much of a help, as it still leaves $1.06 BILLION more that needs to be lapsed for the 2 years in the budget, with over $726 million of that coming after July 1. If revenues stay at their current reduced levels, it means that you can expect many in-year cuts and/or furloughs for state services coming after that time (likely after the November elections).

Now, onto the reasons behind the revenue projection changes. I’ll keep to the numbers on this one, and go more into what I think it portends for the future in an upcoming post. The biggest factor driving the revenue changes is a reduction in projected income taxes, by $48.5 million in this Fiscal Year, and $188.2 million in FY 2016-17. This goes along with the below-budget trend we have seen so far – income taxes needed to go up by nearly 7.3%, and it hasn’t been hitting that in the Department of Revenue’s monthly releases, (including the December figures they snuck out this afternoon).

The LFB adds that the recently tax cuts from Congress also will take a bite out of the state’s revenues, and the gap would be even larger except that there is expected to a one-time bump in the coming months…in a form that you probably won’t like.

Based on the preliminary collection information through December, 2015, individual income tax revenues for the current fiscal year are 5.1% higher than such revenues through the same period in 2014-15. A higher rate of increase (7.9%) is anticipated over the next six months largely because fewer refunds are expected for 2015 tax returns than were processed for 2014 tax returns. A lower level of refunds will occur this year because the withholding table change that took effect in tax year 2014, affected withholding levels for nine months in the 2014 tax year, but all 12 months in the 2015 tax year. Because withholding changes do not affect individuals’ tax liabilities, lower withholding levels result in lower tax refunds.

What that means is that if the 7.9% increase in individual income taxes isn’t showing up by May (when tax refund season is mostly paid out), we have big-time problems.

The LFB also says they anticipate a pickup in sales tax growth for the next 6 months (to 3.9% from the current 2.3%), so they did not change their projections for sales tax revenues for this year or next year. However, the DOR's December report gives a big flashing warning sign, as sales taxes were only up 0.1% vs 2014, in a month with huge amounts of retail spending for the Holidays, and a month with record warmth that should have allowed people to stay out and about and keep on spending. Uh oh.

Corporate taxes were slightly revised down for this fiscal year, but up by more than $29 million for 2016-17. The LFB says they expect profits to pick up this time next year, which explains why they’re bumping up the totals. In fact, they say it’d be even higher, except for the DC tax cuts and that the Manufacturers and Agriculture giveaway tax credit is being used more by “individuals” than corporations.

Lastly, the LFB says there’s one other intriguing bit of support to tax revenues.

Excise tax revenues over the next biennium are estimated at $706.4 million in 2015-16 and $705.1 million in 2016-17, which represents increased revenue of $26.9 million in the first year and $28.3 million in the second year compared to prior estimates. Excise tax estimates have increased largely due to higher year-to-date cigarette tax collections, which are currently 2.2% higher than collections over the same period in 2014.

In fact, cigarette taxes were expected to fall by $18.6 million this year and another $5.5 million next year instead of going up. So THANK YOU SMOKERS, I guess! (I rarely see people smoking here in Madison, so is it really picking up elsewhere? I could use some insight here)

The LFB also gives a cautionary note that economic forecasts for the U.S. and the state were taken before the oil and stock markets had its huge drop, and it is noteworthy that the LFB quotes a survey from Global Insight which expects 2.4% real GDP growth for 2015, while the Congressional Budget Office just suggested a 2.0% growth rate in its estimates this week. That little bit of difference could go a long way as we move forward with our current budget.

I have one last issue to clear up, and as you’d imagine, it involves typical WisGOP lying about these figures. Both Assembly Speaker Robbin’ Vos and Governor Walker called the $135.2 million projected ending balance a “surplus.” (Walker is especially weaselly in how he spins the numbers).

Here’s the reality.

Ending 2014-15 balance +$135.6 million
Projected ending 2016-17 balance $135.2 million
Change in balance -$366,300.

That’s not a surplus, that is technically a DEFICIT. And the $148.7 million DEFICIT in Year 2 of this budget means a structural deficit near $300 million for the next 2 years…before the increased tax credits and mandatory extra spending kicks in that will both be a part of those budgets.

So stop it, Republicans. While these LFB figures weren’t as awful as some of the hints indicated they might be, we still are worse off, and they certainly do not vindicate the disastrous direction that Gov Walker and WisGOP have put the state on. And as I’ll go into detail later, it’s likely that these budget figures will get worse, and not better.

Follow-up from yesterday's events- more budget deficits, and more DOT funding?

I ignored the silliness of Gov Walker's State of the State speech last night (Twitter is always a better source than putting up with that guy's voice). But the real headline from state politics yesterday was revealed in the Journal-Sentinel’s rundown of the State of the State. And it didn’t come from Walker, but instead came from the GOP's Senate Leader hinting that an already-bad state budget situation is likely to get worse after the Legislative Fiscal Bureau releases new revenue figures next month.

The state budget remains relatively tight — and Senate Majority Leader Scott Fitzgerald (R-Juneau) said Tuesday that new estimates on tax revenues would leave it still tighter.

"It sounds like the projections are going to be far shorter than what we anticipated, although we don't know what the number is going to be yet," Fitzgerald told reporters after the speech. "It's not going to be the $150, $160 million (surplus for the two-year budget) that we thought we'd be working with."

So Walker focused his address more on past accomplishments than costly future plans. The governor said he would invest future state savings on education, but gave no figures and limited his new proposals to addressing student loan debt and modestly funding partnerships between high schools and technical colleges.

Speaking of the governor’s band-aid bills on higher education (I’ve earlier explained why I think it doesn’t go nearly far enough to solve the crisis past Walker/WisGOP cuts have caused), those bills were formally published today, and an Assembly Committee hearing is scheduled on them Thursday morning. Seems odd to be in such a hurry, especially since we don’t know if there is going to be any money available for these initiatives after the revenue numbers hit. But maybe that's the point (don't bet against it with this crew).

Tere was one item of good news on the budgetary front, and this is something else I hinted at in my post yesterday. The Joint Finance Committee just received information from the Department of Transportation that includes plans to spend an additional $37.6 million heading to Wisconsin as part of the recently-passed Congressional budget bill (the one that’s increasing the federal deficit for the first time in the last 5 years). This includes additional bridge work, state highway projects, and some freeway resurfacing.

In addition, the DOT says those federal highway funding levels will be elevated for the next year, allowing for more projects to be done. This is a good thing, mostly because state taxpayers aren't putting up the brunt of these funds, but I also think this extra boost of federal aid allows for another option. This seems like a good opportunity for the Joint Finance Committee to go back on their plans to borrow $850 million in the next 2 years, and use this funding along with the $140 million that was carried over from the last year to drop the future debt costs in the General Fund that is set to happen as a result of the careless DOT policy of “borrow and spend.” Oddly, the upside in revenue that we will likely see will be enough to offset the borrowing in the Transportation Fund, but it probably won't do that for the General Fund money that was borrowed in this budget (more in a second why this is an important difference).

In addition, there should be cost savings in the Transportation Fund coming from lower gas prices reducing costs for the State Patrol, highway maintenance vehicles, and other parts of the sizable DOT fleet of cars. Which is another reason that there should be extra funds left over in the Transportation Fund that could well reduce the massive borrowing that is in the current budget, and allow the state to catch up on some of its large backlog of projects. But here's the problem- because of the 2014 Road Builders' Amendment to the State Constitution, this extra money can't be used to fill in the looming General Fund budget. So the state seems likely to have to cut more General Fund services like school aids, health, and the DNR in the next 1 1/2 years due to that deficit, but can't do anything with the one-time surplus of funds in Transportation other than fixing more roads (and note than none of these surplus funds are going to transit).

When the LFB officially reveals later this month how much of a revenue crater the state is in, it'll be interesting to see if immediate action is required to fix that problem. It would have to be an overall revenue shortfall of around $300 million in year 1 or $200 million in year 2 to officially go into the red, and if that $300 million doesn't show up for this year, it would likely allow Assembly Speaker Robbin' Vos and Senate Leader Fitzgerald to stay on track to end this legislative session by March. That move would allow more time for WisGOPs "independent" supporters to run campaign ads trying to convince the public that they haven't totally messed things up in Wisconsin during their reign of error (good luck), and kick the can on a potential budget repair bill till after the November elections.

But delaying the inevitable budget repair bill doesn't mean Wisconsin's General Fund budget situation is any good, or that there is any money out there that can fulfill Gov Walker's half-measures on college affordability. And it still doesn't reduce the $1.1 billion in unspecified lapses that are baked into this budget, an important fact to remember as any budget deficit comes on top of that absurd gimmick, which means that worker furloughs and other in-budget cost reductions seem to be a certainty for the State of Wisconsin starting on July 1, if not sooner.

Stay tuned, it's gonna get frantic at the Capitol soon enough, and likely very messy and ugly.

News out of DC likely grows Wisconsin deficit even more

A surprise headline out of Washington today was the Congressional Budget Office’s projection of higher U.S budget deficits for the near future. This increase in the U.S. deficit would go from $439 billion in the recently-completed 2015 Fiscal Year to $544 billion in 2016, and would be a reversal of the trend since 2011, as the deficit had been cut by more than 2/3 in the four years since that time.

In addition, future U.S. budget deficits were projected to rise by an additional $1.5 trillion over the next decade. The CBO explains a couple of the reasons behind this projected increase.

About half of the $1.5 trillion increase stems from the effects of laws enacted since August—which will reduce revenues by $425 billion and increase outlays by $324 billion over the 2016–2025 period, CBO estimates, adding $749 billion to projected deficits. Much of that amount stems from the extension of tax provisions by the Consolidated Appropriations Act, 2016, which will reduce corporate and individual income taxes.

About 30 percent of the increase in CBO’s projection of the cumulative deficit through 2025—$437 billion—results from revisions to CBO’s economic forecast. Lowered expectations for growth in the economy and for wages and corporate profits led the agency to reduce its projections of tax receipts from all sources by $771 billion over the 2016–2025 period. Lower projections of inflation, interest, and unemployment rates, among other changes, led CBO to mark down projected outlays by a smaller amount, $334 billion.

I’ll leave the tax cuts and extra spending alone for now (I’ll tie them in later), and concentrate on the GDP growth projections that the CBO relied on for this report.

The CBO says 2015’s full-year GDP is still expected to come in at 2.0%, just as they projected in August. But 2016’s growth was revised down to 2.7% vs 3.1% in August, and 2017 dipped to 2.5% vs the last projection of 2.7%. And that 3-year CBO trend of 2.0%-2.7%-2.5% growth for 2015-17 is a notable slowdown compared to what the Wisconsin Legislative Fiscal Bureau had in their state revenue projections from 12 months ago.

Gross Domestic Product.

It is estimated that real GDP grew by 2.4% in 2014. Global Insight expects accelerated GDP growth of 3.1% in 2015, primarily caused by lower energy prices, which stimulates growth by increasing the amount of disposable income that consumers can spend on discretionary purchases. Real GDP is expected to grow at a rate of 2.7% in 2016 and 2017. Growth in nominal (current-dollar) GDP is expected to track a similar course, accelerating from 4.0% in 2014 to 4.9% in 2015, followed by a slight slowdown to 4.6% in 2016 and 2017.

So 3.1% growth in 2015 was predicted by LFB in January 2015, but now CBO says it’ll be 2.0%. And while 2016 and 2017’s rate isn’t that different, it’s from a much lower BASE due to the 1.1% gap in 2015, so those total output numbers would also be lower.

Let’s also see what the LFB predicted would happen for job growth 1 year ago.

Employment.

The average unemployment rate for 2014 was 6.2%, an improvement from a rate of 7.4% in 2013. The unemployment rate is expected to continue to decline through the forecast period, dropping to an average rate of 5.5% in 2015, 5.3% in 2016, and 5.2% in 2017. The labor force participation rate has fallen each year from 2006 through 2014, declining a total of 3.2 percentage points from 64.6% to 61.4%. This trend is expected to reverse over the forecast period, with the labor force participation rate increasing to 61.6% in 2015, 61.8% in 2016, and 62.0% in 2017.

Total nonfarm payrolls reached their first quarter 2008 pre-recession peak of 138.3 million during the second quarter of 2014. Global Insight expects total nonfarm payrolls to continue growing over the forecast period, increasing to average payrolls of 141.7 million in 2015, 144.2 million in 2016, and 146.0 million in 2017. Private sector payrolls, which reached their prerecession level in the first quarter of 2014, increased 2.5 million in 2014 and are expected to increase an additional 2.8 million in 2015, 2.4 million in 2016, and 1.6 million in 2017. Public sector payrolls grew by an estimated 37,000 in 2014, and are expected to continue growing by 59,000 in 2015, 87,000 in 2016, and 210,000 in 2017 due to increases in state and local employment. Federal employment is expected to decline slightly. Public sector payrolls are not expected to reach prerecession levels over the forecast period.

Now compare that with the actual data that came in. Labor participation rates did not increase in 2015 vs 2014 (the numbers from the BLS are slightly higher than what the LFB quotes, but participation rates were down by 0.1% in December 2015 vs December 2014). This lack of increase in participation rate helps explain that while the unemployment rate was lower than the LFB’s paper indicated for last year, job growth was not as high in 2015 as what the LFB thought it would be.

12-month change in total jobs, Dec 2015
LFB projection private sector +2.8 million
Actual private sector +2.55 million (-250,000)

LFB projection total jobs +2.86 million
Actual total jobs +2.65 million (-210,000)

Average unemployment rate
LFB projection 2015 5.5%
Actual rate for 2015 5.3% (-0.2%)

So even And with the unemployment rate being lower than expected, this may mean that job growth could be somewhat limited, barring a huge increase of participants into the work force (not likely given the large amount of Boomers that are leaving jobs).

What this means is that these projections of U.S. job and GDP growth would reduce the amount of revenue growth that could come in Wisconsin over the next 2 fiscal years (everything else being equal, of course). So combine those slower growth prospects with the below-budget income tax revenues that we’ve seen in Wisconsin for the first 5 months of the 2016 Fiscal Year, and it would seem very likely that the LFB would reduce Wisconsin’s projected revenues from the amounts that were written into the 2015-17 budget 6 months ago.

Now, some of these revenue issues may be offset a bit by the added spending in that deficit-increasing bill that passed Congress, especially in Transportation. By the same token, some of the state’s tax revenue will also go down with the addition of those federal tax cuts, as many of those will reduce federal taxable income, which then reduces how much income the state can tax). So I can’t say one way or the other whether that new tax bill that went through in Congress will help or hurt the Wisconsin state budget picture.

But here’s what I do feel comfortable saying. Today’s CBO report not only predicts higher budget deficits for our federal government in coming years, but the lowering of economic growth mentioned in that document portends a current budget deficit in Wisconsin that will have to be dealt with. It seems likely that those lower projections would be the final source of data needed for the LFB to say Wisconsin tax revenues will be projected down when their numbers come out in the very near future, and it’ll make for even more “fun” in a Walker/WisGOP budget that was screwed up to begin with.

Gordon Hintz's State of the State primer

Just in time for this evening, we get this excellent write-up from a top-notch legislator, State Rep. Gordon Hintz. Rep. Hintz released this State of the State "primer" predicting certain statistics and BS Gov Walker will try to throw out this evening at the Capitol, using some of Walker's pathetic spin in recent months.

Hintz's first point should be familiar to all 4 of you who regularly read this blog.

CLAIM: "We have at least according to two of the statistics from the federal government, the highest number of people last year working in the last 20 years." (http://www.wearegreenbay.com/news/local-news/state-of-the-state-preview) 1/17/16

In May of 2010, Wisconsin had 3,074,000 people in the labor force (BLS). In May of 2015, Wisconsin had 3,076,000 people in the labor force. The labor force growth rate over the past 5 years is an anemic 0.01%. Compare that to the growth of Indiana (.41%), Iowa (.31%), and Minnesota (.61%) over the same time period.

Related to that, Hintz points out that Wisconsin's workforce participation rate has dropped by more than 6.8% since 1995, and their 1.82% drop in the last 5 years matches the drop in participation that right-wing spinmeisters try to use as a mark against the Obama Administration. Sorry Scotty, you didn't build that high participation rate, you haven't increased it since you've been in office, and you certainly don't get to take credit for the "low" 4.2% unemployment rate that's a result from that decline in participation.

There's another one Walker claim Rep. Hintz cites, one which Walker has constantly mentioned throughout his 5 years in office. What I didn't know until Gordon mentioned it was that there seems to be an ulterior motive for Walker continuing to cite this particular source.

CLAIM: “Chief Executive Magazine today ranked Wisconsin the “12th Best State for Business” in its annual survey of CEOs, an increase of two spots over the 2014 ranking, and a significant increase since 2010, when the state ranked 41st.”

Business leaders were asked to grade states with which they are familiar on a variety of competitive metrics that CEOs themselves regard as critical. These include: 1) taxation and regulation; 2) quality of workforce; and 3) living environment. The tax and regulatory grade includes a measure of how CEOs grade a state’s attitude toward business, a key indicator."

One of the State Advocate CEOs for Chief Executive.Net Magazine is none other than Diane Hendricks, Chairman of Hendricks Holding, Beloit, WI. Forbes Magazine estimated Hendricks' March net worth at $2.8 billion. Hendricks and her husband, Kenneth, built ABC Supply. She became chairman of the company after her husband died in 2007. The company posts annual revenue of more than $4 billion.

She was also Scott Walker’s largest donor, and yet owed no state income tax in 2010.

Yes, THIS Diane Hendricks.



It's bad enough when a Governor thinks that literally kissing up to CEOs is a mark of doing a good job (it usually means very bad things to real people), but when he doesn't reveal that "CEO Magazine" IS A MOUTHPIECE FOR ONE OF HIS OWN PUPPETMASTERS, then it looks even more pathetic.

And there are 4 other demolitions of Walker claims in Hintz's primer. Feel free to read the whole thing.

Thought of this MLK evening

These words are sadly every bit as relevant today as they were in 1963.

I must confess that over the past few years I have been gravely disappointed with the white moderate. I have almost reached the regrettable conclusion that the Negro's great stumbling block in his stride toward freedom is not the White Citizen's Counciler or the Ku Klux Klanner, but the white moderate, who is more devoted to "order" than to justice; who prefers a negative peace which is the absence of tension to a positive peace which is the presence of justice; who constantly says: "I agree with you in the goal you seek, but I cannot agree with your methods of direct action"; who paternalistically believes he can set the timetable for another man's freedom; who lives by a mythical concept of time and who constantly advises the Negro to wait for a "more convenient season." Shallow understanding from people of good will is more frustrating than absolute misunderstanding from people of ill will. Lukewarm acceptance is much more bewildering than outright rejection.

I had hoped that the white moderate would understand that law and order exist for the purpose of establishing justice and that when they fail in this purpose they become the dangerously structured dams that block the flow of social progress. I had hoped that the white moderate would understand that the present tension in the South is a necessary phase of the transition from an obnoxious negative peace, in which the Negro passively accepted his unjust plight, to a substantive and positive peace, in which all men will respect the dignity and worth of human personality. Actually, we who engage in nonviolent direct action are not the creators of tension. We merely bring to the surface the hidden tension that is already alive. We bring it out in the open, where it can be seen and dealt with. Like a boil that can never be cured so long as it is covered up but must be opened with all its ugliness to the natural medicines of air and light, injustice must be exposed, with all the tension its exposure creates, to the light of human conscience and the air of national opinion before it can be cured.

- Dr. martin Luther King Jr.
"Letter from a Birmingham Jail, April 16, 1963

Sometimes those in power won't do what is needed, because they don't want to kill the golden goose that may have helped them reach power, or don't care deeply enough about the plight of other groups of people being wronged. And that's as true today as it was 53 years ago.

As Dr. King would constantly remind people (especially in his later years), when the status quo is unacceptable and/or declining, then that situation must be changed. And that's only done by DEMANDING it and acting for change.

Sunday morning Vegas thoughts

Quick thought on last night's game from Vegas (where the gambling gods and the nightlife have been nice to me...so far)

It was borderline shocking for the Pack to be even in that game given that their top FOUR receivers were out for most of it. But it's still a lousy defensive breakdown in OT after the D had played so well up to that point.

I'm just glad I'm older now and get over things like this faster as a fan. But 5 playoff losses in the last 9 years coming on the last play of the game? That's just a lot.

Onto the gaming floor and the 60 degrees sunshine.

Gotta get out of Dodge

On a 3-day weekend with a ton of great sports, combined with two buddies 40th birthday, there's only one place to go.



And a whole lot of us have put on some LBs in the last 20 years, haven't we? I'll check in a bit, but I've got more important events to attend to in....VEGAS!

I just hope I don't look like this by Day 2.



But let's face it, given the way Wall Street has been going (and plummeting again today), going to the sports book is a much safer and legitimate investment these days.

Rep. Bowen calls out WisGOPs for not giving a crap about MKE

State Rep. David Bowen (D-Milwaukee) has been building an impressive resume of statements and political positions in recent years, maybe none more than last year when he rightfully expanded the debate on the racist South Carolina shooter to the wider issue of racist speech by right-wing politicians and media members. He’s part of a good group of young Milwaukee legislators that move past the machine politics of the past and are in the process of returning the state’s largest city to its more progressive roots.

And it was Rep. Bowen made that another great statement in light of dimwitted Rep. Bob Gannon (R-262 area code) flipping off Assembly Minority Leader Peter Barca. The incident happened after Gannon was rightfully called out on the Assembly floor for his racist and arrogant comments about violence and unemployment in Milwaukee, and Rep. Bowen contrasted bipartisan bills that were passed dealing with issues afflicting many poor people across Wisconsin, and compared it to the anti-Milwaukee attitudes that Gannon and the Wisconsin GOP have.

Today, legislators from both parties, from all corners of the state, came together to pass legislation that addresses heroin abuse, an issue that greatly affects rural areas. This included legislators that don’t represent these areas, because it is good for our whole state when we pick each other up instead of tearing each other down.

Yet, Rep. Gannon, and those on the other side of the aisle who agree with him but who may not be quite as animated, say Milwaukee’s problems are Milwaukee’s alone. In doing so, they choose to separate themselves from ‘We’re in this together’ and instead embrace an ‘It’s your problem, you fix it’ mentality. They have effectively taken themselves out of the equation when it comes to addressing the root causes of poverty, and they have taken themselves out of the equation when it comes improving our state by improving our largest city.

That final paragraph knocks it out of the park, because it’s what infuriates me about the WisGOP mentality in the 262 area code. They and their spokespeople on AM radio claim to be concerned about the economic issues surrounding the poor in Milwaukee, but don’t lift a finger to do anything that might help to solve those problems.

Well, I guess do lift ONE finger when it comes to the City of Milwaukee. In this video clip you'll hear Gannon ramble about some more dog-whistling garbage, and seems to imply that the City of Milwaukee should get more money from the Feds to fight the problem (the state can't put together these funds to target the issue because...?). Then Dem leader Barca comes on the respond, and the incident happens around 1:20 in this video after Gannon and Barca responds (you'll see Barca complain about what Gannon calls the "guess-ture", but you won't see the finger itself).



In fact, the Bob Gannon, Speaker Robbin' Vos and the rest of the GOPpers from the 262 have often made those inequities much worse, whether it’s through cutting inflation-adjusted shared revenues to the city by $55 million since 2000, defunding Milwaukee Public Schools through the failed voucher program and the recently-passed privatization of certain schools, or by using the city as a punching bag for partisan advantage (that means you, Governor Walker), which drives down its attractiveness to outsiders that may want to visit or relocate there.

In addition, the lagging job growth in the Age of Fitzwalkerstan and lack of new start-ups that have resulted from WisGOP/WMC economic strategy keeps a lack of good jobs from being located in and around Milwaukee, which continues the cycle of poverty and economic stagnation. Given that the GOP is in power in pretty much all facets of state government these days, perhaps these guys might want to do something different that helps to attract jobs and talent, and improves the quality of life for the state’s largest city

But that goes to Rep. Bowen’s larger point- WisGOPs don’t want Milwaukee to succeed, and they don’t want violence and unemployment to go down there, because they need that cycle of poverty to continue. If lower-class and other mediocre white suburbanites to feel superior to another group of people, they don’t ask too many deep questions as to why their lives haven’t improved in the Age of Fitzwalkerstan, and why their schools and roads are falling apart, but instead can just blame the poor minorities in Milwaukee for not pulling their share, and back policies that stick it to “those people.”

It’s a pattern that the New Republic’s Alec MacGillis captured very well in June 2014, describing the “Toxic Racial Politics of Scott Walker,” and the Wisconsin GOP that he heads up. MacGillis notes the difference between the heavily GOP “WOW Counties” around Milwaukee (Rep. Gannon is from Washington County, the reddest of the 3), and the city that many of them owe their existence to.

It is as if the Milwaukee area were in a kind of time warp. Like the suburbanites of the ’70s and ’80s elsewhere in the United States, the residents of the WOW counties are full of anxiety and contempt for the place they abandoned. “We’re still in the disco era here,” says Democratic political consultant Paul Maslin. This has affected the politics of the state in myriad ways. The nationwide trend of exploring alternatives to prison hasn’t reached Wisconsin—it has the highest rate of black male incarceration of any state in the country. [AM talk show host/GOP spokesman Charlie] Sykes told me he could track the desertion of the city through the discussions of Milwaukee public schools on his show. “Through the 1990s we were very interested in education reform, and then it was like a button was switched, and those were someone else’s kids,” he said. “That’s when I realized we weren’t a Milwaukee station anymore.”

Predictably, by 2010, the WOW counties were aflame with anti-Obama fervor, and Walker set his sights on the governor’s mansion. This climate should have favored his primary opponent, Mark Neumann, a highly conservative ex- congressman from southern Wisconsin. But so formidable was Walker’s talk-radio base that it altered the course of the race. Day after day, Sykes and [fellow AM radio a-hole Mark] Belling lauded Walker and savaged Neumann. Belling called Neumann a “liar” for criticizing Walker’s county budgets and declared, “No one I know thinks [Neumann] has a chance of winning.” The attacks were unfair but damaging, Neumann told me. Walker beat him by 18 points. In some precincts of the WOW counties, he won close to 75 percent of the vote, but lost to Neumann across much of the rest of the state. To Sykes, it was no coincidence that Walker’s support aligned so closely with the listening range of their stations. “If you look at that map, you see talk-radio land,” Sykes says.

Walker won the general election against Milwaukee Mayor Tom Barrett with 52 percent of the vote. Some prognosticators expected that Walker might fare better than previous Republicans in Milwaukee County, given that he had spent eight years governing it. In fact, he did no better than the Republican norm, with 37 percent. But in the WOW counties, he exceeded even the GOP’s usual sky-high numbers. In his inaugural address, he took the audience on a long rhetorical tour of the state—“Superior to Kenosha; Sturgeon Bay over to Platteville ...” He did not mention Milwaukee.

Because Walker and the Wisconsin GOP doesn’t care about Milwaukee, and never will, no matter how much that mentality hurts the rest of the state. And that’s why I find the suburban Milwaukee Republicans like Bob Gannon so obnoxious- not just because their complaints are filled with foolishness and dog-whistle racism, but because they’re more concerned with kicking down at the less fortunate than trying to take any steps to improve the desperate situation many poor people in Milwaukee are in.

And it’s a big reason why Republicans from suburban Milwaukee are unfit for office, at any level. I just wish the suburban 262 would secede from the rest of the state, call themselves the “Republic of Fitzwalkerstan”, wish them luck in raising their own tax revenues, and allow the rest of us who do give a crap about this state’s future the opportunity to get to work repairing the damage this horrible mentality of mediocre suburbanites has inflicted on a once-great state.

Walker student loan "reforms" don't erase the higher ed mess he caused

Feeling the heat from Legislative Democrats and advocacy organizations like One Wisconsin Now, and in light of reports that Americans now owe more than $1.3 trillion in student loan debt, Gov Walker felt the need this week to try to look like he was do something on the issue of student loans and the costs of higher education. As a result, Walker introduced a list of proposals intended to show that he also wants to contain higher education costs, with tax incentives and slightly expanded funding for certain grants included.

Gov Walker’s press release supplied a list of bills that he says have been or will be introduced by GOP representatives in the Legislature (though there doesn’t seem to be any listing for these bills in the Text of Recently Introduced Proposals as of this time). Here’s a look at a few of these proposals on student loans and college affordability.

Deducting All Student Loan Interest – authored by Representative John Macco and Senator Howard Marklein, this legislation would eliminate any cap on the tax deduction for student loan interest, which would save student loan debt payers $5.2 million annually when it is fully phased in. This tax deduction would be the most generous of any state in the Midwest with an income tax and benefit roughly 32,000 Wisconsin taxpayers paying off student loans. This deduction also directly benefits middle class Wisconsinites with an average benefit of more than $200 annually for those making between $30,000 and $70,000;

· Increasing Wisconsin Grants for Technical Colleges – authored by Representative Dave Heaton and Senator Sheila Harsdorf, this legislation would increase needs-based Wisconsin Grants by $1 million for technical college students in the biennium or $500,000 annually. This would benefit over 1,000 students throughout the state;

· Creating Grants for Students in Emergency Financial Need – authored by Representative David Murphy and Senator Howard Marklein, this legislation would provide $130,000 to UW System colleges and $320,000 to technical colleges to provide emergency grants to students. This approach has been credited with increasing the likelihood a student finishes his or her degree in these unfortunate situations by increasing student retention;

For selfish reasons, I approve of the proposal on student loan interes, and wish the concept was taken to Congress, because the phase-out level of that tax deduction is at a point where a couple that each earn the median amount for people with a master’s degree isn’t able to use it. It seems a bit odd to not allow those who put in the work to get their extra education and income aren’t able to write off the interest on the loans that helped to make it possible, because they get paid too much with their improved job. The complication is that 32,000 taxpayers writing off $200 a year means a tax break of $6.4 million a year, and given our state’s budget problems, that may not be affordable. But I'll at least say it's a start.

On the expense side, these items sound OK at face value, but obviously funding must be found to pay for those items as well. And as Chris Walker at Political Heat notes, the $1 million for the “Wisconsin grants” won’t go very far, as the large amount of needs in the state requires a much larger commitment than that.

The bill that Walker touts to will help so-called “need-based” students will fund about 1,000 additional grants. However, last year, more than 37,000 technical college students who were eligible for the grants didn’t receive them. Doling out a small amount of grants will help a very small portion of students in dire need, and do little to help the debt crisis facing college graduates.

There are also provisions in Walker’s proposals to increase funding for staff that can help find students more internships (the WMC crowd loves their free labor!), and a bizarre unfunded mandate to require schools to send out financial literacy information to students, as well as mail current loan status and cost information to students (which seems to be a waste of time for the schools and a veiled attempt to scare some into not continuing their education once they see the costs and debts involved).

Governor Walker also tried to promote the fact that the last two budgets he has signed has frozen in-state tuition for all UW System institutions, saying that this moved has helped make the universities more affordable for today’s students.

According to the Legislative Fiscal Bureau, in the ten years prior to Wisconsin’s current historic four-year tuition freeze, tuition increased an average of 8.1 percent across all UW System. Over that same period, tuition had gone up 118.7 percent prior to the freeze that Governor Walker and the Legislature enacted. Compared to the average increases over the prior ten years, across the UW System, students have saved $6,311 because of the freeze. While savings vary by institution, the tuition freeze meant average savings of $2,926 at UW Colleges and savings up to $9,327 at UW-Madison.

Walker’s claim of a $9,327 savings over the 4 years at UW-Madison (for example) is sketchy enough- an 8.1% average increase would result in total in-state tuition reaching $12,736 in 2016-17 instead of the $9,327 it is at today (or just over $3,400), and even if the savings are taken in total, it reaches $8,192, not $9,327. That still doesn’t mean there isn’t relief there, but it’s not as much as Walker claims it to be (Pages 20 and 21 of the PDF on the Legislative Fiscal Bureau’s paper on UW tuition give a good history of the rates over the last 10 years).

However, it’s worth noting that a large amount of those tuition increases between 2001 and 2011 are attributed to cuts in taxpayer funding to the UW System, to allow the total amount of funding and quality for the UW System to stay somewhat consistent. That has not been the case in the Age of Fitzwalkerstan, as the UW’s documentation said the one-time benefit savings of Act 10 didn’t come close to making up the difference in tuition that was required as a result of Gov Walker’s first budget cut in 2011 (it’s on Page 21 of that LFB tuition paper). Now the cut of $250 million for 2015-17 has been installed along with the tuition freeze for those two years, meaning that despite general taxpayer funding being around $50 million less for the UW System vs 2013, tuition hasn’t been able to be raised to make up that difference, let alone pay for higher costs over the last 4 years.

Walker’s claim also assumes that the UW would have used the tuition to offset increased costs in wages and benefits for their faculty and staff, but those increases have been far smaller in the post-Act 10 world, so there wouldn’t be a need to raise tuition as much anyway. In fact, it seems quite likely that had Walker decided to adequately fund the UW System since 2011, tuition increases could also have been mitigated or outright avoided. These same goals of putting a lid on tuition would have been able to be done without sacrificing the UW System’s quality and potentially reducing access to programs, both of which hamstring the earning ability of students once they get out of college, and their chances of growing the state’s economy.

This doesn't even include the crippling of tenure, stacking of the UW Board of Regents with right-wing hacks, and regressive social legislation that has made retaining talent less likely for UW System schools. All of those developments have compromised the UW’s ability to produce a high-quality education that allows high-skilled talent to come to Wisconsin for college, and/or want to stay after college ends, and preventing that scenario from occurring would seem to be a much more worthwhile boost to Wisconsin’s economy than tuition freezes or being able to write off a few dollars of student loan interest on one’s taxes. So while Gov Walker’s proposals on student loan repayment and college costs might be a slight improvement from the status quo, it still doesn’t come close to making up for the damage his past policies have had on higher education and college graduates in the state.

And this package of proposals also doesn’t forgive Walker from avoiding the common-sense solution in the Wisconsin Democrats’ “Higher Education, Lower Debt” bill, which would allow college graduates to refinance their student loans into lower interest rates, just like they can with a car, a house, or most other types of debt. Sorry, Scotty, but your misdirection play isn’t going to fool any of us outside of the Bubble, and it doesn’t come near close enough to handle the real problem of student loan debt and the reduced economic activity that results from that debt.