Sunday, March 24, 2019

Wisconsin manufacturing jobs keep falling behind. Why do they still need their tax cut, again?

Among many areas of concern is the economy these days was evidence of softening in the job market. While I noted that the meager growth of 20,000 jobs in February may simply be due to brutal weather and a balancing out of an allegedly strong January 2019, that really hasn't been the case closer to home.

Wisconsin’s job situation was already weak in 2018, with growth revised down to less than 1% for the year. And to start 2019, things deterioriated further, based on this week’s state jobs report.

Wisconsin jobs report
All jobs
Feb 2019 -3,400
Jan 2019 (revised) -800

Private sector jobs
Feb 2019 -300
Jan 2019 +100

Manufacturing
Feb 2019 -900
Jan 2019 -1,100

Those losses in manufacturing are on top of a downward revision of 14,000 manufacturing jobs that we found out about earlier this month. Which means we’ve added all of 3,100 manufacturing jobs in the last 12 months, and averaged less than 2,000 a year since the end of 2014.

Yet WisGOPs are running around claiming the massive tax cut to manufacturers that’s been in effect for manufacturers in that time is necessary and a “job-creator”? Give me a break. This analysis and chart from UW-Madison's Menzie Chinn shows the before-and-after in manufacturing job growth since the $225 million-a-year Walker/WisGOP tax cut for manufacturers has been in place.


In fact, it shows that 2018 was a year manufacturing-heavy Wisconsin actually fell behind the US rate of job growth. We just weren't told of that until after the November election, when totals were benchmarked to the "gold standard" Quarterly Census of Employment and Wages (QCEW). And the declines reported in January and February should make you wonder if the change in administrations in Madison is causing a more honest accounting of manufacturing jobs in the state (or at least it should).

So no matter what BS Noah Williams and the Koched-up hacks in WisGOP World are making up and trying to sell you, it's pretty evident that there has been no correlation between the major tax cut to manufacturers and job creation in Wisconsin. In fact, I'd likely be more accurate if I claimed it's causing a negative effect due to the encouragement of more profit-hoarding by CEOs.

And now if this week's interest rate revision is as indicative as it’s been over the last 40 years, it means that an official recession will start by this time next year. So I certainly don't see where it helps to be giving preferential treatment to a group of businesses that haven't done anything to hold up their end of the bargain. Especially if available resources for schools and road repairs drop due to the lack of activity, there's no way those oligarchs should be allowed to continue their free ride.

The economic outlook is back! And tells a tale of Wisconsin's subpar record

Among many improvements with the start of the Evers Administration was one that came out on Friday- the return of The Wisconsin Economic Outlook from the Department of Revenue! As the state continued to fall farther behind during the Age of Fitzwalkerstan, the Walker Administration stopped distributing this quarterly report 4 years ago. But now that Evers is in office, this analysis has returned.

In addition to a look ahead at what it thinks Wisconsin's economy will look like for the next two years, the DOR's Economic Outlook also looks at the state's recent economic history. And it's not so good.
Wisconsin personal income grew  3.6% in 2017, just above the 3.5%  growth in the Great Lakes region and below the 4.4% growth nationwide.  Wisconsin personal income should post growth of 3.8% in 2018 and 3.9% in 2019,  compared to 4.5% growth  nationwide in both years.     

Wisconsin employment grew at  slightly less than half the pace of  the U.S. in the last two years. Wisconsin added just 21,500 jobs  in 2017 and 23,000 in 2018, after  adding an average of 33,700 jobs  per year between 2011 and 2016.  Wisconsin employment posted  year‐over‐year growth of 0.7% in  2017 and 0.8% in 2018, compared  to growth of 1.6% nationwide.   The forecast calls for similar  growth in 2019 and 2020, while  U.S. employment growth slows to  1.4% in 2019 and 1.0% in 2020. 

On the positive side, the DOR report indicates that Wisconsin's unemployment rate will continue to be around 1% below the US rate, as it has been for most of the last 10 years. But the trend of lower wage growth is also expected to continue (and yes, I find this to be an oddity).
Wisconsin wages and salaries  grew 3.4% in 2017 in Wisconsin  and 4.6% nationwide.  Wisconsin's  forecast calls for total wage  growth of 3.9% in 2018 and 3.6%  in 2019, compared to 4.7% and  4.6% nationwide.  The share of  wages and salaries relative to total  personal income stands at around  50% in 2017 and shows a  continuing declining trend since its  peak at 63% in the '60s. 
Despite those lagging numbers, the DOR's Economic Outlook says that the state's revenue picture is in line with expectations, with 4 months left in the 2019 Fiscal Year.


Lastly, the Economic Outlook also notes that Wisconsin has fallen behind the country on it's growth in economic output, and that situation isn't expected to change much either.
State Gross Domestic Product  (GDP) shows Wisconsin real GDP  growth of 1.2% and 1.8% in 2016  and 2017, respectively, compared  to 1.6% and 2.2% nationwide.  As seen at the national level, the tax  cut and fiscal stimulus passed in  2017 will boost 2018 growth to  2.4% in Wisconsin and 2.9% in the  U.S.  The forecast expects  Wisconsin real GDP to grow 2.0%  in 2019 and then decelerate to  1.5% in 2020 and 1.1% in 2021, as  the federal stimulus fades out. 
Given that we reached an interest rate inversion on Friday, which has reliably called every recession in the last 40 years, I'd say those GDP predictions may be a bit, ahem, aggressive.

But it's nice to see honest analysis return to state government, instead of campaign propaganda at taxpayer expense, and bad news being hidden. Let's hope it's yet another sign that Wisconsin is taking steps back toward the decent, open governance that we deserve.

Saturday, March 23, 2019

Two big words from yesterday- not "March Madness", but "RATE INVERSION"

Earlier this week, the Federal Reserve was sending signals that the US economy was slowing down quickly from the sugar high of the GOP Tax Scam in 2018, and I noted that we were nearing a situation that has predicted every US recession in the last 40 years.

Well, that situation arrived on Friday, and was accompanied by a 460 point drop in the DOW.
A closely watched section of the Treasury yield curve on Friday turned negative for the first time since the crisis more than a decade ago, underscoring concern about a possible economic slump and the prospect that the Federal Reserve will have to cut interest rates.

The gap between the 3-month and 10-year yields vanished on Friday as a surge of buying pushed long-end rates sharply lower. Inversion is widely considered a reliable harbinger of recession in the U.S. The 10-year slipped to as low as 2.439 percent.

U.S. central bank policy makers on Wednesday lowered both their growth projections and their interest rate outlook, with the majority of officials now envisaging no hikes this year. That’s down from a median call of two at their December meeting. Traders took that dovish shift as their cue to dig into positions for a Fed easing cycle, pricing in a cut by the end of 2020 and a one-in-two chance of a reduction as soon as this year.

“It looks like the global slowdown worries have been confirmed and the market is beginning to price in Fed easing, potential recession down the road,” said Kathy Jones, chief fixed-income strategist at Charles Schwab & Co. “It’s clearly a sign that the market is worried about growth and moving into Treasuries from riskier asset classes.”
Uh oh...

One area that might benefit from the plummeting interest rate environment is the US housing market, which became increasingly shaky over 2018 as higher prices and rates made housing less affordable for many. Data that came out on Friday indicated that these trends reversed in February.
The National Association of Realtors said Friday that existing homes sold at a seasonally adjusted annual rate of 5.51 million last month, a decisively sharp rebound from a pace of 4.94 million in January.

The burst in sales points to the housing market regaining the momentum that it lost in the middle of 2018, after a spike in rates for home loans caused sales to slow. The February sales figures point toward growth in sales of homes priced between $250,000 and $500,000, a range that is generally affordable to middle-class families.

“This was fueled principally by an improvement in affordability resulting from a combination of slower house price gains, lower mortgage rates and more rapid wage growth,” said David Berson, chief economist at Nationwide Mutual Insurance.

Still, existing-home sales are down 1.8 percent from a year ago because of the severity of last year’s slowdown. But 30-year mortgage rates have since tumbled after peaking in early November at roughly 5 percent, helping sales to recover as that average has fallen to 4.28 percent this week, according to mortgage buyer Freddie Mac.
That jump in housing sales was one of two reasons that the Atlanta Fed bumped up its projected rate of growth for Q1 2019 yesterday, from 0.4% to 1.2%.


About 1/3 of that recent improvement is due to the improved housing figures in the last week. But if you dig into the Atlanta Fed's calculations, about 2/3 of that is due to inventories continuing to stay on the shelves, despite having inventory builds in the last 2 quarters. Which should make you wonder when orders stop being made because they're not necessary to have product ready to go.

Along those lines, another trigger for Friday’s rate inversion was a new report showing that the US’s growth in manufacturing was at its lowest levels in 2-3 years.
The seasonally adjusted IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™ ) 1 registered 52.5, down from 53.0 in February and the lowest reading since June 2017.

Softer rises in output, new orders and employment all weighed on the headline PMI in March. The latest expansion of production volumes was only modest and the least marked since June 2016.

A number of manufacturers commented on a cyclical slowdown in client demand. Reflecting this, new orders increased at the weakest rate for just under two years in March.

Growth of input buying was the slowest since May 2017, with survey respondents citing the need to adjust purchasing volumes to softer demand conditions. This helped alleviate pressure on supply chains, with lead-times from vendors lengthening to the least marked degree for almost one-and-a-half years.
So add it to the pile of evidence of economic softening that has come up over the last few months.

Also, the IRS released its latest updates on tax refunds, and they still continue to lag behind last year’s totals, down $5.6 billion as of March 15. As we have seen throughout much of this tax season, the refund amounts are basically the same as FY 2018, but the lower totals are due to 1.8 million fewer Americans getting refunds at this point of the year. Those gaps in amounts and number of refunds between 2019 and 2018 have persisted for the last month.


Yes, lots of us may have missed these bits of economic information because we were busy spending numerous hours socializing and watching hoops yesterday (guilty). But the real Madness may just be starting when it comes to the US economy and financial markets in the near future, and it's time to look to see if the lack of refunds and slowing economy starts to have its effect on many a Main Street in this country as the 2010s end.

Friday, March 22, 2019

Walker abused nationally on redistricting

Our fair ex-Guv has a new gig. And he got a lot of national attention on his first day.








Yes, ex-Guv Dropout is a lying partisan hack. But what's even more disgusting is the low opinion they have of voters as they try to slip this BS through.

Fortunately, Scotty got exposed nationally yesterday while losing in Wisconsin courts on his Power Grab. And if the WisGOPs want to play "victim" for being held accountable for their silliness, we need to be driving the nails into their cross.

Wednesday, March 20, 2019

WISGOP throws a tantrum on building projects, and blows their advantage

A few tweets on today's absurdity at the State Building Commission.


But if Vos and Fitz agree with a lot of the projects, why are they ordering their WISGOP appointees not tovote for them?




Here's the most idiotic part about this GOP stunt today. IT DIDNT DO ANYTHING! The whole thing goes to Joint Finance, and projects can be added/removed there just like it would have if the Commission signed off on most/all of the projects.

Look, I get that WisGOP may not like what Evers' did in the Capital Budget. Heck, I think it borrows too much (even if a lot of it is paid back via non-tax sources like room and board, parking, and other user fees), and is so big it gives a too-easy target for it to be criticized.

But instead of surgically improving the Capital Budget and still making the point about "overspending," WisGOP stamps their feet like children saying "NO! NO! NO!" And now the gerrymandered GOP legislators will look very foolish, while needed infrastructure continues to crumble.

I'm sick of these adolescent dopes messing up my state.

Fed speaks, Wall Street celebrates...then reality of slower economy sinks in

I occasionally look at the stock indexes while working, and around 1:15, I noticed that there had been quite a turnaround.


Huh, what happened around 2 pm Eastern?
The Federal Open Market Committee on Wednesday said it will hold benchmark interest rates unchanged at between 2.25% to 2.5%, marking the second straight pause on rate increases. This decision been widely expected by market participants.

The Fed’s latest dot plot, a chart showing each of the FOMC members’ target interest rates for the near- and long-term, pointed a median of zero rate hikes in 2019. This is lower than the two rate increases in 2019 suggested in the December dot plot, the last time the projections were released.

The FOMC also said in a separate statement that it expects to “conclude the reduction of its aggregate securities holdings in the System Open Market Account (SOMA) at the end of September 2019,” referring to its balance sheet normalization process.
Both of these items indicate that money won’t be tightened in the near future. And sure enough, longer-term interest rates took a dive, especially the benchmark 10-year note.


If you look at the Fed’s statement on their interest rate decision, while they talk a nice game about a balanced economy with continuing growth, you can tell they’re seeing some weakness.
Information received since the Federal Open Market Committee met in January indicates that the labor market remains strong but that growth of economic activity has slowed from its solid rate in the fourth quarter. Payroll employment was little changed in February, but job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Recent indicators point to slower growth of household spending and business fixed investment in the first quarter. On a 12-month basis, overall inflation has declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.
I read that and I wonder if the Fed is a bit behind the curve on the inflation. Those lower energy prices are based on what they looked like at the start of 2019, when gas was below $2 a gallon. It’s risen more than 50 cents in my neighborhood since then, and oil futures hit $60 today for the first time in several months, meaning gas will likely continue to climb in the near future.

If inflation heads back toward the 2.5%-3% range that we saw for much of 2017, the Fed is going to have a problem. It will become stuck between keeping prices in check while not ending the Bubblicious party that’s been going on over the last 3 months on Wall Street, and turning the “slow” economy into an all-out recession.

Fed Chair Powell publicly claimed after the meeting that “all was well.”
“The U.S. economy is in a good place, and we will use our monetary policy tools to keep it there,” Powell said in press conference Wednesday. “It’s a great time for us to be patient and watch and wait to see how things evolve.”
But the Fed’s own report had them lowering GDP growth now, and for the future.

Powell’s fear of a Trump Tantrum probably kept him from outright admitting that our ongoing economic expansion is sputtering, but the bond markets sure seem like they know a downturn is coming. While the 10-year was shedding more than 8 basis points today, the 3-month note nudged up by a point.

These two fixed-income securities are now only 6 points away from each other, and history shows that when the 10-year inverts below the 3-month note (the red line on this chart), recessions follow.


Coked-up Wall Streeters may have liked the statement from the Fed today when they first heard it, but the rest of us should see major warning signs flashing. And given that the market couldn’t hold that sugar high following the Fed announcement, I think even the coke fiends know the party might be ending soon.

Tuesday, March 19, 2019

The other way Evers may have gone too far - the last few tax hikes

As we wait for the Legislative Fiscal Bureau to release its summary of Governor Evers' first budget, I wanted space to step back and go over another area where I think Evers may be asking too much - tax changes.

It's not that Evers is wrong to ask for a lot of these things- as you'll see, I think many of the provisions do a good job in trying to re-level a playing field that has been slanted far towards the rich and corporate and away from the vast majority of the rest of us. I'll start by pointing out the tax cuts, which are targeted toward the middle and working classes, and also discuss the costs of these tax cuts.

Indexing Homestead Credit
$38.9 million in year 2.

EITC Expansion
$53.1 million

Middle-class tax credit
$421.5 million in FY20 and $412.0 million in FY21.

Evers also wants to make a tax shift that moves the income tax cut passed by the WisGOPs in the Lame Duck Session from one that gives more to the rich, and redirects it so that all taxpayers get a similar tax cut. This is described in the official budget summary as follows.
The Governor recommends modifying the current law automatic individual income tax rate reductions associated with increased sales and use tax collections from remote Internet sellers, resulting from a U.S. Supreme Court decision, to focus the entirety of the cut on the lowest individual income tax bracket.
That makes for quite a bit of tax relief for people on the lower 80% of the income scale. And it is more than offset by targeted tax increases on other organizations and individuals.

Reverse M&A tax cut for manufacturers that make more than $300,000
Increase in tax revenue of $279.5 million in FY20 and $237.1 million in FY21.

Capital Gains changes
Increase in tax revenue of $285.1 million in FY20 and $220 million in FY21.

End of Private School Tuition Tax Break
Increase in tax revenue of $12.1 million in FY20 and $12.2 million in FY21.

These 3 items all reverse Walker/WisGOPs giveaways to the rich, corporate and DeVos-paid voucher school backers. All are pretty good ideas, and if that was all we had, the net effect on revenue would be an increase of around $120 million over the 2 years - much less than the $320 million saved through taking Medicaid expansion.

But then more is needed to pay for expanded health services, restoring the Fitzwalkerstani cuts to K-12 funding for public schools, and giving more aids to local governments.


So more revenue is needed. The next 2 revenue raisers are relatively straightforward, as they clarify and streamline certain provisions, and I'll go back to quoting the budget document to describe them.

E-Commerce Sales Tax
The Governor recommends clarifying current law to explicitly require Internet marketplace providers to collect and remit sales and use tax on taxable sales facilitated by the marketplace on behalf of third parties. This provision is expected to increase collection of taxes already owed to the state by $26.8 million in FY20 and $67.1 million in FY21.

E-Cig Tax
The Governor recommends the imposition of a tobacco products tax on vapor products at the rate of 71 percent of the manufacturer's list price. The tax would also apply to any cartridge or container of any solution, which may or may not contain nicotine, that is intended to be used with an electronic cigarette or similar product. The fiscal impact is an estimated increase in tax revenue of $14.9 million for FY20 and $19.8 million in FY21.

Plus there is another $6.8 million from charging cigarette tax on little cigars.

That's still not really a big deal. While I doubt the Koched-up WisGOPs would have signed off on many of these tax increases, they certainly would have been put on the defensive to do so if that's all that was in the budget. Most Wisconsinites wouldn’t be affected by any of these tax increases, but many more would receive a tax break under these provisions, and there would still be nearly $255 million more to use for schools or Scottholes or whatever. And that’s before we talk about the $325 million saved from Medicaid expansion.

But I fear this part of Evers' budget is going to hit a lot more Wisconsinites, which will allow the GOP to have a much easier talking point of “look at all these tax hikes”.

Internal Revenue Code Update
The Governor recommends modifying Wisconsin Statutes to conform with changes made to the federal Internal Revenue Code. The net fiscal impact of these changes is an increase in tax revenue of $187.9 million in FY20 and $174.6 million in FY21.

That’s a $362.5 million run up on items that aren’t adequately identified. And I fear that the LFB will show that much of it will hit workign and middle-class Wisconsinites who have lost the usefulness of their itemized deductions from the GOP's federal Tax Scam (as many of you are likely aware of if you have filed your taxes).

Those last tax hikes may make it far too easy for the GOP to say “Forget it, throw it all out. It’s $1.3 billion in added taxes, herpy derpy yadda yadda.” It also takes away the card that Evers played when he rightfully vetoed WisGOP's unfunded tax cut last month, because the added investments in Evers' budget result in a structural deficit just like the WisGOP tax cut did, even with these tax increases.


It seems like an unforced error, just like I argued that the last few spending items (or decision not to cut spending on GOP giveaways like vouchers) will make a major difference in the bottom line. Which threatens to spoil the image of what is generally a good, progressive budget that tries to reverse some of the damage of the past.

Maybe the plan was for Evers to "go big" and compromise down from there, and while I appreciate that idea (it's not like WisGOP is going to be reasonable no matter what you do), I think a few limits here and there would do a lot for the public opinion battle. And let's face it, much of what is in this budget debate comes down to PR at this point, and likely will stay that way for the next 2 years. So why give dishonest WisGOPs something to jump on when it's not really needed?

Shopko sunk by vulture capitalism and bad Wisconsin business policies

As this week dawned, we knew that a major Wisconsin retailer was in big trouble, and this story from Monday is worth thinking about as you pass by a Shopko “Store Closing” sale in your community.
In a motion filed in bankruptcy court [last] Tuesday, a committee representing some of the company's largest landlords and suppliers said $67 million in special dividends and fees constituted a "fraudulent conveyance" while another $50 million in dividends were "illegal."

The creditors committee is seeking a Nebraska bankruptcy judge's permission to attempt to recover those claims, which could add millions of dollars to Shopko's balance sheets at a time when unsecured creditors, those who do not have a claim to collateral, face a real chance of not receiving anything of what the Ashwaubenon-based retailer owes them for inventory, services and leases.

In February, Shopko's two independent directors identified $179.5 million in dividends paid to Shopko's private equity owners — Sun Capital, Waverly Securities, KLA Shopko LLC and H.I.G. Sun Partners Inc. — between 2007 and 2015. The company borrowed money to pay the dividends, according to court documents.
Your hometown...hedge fund play?

While a “fraudulent conveyance” merely allows for a court to recover some of that money to shore up its balancer sheet, it’s still a reflection of horrible priorities, where hedge funders got paid while Shopko went under and screwed over many people in the process with job and business losses.

Then that was followed by worse news yesterday, where we found out those creditors aren't likely to get much of anything, because the other 120 Shopkos in America will also be no more within 3 months. And that the job losses will also happen at the company's GB-area's corporate offices.
Employees at Shopko headquarters, in Ashwaubenon, found out about the liquidation during an emergency meeting on Monday. Individual stores had team meetings to pass along the same information. An employee who works at the headquarters said longtime employees teared up as managers told them the news.

The liquidation will leave big holes in tow Green Bay area shopping malls: Bay Park Square in Ashwaubenon and East Town Mall in Green Bay. But it also means big impacts in smaller communities like Oconto and Sister Bay, where there isn't another large retailer or a pharmacy to take over prescriptions.
In addition to loss of one of the few sizable corporate headquarters that are in the Green Bay area, there are now going to be large amounts of empty retail spots in Wisconsin communities, which increases the property taxes that homeowners will have to pay as a result. And as the article alludes to shopping opportunities will be significantly reduced in some smaller communities.

The liquidation announcement was an abrupt reversal from what was expected from Shopko this week.
The bankruptcy court had scheduled an auction for Tuesday morning in the hope of driving up the price of initial bids that were submitted last week. On Monday, it announced the auction was canceled and a bankruptcy consultant would oversee liquidation over the next 10 to 12 weeks.

The court filing indicates all store closures will be completed by June 16.
Remarkably, it was barely 7 years ago that Shopko was merging with Pamida and moving corporate jobs from Nebraska up to Brown County. Naturally, that move included a waste of WEDC tax dollars.
The merger, expected to be finalized by next month, will create one of the largest U.S. retailers and shift 120 jobs from Pamida's headquarters in Omaha, Neb., to Green Bay, where 600 work in the Shopko headquarters.

With annual revenues of $2 billion, Shopko has 149 stores in 13 states. Pamida has 193 stores in 17 states and annual revenues of about $1 billion. Its 14 stores in Wisconsin include locations in Reedsburg, Adams and Lancaster.

Both companies are owned by affiliates of Sun Capital Partners, a private investment firm in Florida. Financial details of the merger were not disclosed.

However, the Wisconsin Economic Development Corp. will provide $2 million in tax credits based on creating 129 jobs over the next three years, said Tom Thieding, a spokesman for the WEDC.
Huh, you mean a "jobs announcement" made before Scott Walker's recall election didn't quite work out? Imagine that.

Yesterday was a sad one for a lot of Wisconsin communities, and the end of Shopko will leave a major gap in a lot of parts of Wisconsin going forward. But this also illustrates yet again why we shouldn’t be trusting our state’s corporate leaders and their GOP-puppets on economic policy, as all they care about is short-term headlines and rent-seeking, and it fails in the long-run.

Foxconn claims it'll build a factory by 2020. We should hope they don't

Despite falling behind schedule, Foxconn is sticking with their claims that they’ll actually make something in Racine County.
Foxconn Technology Group (Foxconn) today announced the next steps in construction of its Gen6 advanced manufacturing facility in the Wisconn Valley Science and Technology Park in Racine County, Wisconsin. The next phases of construction will begin by Summer 2019 and the facility will begin production in the 4th quarter of 2020.

“Our commitment from day one has been to establish a winning formula for Foxconn and for Wisconsin,” said Dr. Louis Woo, Special Assistant to Foxconn Founder and CEO Terry Gou. “We continue to expand our presence around the state, create jobs, and deepen our partnerships while innovating and adapting to meet changing market needs. We’re investing in Wisconsin because we know manufacturing here is going to drive even greater success and growth for Foxconn and for the community.”

The initial Gen6 facility will manufacture LCD screens for use in a variety of product applications, including vertical solutions for industries such as education, medical and healthcare, entertainment and sports, security, and smart cities. The plant is expected to begin production in the 4th quarter of 2020.
Of course, the Racine County plant was supposed to be a Gen 10.5 factory making much larger panels, and was supposed to include a separate glass factory, so this is already significantly downsized from the promises made in the last groundbreaking at Foxconn. And at least one of these guys probably knew that at the time.


You may think this is good news, that at least we aren’t left with a giant vacant field in Mount Pleasant. But it is not. It’s actually Foxconn maximizing the handout in the short term with the least amount of jobs possible.

Go back to the contract that Foxconn made with the Walker Administration and WEDC in November 2017. I’ll even go off of the Walker Administration’s rosy spin on it to show where the problems are.

Allegedly as many as 1,500 people might work at the plant, and while you should be rolling your eyes at that claim given the multitude of times Foxconn and WisGOP hacks have lied about this, remember that Foxconn’s “workforce” counts anyone who works for the company throughout the state (or beyond?). Then note the minimums required to get the full tax writeoffs from Wisconsin.

Minimum job thresholds for Foxconn
To get a 15% payback for factory costs
2019 520
2020 1,820

To get 17% payback on salaries
2019 520
2020 1,820

So if Foxconn has a few people working seasonally, counts anyone associated with Foxconn’s Wisconsin “projects”, and has their connected contractors run up the bill to $2 billion in total “investment”, and they can get $300 million for the factory and $80 million or so in jobs.

The timing is quite convenient as well, promising the factory to be open “in the 4th Quarter of 2020” – right before the presidential election so another photo op can take place. Or so Foxconn can quietly admit after the election that the high numbers of jobs and commerce isn’t quite going to work out, as they did after this November’s election.

Soon after that 2020 election, it seems highly likely that Foxconn would automate the overwhelming majority of whatever work force may be at this Gen 6 factory, and dare the State of Wisconsin to claw back their money after 2023 (which is the earliest date it can happen according to the contract).


Which proves yet again that the best thing that could happen for Wisconsin is if this expansion at Foxconn doesn’t happen, and they go away. If we get 1,900 jobs throughout Wisconsin, that would be a state cost of $380 million is a cool $200,000 a job, and that doesn’t even count the $1 billion+ more in infrastructure and local subsidies that have been handed out.

Cutting these guys a check of $100 mil (or forcing a court settlement along those lines) to have them clear out would be preferable than the massive amount of money we would stand to pay for these short-time jobs. Of all the lies told with the Fox-con, the biggest one is that we need to spend all of this money to add jobs - the growth may well have appeared without the massive WEDC handouts and local kickbacks.

So let's find out if someone else can make it in Racine County. Use the massive amounts of acres that have been cleared in Racine County for businesses that actually are invested in and want to grow in Wisconsin, instead of grifting off of sweetheart deals from gullible/crooked GOP politicians. I understand there's a giant convention in Milwaukee for the Summer of 2020 that could use some extra lodging. Seems like a win-win solution, doesn't it?

Monday, March 18, 2019

Walker now doesn't like debt? That's not what his record shows

Looks like our fair ex-Governor has finally found a (symbolic) job.
The Center for State-led National Debt Solutions (CSDNS) today announced its selection of former Wisconsin Governor Scott Walker to serve as National Honorary Chair. This summer, CSNDS will launch a 10-state campaign to support the ongoing effort to attain the final 6 states needed to call a convention limited to the proposal of a balanced budget amendment to the U.S. Constitution.

“If the [Congressional Budget Office]’s projections hold steady, we’ll see trillion-dollar interest payments in 5 – 10 years which will account for approximately 25% of federal revenue, yet Congress has proved unable to rein in its spending,” Governor Walker said. “Where Washington has failed, the states must step up and lead – using their constitutional authority to solve the problem.”

Given the dire threat America faces and Congress’ refusal to address it, momentum is building for the states to take constitutional action. Under Article V of the U.S. Constitution, it takes 34 states to call a convention to propose an amendment and 38 states to ratify it. Presently, 28 of the 34 required states have called for a convention to propose a balanced budget amendment.
There is a lot of absurdity here.

Some of that absurdity is due to Walker's horrendous record of debt with the Wisconsin DOT. Here's a recent bit of information from WisDOT reminding us of the mess Walker left due to his "fiscal conservatism" on road funding.
Total overall budget allocations [for WisDOT] have remained relatively stable from 2005-2007 though 2018-2019
• The budget allocation for debt service has increased 95% over that time period
• This increase has reduced the budget allocation to other program areas
WisDOT also notes that paying off debt took up an increasing amount of expenses since Walker took office in 2011, and is projected to keep growing in the next 2 years as a result of past borrowing.

That record debt in WisDOT accumulated because Walker refused to raise taxes or fees while costs of construction continued to go up (and it still wasn’t enough to prevent all of the Scottholes that have come up in recent years). And you can bet the Koched-up oligarch group that Walker will represent will want similar idiotic levels of disinvestment as their solution to balancing the budget.

The other reason it is absurd for Walker to talk about the US debt is because Walker vocally backed the GOP’s Tax Scam that is a major reason those long-term budget problems and higher interest payments exist. That includes a claim from Governor Dropout at the end of 2017 that Wisconsinites would get over $200 more a month due to the Tax Scam. As you write your check to the IRS over the next 4 weeks, is that how it worked out for you?

The Tax Scam is certainly adding to the deficit, as a CBO report from earlier this month indicated that the country’s budget deficit had risen to $537 billion in the first 5 months of Fiscal Year 2019.

Our year-too-date deficit is $146 billion (37.3%) above where we were at the same time last year. Most of the increase in that deficit was due to increased spending of $142 billion in Fiscal Year 2019, but tax revenues were also down $4 billion, which is something that shouldn’t be happening in a time of economic growth and 2% inflation.

And the GOP Tax Scam is the reason why those revenues are down, especially on the corporate side.

Change in tax revenues, Oct-Feb
Individual Income Tax
FY 2018 $648 billion
FY 2019 $628 billion (-3.0%)

Corporate Income Tax
FY 2018 $74 billion
FY 2019 $59 billion (-19.2%)

The only reason that receipts are close to FY 2018 levels are due to the following:
· $21 billion more in payroll taxes for programs like Social Security and Medicare
· $14 billion in added tariffs
· $8 billion from the one-year excise tax on health insurance providers in 2018 (it is not in effect now).
· $10 billion in reduced tax refunds. Keep your eye on this one going forward, as the IRS says refunds were still down by $5.3 billion as of March 8.

On the expense side, some of that $142 billion increase is due to more expenses falling in 2019 due to the last October 1 falling on a Monday ($44 billion). The rest of the $99 billion is
· Social Security, Medicare and Medicaid $35 billion (+4.3%)
· Military $24 billion (+9.5%)
· Interest on the Debt $20 billion (+15.0%)
· Everything else $20 billion (+3.8%)

So what does Scotty want to see cut out of that? C'mon kiddo, enlighten us!

And doesn't our Dropout Ex-Guv know that we can use the Internet to find information, which tells us how miserably and recklessly he and his fellow Republicans have been when it comes to deficits and debt? And how their absurd "no tax increase" stances have kept Wisconsin well behind the rest of the country for job growth over the last 8 years, while our roads, schools and services have declined?

Sunday, March 17, 2019

Real health care academics find WisGOP study against Medicaid expansion to be "garbage work"

You know that "study" that WisGOP politicians used to say Medicaid expansion in Wisconsin would raise costs for most other people? Guy Boulton of the Journal-Sentinel talked to actual academics, and it was found to be the BS we suspected it to be.
“My real concern is they are trying to affect policy with such garbage work,” said Tim Classen, a professor of economics at Loyola University in Chicago.
Why is it garbage? Well, it goes beyond the fact that it was created by Will Flanders of the Bradley Foundation front group WILL, and right-wing hack Noah Williams of the Koch-Bradley-funded CROWE Institute at UW-Madison.

One of the reasons the right-wing study is absurd is that it conveniently ignores what has happened since the Medicaid expansion and ACA insurance exchanges have been in full effect in America.
The expanded eligibility for Medicaid programs under the Affordable Care Act didn’t begin until Jan. 1, 2014. Health systems would begin to see any purported shortfalls from more patients’ being covered by Medicaid during that year.

Insurers typically negotiate three- to five-year contracts with health systems and other providers. Even assuming that health systems could raise prices for every heath insurer if there was a shortfall, the price increases would not have been set until the following year, 2015.

Insurers and employers who self insure, in turn, set premiums for their health plans for the following year in September or October.

This means that any costs shifted to private insurers wouldn’t have appeared in the cost of health plans until 2016 at the earliest.
.Anyone with a clue about how insurance's many interacting parts would have known that. And I'll give Flanders and Williams "credit" in the sense that I think they know that too, but they're paid to come up with a certain conclusion, so they manipulated the numbers to say what they wanted to say, and left this important context out.

Naturally, WisGOP politicians use these cherry-picked "facts" as a reason to ignore the hundreds of millions of dollars of savings from Medicaid expansion, and the will of the public.

It's almost like Robbin' and the Bradley's are working together, isn't it?

Another bit of context the Bradley Boys ignored was that it didn't look at Wisconsin's particular circumstance, even though the policy paper allegedly was supposed to analyze whether Wisconsin should make this move.
Critics of the study done by Flanders and Williams also contend that it did not account for the fact that Wisconsin already partially expanded Medicaid.

“The issue that really is not addressed for me is Wisconsin’s expansion has sort of already happened,” said Laura Dague, an economist and associate professor of health policy at Texas A&M University. “The application of these numbers to the Wisconsin context is pretty questionable.”

Basically, the study comes up with a national average of the purported cost shift to private health plans from a broad group — adults with incomes up to 138 percent of the poverty threshold. It then applies that average to a subset of that group — those with incomes between 100 percent and 138 percent of the threshold.
Needless to say, that's not the only people that a private insurance group pays for. In fact, one of the concerns about ACA is that the exchanges and expanded Medicaid pick up the sickest and most economic vulnerable individuals, which is a boon to private insurance companies since they don't need to pay for those individuals as much anymore.

The article ends with this great passage and comment.
Whether to accept the federal money is a key issue in the debate. And the position of the Republican lawmakers frustrates Robert Laszewski of Health Policy & Strategy Associates, a health care consultant and Wisconsin native who has been a sharp critic of flaws in the Affordable Care Act.

“Why are we even having this discussion? The data is there. The studies are there. The practical information is there,” Laszewski said. “When are these people going to give up and finally admit that forcing Wisconsin taxpayers to pay something the federal government has been begging to pay for is not smart policy?”
That answer's easy.

1. When the Koch/Bradley money dries up and there are no more donations to be made by trying to sabotage Obamacare (I wouldn't expect that to happen for a while).

2. When voters in their districts toss their asses out of office for deliberately hurting Wisconsinites.

Saturday, March 16, 2019

Weekend reading - a new direction is possible in Wisconsin

It's a busy time in my world, so I wanted to forward to you a couple of recent articles from progressive policy wonks, who were both coming up with proposals that can improve this state's economic future.

The first is from professors Jeffrey Sommers and Michael Rosen, who say it's well past time to raise the minimum wage in Wisconsin, and use their column to rebut many of the arguments against doing so.
But, “Won’t many small businesses relying on cheap labor expire without it?” No, because their competition will have to pay the same wage they are paying when the minimum wage is raised. Take wages out of competition and firms will be forced to compete on quality, innovation and service. Of course, some workers may be exempted, as some are now with the minimum wage.

But, “Hey, I currently make $15 an hour, so why should burger-flippers make more than me?” First, no one should work full time and live in poverty. Second, these folks work really hard. And, finally, the minimum wage is a floor that lifts up all low-wage workers’ pay. If the minimum wage were eventually raised (in steps) to $15, your pay would almost certainly rise above $15 an hour. Your self-respect should not be dependent on making a few dollars more than someone cleaning an office building or emptying bed pans (honorable, needed, and hard jobs). Remember, you are going to get a raise too!
At least you would think so, because there is going to need to be a sizable premium above minimum wage if businesses are going to retain the talent that they have. The "divide and conquer" crowd doesn't want people to think that, and to be resentful of people just below them on the wage scale. But in a time of sub-4% unemployment, it's the employers that are the beggars, and if the higher minimum wage was combined with Medicare for All, those employers would have more funding available to pay salary since they don't have to think about offering health care benefits.

Sommers and Rosen continue to knock down the arguments against a higher minimum wage, pointing out that it is good for the economy and even employers if we pay more for quality work.
But, “How can America compete against other countries if its wages go up?” The United States used to have the world’s highest minimum wage for developed countries (some countries set this by law, others let unions set them). Know where we are now? Dead last for developed countries. Has this made the U.S. more competitive? No, it just means there are more people living in misery requiring public support. Inequality has soared to unprecedented levels. The U.S.’ minimum wage, currently at 1950-inflation-adjusted levels, forces people to go deeply into debt to buy the goods and services our economy makes. That makes the billionaires on Wall Street richer, but Main Street poorer. It also makes our economy more liable to financial busts.

But, “Won’t the price of my Big Mac go up?” Sure, prices will rise a few cents. But c’mon, don’t be a chiseler! Aren’t you willing to pay a little more so people who work hard and their children don’t live in poverty? We understand that even parts of the middle class are struggling. But remember, if the minimum wage increases, even many middle-class workers will see their wages rise...

But, “Don’t all employers want low wages?” No. Many employers want to pay more because when they do employees become more efficient at their jobs and quit less often. That saves companies money! Why don’t they pay more, then? There’s a limit to how much more you can pay than your competition. Costco, for example, is the biggest lobbyist in the United States for raising the minimum wage. They want to pay people even more, but are blocked by bottom-feeding businesses like Walmart that pay low wages and rely on government to cover part of their wage bill through social programs.


I also wanted to mention that the Wisconsin Budget Project recently released "A Blueprint for Stronger Growth and Shared Prosperity." Here the main ideas.
#1 Invest in healthy and well-educated workers and communities

#2: Make work pay and uplift working families

#3: Strengthen Wisconsin’s infrastructure and communities

#4: Close tax loopholes that favor big corporations and the well-connected.
Some of the items the Budget Project wants are included in Governor Evers' budget, including indexing of the Homestead Credit, an expansion of the Earned Income Tax Credit, expanding Medicaid under the Affordable Care Act, increased investments in K-12 education and child care, and more broadband Internet in rural communities.

But the Budget Project also asks for a few things that weren't in Evers' budget, including a requirement for employers to offer paid family and sick leave, and a few other items.
Limit the practice of suspending driver licenses for low-income Wisconsinites who are unable pay fines and forfeitures: End suspensions for offenses unrelated to driving, waive reinstatement fees, allow and encourage judges to use alternative sanctions, and authorize the issuance of occupational licenses.

Take a strong stand against wage theft and wage discrimination: Enact and enforce a strong wage theft prevention law similar to the ones enacted in California and Maryland in recent years.

Limit the Foxconn subsidies to the minimum that we are contractually obligated to pay: Protect state taxpayers from the bloated cost of potential Foxconn subsidies by being sure that the contract is not amended or reinterpreted in ways that would allow the foreign corporation to get huge cash subsidies even if it continues to fail to meet the contract’s terms.
Restore the alternative minimum tax: Reinstate this tax to ensure that all high-income Wisconsinites pay at least a modest amount of income tax.
What both these articles show is that a different way is possible in Wisconsin if our political leaders choose it, and if the people elect politicians that will do it. We do not need to bow down to Lord Business and settle for the lesser outcomes that we have today.

Friday, March 15, 2019

Did Evers end up too ambitious in this budget? Or did he not go far enough?

In looking at the totals from Governor Evers' budget, I'm surprised I'm going to say this, but I think Tony went too far. I sayu this because the way the overall numbers and his spening plans are set up, it opens him up for attacks from the WisGOPs that allow the Republicans to avoid making the harder justifications (and spend the money) to keep their failed spending priorities in place.

The high numbers in Evers' budget means the GOPs aren't left to complain about the budget solely on policy reasons (which they wouldn’t win on with the public), but instead can whine that it has larger-than-needed amount of tax hikes and a sizable structural deficit built in for the future (even if it ignores that WisGOP’s unfunded tax breaks also have major structural deficits baked in).

As submitted, Evers’ budget would run a surplus in Year 1, but give it all back and then some in Year 2, as new initiatives hit full-force while revenue growth is projected to slow.

Projected balances under Evers budget
FY 2019 Proj Starting balance $691.5 million

FY 2019 Proj Revenues $18,319.3 million
FY 2019 Proj Expenses $18,072.9 million
FY 2019 Proj Ending balance $937.9 million (+$286.4 million)

FY 2020 Proj Revenues $18,665.3 million
FY 2020 Proj Expenses $19,497.9 million
FY 2020 Proj Ending balance $105.3 million (-$832.6 million)

That leaves nearly no room for flexibility if the economy doesn’t just slow down, but falls into a full-fledged recession. That seems like an iffy proposition at best when we are seeing retail spending and income growth slow down over winter, and sizable paychecks still to be written by many Wisconsinites due to the GOP’s Tax Scam.

On the spending side, let's look at what the Wisconsin Policy Forum had to say , as part of their high-level overview of Evers’ budget.
Evers would increase spending in the state’s general fund, or main account, by 3.8% in fiscal year 2020 to $18.5 billion and by 7.4% in fiscal 2021 to $19.8 billion. This two-year increase of $2.7 billion in general purpose revenue (GPR) does not factor in additional spending of federal funds or money from separate state accounts such as the transportation fund.

As shown in Table 1, 81.3% of the overall increase falls in just three agencies or areas: the Department of Public Instruction (K-12 education), the Department of Health Services (Medicaid), and aid to local governments and state tax credits.

The budget also calls for significant increases in overall spending. All funds expenditures would rise by a proposed 5.4% in 2020 to $40.7 billion and 4.9% in 2021 to $42.7 billion.
You can see over half of the spending increases are the result of restoring state funding in K-12 education and special education to levels this state used to have in the 1980s.


I understand that Evers had to back up the budget request that he sent for K-12 when he was the Superintendent of Public Schools, and I do like the idea of “going big” to showcase just how much public K-12 education was neglected n the Age of Fitzwalkerstan. But I also wish he would have tried to cut a few provisions.

For example, Evers wants to limit enrollment in the school voucher program to what it is next year, but it’ll still spend nearly $87 million more on vouchers over the biennium, $6.3 million on vouchers for special edu students (something that is redundant with the increases in public schools’ special ed aids, and $28.6 million for independent charter schools. Freezing the amount of money going to these privatized schools would save more than $120 million over the biennium – money that could well be needed for stabilization if the US economy slows as much as I fear it will in the next 2 years.

There’s also this provision where more than $203 million in additional spending in FY 2021 comes from “sum sufficient” measures.
The Governor recommends reestimating the following appropriations to reflect anticipated utilization: county and municipal aid account, public utility distribution account, state aid for tax exempt property, state aid for personal property tax, claim of right credit, jobs tax credit, business development tax credit, homestead tax credit, enterprise zone jobs credit, electronics and information technology manufacturing zone credit, research credit, lottery and gaming credit, farmland preservation credit, farmland preservation credit 2010 and beyond, veterans and surviving spouses property tax credit, cigarette and tobacco product tax refunds, earned income tax credit, and transfer to the conservation fund.
Some of these are good things, like transfers to the conservation fund, the EITC and credits for veterans and surviving spouses. But there are a couple of items in that list I want to single out.

1. “State aid for personal property tax” – this is a $75 million-a-year giveaway engineered by WMC/WisGOP that lowers the property taxes for businesses, and while it is intended to make up the difference to local communities, it still raises taxes on homeowners because they make up a greater part of the tax base due to this move. Why not ditch it and bank that $150 million, or use it for something like local road aids that benefit a lot more people than a few businesses?

2. “Electronic and information technology manufacturing zone”. These are the first incentive payments for the Foxconn project, and they are projected at nearly $212 million. From what I can tell, this includes the 15% kickback for capital expenses for the Foxconn facility as well as the 17% payback of any salaries that are created for Foxconn employees (no matter where they are in the state).

The Foxconn funds stand out for two reasons. First, it doesn’t seem like the Walker Administration allowed for this extra expense to be assumed as part of the budget requests for 2019-21 (if I'm wrong and you find it mentioned and paid for, let me know). So this was going to be a big post-election surprise regardless of who was in office. Sneaky…and scummy.

It also seems like the budget assumes a smaller handout for Foxconn in the coming years, because the LFB assumed $473 million in state tax credits were going to be spent in the 2019-21 biennium on the Fox-con. But since we know the Foxconn project is going to be smaller and employ fewer people than what were we told when this scam was set up 18 months ago (and might continue to fall short of the paltry minimum amount of jobs they need to get that state money), why should we assume that the state will even spend that much in year 2?

Further cuts in the money assumed to go to Foxconn would be a win-win for those of us that hate this boondoggle. Not only will this free up money for something more legitimate, but it also brings the spotlight onto the WisGOP Legislature and Evers to explain what has to suffer if we keep setting aside scarce funds for the Fox-con. And it could hasten a settlement and/or lawsuit to stop throwing money away on it.


By comparison, the proposed increase in DHS spending is actually $280 million below their budget request, because taking the ACA’s Medicaid expansion saves over $320 million over the two years of the budget. And those savings are then used to expand current health services and attempt to close health disparities in other parts of the state. That’s the way you do it – use savings from one move to help other priorities, and dare the GOP to stop you.

Overall, while I’m pleasantly surprised at how ambitious Evers’ budget is, and how it’s a long-overdue restoration of the investments that were lost in the Age of Fitzwalkerstan, I also think there were other spots he could have been bolder by reducing spending on GOP handouts that haven’t done anything to improve outcomes and our economy in the 2010s.

Now GOPs can just cut out some of Evers’ proposed spending increases while not having to justify adding back money to pet causes like vouchers and Foxconn that Wisconsin voters do not approve of. They also can point to certain proposed tax changes that might hit Wisconsinites who work, instead of making the WisGOPs have to talk about why they should allow giveaways for manufacturers and stockholders to end.

I understand that maybe there were enough issues with keeping things running smoothly and within budget. But it does seem like there was room for improvement and more fiscal responsibility, while also giving more political wins for Tony Evers and the Dems than they're already likely to get over the next few months.

Thursday, March 14, 2019

Consumer spending starting to show some shakiness

The newest information on retail sales came out on Monday, andit had more interest than usual, because December’s sales dropped by the most in any month in the 2010s. While there was some bounce-back, was there enough?
The report from the Commerce Department on Monday was welcome news for the economy after a raft of weak December data, as well as a sharp moderation in the pace of job growth in February. Still, January’s increase in retail sales recouped only a fraction of December’s plunge, leaving expectations for a slowdown in consumer spending in the first quarter intact.

“Sales managed only a tepid reversal in January from December’s deep freeze,” said Douglas Porter, chief economist at BMO Capital Markets in Toronto. “While we expect some further comeback in the next couple months, the big story is that the economy’s big engine is cooling.”

Retail sales rose 0.2 percent as increased purchases of building materials and more discretionary spending offset the biggest decline in motor vehicle sales in five years. Data for December was revised to show sales tumbling 1.6 percent instead of decreasing 1.2 percent as previously reported.
In other words, retail sales would have dropped again if December’s totals didn’t get revised even lower.

Granted, take out lower gasoline sales (which reflect the drop in prices that has since reversed), and the January increase was a better 0.4%. But that stat is still 0.8% below what we had in November, and the average over the last 3 months have only increased by 0.1% than the prior 3 months. And that’s before inflation.

I also noted that new home sales came crashing down after 2 months of increases to round out 2018.
Sales of new single‐family houses in January 2019 were at a seasonally adjusted annual rate of 607,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.9 percent (±16.3 percent)* below the revised December rate of 652,000 and is 4.1 percent (±14.0 percent)* below the January 2018 estimate of 633,000.
Ugh. And while this week’s report on construction spending showed a decent increase of 1.3% overall, it was entirely in the public sector while the private sector flatlined, and home construction kept falling.
Spending on private construction was at a seasonally adjusted annual rate of $966.0 billion, 0.2 percent (±0.7 percent)* above the revised December estimate of $964.2 billion. Residential construction was at a seasonally adjusted annual rate of $511.4 billion in January, 0.3 percent (±1.3 percent)* below the revised December estimate of $512.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $454.7 billion in January, 0.8 percent (±0.7 percent) above the revised December estimate of $451.2 billion.
Isn’t it funny how public spending jumps when Republicans run the show to keep things moving?

Sure, things aren’t all bad. Consumer inflation went up in February for the first time in 3 months, but only by 0.2%, and inflation over the last year (1.5%) is at its lowest level since the Summer of 2016. This, along with a bump up in hourly wages, means that real hourly wages are up by their most in several years.


So now the question is whether the decent wage figures will keep consumer spending (and the economy) afloat, or if people start clamping down due to having to write surprise checks to the IRS due to the GOP Tax Scam. I also want to see if the brutal winter delays some spending, and if the 41,000 announced job cuts in retail for the first 2 months of 2019 aren’t made up in other sectors of the economy, and start spreading.

The Atlanta Fed isn’t counting on much so far. They think that GDP growth for the 1st quarter of this year will be near zero.


We’ll see. There’s still a bit of a backlog of economic data due to the shutdown from the start of this year. That’ll be caught up soon for both February and March, and if the numbers remain in the December-January doldrums, things could start spiraling fast.

Tuesday, March 12, 2019

No matter how many people work at Foxconn, we'll pay big for Racine Co roadwork

While there continues to be a question as to what type of factory (if any) will be at Foxconn, and how many people will work there as a result, there is one certainty from this boondoggle. Hundreds of millions will be spent for Foxconn-area roads.
Between work done on Interstate 94 in Racine County and the local roads and state highways in the Foxconn area, roughly $225 million has been spen[t] as of the end of January.

And there still is roughly $155.2 million worth of work remaining on local roads and $167.1 million worth of work remaining on Interstate 94…..

According to an open records request, the state, along with Mount Pleasant and Racine County, have spent $106.9 million on state highways such as Highway H, KR, 11 and the construction of Wisconn Valley Way. Those funds spent also include work done on Braun Road and 90th Street.

So far seven construction contracts have been awarded along with construction oversight contracts.

When the local road projects are completed, it’s estimated the state would have spent more than $221 million, and Racine County and Mount Pleasant would have spent $31.5 million. There is $9.6 million of federal funding used on these projects for a total of $262.1 million.
This highway work was based on the pipe dream of "13,000 jobs at a Gen 10 panel factory for Foxconn in Racine County". We now know neither of those things will come close to happening, but the road projects keep coming. DOT’s project manager for the Foxconn area claims in the article “[the Foxconn work] didn’t delay any other work statewide,” as he cites $100 million in underbids for other projects and $66 million from the Feds from their left-over funds on projects.

But we know that calculation is BS if we go back to a Legislative Fiscal Bureau memo from February of 2018, where the Walker Administration laughably tried to claim that a budgeted increase in State Highway Rehab (SHR) funding meant that more money was available. It wasn't, because the Foxconn projects were using money targeted for other statewide work in that budget, and the LFB noted that the state was far behind before the Walker Admin redirected the funds to Foxconn.
Finally, the use of any SHR program funding for previously unscheduled Foxconn-related local and state highway work will also impact the overall backlog of SHR roadwork, which can be measured by the estimated decline in the condition of state highways. As noted earlier in this memorandum, even at the higher amount of biennial rehabilitation program funding initially proposed by the Governor ($1,701.6 million), state highway conditions would be expected to decline substantially over a ten-year period, assuming a constant funding level. Estimates by the Department during 2017-19 budget deliberations indicated that funding in excess of $2.4 billion per biennium would be needed over a ten-year period to maintain (prevent a decline in) current state highway conditions. Given the expected deterioration of state highway conditions, using any SHR funding for completing work on roads that were previously under local jurisdiction or for advancing state highway work related to the Foxconn development, whether budgeted or through let savings, limits the funding that could have otherwise been used to make needed improvements to state highways throughout the state.

That $66 million in federal redistribution funds also wasn't much different than we get in a typical year, and was largely assumed in the state budget. So yes, money is still being funneled down to Foxconn instead of going to the many backlogged projects in the state.

And given that the diminishing number of employees and products that will be at the Racine County Foxconn site, why are we expanding all of this highway capacity? That, along with the fiscal and social costs of acquiring the land for these bigger highways is a big reason why this week’s Racine County Board meeting may feature questions and controversy about Foxconn road construction.
The County Board is scheduled on March 12 to discuss a resolution on the controversial widening of a 2.8-mile stretch of Highway KR a move that could result in eminent domain being used to take substantial portions of land from residents of Racine and Kenosha counties.

The resolution would authorize the acquisition of land from landowners on the Racine County side of Highway KR, including provisions for eminent domain if deemed necessary. The board is discussing the resolution less than two weeks after a Wisconsin Department of Transportation public hearing and open house, attended by dozens of residents who live along the highway, revealed strong negative sentiment about the project among affected landowners.

As planned, the widening would require the acquisition of 68.9 acres of residential and agricultural land from 400 feet east of Highway H to just east of Taylor Avenue (Old Green Bay Road/Highway M in Kenosha County), with most of it coming from the Racine County side of the highway. The $59 million project would reconstruct the two-lane rural road into a four-lane urban road that would accommodate increases in traffic between the Interstate and Highway 31, anticipated as the Wisconn Valley project is developed.

The cost would be shared by Racine and Kenosha counties and the state Department of Transportation. The counties are responsible for land acquisition, which would affect more than two dozen property owners and necessitate tearing down four homes and one business in Mount Pleasant.
If there’s not going to be a major employment center nor many products being sent out of the Foxconn Racine County site, why should we continue to spend these scarce funds to widen and change the roads? And then you are thinking of using eminent domain on the local landowners, who are paying property taxes that Foxconn isn’t?

Especially when at the same time, Scottholes multiply around the state with taxes needing to be raised just to pay for projects that should have been started and finished already. What a complete waste.

Cynical GOPs lie about higher ed benefits for vets and the undocumented.

I received a report that our dogs were howling this morning, and I couldn’t figure out why. Then I read this press release from a group of Assembly Republicans that are also veterans.
Assembly Republican veterans are speaking out against a proposal in Governor Tony Evers’ budget that would reduce tuition for non U.S. citizens. Under the Evers proposal, college applicants in the country illegally would pay substantially reduced in-state tuition if they’ve attended a Wisconsin high school and been “present” in the state for three years. In contrast, veterans in the state must prove not only residency of five years, but prove military service and maintain their grades in order to receive tuition benefits.

“This is a stunning display of the displaced priorities Governor Evers used to develop his budget,” said Rep. Ken Skowronski (R-Franklin). “Veterans who have served our nation are forced to meet a much higher standard to get the tuition remission they earned through sacrifice than the governor asks from illegal immigrants.” The Republican representatives are asking the members of the Joint Committee on Finance to remove the item from the budget. The tuition break for each illegal immigrant could run tens of thousands of dollars, much more than what veterans receive in the tuition remission program.

“Governor Evers’s proposal shows how out of touch he is with Wisconsin’s veterans,” said Rep. Jim Ott (R-Mequon). “Of course, it should be taken out of the budget.”

“Governor Evers has misplaced priorities if he thinks it’s acceptable that undocumented immigrants should have an easier path to in-state tuition than our veterans,” said Rep. Jesse James (R-Altoona) (yes, that is his name). “It’s frankly quite disgusting and a disservice to those that have served and defended this country’s freedoms, freedoms that make it possible for the Wisconsin Idea to exist. I urge the Joint Finance Committee to remove this from the budget.”
Walker is gone, but "divide and conquer" lives

What got these guys so upset? Let’s go to the Legislative Fiscal Bureau’s memo on the issue. We’ll start with how the veterans remission benefit works.
Under current law, the UW System Board of Regents and technical college district boards must remit 100% of tuition and fees, less any amount paid under the federal Post-9/11 G.I. Bill, for up to 128 credits or eight semesters, whichever is longer, to eligible veterans. To qualify as a veteran eligible for this remission, a student must be verified by the Department of Veterans Affairs as: (a) being a resident of this state for the purpose of receiving benefits; (b) having been a resident of this state at the time of entry into the armed services or having resided in this state for at least five consecutive years immediately preceding the semester in which the student enrolls; and (c) having qualifying military service. Veterans are required to maintain a cumulative grade point average of at least 2.0 to remain eligible for remissions.
Ok, so if you’re a state resident when entering the military OR if you have established residency for 5 years during/after military service, you’re entitled to all of your tuition and fees to be paid for, with the state filling in the (likely small) amount that the GI Bill doesn’t cover. Cool.

So let’s compare to the provision for undocumented individuals.
Under the Governor's budget bill, AB 56/SB 59, a person who is a citizen of a country other than the U.S., while they continue to be a resident of Wisconsin, would be entitled to an exemption from UW System nonresident tuition, but not from incidental or other fees, and would be considered a resident of Wisconsin for the purpose of WTCS admission requirements and fees and tuition requirements if that person meets all of the following requirements: (a) the person graduated from a high school in Wisconsin or received a declaration of equivalency of high school graduation from Wisconsin; (b) the person was continuously present in this state for at least three years following the first day of attending a high school in Wisconsin or immediately preceding receipt of a declaration Page 2 of equivalency of high school graduation; (c) the person enrolls in an institution and provides that institution with proof that the person has filed or will file an application for a permanent resident visa with U.S. Citizenship and Immigration Services as soon as the person is eligible to do so. These provisions would first apply to persons who enroll for the semester or session following the effective date of the bill.
So a undocumented resident would get in-state tuition (that they still have to pay for), assuming they have lived in the state for 3 years.

In both cases, an individual may not have started off in Wisconsin, but that person has lived here for a while, and are entitled to certain benefits. What the GOPs seem to be angry about is that the undocumented person needs a smaller period of residency to gain benefits than Wisconsin veterans who were not state residents when they joined the military. That’s a pretty small cross-section to be concerned about.

And it’s not even the same benefit. Not by a long shot.

Wis resident veteran
Pays zero for tuition and fees

Wis HS graduate that’s undocumented
Pays full in-state tuition and fees (less financial aid)

The complaint about “taxpayer costs” is also garbage. Veterans already get much of their costs paid for with the GI Bill, so the state pays relatively little. On the other side, the only “cost” for giving in-state tuition to Wisconsin HS grads that are undocumented is the fact that they’re not paying out-of-state tuition. There is no extra cost to taxpayers at all, at least no more than having a veteran student go to school.

In fact, in-state schools lose funds under Evers' plan, because they don't get those tens of thousands in out-of-state tuition. The alternative is that if undocumenteds have to pay out-of-state tuition for an in-state school, many may not choose to go on to higher education at all. So I think it's a worthy trade-off, and I bet the schools do too.

But if you want to reduce the waiting period for certain veterans to get state benefits, and make it even with the waiting period for undocumented HS grads to be considered “in-state”, I am totally down with that. In fact, I think both undocmented individuals and veterans should have no extra waiting requirements at all, assuming they can qualify as state residents. I only needed 1 year to establish residency before going to UW-Madison for grad school myself (although I also wasn’t getting any state benefits either).

But hey, you gotta fill those hours on AM talk radio to feed the rubes with, which is the main reason WisGOPs are spreading dishonesties on this issue. Good ol’ fashioned racist dog whistling and fake-triotism are two of the most tried-and-true methods to keep those low-info voters distracted, and the "tuition and remissions" issue is an easy way to combine those concepts.