Tuesday, November 21, 2017

Again, the Trump/Ryan tax cuts will not pay for themselves.

One of the absurd canards that Paul Ryan and others in today’s GOP try to claim is that their tax cuts will “pay for themselves”, as huge increases in incomes and economic growth would make up for the loss of tax revenues that would otherwise happen, and won’t require spending cuts to keep the deficit from growing out of control.

The Tax Policy Center took a look at the tax plan that recently passed Ryan’s House of Representatives (a bill backed by all 5 Wisconsin Republicans in the House, by the way), and found that just like Ben Stein told us 30 years ago, this tax plan will not “pay for itself”.

Sure, the Tax Policy Center says that the House bill would boost the economy because of more disposable income being available. But that boost would be limited because the tax cuts are so heavily slanted toward the rich (who spend less of their incomes) and because the economy is already in a good place without any juice needed from tax cuts.
The legislation would increase aggregate demand, and therefore output, in two main ways. First, it would reduce average tax rates for most households over the first few years after enactment, increasing after-tax incomes. Households would spend some of that additional income, increasing demand for goods and services. These economic benefits would be modest because most tax reductions would accrue to high-income households, who spend a smaller share of any increases in after-tax income than lower-income households. Second, by allowing businesses to elect to immediately deduct (expense) new investment over the next five years, the legislation would encourage firms to increase their near-term investment, further increasing demand. The boost in demand would raise output relative to its potential level for several years until higher interest rates and prices cause output to return to its long-run potential level. Because the economy is near full employment, the impact of increased demand on output would be smaller and diminish more quickly than it would if the economy were currently in recession.
Another point by the TPC is that any help that comes to corporations due to this package would come into capital over actually paying workers, and that investment would likely go down in later years.
Largely because the plan would reduce the corporate income tax rate and temporarily allow businesses to expense investment, the legislation would increase the after-tax returns to saving and investment significantly. That would encourage saving, foreign capital inflows, and investment.

Although the legislation would increase incentives to save and invest, it would also substantially increase budget deficits unless offset by spending cuts. Higher deficits would push up interest rates, which would tend to discourage investment. Thus, while the plan would initially increase investment, we estimate that rising interest rates would eventually negate the incentive effects of lower tax rates on capital income and decrease investment below baseline levels in later years.
As a result, the TPC says that while GDP might be boosted by 0.6% in 2018 with this tax cut package, that increase fades quickly, and while overall we’d stay ahead over the next 10 years vs doing nothing, we’d actually be looking at lower growth starting in 2019.

And the TPC notes that this tepid stimulus would come nowhere near making up for the losses in revenue that would result. This means the federal budget deficit would increase by a total of $1.266 trillion by the end of 2027, even if we account for the added economic growth that would result from the tax cuts.

The Tax Policy Center's analysis doesn’t even account for a few items that likely will make this tax cut even worse for the typical American. The first is that because the rich and corporate are so preferred with this tax cut, that it would encourage even more profit hoarding and wage suppression than we see today, increasing the crippling inequality and stagnant incomes that have led a large amount of Americans to feel very little of the prosperity this country has allegedly had over the last 40 years in this country.

The next problem is that the tax package will likely depress home prices due to the larger standard deduction making it less likely that people will see tax benefits from owning a house (as mentioned in this post). Just go back to 2006-2008 and find out what happens when a bubbly housing market and stock market declines. That boost of 0.6% in GDP doesn’t mean much if the economy is in recession.

And the last item to be worried about is the second part of the “tax package two-step” that makes it especially harmful on poorer and working-class Americans. The higher deficits are likely to lead to calls to reduce spending to get the balance sheet in line, and Ryan and other GOPs in Congress are champing at the bit to use that as an excuse to cut benefits for Social Security and health care- programs that have kept tens of millions of older and lower-income Americans out of poverty for the last several decades.

Not only that, but cutting benefits and other governmental spending to “get the deficit in line” would reduce economic output, and counteract any (already-fading) added growth that the tax cuts might give in a few years. It also could lead to fiscal problems at the state and local level, since some of the cuts could be in the form of aids sent down to other levels of government.

But with Republicans, the economic calamity that might follow would be a feature and not a bug. It would allow for injury of vulnerable people that they otherwise couldn’t do in isolation, and would tie the hands of Democrats that will be forced to clean up from the mess the elephants cause.

God, I hate these vandals. This tax scam and the GOPs backing this voodoo need to go down in flames, along with the oligarch slime that are the only ones that seem to be in favor of this failed regressive garbage.

Walker and rest of GOP doesn't want fair elections - harder to win that way

You may have noticed that the Wisconsin Elections Commission has been sending messages to Governor Walker’s administration and other Wisconsinites that they need more assistance in securing the state’s elections system after Russian interests tried to hack them last year.

That effort continued yesterday as the bipartisan Commission unanimously agreed to request additional staff to improve security before the voters to go to the polls to choose a new Supreme Court justice in the Spring, and vote for Senator and Governor in the Fall.
The commission approved a request for three additional workers at its Monday meeting in Madison. The agency is writing a new elections security plan to put in place for the 2018 elections.

Elections Commission Administrator Michael Haas said if they don't get the employees, they'll only be able to implement parts of the plan.

"We thought three was the minimum we needed to be confident in ourselves that we are putting in place all the best practices that are out there," Haas said….

Gov. Scott Walker cut five new positions for the commission in the 2017-2019 state budget with his veto pen (and the Wisconsin GOP-run Legislature refused to vote to override this veto). He said the commission could function with temporary or contract employees to fill any gaps, but Haas said that can be problematic.

Haas said a 28 percent reduction in staff since 2015 has weakened the ability of elections workers to address voter safety and eroded fulfilling all other state and federal law requirements.
By itself, you may think that this is simply Scott Walker being incompetent and caring too much about having money available for political talking points and WEDC favors over making sure our state’s elections are secure. But then take a look at this interview from Mother Jones over the weekend, and the reasons become a lot darker.
Republican efforts to make it harder to vote—through measures such as voter ID laws, shortened early voting periods, and new obstacles to registration—likewise “contributed to the outcome,” [Hillary] Clinton said. These moves received far less attention than Russian interference but arguably had a more demonstrable impact on the election result. According to an MIT study, more than 1 million people did not vote in 2016 because they encountered problems registering or at the polls. Clinton lost the election by a total of 78,000 votes in Michigan, Pennsylvania, and Wisconsin.

“In a couple of places, most notably Wisconsin, I think it had a dramatic impact on the outcome,” Clinton said of voter suppression.

Wisconsin’s new voter ID law required a Wisconsin driver’s license or one of several other types of ID to cast a ballot. It blocked or deterred up to 23,000 people from voting in reliably Democratic Milwaukee and Madison, and potentially 45,000 people statewide, according to a University of Wisconsin study. Clinton lost the state by fewer than 23,000 votes. African Americans, who overwhelmingly supported Clinton, were more than three times as likely as whites not to vote because of the law.

“It seems likely that it cost me the election [in Wisconsin] because of the tens of thousands of people who were turned away and the margin being so small,” Clinton said.
And guess who actively backed and then signed those voter suppression laws in Wisconsin? SCOTT WALKER. As I’ve posited before, there is no question that smaller turnouts in key Dem cities were a big reason behind Trump’s surprising win here, and regardless of whether that’s a direct effect of Walker/WisGOP voter suppression or indifference toward Clinton, the GOP were certainly happy with the results.

That graph gives the game away to me when it comes to why Walker won't add the tiny investment to help guarantee fair elections. Walker doesn’t want Wisconsin’s elections to function properly in 2018, because that chaos and rigging helps him and other Republicans win. This is a guy who is the personification of a Republican Party that doesn’t believe in any concept of “public good”, and believe the best use of government is as a means to grab more money and more power.

Frankly, Democrats haven’t done nearly enough to call this Banana Republicanism out and directly go after it. The Obama Administration and Clinton campaign didn’t actively fight Walker-style voter suppression in ALEC states like Wisconsin, Michigan, and Pennsylvania before the 2016 election, likely out of arrogance that Clinton would win and therefore there wasn’t a need to “rock the boat”. How did that work out for us?

Brian Beutler points this out today in an article titled “Grappling With a Legitimacy Crisis”. Beutler argues that ignoring that Donald Trump was AT THE VERY LEAST elected with the help of foreign propagandists and suppressed votes in key states, and that it likely affected Senate and state races as well (hi, Ron Johnson!), is to ignore that American democracy is in big trouble.
But comparably few prominent public figures are willing to suggest Russian interference changed the outcome of the election. Some are reluctant because they don’t want to look like sore losers. Others are reluctant because it implicates their own conduct. Yet more will refuse because nothing less than the legitimacy of the president is at stake.

This explains the credulous and dissonant spectacle of platform monopoly executives, who boast endlessly of the revolutionary power of their products, but now downplay the political impact of the foreign propaganda content that thrived on their networks last year.

It explains why CIA Director Mike Pompeo contradicted the intelligence community (which understand how counterfactuals work) to declare that Russian meddling didn’t sway the U.S. election result, and why the chairman of the Senate Intelligence Committee began a hearing on Russian social media agitprop with special pleading on Trump’s behalf.

If the U.S. citizenry were immune to foreign propaganda, there’d be no need to conduct any oversight. The implication of the hearing, and of the multiple Russia investigations, is that foreign propaganda can sway voting decisions. But once you acknowledge that, you have to contend with the possibility that foreign propaganda might be capable of swaying enough decisions to tip a close election—and elections don’t generally come closer than the election Trump won. Running away from that inescapable logic sends a clear signal to future saboteurs that American institutions are too paralyzed and self-interested to protect their own elections, which will thus be vulnerable to future meddling and a massive crisis of faith.
Then again, a lack of faith in government and an acceptance of corrupt Banana Republicanism is exactly what slime like Donald Trump and Scott Walker want, so that situation becomes a win for them.

To go along with Beutler’s point, I am having a hard time figuring out an appropriate response to the fact that that we may be in a state and a country with an illegitimate government, elected in no small part through propaganda and election-rigging. And if that illegitimacy cannot be rectified by the constitutional channels of government oversight, voting and impeachment, then the next option becomes a lot worse – and a lot more destructive to many of us.

Let’s not have it come to that, and start to get this cleaned over the next 12 months, shall we?

Monday, November 20, 2017

Pre-election spending increases don't make up for failure of Walker's austerity

The National Association of State Budget Officers (NASBO) released their annual State Expenditure Report last week. If you dig inside the numbers, you can see how Scott Walker’s attempt to use his 2015-17 budget as a prelude to a presidenctial so badly shortchanged the state, and how the lack of investment slammed job growth to a near-halt.

The NASBO report says that Wisconsin was only 1 of 8 states that spent less money in Fiscal Year 2016 than Fiscal Year 2015. Wisconsin wasn’t hit with the oil bust like many of these other states were, which means we fell into the other common category behind spending cuts in that year - bad leadership.

States with less spending in FY 2016
Alaska -25.3% (oil bust)
Ill. -16.3% (delayed payments due to bad leadership)
N. Dakota -5.9% (oil bust)
N.J -0.9% (Chris Christie credit downgrades)
Wis. -0.8% (bad leadership)
Mississippi -0.3% (it’s Mississippi)
Oregon -0.2% (“other state funds” had a one-year decline)
Louisiana (-0.1%, Bobby Jindal’s bad leadership AND oil bust)

It’s even worse when you focus in on the actual spending on K-12 education for 2015-16. Wisconsin was number 2 in the nation for cuts in spending and 1 of only 6 states to cut in this category.

States with less K-12 spending 2015-16
Cal. -3.3%
Wis. -2.7%
Okla. -2.6%
Kansas -2.3%
W. Va. -2.0%
Va. -0.8%
Alaska -0.5%

The California part is interesting, although I am not sure where that comes from. I do know this, when you’re cutting K-12 education more than Oklahoma, Kansas, and West Virginia, that is a BAD sign.

Also noteworthy is that Wisconsin didn’t come back with much more spending for Fiscal Year 2017, with only oil states, Colorado and West Virginia being lower on the list for the 2015-17 biennium. And no Midweste111rn state had a smaller increase in Wisconsin, including Illinois (which paid back some of their past-due bills in FY 2017)

Total spending change in FY 2017 vs FY 2015
Alaska -24.9%
N. Dakota -8.8%
Wyo. -1.5%
Col. -1.4%
W. Va. +0.4%
Wis. +2.0%
Conn. +2.1%
Ver. +2.3%

Any coincidence that Wisconsin’s job growth noticeably declined compared to the headier days of 2013-2015?

Even more remarkable is that most of Wisconsin’s spending increase in 2015-17 is concentrated in one area – Medicaid. NASBO says that of Wisconsin’s $909 million increase in total spending over those two years, $631 million of it was concentrated in Medicaid, which means spending for everything else in the state went up by less than 0.75% for those two years. That’s way below the rate of inflation for that time period, and it’s no coincidence that the state’s pothole problems and new wheel taxes and local sales taxes multiplied in those years.

Those spending reductions and the bad results that followed is what made the actions of the 2017-19 budget all the more notable. The Wisconsin Taxpayers Alliance noted this reversal of previous austerity policies by noting that the current budget increased General Fund spending by the largest amount since Scott Walker and the Wisconsin GOP came to power in 2011.
Planned spending in the recently enacted 2017-19 state budget departs from recent pat­terns in two important ways. First, general fund expenditures rise 8.8% over the two years, the largest biennial increase since 2009-11 (12.1%). Second, much of the increase is for school aid, which has grown less in recent years. K-12 aid will grow 8.3% over two years, the largest biennial jump since 2005-07 (9.0%)….

The state’s largest expenditure is for K-12 school aid, which grows significantly over the next two years. School aids are rising 3.4% ($187.4 million) this year and 4.7% ($264.3 million) in 2019 to $5.9 billion. School aids rose 5.6% and 3.9%, respectively, during the prior two biennia. Nearly all of the additional dollars are directed into a relatively new “per pupil” aid, rather than into the much larger equalization aid formula; this is a major shift in school funding.

Two other areas claim the bulk of remaining new spending. The budget uses income and sales taxes to reduce property taxes. It eliminates the state levy for forestry programs ($90 million annually) and the personal property tax on machinery, tools, and parts ($74 million); increases the school levy credit by $87 million per year, and raises the lottery credit by shifting $48 million of general fund taxes to pay lottery expenses.
But at the same time, some areas still were subjected to cutbacks in the latest budget, particularly when it came to state highway and high-cost bridge spending, which was cut by a total of $245 million for 2017-19. Yes, some of that was made up by increased local aids to streets (and you can argue that this is a better allocation of resources), but the needs on the state’s main highways will be worse in 2019, and require more costs, taxes and borrowing.

But again, those cutbacks in highway spending (done in a desperate attempt to stay on the good side of RW oligarchs by not raising taxes) make the Scott Walker/WisGOP Christmas Tree budget of 2017-19 all the more striking. It’s basically an admission the austerity gimmicks of that budget did not work either economically or politically.

So no Scotty, you don’t get to turn around and take credit for “extra investments” when your previously failed strategy set the state back. Instead, you must be held accountable for the screw-ups that you caused by deciding to value donors and right-wing oligarchs over the people of Wisconsin that PAY YOUR SALARY.

Sunday, November 19, 2017

11-0! Fun times in the Mad City

That was a lot of fun to watch yesterday. Yeah, it made for a long Saturday due to the 11am kick, but that's a mere trifle when Bucky comes through like that. And by the time UW had taken a 21-10 lead after 3, the Camp was rocking.

It's been an enjoyable ride, and the last 2 games in particular have been very gratifying (it's fun to watch a team physcially dominate like UW does). And THEY'RE NOT DONE YET.

The Budget Guy on GOP tax deform - "The End of All Economic Sanity"

As the debate over taxes continues in DC, one of the must-follow writers on the topic is Stan Collender of Forbes - aka TheBudgetGuy on Twitter. And what he wrote this weekend is especially relevant to figuring out where things stand on the tax issue.

While his approach is more fiscally conservative than I prefer, Collender is a must-read when it comes to understanding the Federal Budget and the many different proposals being floated around under the guise of "tax reform." Collender has constantly criticized the Trump/Ryan efforts to give a large tax cut to the rich and to corporations, and his most recent column proclaims "GOP Tax Bill Is The End Of All Economic Sanity In Washington."
There's no economic justification whatsoever for a tax cut at this time. U.S. GDP is growing, unemployment is close to 4 percent (below what is commonly considered "full employment"), corporate profits are at record levels and stock markets are soaring. It makes no sense to add any federal government-induced stimulus to all this private sector-caused economic activity, let alone a tax cut as big as this one.

This is actually the ideal time for Washington to be doing the opposite. But by damning the economic torpedoes and moving full-speed ahead, House and Senate Republicans and the Trump White House are setting up the U.S. for the modern-day analog of the inflation-producing guns-and-butter economic policy of the Vietnam era. The GOP tax bill will increase the federal deficit by $2 trillion or more over the next decade (the official estimates of $1.5 trillion hide the real amount with a witches brew of gimmicks and outright lies) that, unless all the rules have changed, is virtually certain to result in inflation and much higher interest rates than would otherwise occur.
Not sure I buy Collender's inflation argument too much, because unlike 50 years ago, the average worker isn't getting pay raises that match the increases in the deficit or other assets.

But I agree that it is absurd to have a major tax cut package for the rich in a time of full employment and a Bubbly stock market. I'd go further than Collender, and say a deficit-increasing tax cut would make the situation in the 2010s and 2020s worse than what we saw in the 1960s and '70s, because the only thing it'll inflate are assets like housing and gasoline. Those needs become less affordable for the average person until the asset bubbles inevitably pop - which is exactly what we saw with the 2006-2008 US economy and the resulting Great Recession that some parts of this country still haven't recovered from.

Collender adds that passing this deficit-busting tax package would lead to a structural deficit of $1 trillion, which goes along with the projections the Congressional Budget Office gave to the House GOP's bill earlier this month.

And Collender points out that those numbers grow higher into massive fiscal problems once that Bubble does pop and the economy falls into recession.
The tax hikes that will be needed to resolve the structural imbalance between federal spending and revenues will be impossible for political reasons.

Whenever the U.S. economy grows more slowly than expected or there's a downturn, an annual deficit of $2 trillion could easily become the norm.

The federal government will have far less ability to respond to economic downturns unless previously unimaginable and politically intolerable deficits, tax increases or spending cuts suddenly become acceptable.
And guess where spending cuts would have to come from? Medicare, health care, and Social Security, which is just what Paul Ryan is counting on.

As if you needed more reasons to punch this face.

And on top of that, let's not forget that the Joint Committee on Taxation said this week that the Senate bill would raise taxes on low-income workers 3 years after the tax bill takes effect. And then EVERYONE would see their taxes go up in 2027, as part of a budget trick designed to allow the tax scam to pass with 50 votes in the Senate.

There is no honest justification for the type of "tax reform" that the GOP is trying to shove through Congress (and all 5 House GOPs from Wisconsin voted for this crap last week)). But of course, this has nothing to do with good tax policy.

And yet these guys being paid with OUR tax dollars to only do the bidding of those oligarchs at the literal expense of the rest of us? They gotta go.

Saturday, November 18, 2017

UW merger may be on, but it's still not being done right

Now that the merger of the UW System's 2-year campuses with several of its 4-year campuses has been approved by the UW Board of Regents, the hard work of implementing the change will happen over the coming months and years. Faculty and staff were largely locked out of that merger decision, and that is something that former Regent and Assembly Speaker Tom Loftus contrasted with what was done 30 years ago.

In an open letter to UW System President Ray Cross, Loftus describes a listening tour that he and then-Gov Tommy Thompson took to discuss the best way to sort out some of the issues that remained from the prior merger of UW-Madison with the Wisconsin State System. Loftus says those listening sessions (which actually involved listening to and dealing with the public, unlike the hand-picked charade of friendly audiences that our current Governor does) led to new ideas and better solutions.
The result was that we came back to the Assembly and put forward a series of proposals that represented a distillation of what we had learned. And, we learned a lot. The proposals we put forward were quite different than what we thought we would do before our listening marathon.

To paraphrase Shakespeare, “there was more in heaven and earth than thought of in our philosophy.”

We sold the package to the Republicans and the Democrats; and the Governor; and Madison and the four year campuses; and, the faculty and students. What passed was a consensus that still governs much of how the System operates today…

I ask you to take back the role of speaking to the public, after you listen to your constituents.

As an early and public advocate of yours it pained me to see the actions that lead to a faculty vote of no-confidence in your leadership. Use the listening tour to show that they were heard and you came to town to listen.
If you read between the lines of Loftus letter, you can tell that he’s dismayed at the top-down and secretive manner in which Cross and the Walker-stacked Board of Regents are trying to pull off this merger. And that such a method of decision-making will doom the merger to not working out as well as it should.

But that's the suboptimal way Cross and the rest of the pro-Walker crew at the Board of Regents do things. Let me direct you to an excellent column from former UW professors William Holahan and Charles Kroncke that starts off with good news. UW-Milwaukee just recently joined UW-Madison as an “R-1” top-tier research institution, and that UWM produces a sizable amount of Wisconsin’s highly-educated work force, as 80% of its graduates stay in Wisconsin. Holahan and Kroncke also note that Milwaukee’s business community frequently relies on UWM innovation and research to improve their products and service delivery.

But despite UW-Milwaukee gaining prestige and value for the state, 7 years of budget cuts and anti-intellectual mentality from Governor Dropout and his lackeys in the Legislature and the Board of Regents is taking its toll. The professors note that talented academics are leaving UWM and going to places where their talents will be better appreciated.
Since 2010, the number of tenured and tenure-track professors in the physics department is down 24% (from 26 to 19). The story is the same in biological science—from 38 down to 26. The economics department has lost 26 % of its faculty; educational psychology 48%; history 27%. One measure of the quality lost is to look at where they have all gone: UCLA, Minnesota, Tufts, Texas A&M, North Carolina, Ohio State and Duke. Not a single program has been immune. All university stakeholders—students, parents, donors, business collaborators, alumni—should be alarmed.
Holahan and Kroncke also point to the arrogant mentality in how Walker and his hand-picked Regents administer the state’s 4-year schools, and how these right-wing “business-oriented” people have no clue about the product that comes out of academia, or how that product is made.
In most instances, the regents are successful members of the Wisconsin business and legal communities. They are far more likely to be attuned to the nuances of business organizations than to those of academic institutions. Authority in most business organizations tends to be top-down, with those at the top taking risks with their own time and money, thereby earning the right to direct employees.

Accordingly, the regents have a hard time understanding why faculty cannot be managed by university administrators. They envision faculty as “employees” and “subordinates” to administrators—even though most of those “bosses” have no understanding of what those faculty do in their research or in the classroom. The reason is that, in universities, professors normally know far more about their work than administrators. Consequently, the true job of a university administrator is to facilitate the work of the faculty, not try to lead it.

Moreover, evaluation of faculty research work relies on “peer review”—the rigorous process conducted by scholars throughout the world qualified to judge the research output of university professors. The top-down authoritarian business model being implemented at the UW system will disrupt this natural relationship between faculty, administration and the international community of scholars.

Disruption can be great for society, especially when new products or processes are introduced into the marketplace to supplant less efficient ones, but this new alternative “business” model will not advance teaching or research at the university, rather it will retard growth and stifle creativity and innovation—the very life blood of our economy and economic wellbeing [-the] essence of the contribution that the university makes to society.

And then we wonder why this state continues to stagnate and have talent flee under the ALEC crew? These mediocre corporate front men and women either do not know or do not care that they are strangling the success of the UW System, and damaging the state’s economic competitiveness as a result.

Just a thought, but when it comes to higher education we should listen less to Wisconsin’s failing, regressive business community and more to the faculty and students that are still succeeding at the UW despite the ALEC crew’s attempts to mess it up. But that’ll only come with new leadership at the top, starting in the Governor’s office, and trickling down to the Board of Regents and the Legislature.

Friday, November 17, 2017

October jobs look good in Wisconsin, but previous "gains" haven't held

Yesterday had the release of another Wisconsin jobs report, this time for October 2017. And no matter how you look at it, this one went pretty well.
Place of work data: Based on preliminary data, Wisconsin gained a significant 10,500 total non-farm, 9,500 private sector jobs and 3,400 manufacturing jobs from September to October 2017. The state also added a significant 42,400 total non-farm jobs and 39,400 private-sector jobs from October 2016 to October 2017, with a significant year-over-year gain of 13,000 manufacturing jobs. The number of total non-farm and private-sector jobs in Wisconsin reached all-time highs, according to the preliminary numbers.
It’s a nice bounce back from some bad months in the Spring and Summer, and September’s jobs were also revised up by 3,600 total and 1,200 in the private sector.

As for the state’s unemployment rate, that had good news as well, down by 0.1% to 3.4% (OK, 3.41% vs 3.46%) after a few months of rises. And unlike the national decline in unemployment, it wasn’t due to people leaving the workforce, as household employment was up 2,300 (with revisions) while the labor force only went up by 900.

Among sectors, leading the way was 4,300 seasonally-adjusted jobs in “Business and Professional Services”, and as Walker’s DWD mentioned above, 3,400 were added in manufacturing. However, I’d be skeptical of that gain in manufacturing jobs holding, and not just because these one-month figures are quite volatile.

The real reason is because the October jobs report also included the pre-release of the figures for the “gold standard” Quarterly Census on Employment and Wages for the 2nd Quarter of 2017. And if you look at those numbers, you see that manufacturing jobs are not quite undergoing the boom that Walker’s DWD is claiming to happen.

Manufacturing jobs, June 2016-June 2017
Reported by DWD +8,300
Reported in QCEW +3,771

And it’s not the first time that manufacturing jobs have been overstated in Wisconsin. As UW-Madison’s Menzie Chinn notes in Econbrowser, this also happened in each of the previous 2 years.

But still, 3,771 jobs gained in manufacturing is better than LOSING nearly 4,000, like we did in 2016. What’s less good is that total wages in the QCEW for Q2 2017 in manufacturing were only up 3.1% overall from the same quarter a year ago, which comes to less than 2.3% per person – not much above the rate of inflation for that time period.

Also interesting in the pre-release for the QCEW is that it took a significant a pickup in hiring in June to save the state from being below 1% job growth for that 12-month period.

Private jobs added, June 2017 vs June 2016 QCEW
June 2016 +34,002
June 2017 +41,849

Much of that June pickup came from manufacturing (+9,450 in 2017 vs +7,550 in 2016) and Leisure and Hospitality (+16,300 in 2017 vs +11,900 in 2016). Now maybe that hiring up was a sign of good things to come, and that the good October figures reflect new strength in Wisconsin's job market. But it could also just be a seasonal blip that we see go back down as the snow starts flying.

For now, let’s allow the Walker people to shoot their mouths off about what is a very good October report. The lack of wage growth that still appears in the QCEW illustrates the underlying problem with Wisconsin's economy un the Age of Fitzwalkerstan, even more than our still-substandard job growth. And with prevailing wage being repealed on construction projects along with a discouraging of start-ups from a Wisconsin GOP that prefers to pay back their campaign contributors, I wouldn’t count on wages getting better any time soon.

GOP tax "reform" likely to mess up economy, even if you pay less

With both houses of Congress trying to jam through competing tax proposals this week, it seems to be a good time to take a step back and see what these proposed changes might mean, and what other effects might crop up as a result. And to help with this question, I found a nifty tool in a CBS Marketwatch article- the Trump tax calculator.

I plugged in the situation for my family, and it looks like we would pay $350 less in taxes under the Senate bill than the House one, because of the way the mix in tax brackets works (we end up in the 22% marginal tax bracket for the Senate bill, but 25% under the House one). But more notably, this calculator says that under either plan it is better for us not to itemize, and take the newly doubled standard deduction instead. Going with the standard deduction would save us over $3,100 under the Senate bill, and around $930 under the House bill.

In other words, all of the state income taxes, property taxes and mortgage interest that we would pay next year would GIVE US NOTHING when it comes to a tax write-off. Neither would our charitable donations. If switching to the standard deduction becomes incentivized for many other Americans under this tax “reform”, significant ripple effects that would follow.

1. It makes owning a house a less worthwhile investment, because there are no tax advantages from it. This would obviously lower demand for buying a home vs renting, and would likely depress housing prices. Interestingly, Madison Mayor Paul Soglin went off on the GOP’s tax reform package two months ago, and said it would depress home prices. Soglin's complaint at the time was that State and Local Taxes (SALT) and mortgage interest deductions would go away, but even if SALT and mortgage interest were to stay in these bills (they mostly do in the House bill, while the Senate gets rid of SALT), my wife and I would STILL not take advantage of them because of the larger standard deduction, and I'm sure many others would be in the same spot.

2. Charities would hate it if individuals could not write off their donations, and you’d likely see a loss of services and employment in the non-profit sector as a result, since there would be less funds going in.

Then again, the ALEC/Koch model wants to have everybody beholden to a handful of connected, for-profit companies to get the services they need, so maybe that’s the intelligence of the GOP’s design.

These guys don't have to worry if they benefit from the GOP's plans

3. It also makes incentivizes states to shift more of their tax burden onto sales taxes (which have no write-offs in Wisconsin today), and away from income or property taxes. The Wisconsin GOP has already hinted that they would go in this direction if Congress were to get rid of SALT or make it less likely to be used by Wisconsin taxpayers. So if this garbage bill passes Congress and this state is stupid enough to return the GOP to power, get ready for 7-8% sales taxes.

We already know that the lower and middle classes pay more in Wisconsin taxes under the present system, but raising sales taxes and lowering property/income taxes would put even more of a burden onto those who are already paying a higher percentage of their income in state and local taxes.

In addition, as it stands right now the GOP tax plan gets rid of “above the line” deductions for items such as student loan interest, tuition for higher education, expenses that teachers pay for supplies, and contributions to an Health Savings Account or self-employed health-insurance plan (lines 23-35 on form 1040, if you want to give it a look).

Why does that matter for state taxes? Because it raises the person’s adjusted gross income, which means there IS MORE INCOME FOR THE STATE TO TAX. In other words, it would be an automatic TAX HIKE at the state level, a fact that Scott Walker failed to mention in the column he "wrote" this week approving of the GOP’s tax-cutting plan.

Now I’ll have to go look at our taxes from last year to see how it measures up, and whether we would pay more or less next year under these tax plans. But I do have little doubt we would pay more when the individual tax rates go back up in 8 years, as they would under the Senate bill (a budget trick designed to allow it to be passed with 50 votes in the Senate).

And I’m only talking about the tax side of the equation in this post. Obviously, the GOP’s plans to deform Obamacare and use spiraling deficits as an excuse to cut Medicare and Social Security are extra levels of toxic waste on top of these Piece of Shit tax “reform” bills.

Let’s not have that happen. Let’s put that Piece of Shit away, and deal with the real problems in our economy- stagnant wages and crippling inequality. Both items will be made even worse by the trickle-down absurdity that permeates this tax “deform” effort, and the inevitable bursting of both the stock and housing bubbles that would come soon after this bill would be signed would set this country’s economy even further back.

For many, we’ve already slid far enough over the last 40 years of this supply-side nonsense. Any more could be deadly.

Wednesday, November 15, 2017

Real wages still slipping, you tired of all the winning yet?

With the middle of the month hitting us, it was time to release the US Consumer Price Index Report. That CPI report showed that we had relatively tame inflation last month after a notable increase in September.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in October on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.0 percent.
Also noteworthy is that the real wages report came out at the same time as the inflation report, as it usually does, since CPI gives the second part of information that is required to complete that statistic (the first comes from average hourly wage info in the monthly jobs report).

And even with very little inflation, the 1-cent-an-hour drop in average hourly wages in the October jobs report meant that American workers fell behind last month.
Real average hourly earnings for all employees decreased 0.1 percent from September to October,seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from no change in average hourly earnings combined with a 0.1-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U). Real average weekly earnings decreased 0.1 percent over the month due to the decrease in real average hourly earnings combined with no change in the average workweek.
Widening it out for the last year, the real wages report shows that nothing’s really changed on the wage front, except that inflation is a little higher now than it was a year ago, so the minor wage increase workers may be seeing isn’t going as far.

12 month change
Oct 2016
Avg hourly earnings +2.7%
Real avg hourly earnings +1.1%

Oct 2017
Avg hourly earnings +2.4%
Real avg hourly earnings +0.4%

And the recent trend isn’t going the right way either, as real average hourly wages have declined for each of the last 3 months.

Real avg hourly wages, Aug-Oct 2017
Aug 2017 -0.3%
Sept 2017 -0.1%
Oct 2017 -0.1%

That’s the first time we’ve been going the wrong way in this stat since the end of 2016 and January 2017, when real wage growth was at 0% or less for 5 out of 6 months. That stagnation is apparently what led blue-collar whites to say they wanted to see change under Donald Trump (if you believe what they tell reporters in those many “rural white guy in the Midwest” stories). So how do you think they feel with wages declining again in late 2017?

An even bigger concern for me is that the October 2017 CPI report had gasoline declining by -2.4% after a post-hurricane spike in September, and real wages still went down. We know that gas prices have gone back up in the next month, so that would seem to indicate CPI should be higher again for November, and that means wages have to go up higher next month, or else we have a 4th straight month of declining wages.

And tell me what is going to change under GOP control in either DC or Madison that would turn these real wages back up? Absolutely nothing, and in fact these guys want to keep workers desperate enough that wages do NOT go up for their corporate contributors. Our economy will not hit the next level until people actually see a benefit from their work to allow them to consume more without going into debt, and the recent decline in real wages is an ominous sign.

How can GOP make tax bill even worse? Just add ACA deform!

Well, it's been a wild last 36 hours or so for the Trump/Ryan tax bill in Congress. There were odd developments involving the tax part of the bill, and whether they can even legally pass the bill as it stands today. And so to pass the bill, GOP budgeteers decided to resurrect another failed idea - messing up Obamacare.

The real reason the Republicans are putting all of these bad ideas together in one gigantic Piece of Shit Bill seems to derive from one central problem - THE NUMBERS DON’T ADD UP OTHERWISE. Note that a lot of these “combine ACA deform with tax deform” ideas came out yesterday, which was one day after the Congressional Budget Office sent a letter to the Number 3 Dem in the House that said the GOP tax plan would result in significant budget cuts.
In a letter to House minority whip Steny Hoyer (D-MD), the CBO explained that without any more money to offset the fall in revenue, the Office of Management and Budget (OMB) would be required to issue a “sequestration order” to reduce spending in 2018 by $136 billion.

The effects of this sequestration order would trigger automatic cuts to various programs, including Medicare. According to the CBO, this could be as much as 4% for Medicare, which amounts to $25 billion in 2018. Furthermore, all non-exempt programs would be eliminated, which include some farming subsidies, border security, and student loan help. Others, like Social Security, would remain untouched.
In fact, the letter says that there is only $85-$90 billion that is in the part of the budget that could be sequestered, and $111 billion outside of Medicare would have to be cut. The $25 billion in Medicare cuts is likely radioactive to begin with, but that letter also more laws and appropriations would have to be changed in order to make the tax cuts pass legal muster.

Well that, or the Trump Administration could try to ignore the laws of either America or economics. Good luck with that one, guys.

So if the tax bill is able to stay within the $1.5 trillion budget outline and then stabilize after 10 years, then those automatic spending cuts for Medicare and other areas won’t apply. So where does the GOP look for “savings”? No silly, not the military (the House just added $97 billion to Trump’s already-high budget request for this year). Instead, the GOP is choosing hurt low-income people who don’t donate to their campaigns by giving another try at TAKING THEIR HEALTH CARE.
Repealing the individual mandate has been up for consideration for weeks, but the discussion had been happening mostly behind the scenes as Republicans debated using an estimated $338 billion in savings to cover the cost of and finance additional tax cuts over the next decade.
And where would those savings come from? Because fewer people would be insured through Obamacare, while those who would still have insurance would pay more. What a deal!
Roughly 4 million fewer people would be covered in the first year the repeal would take effect, the Congressional Budget Office said last week, rising to 13 million by 2027, as compared to current law.

Premiums would also rise by about 10% in most years of the decade, CBO said.
And speaking of health care, have I mentioned that the CHIP health program that gives coverage to 9 million American children has been out of commission for a month and a half? If that program and its spending is not restored in some fashion, then those sizable costs will be shifted to the states, or children won’t receive medical services because the states will use a lack of funds as the excuse to cut those programs.

So tell me how our economy will improve if you’re pulling health care for millions of Americans and forcing a higher proportion of those individuals’ limited amounts of disposable income into health care as opposed to other areas? Then at the same time, Republicans want to add even more tax cuts for the rich and corporate, who will have even more incentive to underpay workers in order to maximize profits.

And add in the fact that this bill would be inflicted on an economy that has 70% of it based on everyday consumer spending, and combine it with a country that has huge amounts of Boomers retiring every day, and I see no way that leads to any sort of sustainable growth in the coming years. This means our 8-year expansion would likely end in the near future with another burst Bubble and bad recession.

If you ever were foolish enough to think that Republicans actually gave a fuck about anyone but their oligarch donors, the fact that they’d even consider going ahead with this destructive tax/health care Piece of Shit Bill that NO ONE ELSE WANTS should put that to rest.

Oh wait! It looks like some Republicans are getting a fit of conscience and want this Piece of Shit improved. Including.... Ron Johnson????

Ahh, that makes more sense. (mo)Ron doesn't like this bill not because it's a Piece of Shit, but because his father-in-law's company won't get as much of a handout as corporations will. Meh, any port in a storm, I guess.

Tuesday, November 14, 2017

Even WEDC knows the Fox-con won't make its money back

Hidden in the news in light of the recent signing of Wisconsin’s contract with Foxconn to build a mega-campus in Racine County is the fact that even the Wisconsin Economic Development Corporation (WEDC) is having concerns with the deal. That was revealed as part of a release of WEDC’s staff review of the deal.

Wispolitics posted the report on its website, and summarized some of WEDC’s concerns with the deal, which ultimately was agreed to by the WEDC Board and signed by Governor Walker on Friday.
The state jobs agency pointed to the state’s break-even point under the Foxconn deal as one of the agreement’s “weaknesses,” according to the staff review board members approved last week.

Estimates from the Legislative Fiscal Bureau, as well as separate analyses from Ernst and Young, Baker Tilly and the Wisconsin Economic Development Corp. found it would take some 20 or 25 years before the boost in tax revenues and the jobs the project would create would exceed the state’s $3 billion investment…

The other weaknesses WEDC identified include: the potential for the project’s start date to be impacted by the timing of property acquisition and negotiations with property owners; Foxconn’s low profit margins compared to industry benchmarks; and a Foxconn subsidiary’s net loss in 2016.
It’s actually worse than Wispolitics is letting on. What immediately jumps out is that WEDC’s own estimates show the Foxconn development will not add as many jobs as those state consultants claimed it would earlier this year.
The WEDC final results were significantly different from the EY and BT economic impact studies in that WEDC used a more concentrated 21-county region in Southern Wisconsin as its geographic area (as opposed to the state of Wisconsin or a 100- or 200-mile radius around the project site). Using a smaller geographic footprint reduces the labor population that can be applied to the indirect and induced employment multiplier, which has a material effect on indirect and induced employment. In addition, WEDC’s analysis only factors in the effect of state income tax revenue (using an effective rate of 4.35%) and does not factor in other state revenue impacts, including sales tax and corporate income.

As a result, WEDC’s analysis shows significantly lower impacts on construction (15,639 jobs (direct and induced), $896 millon in total labor income, and $188 million in total state revenue) and operations (19,931 jobs (direct and induced), $1.2 billion in labor income, and $57 million in annual state revenue).
That impact of less than 20,000 total jobs impacted by Foxconn is a well under the 25,000+ that Baker Tilly estimated and 35,000+ that Ernst and Young had. You don’t think those consultants might have been trying to tell Walker and WEDC what they wanted to hear so the Fox-con could be sold to the public, do you? In addition to fewer jobs once the plant is open, WEDC’s analysis says the construction of the plant will raise barely half the tax revenue that the two consultants claimed, which means Wisconsin will fall into the hole from this deal deeper and faster than we saw in the Legislative Fiscal Bureau’s earlier analysis of the Fox-con.

To be fair, the LFB analysis counted on added sales taxes and the WEDC analysis does not so the gap would be less than $58 million a year between the two (the LFB asumed $115 million a year in total added tax revenue). But on the flip side, the LFB relied on the consultants’ estimates of 13,000 workers at the Foxconn facility by 2021, and the contract outline that was agreed to last week only planned on 9,100 workers to be at the plant at that time. In addition, Foxconn only needs to have 3,640 workers at the plant and in “related jobs” to avoid clawbacks.

Both of these items would delay the payback date that would come with the Foxconn, and the LFB already estimated that the state won’t break even for 25 years under the most optimistic of scenarios. In 25 years, it seems unlikely there’d be much going on at that plant anyway (especially since Foxconn can skip town in 15 without penalty).

It's going to be even worse than this

One other bit of news from WEDC’s analysis is a part that notes that most of the jobs will go to a Foxconn contractors and subsidiaries, with the claim that the average starting wage per hour will be $23.02 an hour in ALL facets. In addition to the sketchiness of using “average salary” as a gauge in general (a few high-priced workers throws that number off) the contractor part indicates another problem. Is the “average hourly wage” that is being spun by WEDC and the Walker Administration what is paid TO THE CONTRACTOR? If so, you’d figure the contractor would take some of that wage off of the top, and then pass along a smaller amount to Wisconsin workers.

In other words, a sizable amount of that “average wage” figure Walker and WisGOP keep spinning may well be going to someone who lives and works outside of the state. Keep an eye on this potential slight-of-hand going forward.

And this doesn’t even count the amount of economic activity in the state that will be funneled away and/or prevented because of so many taxpayer dollars being sent to the Fox-con, nor does it account for the healthy subsidies that are also going out from local governments in Southeastern Wisconsin.

The more you look at this scam, the more obvious it is that Wisconsin taxpayers are being taken for a ride by the Fox-con, with benefits that will never come close to covering the costs that we’re going to shell out.

Monday, November 13, 2017

Pretty pictures, but not good results as Wis economy still lags

I wanted to point you over to a couple of recent bits of Wisconsin economic analysis which evaluates where Wisconsin’s economy is, and where it might be going.

The first is another installment of Bruce Thompson’s Data Wonk segment in Urban Milwaukee, titled "The Wisconsin Jobs Mystery." That "mystery" that Thompson looks into is why the state has a low unemployment rate, but also low job growth, and I wanted to go over this portion of Thompson’s analysis, which seems to indicate that a significant reason Wisconsin’s unemployment rate is at a low 3.5% is because people are moving out of the state.
Other groups [of the unemployed] are new workers, such as recent graduates and those reentering the workforce after stopping work to raise children, get married or care for elderly relatives, who now want to re-enter the workforce. If they move to another state because they perceive it as more favorable, Wisconsin’s unemployment rate will go down and the other state’s will rise.

As the next chart (based on IRS data, comparing 2014 returns to the same people in 2015) shows, Wisconsin is a net exporter of people.

The next chart shows the average adjusted gross income for Wisconsinites who stayed put (in blue), those who moved within Wisconsin (brown), those moving to other states (yellow), and people from other states to Wisconsin (green). The solid lines are their 2014 income; the dotted lines are for 2015.

For younger people, there is not a lot of difference in income between those who move from the state and those who don’t. The differences get much starker with age. Those moving within Wisconsin fare worse, perhaps reflecting
the effect of evictions or other moves forced by finances. The most prosperous middle-agers are those leaving Wisconsin. It would be useful, I think, to better understand the reasons for these moves.

Look at that spike up for both of the yellow lines, which shows mid-career Wisconsinites that leave the state make more money. If Bruce isn’t going to say it, I will- Wisconsin businesses aren’t paying people enough to keep them around, and job growth is suffering as a result.

Another recent analysis of the state of Wisconsin’s economy comes from UW Professor Menzie Chinn in Econbrowser. Prof. Chinn notes that in 2017, the state has fallen short of the “future so bright, I gotta wear shades” rhetoric that Walker was trying to sell earlier in the year.
To begin with, let’s look at the forecasts used in the Governor’s budget, from February (based on IHS MarkIt forecasts), and compare to outcomes realized so far.

First employment:

As noted in this earlier post, employment has been trending sideways for some months. Currently, average employment through September 2017 is nearly 11,000 below the forecast for 2017 (and is still 29,400 below the level promised by Governor Walker for January 2015).

Second real GDP:

So far, GDP has grown 2.1% q/q SAAR in 2017. It would need to grow about 3.2% SAAR for the next 3 quarters to hit the forecasted level.
And Scott Walker's office seems to recognize that he looks ridiculous today in making those "future's so bright" statements, because you can't even find a record of that release on his site anymore.

And how much more are things going to pick up in a maxed-out work force that isn’t being paid enough? Walker and WisGOP have no plan to turn around this state’s unfavorable demographics and low pay - in fact, I’d argue they and their puppetmasters WANT that slow decline for political reasons.

Which means is if we want this state to snap out of the economic doldrums that we have been in for several years, it’s going to take a new crew in charge and a new way of thinking to do so. And even then, it'll take quite an effort to dig us out of the hole we've been put into under this Reign of Error.

Dems should win 2018...if Dem Party insiders get out of the way

Over the weekend, the Wisconsin State Journal’s Mark Sommerhauser observed the Democrats’ strong performance in recent elections around the country, and looked at how it might translate into Wisconsin’s electoral situation for 2018. The article featured a lot of spin from both parties, but even Republicans seemed to acknowledge that due to the anchor of Donald Trump as a president and other reflections of voters’ moods, it’s going to be a tougher lift for them than in recent years to stay in power after next year.

Despite the improving situation for Dems, I read this paragraph in Sommerhauser’s article and found myself rolling my eyes.
Sachin Chheda, a Wisconsin Democratic consultant, said opportunities for Democratic pickups in 2018 can be found in the Milwaukee suburbs — long the state’s Republican stronghold. In races Tuesday and throughout 2017, Democrats made gains in suburban districts in large metro areas.
That sounds nice, Sach, but my thought is that if those people can’t figure out by now that what GOPs are doing is failed BS that’s shortchanging their communities (especially in quality public education which drove them to live in the burbs in the first place), then they’ll never get it. Why would you waste your time trying to convince a highly-educated group of people that already have a higher awareness of events?

And anyway, what happened on the Coasts last week really doesn’t apply all that much to most of Wisconsin. Assembly Speaker/ gerrymandering mastermind Robbin’ Vos notes in Sommerhauser’s article that he and the off-site Michael Best lawyers that drew the districts did so to avoid the vulnerabilities that hit Virginia Republicans.
In the Virginia legislative elections last week, Vos said many of the Democrats that defeated GOP incumbents ran in districts that voted for Democratic presidential nominee Hillary Clinton in 2016.

In Wisconsin, just three state Assembly Republicans hold seats that were carried by Clinton: Reps. Dale Kooyenga of Brookfield, who’s running for state Senate next year, Jim Ott of Mequon and Todd Novak of Dodgeville.

None of the Republican-held state Senate seats that will be on the ballot in 2018 was carried by Clinton.
So sure, disgust with Trumpism and other GOP hate/idiocy may give some damage to the hopes of GOPs in statewide races for Scott Walker and whatever amoral puppet ends up running for US Senate. But it’s not going to go that far if Dems want to take back the Assembly or Senate next year, especially if they copy Clinton’s and the Dem Party’s top-down mentality in 2016.

Seems to me that it would be more worthwhile to show casual voters in every corner of the state just how badly they are being shortchanged by the Fitzwalkerstanis and Wall Streeters that make up much of Trump’s cabinet. Pretty much everywhere in Wisconsin outside of Madison continues to fall behind the rest of the country, and Dems should point this out continually, and remind voters that they are the only party that cares about making this situation better.

This difference between the thinking of DNC/DPW insiders and everyday voters’ desire for real change was illustrated well in this Saturday Night Live skit from the weekend. Note that ALL of the Dems imitated in the skit are from the East or West Coasts, and almost all are 70+. Extra props for the drop-ins by Jason Sudekis (as Joe Biden) and Larry David (as Bernie Sanders).

Perhaps the desire for new faces and new approaches (or what APPEARS to be new faces and approaches) among voters is what the campaign of firefighters’ union president Mahlon Mitchell senses, as he officially jumped into the Dem race for governor today.

I will say this, if Mitchell and any other Dem wants to be successful in 2018, he should ignore connected insiders like Sachin Chheda and Brandon “the Fox-con is something Dems should support” Savage, and instead work on a unifying message that connects to Wisconsinites of all backgrounds, and all communities. Dividing up the electorate by using cynical centrism isn’t something that works in a state like Wisconsin. And anyway, there isn't enough population and legislative seats in the burbs and big cities for Dems to rely solely on those commmunities to gain power.

The statewide Dem theme should be obvious: “Walkerism and Trumpsim isn’t bringing back good jobs and good wages, its corruption leaves everyone out except for a few cronies, and it’s making this an angrier, more divided state/country. That isn’t what Wisconsinites believe in, and it’s time we restore decency, intelligence and competence to OUR government.”

Look at who is being left behind. Meet with them.

C’mon DNC/DPW, just listen to people for 5 minutes and this is obvious. All you have to do is operate from the simple understanding that ALL VOTERS DECIDE ELECTIONS, and not party hacks, and 2018 is yours for the taking.

Sunday, November 12, 2017

Lincoln Hills- even worse than you thought. And definitely a Walker failure

Just because Scott Walker refuses to visit the problem-riddled correctional facilities in Northern Wisconsin, it doesn't mean those problems have gone away. And late Friday afternoon, Molly Beck of the Wisconsin State Journal reported that the problems are getting worse, with more guards being threatened and assaulted than before.
According to records released to the Wisconsin State Journal on Friday under the state’s open records law, the number of times inmates assaulted or tried to hurt staff at the Irma prison have risen more than 30 percent so far this year since 2016.

DOC staff at the youth prison recorded 195 times staff members were injured in 2017, assaulted or inmates attempted to assault staff — up from 145 incidents recorded in 2016 and 32 reported incidents in 2015.

It’s unclear whether that two-year jump is partially due to staff recording more incidents after 2015, when a federal investigation prompted DOC to hire new prison administrators and change its practices on record keeping. A DOC spokesman did not respond to a request for clarification.

But staff at Lincoln Hills and Copper Hills are also saying that the problems at Lincoln Hills aren't just due to kids that are out of control, as you will see in this report from Channel 12 in Rhinelander. While staff members agreed that the injunction limiting the use of pepper spray and handcuffs on the inmates had allowed some of the juveniles to act up more, since the consequences weren’t as harsh, the WJFW report quotes numerous staff pointing to a certain “bomb” that led to this mess.

"In my opinion, Act 10," said [youth counselor Stacy] Daigle.

"The brakes came off when Act 10 was enacted," said Doug Curtis.

"The Walker administration came in they came up with Act 10, they took our union rights away and next thing you know, everything started going downhill since then," said [youth counselor Kal] Tesky.

Act 10 was passed in 2011 to reduce a budget deficit. It took away collective bargaining rights and benefits for unionized public workers like the Lincoln Hills staff. That meant staff had less ability to negotiate for certain working conditions. Youth counselors regularly work 16-hour shifts...

Curtis retired a year ago after working for 20 years at Lincoln Hills. The dangerous environment was a major reason he left when he did. He still represents the prison's union workers and worries about them.

"It's only a matter of time before someone gets killed up there," said Curtis.
It also seems telling to me in the article that Northwoods State Sen. Tom Tiffany says the area around Irma needs the jobs, and that the rural community is a way to allow the youth to get away from bad influences. Hey Tommy- THEY ARE IN A PRISON regardless of where it is, so they're not on the streets in any of these scenarios. But you know what does increase the chances of those youths to get back on the right path? Being near family and having counselors that have familiarity with the environment those kids may have come from. I don't see either of those items happening in Irma.

In Beck's Wisconsin State Journal article, she notes that the Wisconsin Chapter of the ACLU argued in a recent court filing that the State Department of Corrections still isn't doing their part to provide adequate working conditions at these youth facilities.
But attorneys from the American Civil Liberties Union-Wisconsin and the Juvenile Law Center, which are representing inmates in the lawsuit against DOC, argued that the DOC is failing to adequately staff the prison, provide adequate programming for inmates and to implement the order’s goals. Some inmates causing the trouble are not being treated properly either, the inmates’ attorneys argued.

“To the extent that the facility struggles with violent behavior by some youth, the appropriate response is to ensure adequate staffing, programming, treatment, security policies, and supervision – not to reimpose abusive and unconstitutional conditions,” the inmates’ attorneys wrote. “(The DOC’s report) suggests that Defendants are still far from providing the positive programming needed to ensure a safe facility and also lack adequate staffing.”
And the disaster at the facilities for Lincoln Hills and Copper Hills is a direct result of Scott Walker’s political choices to take away the bargaining rights of state employees, and in closing the state’s juvenile correctional facilities near Milwaukee, and shipping those kids hundreds of miles away to the Northwoods.

By this time, there is no band-aid response from the Department of Corrections or any other attempted face-saving by the Walker campaign Administration to fix the bad results of this failed strategy. It requires new leadership that actually cares about providing the best working environment for state staff at these facilities, and leadership that cares about improving the future lives of the youths that are sent to these facilities. Neither is true today at Lincoln Hills and Copper Hills, nor is it true at the Capitol under WisGOP control.

Saturday, November 11, 2017

JS article shows SW Wisconsin is ripe for Dems' taking in 2018

I know many of you are sick of the many "let's go to Middle America and hear from small-town Trump supporters" articles that we've seen in the last year. But I think Craig Gilbert of the Milwaukee Journal-Sentinel had a good breakdown yesterday where he visited swingy SW Wisconsin, as he combined election numbers with interviews with several locals.
Nationwide, rural white communities are overwhelmingly Republican. The Driftless Area that extends into Iowa, Minnesota, and Illinois — “Driftless” because the glaciers missed it, leaving a landscape of rolling hills, looping streams and narrow valleys — contains the largest cluster of blue and purple counties in rural, white America. It boasts the nation's greatest concentration of Obama-Trump counties -- places that voted for Obama in 2012 and Trump in 2016.

In a very partisan age, the region is dominated by neither party. Like its serpentine roads and rivers, its voters wind this way and that. Last fall, five of the seven southwestern counties voted for Republican Trump for president and Democrat Russ Feingold for the U.S. Senate. Six of the seven voted for Obama twice before swinging to Trump.

Weak party loyalties help explain a history of big election swings. Two of the past three presidential races have featured mammoth partisan shifts in the region — in a Democratic direction in 2008 and a Republican direction in 2016. Trump won the seven-county area by 3 points, four years after Obama won it by 18.
And among that segment of counties in Southwest Wisconsin, Gilbert notes that the most interesting is Richland County, which was among one of those "Feingold-Trump" counties, and while it is ancestrally Republican at the state government level, it still has had wild swings in the last 25 years of statewide elections.

Gilbert notes in the article that many of the voters he talked to in this part of the state indicated their vote was more against Clinton than for Trump, and many of the people quoted in the article express disgust at the current politics in DC, and feel their needs are not being listened to.
And then there were the most conflicted Trump voters, many of them self-described independents. They had qualms when they voted for him, but couldn’t support Clinton and were drawn to at least one part of the Trump package: his business background or outsider mantle or rejection of political correctness or vow to put America first.

These are the Trump voters who are most critical of him today. Some, like Obama-Trump voter Nell Justiliano of Spring Green, now have meager expectations of his presidency.

“I did vote for him. It was really hard … We have been stuck in a political rut on every level,” she said.

But “I’m so embarrassed by what a (expletive) show it is. Because it is a (expletive) show,” she said, citing the turnover in the administration, deriding Trump’s diplomatic and leadership skills, and bemoaning his behavior.
And I have little doubt many of these people are equally disgusted by politics at the state level in the Age of Fitzwalkerstan, especially as their local schools and roads continue to be defunded while the state gives away billions in tax cuts and Foxconn-style handouts to corporations. Given that almost all of SW Wisconsin is entirely represented in the Legislature by Republicans, and with 4 GOP Assembly seats and 1 GOP Senate seat up in 2018, you'd think Wisconsin Democrats would have an opening to tap into that rightful frustration, and attract voters with an agenda that actually deals with the GOP-inflicted problems that have hit this area hard.

And that agenda doesn't have to have a "Democratic" label with it. All it has to be is an agenda based on competent, clean government, giving people a fair paycheck for a day's work, adequately funding rural schools while ending the tax dollar-funneling voucher scam, and restoring the DNR as a place that protects our scenic rural areas and maintains habitats for hunting and fishing.

These things formerly didn't have partisan labels attached to them, and the everyday person doesn't like to think of themselves as partisans (even if they vote for the same party all the time). Framing these as our common values and HEARING AND RESPONDING to what these people are saying would go a long way toward a Dem win in 2018, because we know Scott Walker and company won't

The last item that grabbed me out of Gilbert's article was that false consciousness still exists in that part of the state, as some of the individuals mentioned that they admired Trump as "a businessman." It was a vomit-inducing statement in several ways, most of al because it seemed to indicate that these people thought Trump was a builder that knew construction instead of the reality of Drumpf being the trust-fund baby that traded real estate assets for a living and went bankrupt 4 times while stiffing contractors. In fact, Drumpf is little different than hedge funder Mitt Romney, except that he's probably dumber and definitely less articulate than Mittens, and SW Wisconsin HATED Romney.

Showing Trump as an out-of-touch fool and Walker as an amoral corporate puppet who couldn't care less about rural Wisconsin would seem to be a logical attack by Dems to win in the Driftless Area. It would also have the added benefit of being true.

Anyway, read Craig Gilbert's article, and see what you can get out of it.

Don't think corporations > people in the GOP tac plan? Watch this

As the House GOP tax bill was being debated in Committee this week, we were treated to this masterpiece of researching and framing questions by US Rep. Suzanne DelBene (D-Wash). In this clip Rep. DelBene is asking the Chief of the Joint Committee on Taxation (the independent organization in Congress that gives information about tax bills) about what types of expense deductions go away for individual workers like teachers and fire fighters who buy their own supplies, and contrasts it with the fact that corporations would still be able to write off the exact same expenses.

Not only would teachers and people who move for a job end up paying higher Federal income taxes because their personal expenses would no longer be deductible, note that the Chief of the JCT mentions that it's an "above the line" deduction, which means the person's adjusted gross income also goes up. Which means Federal AND State income taxes go up again, because the person's income went "up". This also would apply to student loan interest and the Health Savings Account deduction.

That makes it a multiple screw job on teachers and other multiple professionals, while allowing corporations to not have to pay another cent for the same activities. And as I understand it, corporations would also still be able to write off their 3-martini steakhouse dinners and sports tickets as "entertainment expense", and those same corps would get a significant tax rate cut and whatever "profits" they have left over after writing everything else off.

Gee, and you wonder why it appears that we have a two-tier society in this country? Why do you GOP voters allow this garbage to go on?

Friday, November 10, 2017

Fox-con is signed, but removing Walker could stop the bleeding

Well, whether we want it or not, the Fox-con is a legal contract between the State of Wisconsin and the Asian company. Since we are going to be stuck with this thing for at least the next few years, I think it's instructive to
look at the draft contract that the WEDC Board agreed to this week and see what it tells us.

First of all, it’s nice that there are specific thresholds of job creation to allow for clawbacks, as that was something that was sorely lacking in the Fox-con package that passed the State Legislature. Here’s how many people have to be working at Foxconn to avoid any chance of WEDC asking for their money back.

Job thresholds, Foxconn
2018 260
2019 520
2020 1,820
2021 3,640
2022 5,200
2023 7,150
2024 7,800
2025 8,450
2026 9,100
2027-2032 10,400

That’s a pretty slow start, although the positive side of that is only $160.4 million of the $1.5 billion in tax write-offs for jobs can come in the first 4 years, with the bigger write-offs coming later.

Now, that doesn’t mean the numbers can’t be gamed by Foxconn. Here’s how the contract defines the “Jobs” figure.
For each [Annual] Period, employ at least the Minimum Cumulative Full-Time Jobs set forth…, which shall be determined based on the number of Full-Time Jobs held by Full-time Employees employed by the Recipients [Foxconn] as of the end of the Period….

In determining whether a Partial-Year Employee is employed by the Recipient as of the end of a Period… (1) Partial-Year Employees who are employed in Full-Time Jobs as of the end of the Period will be counted, and (2) Partial-Year Employees who are not employed in Full-Time Jobs as of the end of the Period will not be counted.
Sure seems like you could ramp-up hiring for the Holiday season at Foxconn and then lay them off in January, and they’d still get the tax credits. And I sure don’t trust WEDC to go hard after Foxconn and the associated businesses on backing up their information and getting the state’s money back, even if they are going to allegedly force the use of a CPA to back up the payroll information that is submitted.

This might not apply year-round

Also concerning to me is how "Foxconn jobs" are defined in the contract.
"Full-Time Job" means an employee position in the [Foxconn Enterprise] Zone or outside the Zone, but within the State of Wisconsin, and for the benefit of the Recipient's operations within the Zone, filled by a Full-Time Employee whose entire Wages are treated as paid in Wisconsin under Wis. Stat 71.25(8)(b).
Sure makes you wonder what is "for the benefit of the Recipient's operations". Could that be a business that supplies the Foxconn cafeteria with food? Could it be contractors doing Foxconn's books located somewhere outside of Racine County? If so, we might be talking a lot less than 10,400 jobs actually occurring at the Foxconn site, and how much of that activity might take away from other business that is not being given tax incentives? Sure seems like a wide loophole.

On the flip side, the 15% payback of expenses that Foxconn would get for building the factory have the same job thresholds starting in 2019. What’s concerning is that if annual expenses of building the plant locations are less than 1/7 of $9 billion in one year, the unused tax credits can be “banked” and used in a future year. This would be true even if there are more expenses in that year that would apply above and beyond the $192.86 mil that is allotted for that year. This could cause a bigger-than-expected hole for the 2019-21 or 2021-23 budgets than the Legislative Fiscal Bureau is already counting on.

What’s also concerning is that even with the slow ramp up of expected jobs for the Foxconn campus, the jobs credits and related clawbacks only apply until the end of 2032. If Foxconn were to close up in 2033, there’s nothing the state would get back from it. Meanwhile, the environmental damage and added local and state debt costs for infrastructure would still have to be dealt with.

And unlike the corporate media in Milwaukee, I’m not going to be suckered by Foxconn Chairman Gao using his personal guarantee of covering 25% of any clawbacks that have to be paid. Any clawbacks to be paid would be several years down the line, and I’m guessing a multi-billionaire like Gao will lawyer up and delay those payments as much as he can.

But the contract also identifies yet another positive that would come with the removal of Scott Walker in 2018. You know Scotty and his WEDC lackey would never admit the Fox-con isn't working out while he would be in office, but a new governor and new members in the Legislature could renegotiate this deal, and possibly cut out of it before the big costs hit (especially if the plant isn’t doing much). Any Democrat should put the Fox-con question to the voters over the next year, and remind them that they don't have to accept this anchor that will ultimately lead to service cuts and tax hikes in other areas.