Thursday, August 22, 2019

Wisconsin getting hit worse than most as US manufacturing goes down

We know manufacturing in the US has been struggling so far in 2019, and that especially seems to be the case for one of the most manufacturing-heavy states in America – Wisconsin.

Let's start with this headline that hit the wires today.

That comes from IHS Markit's monthly survey, and the reasons for the drop in manufacturing are especially concerning because future prospects look worse than the mediocre present , both in America and overseas.
The decline in the headline PMI mainly reflected a much weaker contribution from new orders, which offset a stabilization in employment and fractionally faster output growth.

New business received by manufacturing companies fell for the second time in the past four months during August. Although only marginal, the latest downturn in order books was the sharpest for exactly 10 years. Latest data also signalled the fastest reduction in export sales since August 2009.

Survey respondents indicated that a drop in sales often cited a soft patch across the automotive sector, alongside a headwind to manufacturing exports from weaker global economic conditions.
Those headwinds were already hitting the Upper Midwest, as the Milwaukee Business Times told us that a number of economic indicators show business conditions in Wisconsin's largest metro area were already in decline.
The Milwaukee-area manufacturing sector contracted for the second time in three months in July, according to the latest Marquette-ISM Report on Manufacturing.

The Milwaukee-area PMI dropped from 56.11 in June to 46.44 in July. Any reading below 50 suggests the Milwaukee manufacturing sector is contracting. The index has declined in seven of the last 12 months.

The 9.67-point drop is the largest decline in any month since December 2014. It pulled the index’s six-month average down by more than 2 points to 51.76. A 2-point drop next month would pull the six-month average into negative territory.
These are not good trends.

That supplements a report from a few weeks back that showed Wisconsin manufacturing falling faster than the rest of the nation.
Production workers in Wisconsin’s manufacturing sector averaged 39.7 hours per week in July, the lowest level for the month since 2009, according to Bureau of Labor Statistics data.

It was also the first time since February 2014 that production workers logged an average of less than 40 hours per week. The average number of hours worked has dipped below 40 just four times since the start of 2011.

The good news for production workers is that their average hourly wage increased to $21.59 in July, up 5.8% from the same time last year. In the first seven months of 2019, production workers in Wisconsin are averaging a 4.2% year-over-year increase in hourly wages.

The July hours worked number could be just a one-month dip below the 40-hour threshold, but it is the tenth straight month Wisconsin’s average has declined from the previous year.

In the past 12 months, Wisconsin has averaged a decrease of 1.14 hours compared to the prior year. The average decrease is 1.58 hours over the past six months. In both cases, Wisconsin has the sixth largest decrease among all states.
Along the same lines, last week’s Wisconsin jobs report showed manufacturers in the state shed 2,800 jobs in July, and have lost 4,100 total since January. It is reminiscent of the swoon that hit the state in 2015 and 2016, when 3,700 manufacturing jobs went away, and many blue-collars in Wisconsin turned to Donald Trump to turn their flagging fortunes around. Doesn't look like that gamble's paying off, is it?

Hmm, sure seems like Wisconsin's "Big Giveaway" tax cut to manufacturers isn't doing much to keep Wisconsin's factories humming these days, does it? We sure could use that $250 million a year to do something better than stuffing the pockets of "job creators" who aren't creating jobs or products these days.

Good luck having Trump and other GOPs showing up at factories to claim "we're tax-cutting our way to prosperity" by this time next year. Well, unless the workers in those factories are forced to show up at these photo ops in order to get paid.

Wednesday, August 21, 2019

Recent US job growth revised down 500K, and Wisconsin job growth lamer

Apparently there are fewer jobs in America than we thought.
The U.S. economy had about 500,000 fewer jobs in March 2019 than previously reported, government revisions show, suggesting that hiring was not as strong in the past year as it seemed. Hiring was weaker in retail, restaurants and hotels. The annual revision is much larger than is typically the case. The preliminary revision in 2018, for example, was just 43,000. Every year the Bureau of Labor Statistics updates its figures based on unemployment data that nearly all employers are required to file with the states. The current revision is one of the largest ever.

That news comes from the BLS’s mid-year benchmarking of total jobs, and complements today’s release by the “gold standard” Quarterly Census of Employment and Wages.

Worse, the current monthly jobs reports (the ones you hear the headlines on) claimed that there was a gain of 2.517 million jobs from March 2018 to March 2019. Now, the QCEW says the gain actually was 1.967 million jobs over that time period. That’s a decline in job growth of 550,000 jobs, and the monthly totals are now likely to be reduced by a significant amount next February, when the full-year benchmarking takes place.

A job growth rate of less than 2 million jobs is a growth rate of 1.4%. This may seem OK at first glance, except a 12-month figure of 1.4% job growth would place it as the lowest 12-month rate of US job growth in 7 ½ years.

UW's Menzie Chinn notes this downward revision is reported on job growth that had already slowed down during the Trump presidency. That slowdown came despite whatever stimulus might have come out the GOP's Tax Scam.

And oh yeah, that Tax Scam and the lower job growth led the Congressional Budget Office to tell us today that the US budget deficit will be even larger than the massive levels that were already projected.

Wisconsin also suffers in the QCEW report, as it says we only gained 3,395 jobs between March 2018 and March 2019. That’s less than what was being reported back in April, which was already a low 9,200 jobs, and ranks Wisconsin 46th in America for job growth over those 12 months.

It continues a disturbing trend where Wisconsin job growth has been consistently revised down for Scott Walker’s last year. In additions the year-over-year rate of growth for Wisconsin declined to the lowest levels since the jobs economy began its recovery in 2010.

Wage growth was also muted for Wisconsin in this report, with average weekly wages up 2.6% from March 2019, slightly below the US rate of 2.8%. Our neighbors to the south and west had average salaries go up slightly more on a dollar basis.

Change in average weekly wages, Mar 2018 – Mar 2019
Ill. +$34
Minn +$27
Wis. +$25

That expanded the wage gap that Illinois and Minnesota has had on Wisconsin. All 3 states had wages grow from March 2011 through March 2019 (as you'd expect due to inflation and economic recovery), but Minnesota and Illinois each had their weekly wages grow by approximately $60 more than Wisconsin over those 8 years.

March 2011 is a fitting benchmark, because that was the month that Scott walker signed Act 10 into law. Didn't really make us better off, did it?

We pretty much knew GOP policies weren’t working out for America, but today’s information shows things weren’t even as good as we thought in 2018 and early 2019. And we know things have gotten shakier in the 5 months since then. Hoo boy.

Monday, August 19, 2019

GOP Tax Scam did little in 2018. Dems should drag Trump/GOP in '19 and '20

Not that this should come as a surprise, but CNBC's John Harwood reiterated over the weekend that “Trump’s tax cut isn’t giving the US economy the boost it needs.”

There are a lot of reasons Harwood cites as to why the Tax Scam hasn’t done nearly what was promised. Much of it we already are familiar with -added growth wasn't close to filling the deficit hole created by the tax cuts, and targeting the tax cut to the rich a corporate played a big role in that.

But Harwood says another reason the Tax Scam fell short has to do with changes in how business is run in the late 2010s. These days, economic power is in fewer hands, and because those businesses would rather boost stock prices instead of actually grow their companies, there hasn’t been nearly the growth that one might expect.
The idea that lower taxes would boost business investment sounds intuitive. But in examining lackluster investment growth after the 2017 tax cut compared with earlier ones, International Monetary Fund economists this spring identified an explanation: corporate consolidation has freed dominant firms with high profit margins to invest as they choose with less regard for government tax rates. “In an environment of rising market power, corporate tax cuts become less effective at raising investment,” the IMF economists wrote….

The 2017 tax cut’s international provisions reduced incentives for U.S.-based multinational corporation to attribute profits to overseas subsidiaries taxed at lower rates. Trump had predicted that would jump-start the economy by bringing trillions of dollars back to the U.S.

But a Federal Reserve study of initial results found “no obvious spike in investment” among the 15 companies holding the most cash abroad. Those firms had easy access to investment capital before the tax cut, the study noted, and instead boosted stock buybacks to reward their existing owners.
Basically, Harwood’s article notes that there was a small, one-time bump from the Tax Scam in the first half of last year. And now that this has worn off, there is nothing left to sustain higher growth.
Most broadly, the tax cuts have not generated the promised growth of 3% or more – even in tandem with the additional stimulus of large government spending increases that Congress enacted separately. After an uptick in the second quarter of 2018, growth declined in the next two quarters to end up at 2.9% for the year.

Goldman Sachs economist Jan Hatzius says that second-quarter surge – initially measured at 4.2% but later revised down to 3.5% – represented the tax law’s peak impact. He expects it to vanish altogether by late this year or early 2020, as the economy returns to the same 2% growth levels Trump inherited from President Barack Obama.

Note that while the DC GOPs have given all of these tax breaks to the rich and corporate, they have done nothing to encourage wages to grow for the everyday Americans that need to consume in order to keep the economy moving. The GOP refuses to consider a minimum wage increase that passed the House last month, and the GOP is vehemently against encouraging unionization, which might allow workers to use bargaining power in a time of sub-4% unemployment and slow labor force growth.

Meanwhile, the US budget deficit will likely climb past $1 trillion next month, and while that hasn’t jacked up interest rates or inflation as of yet, it could tie the hands of policymakers for more tax cuts or other economic stimulus if/when we fall into recession in the near future.
So given that the Tax Scam is a failure in giving a sustainable boost to the economy, and because its distortions have put almost all of its benefits into the pockets of a group of people who didn’t need the help, maybe House Dems should consider using the upcoming budget debate for FY 2020 as a place to draw the line on this idiotic policy.

Oh, but now Trump and the rest of the GOPs have an answer as 2020 nears. MOAR TAX CUTS!

I know, I'm laughing too. But at least this time, the cut would be on Social Security taxes that are only paid on the first $132,900 of income, so at least it'll help all wage earners, and likely give a bigger benefit to lower-income Americans.

However, I don't see plan to offset this tax cut (likely because TrumpWorld just pulled it out of their backsides), which means our already-growing deficit would get even larger.

So if I'm the Democrats in Congress, I use the GOP's desperation as a way to start getting rid of the worst part of the GOP Tax Scam - the major cut in taxes for the rich and corporate. Remember, the FY 2020 budget needs to be passed by the end of next month. The "budget deal" from last month was just a framework to allow more spending, but it's not specific on what the taxes and spending should be laid out.

That happens with the full-year budget, and Dems should demand a dollar-for-dollar increase in corporate taxes for any payroll tax cut, or expand the cap for paying into Social Security. Why not double it up to $265,800, which likely would allow Social Security to pay full benefits well past 2033, while giving the overwhelming majority of Americans a tax cut? And if GOPs won’t agree to that, then let’s see how Wall Street and Trump like the possibility of another government shutdown.

Likewise, if there is any added spending to be had (as Mitch McConnell and Trump agreed to as an admission that they need government to keep spending to keep the economy growing), then make that a dollar-for-dollar trade in reversing some of the provisions of the Tax Scam that isn't working out, and make the GOPs publicly justify continuing the Tax Scam's money-funnel to corporates in a time of flagging wage, GDP and job growth.

So if the Trump Administration wants to juice the economy in a new way, let’s use that as an opportunity to level the field back to where we have an economy that grows for all. Beats where we're currently headed - having Wall Streeters and corporations grow asset Bubbles that drag the average American along, only to have those bubbles burst and have Americans crash to earth after being cut loose by those same rich, corporate greedheads.

If Kudlow says the economy is fine...then it's time to worry

As the Trump Administration realized they were losing the one item of substance that they might be able to run on in 2020, they sent their economic hacks advisors out to Sunday talk shows to claim “All is well.”

One of those advisors was Larry Kudlow, who showed up on both Fox News and “Meet the Press”, and as usual, Coke-low was cherry-picking and BSing to justify that things were fine.
Well, I'll tell you what. I sure don't see a recession. We had some blockbuster retail sales, consumer numbers towards the back end of last week. Really blockbuster numbers. And in fact, despite a lot of worries with the volatile stock market, most economists on Wall Street towards the end of the week had been marking up their forecasts for the third and fourth quarter. That echoes our view. You know, what we've got here -- consumers are working at higher wages. They are spending at a rapid pace. They're actually saving also while they're spending. That's an ideal situation. So I think actually the second half, the economy's going to be very good in 2019….

Just one theme. We're doing pretty darn well in my judgment. Let's not be afraid of optimism. Let's not be afraid of optimism. It's a sign of our times. And I think there's a very optimistic economy going on out there.
Well sure, the retail sales numbers from last week were decent, up by 0.7% for July. But wage growth isn’t all that great, as real average hourly wages have dropped 3 of the last 5 months, including July.

And I’d like to see who Kudlow is referring to on “economists marking up their forecasts” 3Q and 4Q. Goldman Sachs just knocked down their estimates for Q4 to 1.8%, for example. The only way I could see GDP go “up” this quarter is because prices collapse partly due to the inability to sell products overseas. That usually follows with layoffs due to a lack of profitability, which doesn’t seem like a formula for a strong economy to me.

Show your sources, Lar

Kudlow continued to plead his case to Chuck Todd thusly.
Well, I want to get back to the China thing because there are some positive developments, believe it or not, on that front. But actually, in terms of business spending and business investment spending, which as you know, is a key part of the economy, look, a lot of the slowdown that we've seen in so-called capex, capital investment, is really temporary because oil prices dropped down. And so the big oil patch, fracking, and so forth was not as rapid in the last year. We're down what? $55, $60 a barrel? Which is a good number, I might add. And for consumers, gasoline prices are very low. But the oil, gas, fracking boom has leveled off a wee bit. On the other hand, we're seeing a nice pickup I think in durable goods and manufacturing. And we're also seeing now I think intellectual property, which is scored in GDP, you know, that thing's growing at about a 10, 12% annual rate. Let me come back. The consumer part of this thing, 10% on an annual rate last three months. We're going to get a blockbuster number in the third quarter.
The “intellectual property” item Kudlow rambles about was up 4.7% in q2 and is projected to go up 6.4% for Q3 as it stands today. Plus, IP is a relatively small part of the economy, while the production of goods is 5 times larger. Increases in software development are not going to make up for a recession in manufacturing, a sector that is not “picking up”, as UW’s Menzie Chinn illustrated this weekend (look at the black and red lines in particular).

As for the “consumer”, good luck on that staying strong, as consumer confidence fell hard in August along with the stock market and the 10-year note’s yield. But trying to reverse that flagging confidence is why Kudlow was on TV Sunday, right?

This last part of Kudlow's appearance on Meet the Press, is especially hilarious, and is a great example how Republicans try to shift reality to fit their policies.
…And I must say the president is transforming and rebuilding this economy. He deserves enormous credit. A new policy of lower taxes, and regulation, and energy opening, and trade reform. You know, we didn't quite get to 3%. But, look, Chuck, the first two years of the Obama administration we were just a hair below 3%. We're moving in the same direction. And let's be honest here. We faced severe monetary tightening, seven rate hikes in 2017 and 2018. I don't think all that was necessary. It's a miracle we were able to continue as well as we're doing. And, again, bond rates are falling. 100-basis-point decline. That's good for mortgages. That's good for business. And I think the Federal Reserve is going to now be following through, lower interest rates at the low end, because the bond rates have fallen and that's the way that game usually works. And I think that's going to be a big help.
Maybe those lower interest rates work out if you’ve got a ton of debt, or plan to go into debt. But it sucks if you want to save any money, and if the economy really is as good as Kudlow claims it is, then these rate cuts will only succeed making housing and the stock market even more overpriced than it already is.

It’s also a good insight into the world view of Wall Street dimwits like Kudlow. To them, the “eCONomy” is a confidence game based on stock trading and other casino-like measures that leads to booms and busts, entirely controlled by a few oligarchs. They don’t have a clue about what actually makes an economy sustainable or how everyday Americans try to pay their bills and get by.

The main skill Kudlow and Trump and their ilk have is BSing and keeping the grift going as long as they can. Aaron Blake at the Washington Post ran down how Kudlow has been consistently wrong in the last year over both the ballooning budget deficit and the rate of economic growth.
Back in June 2018, Kudlow saw a declining deficit. “The deficit, which was one of the other criticisms, is coming down — and it’s coming down rapidly,” Kudlow claimed. “Growth solves a lot of problems.”

The problem was that the deficit wasn’t coming down, much less rapidly. So Kudlow clarified to CNBC’s Eamon Javers that he was making a prediction. “I was referring to future deficits,” he said, adding, “I think it will come down in 2018, and the big reductions will come in future years.”

This, yet again, has not come to pass. The deficit rose a full 17 percent in fiscal year 2018, to $779 billion, as projections suggested it was headed toward $1 trillion. That path has continued this year, and, in fact, the rate of growth has increased. So not only did the deficit not “come down in 2018,” but it almost definitely won’t come down in 2019. Any reduction in the deficit appears years away, if it ever happens during Trump’s tenure.

Kudlow also predicted in January 2018 that the GDP would grow to between 3 percent and 4 percent based on the GOP tax cuts. Since then (and including preliminary estimates for the last quarter), it has grown by 2.5 percent.

In April 2018, he said the GDP could hit 5 percent for at least a short period of time. The highest quarterly GDP growth since then was 3.5 percent.
Sure, the stock market has regained some of the losses of last week as Wall Streeters speculate that trade wars and economic instability are settling down for the time being (or they’re covering their shorts). But if Larry Kudlow is saying he sees no recession on the horizon, that tells me you should definitely worry that it’s coming.

Sunday, August 18, 2019

The states Trump needs to win are falling far behind for jobs

On Friday, we got more evidence that whatever job growth we have left in this country is largely leaving the Midwest behind. That came from the Bureau of Labor Statistics state-by-state report, which came out on Friday and noted that of the 25 states that have had statistically significant job growth over the last 12 months, exactly ONE is in the Midwest.

That one Midwest state? The "failing state" of Illinois!, at just over 1%. Meanwhile, there are 5 states in the Rust Belt/Midwest that Democrat Barack Obama won in both 2008 and 2012, but flipped to the GOP's Donald Trump in 2016. And all of them have seen their job growth stall out, especially compared to the rest of the nation.

Job growth, July 2018-July 2019
U.S. +1.51%
Iowa +0.64%
Penn +0.50%
Wis. +0.46%
Ohio +0.45%
Mich +0.40%

And all 5 of those states have either complete GOP control of government, or have gerrymandered GOP legislatures tying up any progressive moves to adjust those states' economies. Seems noteworthy.

UW economist Menzie Chinn followed up with this note at Econbrowser, which shows that the three closest states that Trump won in 2016 are all showing declines in manufacturing jobs in 2019. This is even while manufacturing jobs throughout the country have continued to grow (albeit at a slower pace) in 2019.

This is a story that Coastal corporate media doesn't see, but is quite obvious to us in the Heartland. And if Dems want to win big in 2020, they should hammer on Trump/GOP's economic policies, which might have made things better for the rich and corporate, but have left the Midwest even further behind the country than they were in 2016, when many rolled the dice with Trump to improve their stagnant lives.

That gamble's not really working out for those folks, is it? And it'll likely be worse by the time November 2020 rolls around, if 2019's declines in manufacturing and this week's drop in US consumer confidence is any indication.

Saturday, August 17, 2019

Weekend thoughts - Hey Dems, stop overthinking this!

All of these 3 minutes of Trevor Noah are perfect. Dems should stop listening to what pundits claim is more "electable," and VOTE FOR THE BEST CANDIDATE.

This goes along with a quick column that Esquire's Charlie Pierce put up earlier this week regarding how too many Dem voters are making their primary calculations.
Jonathan Martin's taking some heat online about this piece in which a bunch of people talk about how much they'd like to vote for Senator Professor Warren If Only...(Fill in pundit-driven banality here.) The criticism is a little off-target; these pieces get done during every campaign and, if there's one thing we've learned about SPW's campaign so far, it handles bumps in the road as smoothly as a turbo Porsche. But I would like to point out one amazing quote that does not fill me with confidence in my fellow citizens. It is the kind of quote you'd die for, and I am very jealous of Martin for having landed it.
“If it were completely up to me, I’d vote for her."
My fellow citizen, not to be too strident, but, it is fcking well completely up to you.
"I like this candidate, but he/she won't be able to win." I remember hearing similar words about a US Senator from Illinois around this time of 2007. Not saying Liz is Barack, but that sentiment is/was similar. Stop overthinking this.

I understand that there is a lot of PTSD out there from 2016, and the stakes of losing in 2020 are awful. But put the trauma away and look at things with clear eyes. Candidates are electable because more voters choose to vote for them. And voters don't respond to defensive postures and calculated centrism, especially when a corporate-friendly agenda isn't working for the vast majority of the country.

After all, it was a major drop-off of voters in Milwaukee that was a main factor behind Hillary Clinton losing Wisconsin in 2016. If you're voting on "electability", having an agenda of change based in core values that inspires non-voters into becoming voters needs to be a central part of your thinking.

On a related note, has anyone given a reason to vote for Joe Biden in the Dem primary that doesn't include the words "polls" (which are irrelevant 15 months before an election), or "Obama" (who isn't coming back, no matter who is on the ballot)? Because I'm not sure one exists. Any Dem candidate is better than Donald Trump, and if the economy falls as I think it will, any Dem will be heavily favored by November 2020. So vote for the one that resonates with you.

The second part of Noah's statement is also on the money. You can debate whether Trump is a white supremacist, but you can't deny that white supremacists are inspired by him, and that Trump is fine with them being inspired by him.

So why not say so, and stick it in people's faces. And if it hurts people's fee-fees that they might be seen as racist for supporting such a racist...

They can OWN IT, or look in the mirror and change. Those people need to put on the big boy and big girl pants, and deal with the orange ogre in the White House.

For the 2020s, you can come along with us on the path of decency, or you can go away. But you should not be pandered to. And we don't need to compromise what we believe in to win big next year, and start to reverse this country's moral, political, and economic decline.

Moscow Mitch's Russian business deal sounds very familiar to this Wisconsinite

I happened to tune into Rachel Maddow on Wednesday night, and caught this amazing opening segment, which explains why the Senate Majority Leader is rightfully known as "Mocow Mitch". But as she spoke about the deal that Sen. McConnell and a Russian aluminum manufacturer named Rusal that is owned by Kremlin-linked oligarch Oleg Deripaska, it was giving me some deja vu back in Wisconsin.

Here's the clip, and I'll be back to discuss this afterwards. The Deripaska stuff starts around 10:30 if you want to jump to it.

Maddow quoted heavily from this Time magazine article by Simon Schuster and Vera Bergengruen, which connects the dots between the recent removal of sanctions against Russian oligarch Oleg Deripaska and Deripaska following that up by announcing that Rusal would locate a $1.7 billion plant in Ashland, Kentucky.
But to some observers, the story of how a Kremlin-linked aluminum giant offered an economic lifeline to Appalachia is an object lesson of the exact opposite. Critics of the deal, both Democrat and Republican, say it gives Moscow political influence that could undermine national security. Pointing to Moscow’s use of economic leverage to sway European politics, they warn the deal is a stalking horse for a new kind of Russian meddling in America, one that exploits the U.S. free-market system instead of its elections. “That’s just what the Russians do,” says veteran diplomat Daniel Fried, who shaped U.S. policy on Eastern Europe at the State Department from the late 1980s until 2017. “They insert themselves into a foreign economy and then start to influence its politics from the inside.”

What worries national-security experts is not that Rusal, Braidy or Deripaska broke any laws in the deal. It’s that they didn’t. A TIME investigation found that Rusal used a broad array of political and economic tools to fight the sanctions, establishing a foothold in U.S. politics in the process. “You cannot go against them in a policy decision, even though it’s in our national interest, when they have infiltrated you economically,” says Heather Conley, who served as a Deputy Assistant Secretary of State under President George W. Bush. “They use our laws, our rules, our banks, our lawyers, our lobbyists—it’s a strategy from within.”
Basically, it’s buying off people with jobs and (questionable) promises so that the foreign country can seem like they're the good guys. Then, it becomes a lot harder to get tougher on them when they do other things that aren’t so cool.

Some in Kentucky are rightfully skeptical of this deal with Deripaska’s company.
But not everyone in Kentucky was excited about the Russians’ arrival. After Donets’ visit, a red billboard funded by a liberal group was erected on a busy stretch of I-75: “Russian mob money . . . Really, Mitch?” “The only reason Oleg is here is because Mitch McConnell opened the gate,” says Representative Kelly Flood, a Democrat from Lexington. “We are now all aligned with this criminal.” The deal created unease among some Republicans too. “I would not have taken the Russian money,” James Comer, the GOP Congressman representing Kentucky’s First District, said on the day the partnership was announced.
However, the unpopular governor of the state has to face the voters of Kentucky in 3 months, and not surprisingly, he is doubling down on his support of the Rusal project, to show that "help is on the way."
Yet even critics of the deal were leery of the fallout from killing it. In 2017, Governor Bevin had cut an unusual agreement in which the state directly invested $15 million in the new aluminum mill. At least 750 investors, most from Kentucky, put in money as part of the “crowdfunding” portion of Braidy’s common stock offering, Bouchard said. In effect, Kentucky taxpayers were partners in the project. “To pull out as a state now is to pull out on the people of Ashland,” says Flood….

On rare occasions, Russian oligarchs have even described how this strategy works. “What is a factory in a one-factory town? It’s what all life revolves around,” the billionaire Dmitry Firtash, a longtime ally of the Kremlin in Ukraine, told TIME in a 2017 interview. “We don’t just pay wages. We provide the social safety net. So people believe us.” When he and his factories put their support behind a political cause or candidate, “that influences people,” Firtash explained. “That’s what ensures electoral support.”
Sound familiar? It should.

As Maddow was continuing with her opening piece, I found myself saying “THIS IS FOXCONN” several times. Think about it – Scott Walker, Donald Trump and Paul Ryan were desperate to show job growth through increased manufacturing in Summer 2017, and wanted it to happen in a relatively depressed part of the state.

At the same time, Foxconn saw a way to get good PR for themselves and perhaps get an exception to any tariffs Trump might put on products from China or Taiwan. So why not promise a major factory that adds a large number of jobs, and put it in a state Trump needs to hold onto to stay in office. And time the announcement so it comes one year before the GOP governor faces re-election, and put it in the district of the Speakers of the US House and the Wisconsin Assembly. Win-win for everyone!

What a cynical, disgusting scam. And the same thing is happening in Kentucky with this proposed plant from Rusal. Mitch McConnell is a hated incumbent facing re-election in 2020, and Deripaska and other Russian business interests see an obvious opening. “Hey Mitch, if you get rid of our sanctions and stop Congress from looking into how we interfered in the 2016 election, we'll help you buy off a number of votes by bringing jobs to a dying town in Eastern Kentucky.”

Maddow connects the dots with this portion of her opening monologue.
The short story here about Mitch McConnell is that he, more than anybody else in Washington, has blocked U.S. efforts to constrain or respond to Russia`s recent attacks. That`s why they`re calling him Moscow Mitch now, right?

But in this particular instance, his state, an economically disadvantaged part of his state, got a $200 million investment from a Kremlin-connected oligarch immediately after McConnell personally stepped in to make sure sanctions on that oligarch were dropped, despite his role in what happened to our election in 2016 and despite bipartisan support even from his own party for their sanctions.
And if Congress tries to crack down on Russia before the 2020 elections, Maddow points out that Deripaska and Rusal have a new card to play. They can threaten Moscow Mitch with the jobs that they, as the Great Benefactor, have gifted his home state.
But now, Oleg Deripaska`s business activities, the health of his business empire, that`s part and parcel of the hard-scrabble economy in one of Kentucky`s neediest counties. I mean, this is a plant that`s over a billion dollars. It`s one of the biggest aluminum plants in the U.S. ever. It`s 40 percent owned by the company of this Kremlin-connected oligarch.

You`re not going to be able to sanction him no matter what he does to our 2020 election or whatever else he does at all. It would strangle Kentucky in the process. There would be hundred, if not thousands of American jobs riding on anything you did to that Russian guy`s company or, frankly, anything you did to bother him.

He now holds all of those American jobs in his hand. The U.S. government does anything to bother him, he can take them away at will. So, you can`t do anything to his company, not without him exerting that leverage over Kentucky in response.
And wouldn’t it be a bad thing for this plant to fall through before Mitch and Trump face the voters in November 2020?

The Time magazine article also mentioned that Rusal’s holding company had sent a letter to eight governors in April saying they could do for them what they might do for Kentucky. And the first governor addressed in that PDF of the letters?
Dear Governor Evers,

I am writing to you as Executive Chairman of En+ Group PLC, which is listed on the London Stock Exchange, We are the world's largest producer of aluminum outside of China and the largest private sector owner and operator of hydropower installations globally. We generate more than 15 gigawatts of hydroelectricity from which our metals subsidiary, Rusal, creates high quality, low-carbon aluminum. In total, we employ more than 100,000 people through our operations in 13 countries on five continents—from our state of the art smelters in Siberia, to our bauxite mines in Jamaica and West Africa to Europe's largest alumina plant in Ireland.

As part of our international growth strategy, we see significant opportunities across the whole aluminum industry value chain in North America. As you can see from the attached news articles, just this week we announced plans to become a cornerstone investor and strategic partner in the largest new aluminum rolling plant to be built in the US. in nearly forty years. Located in Kentucky, this $1.6 billion project is a first of its kind and will bring hundreds of new high-quality manufacturing jobs to the region.

This investment is just the beginning of our long-term ambitions. Given the growing global demand for high quality, low carbon aluminum and the opportunity for growth |n the U.S., we are eager to evaluate other opportunities around the country and in your state in particular. If appropriate, I would be delighted to explore these issues in more detail with you and your staff.
After the debacle of Foxconn, I would hope Evers told Rusal “HELL NO”. We already have one compromising boondoogle with a foreign company to deal with, and don’t need more.

In addition to the similarities to the empty promises and politically-motivated reasoning with Foxconn, Deripaska has another Wisconsin connection, and it comes from the Mueller report.
Trump campaign chairman Paul Manafort briefed Konstantin Kilimnik, a man with suspected ties to Russian intelligence services, about key battleground states in the 2016 presidential election, including Michigan, Wisconsin, Pennsylvania, and Minnesota, according to special counsel Robert Mueller's report.

The 448-page report, released on Thursday, laid out the findings of the special counsel's two-year investigation into whether members of the Trump campaign conspired with the Russian government during the 2016 presidential race. A key subject of interest in the investigation was Manafort's work for Ukrainian and Russian oligarchs and his interactions with these figures while he was Trump's campaign chairman.

The report noted that Manafort instructed his longtime colleague Rick Gates to provide Kilimnik with internal Trump campaign polling data and briefings on the campaign's strategies. For years, Manafort and Kilimnik worked together closely on political campaigns in Ukraine. Manafort even nicknamed Kilimnik his "Russian brain." The FBI has determined that Kilimnik, who was once a Russian military translator, has links to Russian intelligence services.

The Mueller report noted that Manafort expected Kilimnik to share the Trump campaign information with individuals in Ukraine and with Oleg Deripaska, a Russian aluminum magnate with close ties to Russian President Vladimir Putin.
Put this together, and any wonder why Homeland Security Chair Ron Johnson (who benefitted from Russian propaganda efforts in his election in 2016) doesn’t seem too keen on looking at whether this deal with Rusal in Kentucky has potential issues on national security? Me neither.

You can’t trust any of these oligarchs or the Republican hacks who are glad to do their bidding. They are rotten with bad faith to the core.

Thursday, August 15, 2019

Manufacturing keeps falling away in 2019

We already had seen evidence that the country’s factories aren’t adding to the economy at anywhere close to the strong levels we saw in 2017 and 2018. And now it seems to be one of the economy’s leading headwinds in 2019.

One example of this was in the productivity report released today by the Bureau of Labor Statistics. It showed that manufacturing to be slowing down in the 2nd Quarter of 2019 for output and employment.
Manufacturing sector labor productivity decreased 1.6 percent in the second quarter of 2019, as output decreased 2.1 percent and hours worked declined 0.5 percent. Productivity declined 0.9 percent in the durable manufacturing sector, reflecting a 1.8-percent decrease in output and a 0.9-percent decrease in hours worked. Productivity decreased 2.6 percent in the nondurable manufacturing sector as output fell 2.4 percent and hours worked rose 0.3 percent. Over the last four quarters, total manufacturing sector productivity increased 0.2 percent, as output increased 0.4 percent and hours worked increased 0.2 percent. Unit labor costs in the manufacturing sector increased 5.8 percent in the second quarter of 2019, and increased 4.3 percent from the same quarter a year ago.
The unit labor costs are a good thing for workers, reflecting hourly compensation increases of 4.1% (annual rate). It's also odd to see, as the last jobs report said manufacturing has only been seeing average weekly wage increases of less than 1% a year (as I noted here), which lags almost all other sectors.

And given that producer prices continue to stagnate in light of trade wars and other overproduction, you can't think businesses will stand to see those high unit costs increases for much longer. This is especially true because revised numbers from the 1st Quarter show worker compensation growing by an even faster rate in manufacturing, and hours worked declining even more than Q2.

That's quite a change. The previous few years of stats were also revised, and they showed things jumped quite a bit in 2017, and still increased in 2018. It also has 2016 stats that look a whole lot like 2019's (with less compensation).

So to review, doldrums in 2016, great growth in 2017, decent growth in 2018, and signs of decline for 2019 so far.

Another report from Thursday, also had disappointing news that indicates the industrial side of the economy may already be in recession.
Industrial production fell 0.2% in July, the second drop in the past four months, the Federal Reserve reported Thursday.

The decline in July was unexpected as Wall Street economists had forecast a 0.2% gain, according to a MarketWatch survey.

June output was revised to a 0.2% gain from the initial reading of flat activity, but output in April and May was revised down slightly.
The Federal Reserve report says that even the slight gains in May and June weren’t as big as the drop in April, or the drops in January and February. This means industrial production was down 1.3% through July 2019, which was before all the gyrations in the economy over the last 2 weeks.

Manufacturing is falling even faster this year, with its index down 1.6% for the first 7 months of the year, and July added to the decline.
Manufacturing fell 0.4% in July, with broad based declines across durable and non-durable good sectors. The only sizable gains were in aerospace and miscellaneous transportation equipment. Auto production slipped 0.2% after a 2.5% gain in June.
That auto production stat isn’t good, as auto sales was one of the few bad numbers in this week’s retail sales report, declining by 0.7% in July. And auto inventories had already grown by nearly 7% as of June. Uh oh…

Another note from that inventories report is that it also lists sales by merchant wholesalers, and total sales in that area had declined in both May and June, and was down 0.2% over the last year measured. Meanwhile, those wholesalers’ inventories are up by 7.6%, so those “middle-work” jobs seem to be really in danger, since they can’t get the product they have out the door.

Wisconsin wasn’t spared from damage of the bad July in manufacturing, as the state lost 2,800 jobs in that sector, and had only gained 100 in the 11 months before that. Not really the news Donald Trump wants to hear as some Wisconsin blue-collars took a chance on Trump, figuring he would lead to more jobs and pay. It's sure not working out that way these days.

(Wait, I thought that once Republicans kept the M&A tax cut to manufacturers on the books, that Wisconsin factories would hire like crazy after the budget was signed! Are you telling me those tax cuts do NOTHING for job growth? Yeah, pretty much)

So as Summer 2019 winds down, it's becoming obvious that whatever "manufacturing renaissance" might have existed in the first two years of Donald Trump's tenure in office is ending in 2019. The question is whether the jobs and pay that may have been gained in those 2 years will still be around a year from now, which means we've still treaded water in manufacturing. Given recent data, I'd bet we'll have gone under by that point.

Strong retail sales mean recession isn't now. But stores, economy still in danger

After all the talk yesterday about recession being imminent, I was reminded who is keeping us afloat in the present – the American consumer. That was shown again when July’s retail sales information was released Thursday morning, showing that everyday people were still will to spend money at impressive levels.
Advance estimates of U.S. retail and food services sales for July 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $523.5 billion, an increase of 0.7 percent (±0.5 percent) from the previous month, and 3.4 percent (±0.7 percent) above July 2018. Total sales for the May 2019 through July 2019 period were up 3.3 percent (±0.5 percent) from the same period a year ago. The May 2019 to June 2019 percent change was revised from up 0.4 percent (±0.5 percent)* to up 0.3 percent (±0.1 percent).
And that increased sales number was still strong when you throw out a distortion from the 1-month increase in gas prices, at 0.6%. Grocery stores had sales up by 0.7%, and food and drinking places were up 1.1% for the month. The good retail sales figure led the Atlanta Fed to up its GDP Now forecast for Q3 2019 from 1.9% to 2.2%.

Even beaten-up brick-and-mortar retail such as electronics stores, department stores, and clothing stores all had increases between 0.8% and 1.2% for July.

But those increases pale in comparison to Non-store (usually online) retailers, who had a stunning 2.8% increase in sales for July. Yes, some of that was probably due to Amazon Prime day, but that sector is still up 16.0% from July 2018.

That longer-run growth from Amazon-type retailers is illustrative of a structural shift that continues in spite of the one-month increase in brick-and-mortar.

Change in retail sales July 2018 – July 2019
Non-store retailers +16.0%
Books/sporting goods/hobby stores – 0.5%
Clothing stores -2.4%
Building materials/gardening stores -2.9%
Electronics/appliance stores -3.5%
Department stores -4.7%

So it’ll take more than 1 month of decent numbers from brick-and-mortar to convince me that there won’t be more store closings on the horizon. Just this week, we learned that The Avenue clothing chain will close all 222 of its stores across 33 states, and 26 more Sears/Kmart stores are folding up after hundreds of prior closings.

Store closings have already exceeded the total amount we had in 2018, and could reach 12,000 by the end of December.

That’s a lot of empty lot space to fill, and it seems that this Fall, a sizable percentage of property taxes will get shifted onto homeowners (and that’s before we add in the “dark store” loophole that will burden homeowners in Wisconsin even more). Then realize that a lot of homeowners won’t be able to write off those higher property taxes due to the GOP’s Tax Scam, and it seems like there’s a squeeze on everyday consumers that’s coming. But at least in July, those looming problems weren’t stopping Americans from spending money at the stores.

Granted, in late July the stock market was 1,600 points higher vs now, and “recession” wasn’t on people’s mind. Which makes me curious to see if the recent recession talk will cause people to clamp down on their wallets, a decision that would practically guarantee that there WILL be a recession.

Wednesday, August 14, 2019

UW - In 2010s, Wisconsin farm economy down, but ag economy is up. Huh?

Given all of the news about how America’s and Wisconsin’s agricultural economy has been struggling recently, this may seem like a surprising bit of news from UW-Madison.
Altogether, farms and agriculture businesses in the state generated $104.8 billion in economic activity in 2017, according to the new data released Tuesday and published once every five years.

That’s up nearly 19% from $88.3 billion in 2012, despite the loss of several thousand dairy farms, many of them small, family-run businesses.

The dairy industry contributed $45.6 billion in economic activity in 2017 — up 6% from five years earlier. Dairy processing, which includes cheesemaking, accounted for roughly two-thirds of the amount.
That doesn’t go with all of the stories about dairy farms closing around the state over the last year. What gives?
Wisconsin lost more than 2,300 dairy farms during that time. But milk production climbed steadily to a record 30 billion pounds in 2016 as farms got bigger, the number of cows stayed roughly the same, and the amount of milk per cow increased.

"The cows did not go away. They were bought up by other farms," said Steven Deller, a UW-Madison agricultural economist and author of the report.
Let me also dive into a couple of other things in the UW report on Wisconsin’s agricultural economy. I’ll direct you to this chart, which shows that it’s been continual farm losses since the mid-2010s that turned a one-time annoyance into a full-fledged crisis.
This latter point is particularly important for understanding the current condition of farming in Wisconsin. Given the tendency of “down” years to be followed by a recovery year, most farmers are positioned to plan for and adapt to what are generally year to year swings in net farm income. But there are two periods of sustained “down” years, the period leading to the farm crisis of the early 1980s and most recently (for Wisconsin, 2013 to 2017). The successive “down” years is the primary cause for the current fiscal stress facing many Wisconsin farms.

Without an “up” year to rebuild assets (e.g., cash reserves) farmers are forced into The Contribution of Agriculture to the Wisconsin Economy: An Update for 2017 04 The Successive "down" years is the primary cause for current fiscal stress facing many Wisconsin farms dramatically reducing income to the farm household/family and/or accept higher levels of debt. The reduction in earnings flowing to the farmer (family/household) and workers (Figure 1B) creates an unsustainable fiscal situation for the farm family and the rising of farm debt can overleverage the farm enterprise.

While farm income (net earnings to the farm business and earnings to the farmer) is an important measure of the health of the agricultural economy, it is only one and focuses on-farm production and not the broader agricultural economy, particularly food processing. To gain a finer insight into the agricultural economy consider agriculture’s direct contribution (no multiplier effect is considered here) to gross state product (Figure 2A). These data begin in 1963 and run to 2016 (the most recent year available) and are adjusted to reflect prices in 2016 dollars. When looking at the growth rate of gross state product for all of Wisconsin and both farming and food processing, the lack of growth in the farming sector over this half century period is evident and complements the patterns in farm income (Figures 1A and 1B). When compared to the whole of the Wisconsin economy, which grew some 298% from 1963 to 2016, farm production is only 10.3% higher today than it was in 1963. Again the year to year instability in farming contribution to gross state product is evident. And the sustained downturn of the farm crisis of the early 1980s is not as evident over the past few years in Wisconsin. This is a simple indicator that the current stress in farming is not as severe as the early 1980s. When we compare Wisconsin’s farming contribution to gross state product to the national average and the Great Lakes States (Figure 2B) we find that Wisconsin is largely following national and regional trends.

So where's all this "agricultural growth" in the state? A lot of the canning factories and related food company productions. The UW-Madison study goes on to note that food processing has become a significant employer in the state.
Perhaps the more interesting employment pattern is in food processing. Somewhat surprisingly, there is little evidence of the Great Recession impacting food processing employment and there has been strong growth particularly since 2010 (Figure 3A). Employment in food processing is about 25% higher in 2017 than it was in 1969 with most of that growth occurring in the past decade or less. Indeed, the growth rate of employment in Wisconsin food processing since 2010 has been greater than the overall growth rate in total employment. This trend, however, appears to be a national trend (Figure 3C) and is consistent with the strong growth in gross state product derived from food processing (Figure 2C).

So if you look at the UW study, it illsutrates how the "bigger is better" ag economy strategy has been put in place by WisGOP over the 2010s. And it's another example of how local, smaller businesses are getting replaced by larger, more corporatized businesses, even in rural communities.

What's worrisome is not only that family farms go away and rural populations dwindle, but that a large-scale manufacturing slowdown combined with lower food prices could mean that the local food processing factory could close up. Which would lead to even fewer economic opportunities in rural Wisconsin, an area were few opportunities exist to begin with.

INVERSION!..and the Dow takes a dive.

The big word of the day – INVERSION.
The Dow Jones Industrial Average dropped 800.49 points or 3.05% to 2,5479.42, its biggest point decline of the year and fourth largest point drop of all time. The S&P 500 fell 85.72 points or 2.93% to 2,840.6, while Nasdaq Composite declined 3.02% to 7,773.94. The Dow has given up the entire rebound from a sell-off earlier in the month.

The yield on the benchmark 10-year Treasury note on Wednesday broke below the 2-year rate, an odd bond market phenomenon that has been a reliable indicator of economic recessions. Investors, worried about the state of the economy, rushed to long-term safe haven assets, pushing the yield on the benchmark 30-year Treasury bond to a new record low on Wednesday.

“The U.S. equity market is on borrowed time after the yield curve inverts,” wrote Bank of America technical strategist Stephen Suttmeier.
As you can see, every time the 10-year has fallen below the 2-year in America over the last 40 years, recession has always followed, usually within 12-18 months.

It’s not just the equity market that is in trouble these days, as the real economy also seems to be hitting the wall. And not just in America.
Investors are increasingly worried about a global economic slowdown as weaker-than-expected data in China deepened the gloom in the world’s second-largest economy. Official data published Wednesday showed growth of China’s industrial output slowed to 4.8% in July from a year earlier, the weakest growth in 17 years.

Adding to the fears is Germany’s negative GDP print, which raised the risk that Europe’s largest economy is on the verge of falling into a recession. Euro zone GDP also grew by just 0.2% quarter on quarter, a significant slowdown from the 0.4% growth in the first quarter.
But hey, cheaper borrowing rates makes it easier to pay for a $1 trillion budget deficit that’s going to get higher as the markets and the economy sputters out. So that’s…something?

Our fair ex-Governor chimes in from BubbleWorld.

Nice timing, dickhead!

I'm thinking Dems will have plenty to say about the mess we're likely to be in. Maybe the reason that Trump's "robust economy" is such a secret is because it's not so robust in much of America. Including Wisconsin, which was 39th in the country for job growth in Walker's last year in office.

Hey Scotty - let's see Trump and other GOPs try to sell "their economy" and "their stock market" this time next year, especially in the Rust Belt states you need. I wonder if you'll even try.

Tuesday, August 13, 2019

Tariffs are on! No they're off! It's almost like the idiocy is intentional

(Jake checks stock market as it opens at 8:30am. Sees DOW is down around 75, thinks little of it, goes back to other things).

(Jake checks back a half-hour later, sees this).

So I started frantically searching for headlines to explain that jump. Didn’t see much at first glance, but then I noticed this story.
The Trump administration on Tuesday said it would delay U.S. tariffs on popular electronic goods such as iPhones, Xboxes and laptops that are made in China on the same day the government reported the biggest increase ever recorded in the price of computers.

A 10% tariff was set to take effect on September on an additional $300 billion in Chinese imports that included many consumer products omitted from earlier round of U.S. duties. For the first time cell phones, computers and video-game consoles would have been subject to the tariffs.

Now those tariffs will be delayed until Dec. 15, the Office of the U.S. Trade Representative said Tuesday. The U.S. is also exempting certain toys, clothing and footwear until shortly before Christmas.

The White House had been under pressure from Silicon Valley to delay or rescind the tariffs, with companies saying they would have to raise prices ahead of the Christmas shopping season.
How convenient. Trump using the threat of tariffs to practically guarantee an interest rate cut at the next Fed meeting in September, and then saying “nevermind” after the stock market tanks and the threat of recession rises.

I’ve seen this routine far too many times in the last year. When the Trump Administration leaks out reports that they have some kind of trade talks with the Chinese, Wall Streeters respond by bidding up the market. When those talks inevitably fall through and/or Trump announces some other kind of trade restraint, those gains go away as the market tanks.

It’s almost like a lot of people in TrumpWorld know they can move the market and manipulate the coke fiends traders, and are using these rumors and statements to cash in on a classic “pump-and-dump” scheme. Almost….

Sounds like something Maxine Waters and the rest of the House Financial Services Committee might want to ask a few questions on.

Monday, August 12, 2019

Down on the farm - more lower prices, and less spending on other things

Two more bad bits of bad news for farmers in both our state and the rest of the Midwest today. The first comes from a new national report illustrating how farm closings affect other areas of the economy in Wisconsin, as fewer farms mean less spent on farm production items.
The latest report from the National Agricultural Statistics Service (NASS) found the average Wisconsin farm spent $155,093 on last year's production expenditures. That's 12 percent less than the 2017 average, which NASS adjusted after the latest Census of Agriculture was released in April.

Spending on trucks, machinery and farm improvements saw some of the largest declines from the previous year, with each expense category falling between 67 and 45 percent. These categories saw the largest spending increases in 2017 after falling in 2015 and 2016.

Kevin Bernhardt, agribusiness professor at the University of Wisconsin-Platteville, said the decline in 2018 highlights the way that farmers are trying to cut back on spending when possible after dealing with years of low commodity prices.

"That is something that's more in control of the producer to decide not to do that improvement this year, decide not to do that piece of construction this year, decide not to buy that new tractor this year," Bernhardt said.

Feed expenses, which represent the single largest production expense in the state, also fell in 2018. Farmers spent about 7 percent less on feed than in 2017.

And farmers got even more bad news today when the US Department of Agriculture said the recent stretch of good weather is making up for time lost this Spring.
Corn and soybean futures both fell sharply Monday after the U.S. Department of Agriculture's August production estimates projected larger-than-expected crops following an extremely wet spring that severely delayed corn planting, followed by dry conditions across much of the Midwest. Corn for December delivery dropped 11.5 cents, or 1.3%, to $8.8075 a bushel. The report estimated that U.S. farmers would produce 13.9 billion bushels of corn, down 4% from last year but larger than analysts had expected. Soybean production is forecast to fall 19% from last year to 3.68 billion bushels.
So almost all of the runup in prices that have happened for these crops since the rains came in Spring is going to be wiped out by harvest time. That might be good news on keeping inflation down (I had worries about this a month ago), but not good if you’re a farmer that’s barely getting by before these prices dropped today.

And those two bits of data makes it likely that this awful trend will continue for the 2019 growing season.

US deficit keeps rising while agencies are understaffed. Just in time for a budget debate!

The US Treasury Statement for July hit this afternoon, and it generated this not-surprising summary in the news.
The U.S. government’s budget deficit rose by $183 billion to $867 billion during the first 10 months of this budget year as spending grew more than twice as fast as tax collections.

The Treasury Department say the deficit for the current fiscal year through July is up 27% from the same period a year earlier. Spending rose 8% to $3.73 trillion, and tax revenue rose 3% to $2.86 trillion.
The Congressional Budget Office gives more insight to the numbers in the Treasury Statement, and it showed that the deficit is finally starting to level off compared to last year’s levels.
The federal government realized a deficit of $120 billion in July 2019, CBO estimates—$43 billion more than the shortfall in July 2018. Outlays in July 2018 were affected by a shift to the previous month of certain federal payments that otherwise would have been due on the first weekend in July. If not for that shift, the deficit in July 2018 would have been $123 billion—$3 billion more than the deficit this July.
So we’re basically at a point now where the monthly deficit is going to be in the same range as it was for that month last year.

In looking at the Treasury Statement itself, in FFY 2018, the combined August-September deficit ended up being around $95 billion. But that’s split between an August deficit of $214 billion and a September surplus of $119 billion (September is a month that features a lot of quarterly taxes being paid). If those same numbers happen in 2019, you would see the Fiscal Year deficit hit $1.08 trillion after August, but settle at the end of the year near $962 billion. That total would place it between the CBO estimates from earlier this year and the $1 trillion figure projected by the Trump Administration.

Oddly, even with a year of inflation and job growth, the amount of individual income taxes withheld from paychecks is DOWN by $15.9 billion in Fiscal Year 2019. The only reason income taxes have increased overall is because refunds are down by $22.6 billion for this year. The largest increase in receipts actually is coming for payroll taxes collected for Social Security and Medicare, which are up by $69.0 billion this year.

On the business side, corporate taxes have barely budged from the lower, post-Tax Scam levels of 2018 – a tepid 3.2% increase ($5.3 billion). The bigger increase in taxes that corporations pay comes from tariffs and other customs duties, which are up by $24.5 billion for this Fiscal Year. The problem is that this increase in tariffs isn’t being retained by the US government, but is instead going back out for farm subsidy payments to deal with plunging prices for crops due to fewer markets to send them to.

One item that has helped the government’s budget balance in recent weeks is the plummeting of longer-term interest rates. Look at how the yield on the 10-year Treasury note has fallen in the last 3 months.

That means that debt sevice costs are likely to go down, which limits one of the fastest-growing expenses in recent years. It also makes having to deal with the deficit not as urgent, since it’s not costing us that much more to add on. And it’s a good thing that those debt costs won’t be higher, because the debt ceiling deal that was agreed to in Congress and signed by Trump earlier this month allows for more spending, which would theoretically raise the deficit beyond projections that we see today.

But agreeing to caps is not the same as allotting the money. That has to be done by September 30, and it sure seems like the FY 2020 budget is an opportunity for House Dems to make Trump and the Senate GOPs have to answer for their lawlessness and refusal to hand over information. Especially in light of this issue over the weekend, where underfunding by the Trump Administration is part of this sensational story.

Perhaps the Dems could use the upcoming budget debate to ask for a dollar-for-dollar increase of corporate taxes to pay for having to adequately staff federal prisons. This is just one area that where Dems can make the GOP justify keeping the Tax Scam going in its present form as the deficits and dysfunction grows.

Given how tentative the US’s economic growth already seems due to trade concerns and a 10-year expansion that's already feels maxed out, the potential of a government shutdown at the end of September of one would likely cause a serious reaction in the stock market as well as the overall economy. And any stock market crash or recession would be a killer for the GOP’s hopes of staying in power past 2020.

So with this latest deficit news being fresh in our minds, and the annual number likely to charge past $1 trillion by early September, why not use the next few weeks to remind Americans of the fiscal mess that the GOP’s Tax Scam has put us into? Especially as we are now crunched between an overdue recession hitting now, or allowing the Bubble to be pumped up even longer, making the inevitable “POP” that much worse.

Saturday, August 10, 2019

Rich, connected and soulless men. From the White House to Epstein's private island

Seriously, what kind of person pulls this act?

Dahlia Lithwick looked at that photo and other reports around this visit, and replied with a great essay in Slate. Here's a taste.
Trump is really only good at one thing: being on television. Any event that can be engineered to look like a scene from The Apprentice can be fudged to his advantage. Stadium rallies, press availability from inside the Oval Office, even canned speeches read from a teleprompter can be salvaged; so long as he is essentially only producing a simulacrum of presidenting, he can shift along. But reality confounds him. Take him out from behind the oceans of fawning MAGA hats and put him next to a real survivor of sexual violence, and all the grinning and preening tricks fail him. Put him next to actual heads of state discussing actual international policy, and he sulks and mopes. Oh, he can pull off the photo-op; this is a man made of photo-ops. But time and time again, when he is called on to deal with real people—not glassy superfans but genuine human beings whom he allegedly serves as president—he fails to meet the occasion. The consummate reality-TV president is unerringly confounded by reality.

It’s not simply that an injured baby had to be returned to a hospital so that a grinning president could throw a Fonzie-style thumbs-up for the Twitter fans—that’s gross, yes, but it misses the point. The point is that this president, who understands only ratings and adulation and crowd size and “getting credit,” is seemingly incapable of subordinating all that to the moment. This was a moment in which grieving Americans wanted nothing more than for him to show up and be with them. The “catastrophe,” with all due respect to the unparalleled wisdom of Scaramucci, is not that he failed to show the requisite “compassion” or “empathy” for the cameras. Neither Donald Trump, nor his wife, nor his handlers and enablers, will ever understand that the real catastrophe isn’t how he appeared on television or Twitter. The real catastrophe is that Americans are dead and dying and their president is mass-producing a television show about his presidency, with their personal tragedy as a set choice.

Trump cannot function in reality. He lives in a hall of mirrors with his made-for-TV family, as the national security apparatus, the national intelligence apparatus, the foreign service, and foreign policy detonate all around him. And on the rare occasion on which he is called to step out from behind the glass panopticon that he has built, he fails, spectacularly, because that which really matters can’t be tweeted or reduced to a campaign video.
And when you're someone like Donald Trump, who has been in sheltered circles his entire life and never had to work for anything, you lose touch with reality, and think that life is nothing but a game. And you think you can get away with anything, because everything is reduced to status and social comparison.

Which brings us to the list of wealthy, connected men that was released as part of the unsealing of 2,000 pages of information relating to a lawsuit of Jeffrey Epstein (who now is magically RIP today). Look at these sickos, who were named by Virginia Giuffre as part of claims that she was exploited by Epstein as a teenager.
They include: the late scientist Marvin Minsky, modeling scout Jean-Luc Brunel, former New Mexico Gov. Bill Richardson, 71, former Sen. George Mitchell, 85, Hyatt hotels magnate Tom Pritzker, 69, and prominent hedge fund manager Glenn Dubin, 62. Giuffre has previously identified Epstein’s lawyer, Alan Dershowitz, 80, and Prince Andrew, 59, as two of the people with whom she had sex.

All the men have issued denials, with some of them, including Dershowitz, insisting that they never met Giuffre. No charges have been filed against anyone other than Epstein, who was indicted last month in New York on two counts of sex trafficking. Epstein was found dead in Manhattan Correctional Center on Saturday. Unnamed officials have said the cause was suicide, but that has not been confirmed by the medical examiner.

Some of the testimony released Friday is difficult to read, as when one 15-year-old Swedish girl, shaking and crying in fear, told a butler who worked for two of Epstein’s closest friends that she had been taken to Epstein’s island in the Caribbean and ordered to have sex with him and others. The butler, in a sworn statement, said the girl, visibly traumatized, told him that Epstein and Maxwell had physically threatened to harm her and seized her passport to keep her on the island, according to the butler’s statement.

The houseman, Rinaldo Rizzo, worked for Dubin and his wife, Eva, a former Miss Sweden and founder of the Dubin Breast Center at Mount Sinai. Rizzo said that the girl was so distraught she couldn’t recall how she got back to the U.S. mainland but that it was Maxwell who returned her to the Dubin residence in New York.

The cache of court documents, part of the defamation case’s motion for summary judgment, also shows that in 2006, when the Palm Beach police were first investigating Epstein, he was being assisted by Maxwell as part of a pyramid-like scheme the pair operated to lure young girls from around Palm Beach County, focusing on schools, colleges and spas.
And yet, we have organized our economic system to give every advantage to THESE SOCIOPATHS over the last 40 years, and Epstein was one of the few people that might have finally been facing consequences for being such a sick pud. No wonder why these guys think they can do anything.

This guy may not have gone to Epstein's. But they're in the same Club.

Every day is seems like we get more examples of clueless, bad behavior by rich old men in connected elite circles. If that isn't a walking advertisement for a 90% tax on the rich and a new type of ruling class that comes from outside of the Club, I don't know what is.

Friday, August 9, 2019

WisGOP excuses against Medicaid expansion sad and socialistic

2 telling statements in the last couple of days from right-wingers on Medicaid expansion. The first is from the Bradley Foundation's "MacIver "Institute", who put out another pile of dreck to try to argue against expanding Medicaid to the working poor in Wisconsin.

Check out the main hypothesis of this "study."
Medicaid expansion is not necessary. Affordable, taxpayer subsidized plans are abundant all around the state for those in the very population for whom Gov. Evers and his allies seek to expand Medicaid. The following table is just a snapshot of the rock-bottom premiums and relatively low deductibles made possible by taxpayer-funded subsidies for private market coverage - subsidies that total $1.4 billion - 100 percent federally funded.

And where did MacIver find these "affordable, taxpayer subsidized plans" available? ON THE OBAMACARE EXCHANGES! The same Obamacare that MacIver's right-wing puppetmasters are still trying to outlaw in its entirety!

MacIver follows up that dishonesty with more absurdity and spin regarding Medicaid expansion.
Also lost in the conversation are the tens of thousands of newly eligible enrollees who would not be covered by the enhanced federal medical assistance percentage (FMAP) rate. Under expansion, Wisconsin gets a 90 percent FMAP for childless adults added to Medicaid—meaning Badger State taxpayers would be on the hook for ten percent of the added costs.

But the larger population of parents added to the program, about 30,400 new enrollees, would not be eligible for the 90 percent FMAP. That means a new total of 199,100 parents would be eligible at the standard FMAP, in which the state kicks in 41 percent.
1. The assumption is that parents with incomes up to 300% of poverty would automatically be eligible for Medicaid because their kids are. THIS IS NOT TRUE. The eligibility rules for individuals above 133% of poverty wouldn't change one bit under Medicaid expansion...unless state lawmakers wanted it to change.

In addition, the lame complaint about state taxpayers paying 10% of the Medicaid costs of the newly-eligible people near poverty avoids the fact that state taxpayers would save 31% on the costs of every current member of Medicaid. That's a lot more savings to state taxpayers on a lot more people, which means MacIver is the latest contest on "REPUBLICANS - LYING OR STUPID?"

Then today, we got this sneering from GOP Rep and Joint Finance Co-Chair John Nygren.

Nygren's referring to news from Gov Evers' office last week that credited the state's reinsurance program with lower premiums for people buying insurance on the Obamacare Exchanges. But Johnny the Small Town Insurance Salesman isn't telling you that it comes at a cost to taxpayers - $72 million this year in state dollars, and another $128 million from the Feds.

That money goes to the insurance companies as an way to pay for large medical bills, and is done as an incentive to hold down premiums. So what "free-market, fiscal conservative" John Nygren is saying is that it is a good use of tax dollars to give out money to these private businesses in the hopes that savings will trickle down to Wisconsinites that buy insurance.

Sorry Johnny, but I'd much rather use my tax dollars to expand Medicaid so people are able to choose the services they need, instead of giving it to the middlemen/women of the insurance industry. Same goes for MacIver, who clearly thinks we should center our health policies to serve the needs of the insurance companies over serving the needs of low-income Wisconsinites. WisGOPs won't explicitly say that they're choosing business over people, but when you drill down into the policies that they support and want to fund, that's exactly what they are doing.

Also, think about how pathetic have right-wingers have gotten on this issue. They are now saying the Obamacare exchanges and federal tax dollars do such a good job in covering Wisconsinites that there's no need to expand Medicaid in the state. Someone should ask Ron Johnson and other WisGOPs in Congress what they think about that.