Thursday, January 31, 2019

GOPs and Foxconn try to dump their failure onto Evers

I was wondering what Robbin' Vos and Scott Fitzgerald might try to spin with the yesterday's reported implosion of the Foxconnn project in Vos' district. And they came out with a statement that was even more pathetic than I imagined.
“In a short time, Foxconn has made a positive impact across Wisconsin with more than 1,000 new jobs, an investment of $200 million, three innovation centers and one of the largest gifts ever of $100 million to the UW-Madison. We don’t blame Foxconn for altering plans in an everchanging technology business. It’s also not surprising Foxconn would rethink building a manufacturing plant in Wisconsin under the Evers Administration. The company is reacting to the wave of economic uncertainty that the new governor has brought with his administration. Governor Evers has an anti-jobs agenda and pledged to do away with a successful business incentive for manufacturing and agriculture.


ARE YOU SHITTING ME?? Trying to shove off the Fox-con’s failure onto a Governor who has been in office in 3 weeks and has a limited ability to oversee Foxconn because of what Vos and Fitzgerald passed in GOP their Power Grab during the lame duck session?? That’s insulting, and telling. WisGOPs don’t want to admit that they were the ones who set up this boondoggle, and they’re the ones that have gone out of their way to protect and make excuses for the Fox-con.

But then an article came out today in the Nikkei Business Review that seemed to back up some of what Vos and Fitz were claiming. In addition to Foxconn putting off construction of a plant in China due to worsening business conditions, the story also said Foxconn was suspending their construction project in Wisconsin because they don't know where things are going in the future.
The changes to the construction schedule follow last November's election defeat of Republican Gov. Scott Walker, a Trump ally who backed nearly $4 billion in tax breaks and other incentives for the project, people familiar with the matter said. Incumbent Gov. Evers, a Democrat, approached Foxconn to renegotiate some of the side deals his predecessor made with the company, three sources told Nikkei.
Wait, what are these “side deals”? Have these been revealed to the public, and have they been incorporated into any contracts to give state tax dollars to Foxconn? Seems like something worth investigating.

The Nikkei story mentions Foxconn’s statements from a couple of weeks ago, where they said shaky “global economic conditions” caused them to adjust their plans in Wisconsin. Combine that with a new Governor, and Nikkei says Foxconn is re-evaluating, with no final decisions made either way.
Foxconn does not plan to abandon the $10 billion project entirely, only halt it for further evaluation and discussion with the new governor, one of the sources said.

Local leaders in Racine, [near] where Foxconn's facility is built, issued a joint statement on Thursday, said they understood the challenge. "Foxconn must be nimble in responding to market changes to ensure the long-term success of their Wisconsin operations," they said.

However, they added that they expected the company would "meet its obligations to the state, county and village." (Surrrreee!)

Foxconn special assistant to chairman, Louis Woo, on Wednesday told Reuters that the company is reconsidering plans in Wisconsin, citing steep costs of TV manufacturing and labor in the U.S.
But the organization that oversees Foxconn’s contract with Wisconsin denied the claims in the Nikkei story.
Mark Hogan, CEO of the Wisconsin Economic Development Corp., said Evers never sought to re-negotiate any element of the Foxconn project.

"I have been involved with the Foxconn project from day one and there never have been any side deals and the contract stands on its own," Hogan said Thursday. "In addition, there have been no attempts by either the company or the Evers’ or Walker administrations to renegotiate WEDC’s contract."

He said Evers and his administration "have done a very good job of reaching out to company officials and developing a relationship that will protect our taxpayers’ interests and at the same time, give Foxconn the ability to be successful in Wisconsin.”
Evers’ spokeswoman also denied that there had been meetings with Foxconn, and called out Fitz and Robbin’ for trying to deflect with the blame game and ignore the bigger issues going on.



But that's what they do, Melissa. Surely you know that, don't you? Same way the Fox-con was never a well-thought out economic development plan, but instead was an expensive gamble to distract from Walker's and WisGOP's bad jobs record before the 2018 election.

Although to be honest, I’ll be happier if Evers actually did meet with Foxconn and laid down some conditions. Because it means Evers would be sending the message that the free ride that Walker and WisGOP gave Foxconn in this scam is over. And if Foxconn decides to pack up and goes away as a result of that, my response is simple.

via GIPHY


As I’ve said before, the best thing that could happen for Wisconsin taxpayers is that Foxconn goes away now before even more money gets thrown down the drain that kicks back the facility costs and the small amount of salaries being paid back through actual checks sent to the company.

But there’s something fishy about how Vos, Fitz, and the Foxconn people seem to have a similar theme of “Evers is convincing Foxconn to leave” when WEDC and the Evers Administration say he hasn’t even met with them. It’s all too convenient, and leads me to think that Foxconn’s moves were in the works for a while, that Fitz and Vos (and likely Walker) knew about it well before Evers took office. Now they can use the new Governor as their excuse to avoid their responsibility for this boondoggle.

These guys (both WisGOPs and Foxconn execs) cannot be trusted to be honest about ANYTHING, and they need to be hammered within an inch of their existence on this, or else they'll just keep lying and deflecting. This is the same cynical BS Republicans pulled in 2009-2010, blaming Barack Obama and Jim Doyle for the job losses and unemployment that occurred because the economy collapsed under George Dubya Bush. And hey, it worked then for the GOP, they took power in the November 2010 elections to kick off the Age of Fitzwalkerstan that has messed up the state ever since.

So why wouldn't they pull out the same cynical playbook now? They figure the average dope won't know the difference, but will only know that things aren't working out with Foxconn, and will point their finger at the governor in office instead of the people who screwed it up.

We can't let Foxconn and WisGOP get away with the robbery that they have pulled on Wisconsinites, and we can't let them get away with blaming someone who had nothing to do with it. Not this time.
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Wednesday, January 30, 2019

Wisconsin gets a revenue shortfall, but also an expense shortfall. So now what?

The "Foxconn not making LCD panels in Wisconsin" story diminished another story that usually would be a big deal in Wisconsin, especially with a new Governor in office. That's the Legislative Fiscal Bureau's release of its revenue estimates for the 2019-21 budget.

The big headline here is twofold. The first is that the revenue numbers aren't as good as the Walker Administration claimed 2 months ago, as it was heading out the door.
Our analysis indicates that for the three-year period, aggregate general fund tax collections will be $282.0 million lower than those of the November 20 report (-$142.1 million in 2018-19, -$45.2 million in 2019-20, and -$94.7 million in 2020-21).
Oops! What's going on here? Part of it is new developments that have shown a slowing economy and revenue picture in the last 2 months, combined with a tax cut that WisGOPs passed in the Lame Duck session.
Compared to the November 20 report, the estimates are significantly lower for individual income tax collections, but are higher for general sales and use taxes and corporate income/franchise taxes in each year. The new estimates are based on the most recent national economic forecast and year-to-date tax collections data. The estimates incorporate all law changes enacted to date, including the 2017 Wisconsin Act 368 provisions regarding the election for pass-through entities to be taxed at the entity level and the automatic individual income tax rate reductions, beginning in tax year 2019, equal to the amount of increased sales and use tax collections following the U.S. Supreme Court decision South Dakota v. Wayfair, Inc. DOR's November projections were released prior to enactment of Act 368 and did not include the fiscal effects of the entity level tax or the individual income tax rate reductions...

Through November, 2018, year-to-date growth in individual income tax collections equaled 6.5%. In December, collections decreased 19.8%, compared to December, 2017, and year-to-date collections were at roughly the same level as for 2017-18. The December decrease is due to lower estimated payments and pass-through withholding, and preliminary data indicates that January collections in those categories will decrease relative to January, 2018. According to DOR, similar decreases are occurring in other states.
Looking ahead, the LFB says the economy will continue to grow for the next 2 years, albeit at a slower pace than we are seeing today (2.0% in 2020, 1.5% in 2021), which will slow down revenue growth in 2020-21, but keep it strong in 2019-20 (we'll see...).

But there's a good side to the LFB estimates as well, because despite the drop of $142 million in estimated revenue for this year, we actually end up projected to have $69 million more in the bank than Walker's Administration estimated in November, at $691.5 million. The big reasons why are because fewer people are on medical assistance these days, and (oddly) because of the revenue shortfall.
The net appropriation reduction of $193.7 million is primarily due to two items. First, the November 20 report estimates that $82.6 million will transfer from the general fund to the budget stabilization fund. We believe that this transfer will not occur. Second, our analysis projects that lapses to the general fund will be $103.7 million greater than those of the administration.

Pursuant to s. 16.518 of the statutes, if actual general fund tax collections in any year exceed amounts listed in the biennial budget act, one-half of the additional amount is transferred to the budget stabilization fund. Under the 2018-19 tax collections estimate of the November 20 report, the administration projects a transfer to the stabilization fund in that year of $82.6 million. There are two reasons why our analysis indicates that there will be no transfer to the stabilization in 2018-19. First, our tax estimate for 2018-19 is lower than the November 20 report, which reduces the amount of any potential transfer. Second, under 2017 Act 368 (enacted after publication of the November 20 report), any amounts attributable to increased sales tax collections under the Wayfair decision are to be excluded from the determination of transfer to the stabilization fund. When these two factors are considered, the 2018-19 tax estimate is below the amount estimated when the 2017-19 budget was enacted. Thus, no amounts are projected to be transferred.

Under our analysis, lapses to the general fund in 2018-19 will exceed those of the November 20 report by $103.7 million. The primary reasons for the additional lapse amount are as follows. First, the updated fund condition statement reflects an estimated GPR lapse from the Department of Health Services' medical assistance appropriations of $212.7 million, which is $63.7 million more than the lapse amount included in the administration's November 20 report. The current estimate is based on the Department of Health Services' MA quarterly status report to the Joint Committee on Finance from December, 2018. According to that report, MA GPR expenditures in the 2017-19 biennium are projected to be lower than the Act 59 budget by 3.5%.
And you know what would save taxpayers even more money with health care in the next budget? TAKING THE EXPANDED MEDICAID FUNDING, which makes the Feds pay 31% more of the bill for the same services.

You can expect the Wisconsin GOP to try to spin the $691 million carryover as a reason to blow it all on tax cuts without paying for it anywhere else. But the revenue shortfall indicates that this is a bad idea, especially given that the LFB is still counting on aggressive revenue growth in 2019-20 of 4.2%. Given the volatility in both DC and Wall Street combined with the buzz wearing off from the unfunded GOP Tax Scam, it seems like a much better idea to use any extra money to fill in the many holes that the 8-year of Fitzwalkerstan has created, and finally start reinvesting in the things that would lead everyday people to want to come to Wisconsin.

But now that we finally have a marker laid down for what will be available from the revenue side, those figures can now be incorporated in Gov Evers' first budget, which will be coming out within the next 30 days. Let the fun begin!
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No, we're not getting our money back from a downsized Foxconn

Now that the Internet is unfrozen, I wanted to go into today's Reuters headline of "Foxconn reconsidering plans to make LCD panels at Wisconsin plant."

First, let's remind you that Foxconn originally said this plant in Racine County was going to be making large-scale LCD screens. Then they backed off last June and said Foxconn would make smaller LCD screens, and that there wouldn't be a need for an associated glass factory. Which is not what Scott Walker and other Wisconsin officials sold to the public when this scam was announced in 2017.

Now Reuters' correspondent in Taipei says Foxconn won't even make those panels, and I'll remind you that journalists in Asia have tended to be on the money for what would actually happen later here in Wisconsin, including the earlier downsizing.
Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters. He said the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.

"In terms of TV, we have no place in the U.S.," he said in an interview. "We can't compete."...

Rather than a focus on LCD manufacturing, Foxconn wants to create a “technology hub” in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said. It would also produce specialized tech products for industrial, healthcare, and professional applications, he added.

“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Woo said.

Earlier this month, Foxconn, a major supplier to Apple Inc., reiterated its intention to create 13,000 jobs in Wisconsin, but said it had slowed its pace of hiring. The company initially said it expected to employ about 5,200 people by the end of 2020; a company source said that figure now looks likely to be closer to 1,000 workers.
A few things to unpack.

1. Foxconn "can't compete"? Even after getting $912 million in local subsidies and infrastructure, and after getting $400 million for I-94 upgrades in Racine County, and $130 million in upgrades of local roads into state highways? And in getting 17% of every job kicked back to you IN CASH from the State of Wisconsin? How lousy a business do you have to be to not be able to make it with all of those advantages?

2. There's also this meme being spread around by WisGOPs as they try to put lipstick on this pig.



This is wrong/dishonest in two ways. The first is that it conveniently ignores the local subsidies, highway upgrades and $150 million in sales tax exemptions that are given to construction companies as part of the work in and around the Foxconn campus. That in itself is around $1.5 billion, if I'm counting it right.

Second, Foxconn could still get a lot of money from Wisconsin taxpayers under jobs incentives, even if they only get 1,000 workers to associate with the facility in Wisconsin (jobs that could be located anywhere, by the way). Take a look at the provisions. at the Foxconn contract that was signed with the Wisconsin Economic Development Corportation (WEDC) in November 2017.

Here are the minimums for getting 17% of salaries written off for a given year.

2019 520 jobs
2020 1,820 jobs
2021 3,640 jobs

If we get to that 520 level by the end of this year, then Foxconn can get jobs writeoffs for BOTH 2018 and 2019, which would total $28.6 million.

And even if Foxconn falls short of the minimums on jobs in later years, they still could get hundreds of millions of dollars that defray the costs that go into building whatever this white elephant facility becomes. Here's an example.


So Foxconn will have gotten massive amounts of money on the front end, even if they don't max out what they could get. We can't even claw back any jobs credits until 2021, with the numbers of jobs (located anywhere, by the way) only needing to hit 4,000 by 2023 to avoid penalties for that year. And let's be real, Foxconn will tie that thing up in court for years, and it would be unlikely we would ever get ANY money back that we throw into this for a long time.

We are slated to be out billions of dollars for this Fox-con, and now it isn't even going to make the products WisGOP told us that it would, nor will the facility generate any more jobs than another large-scale development would add - except the typical development doesn't get anything close to this kind of financial help and infrastructure.

Was the future downsizing the reason why WisGOP gave itself control of the overseer of the Foxconn project as part of the Power Grab they pulled off in the lame duck session? Sure seems like it. (And One Wisconsin Now thinks so as well). And I think Assembly Dem Leader Gordon Hintz saw it as well, as Hintz appointed himself to the WEDC Board yesterday, instead of letting another Assembly Dem be a voice of opposition and oversight on this scam.

Is tar and feathers and recall of the small-time Racine County yokels that signed off on this mess too kind a punishment for this?
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Now Foxconn won't make anything?

Woke up to -26 temperature, flipped over to the Wheeler Report, and saw this headline.


In the article, Louis ("Thank you Mr. Foxconn") Woo says it is too expensive to make products in the US.

TOO EXPENSIVE? At $14.25 an hour and after massive subsidies and infrastructure paid for by Wisconsin taxpayers? What kind of horrid business model are they running?

But hey, Scott Walker's donors in the construction industry got some nice kickbacks for this white elephant. And Robbin' Vos sure got a lot of highway pork in his district that the rest of us paid for.

And if Foxconn,hires 400 people this year "associated with the project" that could work anyone else, then they get over $200 mil for the facility and the jobs.

Or more, as the Wisconsin Budget Project's Tamarine Cornelius tells us


I'll talk more later, when my laptop unfreezes.
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Tuesday, January 29, 2019

So what has the shutdown done for unemployment, and other econ data?

In addition to the news from this week indicting that the US economy lost $3 billion during the shutdown that it’ll never get back, we have a new US jobs report coming out on Friday. The information for the January jobs report was compiled between the 6th and the 12th, in the middle of the shutdown, which means that 35-day folly should have an impact on that data.

So how will the 800,000 affected federal workers workers and government contractors at nearly 10,000 businesses be accounted for? Well, here’s what the Bureau of Labor Statistics said, starting with the payroll stats that are commonly used to state how many jobs were gained/lost in a given month.
Federal government employees who are working, but who will not be paid until funding is available, are included in employment counts.

· Furloughed federal employees who were not working during the reference period, but who will be paid once funding is available, are also included in employment counts.
On Wednesday January 16, 2019, the Government Employee Fair Treatment Act of 2019 was signed into law. The law requires employees of the federal government who are furloughed or required to work during the lapse in appropriations beginning on December 22, 2018, to be compensated for the period of the lapse. Because these employees will receive pay for the reference period, they will be counted as employed.
But if you were a federal contractor, and weren’t getting paid during the time your place of employment was shut down, then you are subtracted from the payroll totals, so we should see a downward effect in the January job report from that.

As for the household survey that determines the unemployment rate, the BLS says it depends if you were actually working. Whether you got paid is a secondary consideration.
Federal government employees who are working, but who will not be paid until funding is available, should be classified as employed.

· Furloughed federal employees who are not working for the entire reference week should be classified as unemployed on temporary layoff. (People on temporary layoff need not be looking for work to be counted as unemployed.)

· Similar to federal employees, any other workers who are not working for the entire reference week because of the lapse of appropriation should be classified as unemployed on temporary layoff. (People on temporary layoff need not be looking for work to be counted as unemployed.)

Employed for January? Or unemployed?

This means we would expect to see a bump in the unemployment rate for January’s report. The question is how much of one, given that workers at the TSA and several other agencies were working without pay through that time.

If we assume that ½ of the 800,000 were not working in that given week, that in itself would bump up the unemployment rate by about 0.25%. Which means we should expect unemployment to be at or above 4.0% for the first time since June for the January jobs report. And likewise, unemployment would return to its December baseline of 3.9% in February with the shutdown ending, all things being equal.

What the shutdown has also done is delay the release of some data from the Bureau of Economic Analysis. This includes the GDP by State figures that were supposed to be out today, the first report on year-end GDP for 2018 (which will not coming out tomorrow), and December’s personal income and spending figures (which was supposed to be out on Thursday).

The US Census Bureau was also part of the shut down, which means we are overdue for information on a number of business reports like construction spending and new orders in manufacturing, along with December’s retail sales report. Obviously that retail report is a big one, given the holiday shopping season and the year-end totals that set the tone for what may come for 2019’s economy. In an economy that has 70% of it relying on consumer spending, any slowdown at the end of the year is going to draw serious concern, and good figures will be a source of relief.

These delays also mean that in the next couple of weeks, we’ll get to see a lot of data coming down the pike that’s going to let us know if the 15% drop we saw in the stock market between Dec 1 and Christmas was an oddity confined to Wall Street, or a sign that the overall economy was getting shaky as well. And if the data is really bad, it makes me wonder if it’ll encourage Trump and the GOP to want to shut things down again in 2 weeks just to keep more bad news from being “out of sight, out of mind.”
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Monday, January 28, 2019

Good news - deficit won't be as high. Bad news - GOP Tax Scam still blew it up

Is this good news? Or just “news that is less bad”?
The federal deficit will surpass $1 trillion in 2022, two years later than previously projected, according to a new report by the Congressional Budget Office.

Previous CBO outlooks projected that the deficit would surpass $1 trillion by 2020, but a reduction in emergency spending on disasters such as hurricanes in 2018 lowered the outlook. The central factors driving growing deficits, however, showed no signs of slowing.
Those figures are from the CBO’s Budget and Economic Outlook: 2019 to 2029, which came out this morning. In it, the CBO says deficits will still rise in future years, but at a slower pace than they had projected in December in a prior publication.

For 2019, the CBO says revenues will increase by $25 billion compared to the projections they previously had, and spending will be $51 billion less than last month’s projections. These are relative drops in the bucket when you’re talking total spending that’s projected to be more than $4.4 trillion for this fiscal year, but $897 billion is still less than $973 billion, so I guess we’ll take it.


The CBO says that their economic projections in the Budget and Economic Outlook do not include the effect of the recent government shutdown . They talked about that in a separate document, where the CBO said the shutdown did have a small impact on the economy, especially at the end of 2018.
As a result of reduced economic activity, CBO estimates, real (that is, inflation-adjusted) gross domestic product (GDP) in the fourth quarter of 2018 was reduced by $3 billion (in 2019 dollars) in relation to what it would have been otherwise. (Such references are in calendar years or quarters unless this report specifies otherwise.) In the first quarter of 2019, the level of real GDP is estimated to be $8 billion lower than it would have been—an effect reflecting both the five-week partial shutdown and the resumption in economic activity once funding resumed….

In subsequent quarters, GDP will be temporarily higher than it would have been in the absence of a shutdown. Although most of the real GDP lost during the fourth quarter of 2018 and the first quarter of 2019 will eventually be recovered, CBO estimates that about $3 billion will not be. That amount equals 0.02 percent of projected annual GDP in 2019. In other words, the level of GDP for the full calendar year is expected to be 0.02 percent smaller than it would have been otherwise.
For the deficit side, the CBO basically assumed in the Budget and Economic Outlook that total spending for the 2019 Fiscal Year would be unaffected by the shutdown, which seems to contradict what the more recent report said.
CBO’s projections of discretionary spending were made in mid-December 2018, reflecting laws that were then in place. At that time, only five of the 12 regular annual appropriation acts for 2019 (and one supplemental appropriation for disaster relief) had been enacted. Many federal agencies were operating under a continuing resolution (the Continuing Appropriations Act, 2019, which had been extended through December 21, 2018, by P.L. 115-298), which, with a few exceptions, continued the appropriations and authorities contained in appropriation acts for 2018.20 Funding for those agencies subsequently lapsed when that resolution expired (which resulted in the 35-day shutdown we just had). For agencies affected by that lapse, CBO’s current baseline projections incorporate the amount of fiscal year 2019 funding that was provided before P.L. 115-298 expired on December 22, 2018, annualized (that is, as if that amount of funding had been provided for the entirety of the fiscal year).
As mentioned above, a reason spending is constrained in these newer projections is that the CBO figures that last year’s severe weather events won’t be repeated in 2019. That seems like a pretty risky assumption, given what seems to happen increasingly each year with severe weather events causing more damage in high-cost areas of the country (the CBO projects that this and other “nondefense discretionary spending” will go down by $104 billion).

If those disasters do happen, or if other spending needs crop up, or if we actually do get an infrastructure bill done in the Trump Era, then the deficit goes back toward the $973 billion that was originally projected for this year.

But wasn’t the cost worth it, and didn’t we get a big boost in our economy as a result of the tax cuts, causing a major jump in the economy? The National Association of Business Economics (NABE) says the effect was minor at best, at least from the business side,
“A large majority of respondents, 84 percent, indicate that one year after its passage, the corporate tax reform has not caused their firms to change hiring or investment plans,” said NABE President Kevin Swift.

The lower tax rates, however, had an impact in the goods producing sector, with 50 percent of respondents from that sector reporting increased investments at their companies, and 20 percent saying they redirected hiring and investments to the United States from abroad.
But as usually happens with stimulus, first it giveth, then it taketh away.
The NABE survey also suggested a further slowdown in business spending after moderating sharply in the third quarter of 2018. The survey’s measure of capital spending fell in January to its lowest level since July 2017. Expectations for capital spending for the next three months also weakened.
If true, that would seem to put into question the CBO’s expectations of revenue growth of 5.6% for this fiscal year.

But while the CBO does anticipate growth slowing, their economic projections (found around Page 56 of their report) only indicate slight differences from what they were predicting back in August. The CBO does have slower growth for real GDP (2.3% next year vs 2.4% last August) and corporate profits (8.9% vs 9.6% in Aug), and slightly higher unemployment (3.5% vs 3.4% in Aug). But the differences are very small, despite the volatility in the stock market and the federal government since then.

On the flip side, what seems to have helped to reduce the deficit projections is that long-term interest rates aren’t supposed to be as high next year (10-year note projected at 3.4% vs 3.6% in Aug), and inflation also seems to be slightly lower, which would reduce benefit costs and general costs of government services.

But despite a slightly better picture than what we had last year, the federal budget is still in a significant hole due to the GOP’s Tax Scam, as shown by this comparison, which shows the projected deficit for 2019 has grown by more than $200 billion since the Tax Scam was passed into law.


Now that the one-time bump in growth is going away, 2019 and future years will be left to deal with the fallout of a slower economy, increased deficits and increased inequality that have resulted. And that’s not going to be fun.
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Sunday, January 27, 2019

Davos crowd and Foxconn crew on the same page when it comes to robots vs humans

The concept of business oligarchs meeting in Davos to discuss strategies is sickening enough to me. But what these people actually talk about may be much worse for most of us.

Kevin Roose went to Davos last week, and what he reported back in the New York Times shouldn't comfort you.
They’ll never admit it in public, but many of your bosses want machines to replace you as soon as possible.

I know this because, for the past week, I’ve been mingling with corporate executives at the World Economic Forum’s annual meeting in Davos. And I’ve noticed that their answers to questions about automation depend very much on who is listening.

In public, many executives wring their hands over the negative consequences that artificial intelligence and automation could have for workers. They take part in panel discussions about building “human-centered A.I.” for the “Fourth Industrial Revolution” — Davos-speak for the corporate adoption of machine learning and other advanced technology — and talk about the need to provide a safety net for people who lose their jobs as a
result of automation.

But in private settings, including meetings with the leaders of the many consulting and technology firms whose pop-up storefronts line the Davos Promenade, these executives tell a different story: They are racing to automate their own work forces to stay ahead of the competition, with little regard for the impact on workers.
And instead of investing in worker training or raising salaries to encourage productivity (which supply-siders insist would be the result of reducing taxes on business owners), Roose mentions that billions of dollars are being spent to develop ways NOT to pay for employees.



And is a certain company that's set to get billions from Wisconsin taxpayers to allegedly create thousands of jobs mentioned in Roose's article? OF COURSE IT IS!
For an unvarnished view of how some American leaders talk about automation in private, you have to listen to their counterparts in Asia, who often make no attempt to hide their aims. Terry Gou, the chairman of the Taiwanese electronics manufacturer Foxconn, has said the company plans to replace 80 percent of its workers with robots in the next five to 10 years. Richard Liu, the founder of the Chinese e-commerce company JD.com, said at a business conference last year that “I hope my company would be 100 percent automation someday.”
Yet Wisconsinites and especially people in Racine County are building infrastructure for Foxconn that's supposed to handle thousand of jobs, and gambling that the added employment will lead to other economic growth in the area. That seems increasingly like a losing bet by the day.


And sure, you can say that if Foxconn misses certain employment targets, they won't get job creation credits for that year (like they did this year). But if Foxconn hits the minimum amounts of jobs needed in the 5-10 years Gou says it'll take to get automation underway (a number well below the 13,000 GOP hacks like to throw out), many costs will be sunken. This includes the $1.5 billion they would get up-front from taxpayers to build the plant, and the costs of infrastructure and upgraded highways, which run well north of $1 billion.

The other point to be made here is "How do we deal with all the workers thrown out of jobs by automation and related profit-chasing?" The argument 20 years ago when outsourcing caused major economic problems in America was "well, people will just learn new skills and they'll get paid more, so what's the problem?"

That's not a sufficient answer for a whole lot of people, and it shows in the stagnation of wages that we've seen since the Millennium started, where inflation-adjusted wages in the US didn't change much from 1999-2014.


Sure, the Davos elite and others who are rich and connected enough to insulate themselves from these effects may like the idea of "disruption and automation" (and are certainly happy to exploit the situation with higher profits and stock bubbles). But the overwhelming majority of us sure don't benefit from it. And if we don't install a social system that provides goods and services such as basic health care for all, universal supports and pensions, and a living wage for the work that remains, then the average citizen is going to get even madder and more frustrated than they are today.

And the Davos types should remember what's happened in history when the overwhelming majority of people decide to act on their anger at their lives going into decline while a connected few insiders and decision-makers thrive without accountability to the people they exploit.


I'd say a 70% tax rate on the super-rich and a 50% windfall profits tax on corporations would be a better outcome than that. Don't you?
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MU Poll on issues shows voters prefer Dem ideas. But they need to know Dems are the supporters

As the new legislative session begins in Wisconsin, Charles Franklin at the Marquette Law School took his first poll of 2018 to see which possible budget items had public support, and which didn't. And even with a pro-GOP electorate (R +2), the responses generally favored the agenda of Governor Tony Evers.
That’s welcome news for the new governor, who has had a series of bad headlines in recent days as he reversed himself on his attempts to get the state out of a lawsuit over the Affordable Care Act, or Obamacare.

Forty-eight percent want to get out of that lawsuit, as Evers does, while 42 percent want to continue it, as Republican lawmakers are doing.

Nearly two-thirds of voters — 62 percent — wanted to use Obamacare funds to expand the state’s BadgerCare Plus program to provide health care to more people — an idea Evers has championed. Twenty-five percent agreed with GOP lawmakers and opposed the expansion.

An overwhelming 72 percent of those polled said they support legislative and congressional district boundaries being drawn by a nonpartisan commission rather than the state Legislature, as Evers favors. That's compared to just 18 percent who said the Legislature should continue to draw the boundaries.
If you dig deeper into the Marquette Poll's results, Evers has support on other issues.




What's funny is that the Marquette Poll often took a framing that would favor the GOP's side. For example, the question about expanding Medicaid only asks
"Should Wisconsin accept federal funds to expand Medicaid, also called Badger-care, in order to cover those with incomes up to 138% of the poverty line or should the state reject federal funds and not expand Medicaid coverage beyond the poverty line as it is now?"
That answer gets support of 62% of those asked. But it doesn't even mention the fact that it would save Wisconsin taxpayers $180 million a year. I bet the approval is even higher when that reality is entered into the question.

The same happened with a question regarding transportation funding. In the MU Poll, Wisconsinites rejected raising the gas tax and registration fees by a 52-42 margin. But note the question's wording, which was reflected in a response Prof. Franklin gave to a comment I made in social media about that question and others with GOP framing. My response is also included.



Chucky didn't like that response, but it's true. A lot of any poll question is based in how you word it, and I absolutely trust a longtime pollster like Franklin took the time to figure out the way they wanted to ask the question on transportation funding. It's one of the reasons I come down on the Bradley-funded Marquette Poll as much as I do, because they know better. They're not dumb or sloppy.

(Interestingly, Chuck Thompson, who is the person Evers has appointed to be the new DOT Secretary, just made this same point on Mike Gousha's show. There's no mention in the question about what the alternative to NOT increasing revenues is).

It's pretty clear when you look at both this month's Marquette Law Poll as well as the results of November's referendum questions that the Dems' positions are the choice of Wisconsinites. The way Republicans win is that they have had an advantage on spin and framing, amplified by the megaphones of the right-wing lie machines on AM radio and dark money. The GOP also has generally done better at distracting voters on cultural issues and resentment, and also has buried interest in pro-Dem issues through inaction.

Which tells me Dems in Wisconsin need to push what they believe harder, and make a more public effort to keep most issues top-of-mind for the average voter. Because when they are given a choice, and when they are given the consequences of policy decisions, Wisconsinites tend to prefer the Dems' answers.

So if Dems can neutralize the GOP in the propaganda war, they will win at the ballot box as well. Particularly because a lot of places are currently "represented" by GOP legislators that do not support the beliefs of people in that district.
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Saturday, January 26, 2019

A trip down I-94 for an evening

Got a chance to look at the new tax-funded palace in downtown Milwaukee, and I gotta admit it was pretty sweed.



I still think there were a lot of better things to use a sales tax in Milwaukee for. But it's a good facility, and the decent pay requirements seems to show through as part of the experience. And then the Bucks woke up in the 4th Quarter and rallied for another win.

Also had a good dinner at the new Oak Barrel restaurant on 3rd Street, followed by a great breakfast at Blue's Egg. And it was 15 degrees warmer than the icebox in Madison, thanks to Lake Michigan.

My wife and I agreed again that Milwaukee continues to be a hidden gem of a city, and thankfully we now have a Governor that wants it to succeed.
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Thursday, January 24, 2019

Wisconsin's credit card surplus shouldn't be blown on unfunded tax cuts

Republicans in the State Legislature have been claiming that Wisconsin’s finances are great due to decisions made by Scott Walker and the Wisconsin GOP over the last 8 years, and now they want to use extra funds to cut taxes further. Assembly Dem Leader Gordon Hintz gave a proper reminder of where that money came from, and while it's through GOP choices, it's on what they chose NOT to pay for.
“More than 60% of this touted $588.5 million “surplus” my Republican colleagues are talking about is a result of borrowing and raiding money from veterans nursing homes. The reality is that Republicans have spent the second longest economic expansion in U.S. history cutting funding from K12 education and the UW System to pay for tax cuts for the wealthiest in our state.

“Wisconsin’s economy has only grown at half the national rate over the past eight years. There has been no economic miracle in Wisconsin that generated massive surplus revenue. Only borrowing money from future taxpayers and raiding money from veterans’ nursing homes.”

In addition, a January 17, 2019 [Legislative Fiscal Bureau] memo shows that Governor Scott Walker and Legislative Republicans took $48 million from the state’s veterans nursing homes to pay for services instead of using general purpose fund revenue.

$362.3 million of the $588.5 million Republican “surplus” is the result of deferred payments and fund raids.

Now that’s the way you say it, folks. And Rep. Hintz’s statement has the added benefit of being true. Here’s the LFB memo on the debt refinancings that were done from 2011-2016, which avoided payments on more than $314 million that would have otherwise happened in those years. That money will have to be paid off in the coming years.

And the memo on the transfers of extra money from the state’s Veterans Homes updates a multi-year shell game played by the Walker Administration without oversight from the GOP-controlled Legislature. This includes $14.5 million to fill the hole in the Veterans Trust Fund for this Fiscal Year.

WisGOP could have chosen to use tax dollars to pay our debts when they came due, and to put money into long-neglected nursing homes instead of to fill budget holes in other areas. Now, maybe some of that was smart from the perspective of causing the least disruption possible at the time, and as long as the money’s there for the later costs of debt and veterans’ services, it works out.

But let’s not pretend that this mound of cash that we currently have is solely due to fiscal prudence. There’s been a whole lot of credit-card financing and shell games going on as well, and if the musical chairs stop at some point, that money could go away in a hurry, with the debt handcuffing the state for the future.

We should be especially concerned about the party ending after looking at the latest revenue figures from Wisconsin as well as other states. Wisconsin’s income tax revenues fell by nearly 20% in December 2018 compared to December 2017, and as Governing Magazine noted (today), we are far from the only state that saw this type of decline.
State tax collections took a dive in December compared to the same month a year ago. Observers are worried the dip could indicate more uncertain economic times ahead.

Lower income tax collections is the culprit, according to data compiled by Governing of the top 10 most populous states with an income tax and with recent data available. Every state except Indiana saw a December drop compared with a year ago, ranging from -3.4 percent in Ohio to -41 percent in California…

To a large degree, the dive was expected. Thanks to changes to income taxes and deductions under last year's federal tax overhaul, thousands of taxpayers rushed to file income and property taxes in December 2017, creating an abnormal boost in revenue
.
But the declines of this year were steeper than last year's gains, says Lucy Dadayan, a senior research associate at the Urban Institute. “We might continue seeing weak growth in income tax revenues, particularly in these higher tax states, for the rest of the fiscal year.”
You may remember the rush at the end of 2017 due to the GOP’s Tax Scam, which encouraged pre-payments of state and local taxes because that deduction would be limited for 2018, to the point that there is no reason for many people in Wisconsin and other states to write off those income and property taxes when they file in the next 3 months (you’ve been warned).

With that in mind, and because this will likely lead many Wisconsinites to be writing surprise checks to the IRS, maybe it makes sense to have some of that $588 million lying around to cushion the shock that will hit the state’s finances and economy in the months after that.

The other option would be to invest this available cash in services, quality of life and infrastructure instead of the WisGOP way of blowing it all on an unfunded tax cut and kicking the can down the road. After 7 straight years of bottom-half job growth and a declining labor force in 2018, a new approach beyond “trickle-down hope-and-pray” seems to be in order for Wisconsin.
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WisGOP wants state's "prosperity" to continue? I wanna know when it starts!

I keep hearing Wisconsin Republicans try to claim that the new Democratic governor can't change the state's course, because things are going so great economically. GOP Senate Leader Scott Fitzgerald was the one to throw out this theme today.
During the last eight years, our state has benefitted from tremendous success. Under Republican leadership, Wisconsin has seen more people working than ever before and our unemployment rate hitting historic lows – even falling below three percent for 11 months straight.

But that's not all – our budget is running a surplus, our pension system is fully funded, and we've invested more actual dollars into K-12 education than ever before. Our reforms are working, and Wisconsin is thriving.

Looking ahead, Wisconsin Republicans will work to make sure that all of these results are protected for the next generation, and that our prosperity can continue for years to come. We will fight to lower taxes on hard-working families, keep our state open for business, and make sure that Wisconsin is the best place work, live, and raise a family.

"Our prosperity to continue?" Doesn't something need to start for it to "continue"? The US Bureau of Labor Statistics, released their final report for 2018 on average hourly wages in all 50 states this week. And Wisconsin ended up 43rd in the US for wage growth last year, badly trailing most of its Midwestern neighbors.

Change in average hourly wages, Dec 2018 vs Dec 2017
Ill. +5.6% ($1.53) (7th in US)
Minn +4.9% ($1.40) (15th)
Ohio +4.5% ($1.09) (19th)
Mich +4.0% ($1.02) (21st)
Iowa +2.8% ($0.67) (39th)
Wis. +2.2% ($0.56) (43rd)
Ind. +1.2% ($02.9) (48th)

Another recent BLS report showed the jobs picture for December 2018 for all the states. Wisconsin fared much better here, with the 2nd best year-over-year rate of job growth in the Midwest at 1.64% (at least until it’s inevitably revised down by the “gold standard” Quarterly Census on Employment and Wages).

But unfortunately for Scott Walker and WisGOP, the strong increases in Wisconsin jobs for November and December were too late to affect the 2018 elections, and those 2 months didn’t come close to making up the massive Walker jobs gap. That was reiterated through a chart from Marquette Law School’s Charles Franklin that made the rounds again this week, which showed how Wisconsin (in red) had typically kept around the national rate of job growth (in blue). Until the Age of Fitzwalkerstan started in 2011.


That underacheiving record and its associated pro-rich corruption sure helps to explain why Scott Walker and the GOP lost every statewide race in Wisconsin in November, despite outspending Tony Evers and other Dem-associated interests by $23 million for the Governor’s race.

In addition, anyone reading this week’s Marquette Law School Poll can see that strong majorities favor Dem policies such as expanding Medicaid, adding funding to public schools, and raising the minimum wage. That’s despite the MU Poll’s typical Republican-leaning sample (R+2 this time), and at least 55% of moderates favored the Dem position in all 3 of those questions.

Those realities are why Governor Tony Evers has a stronger hand than it may look on the surface. Even though that same MU Poll found a majority of Wisconsinites approving of the State Legislature’s job in general, and thought the state was going in the right direction (in a related story, a majority of Packer fans like the Matt LaFleur hire and hope it works out), people oppose what that GOP Legislature wants to continue. Because the average Wisconsinite knows that we are not prospering like we should, and that things can and should be improved.

If Evers and other Dems in the Capitol portray themselves as the backers of the policies the people want, they can get more done in these next 2 years than many think. But this will require Evers to use his powers as governor to push ahead with certain agenda items instead of giving in to calls for “bipartisanship” and submitting to the handcuffs of the Lame Duck Laws. (HINT!) In addition, Evers and Dems are going to make a lot of effort to shine a spotlight on how the GOP Legislature is ignoring what the people want, and shove back on the media if they try to play the GOP-favoring “false equivalency” game.

That’s not a pretty and uplifting picture, and it won’t make state politics a lot of fun in the coming months, but this is the mess we have been put in during the Age of Fitzwalkerstan. It’ll take a lot of work to drag us out of the ditch the last guy left us in.

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Wednesday, January 23, 2019

Vos responds to Evers with typically laughable WisGOP spin and omissions

I wanted to discuss what the Wisconsin GOP put out there to respond to Tony Evers’ first State of the State address last night. Fortunately, Assembly Speaker Robbin’ Vos put the whole speech up on the Internet, which makes it easier to laugh at examine point-by-point.

Let’s start with Vos trying to sell what is clearly the baseline WisGOP premise of 2019 – that Wisconsin is in good shape and can’t turn back from the road we’re on.
You simply can’t ignore the facts. The Wisconsin unemployment rate is at its 11th straight month at or below 3 percent. New businesses are up nearly 7 percent. We’re seeing the fewest mortgage foreclosures in 18 years. Exports have increased by 3.2 percent. Tourism spending now tops 20 billion dollars. And Wisconsin families have the lowest tax burden in nearly 50 years. Economists agree that the state economy is the best in decades.
A few things to unpack here.

1. When Scott Walker took office in January 2011, unemployment in Wisconsin was 1.0% below the US rate (9.0% US vs 8.0% Wis). As Tony Evers takes office in January 2019, Wisconsin’s unemployment is 0.9% below the US rate (3.9% vs 3.0%). So tell me how Walker/WisGOP policies caused that decline?

Oh wait, here’s how. Wisconsin has been “helped” in this stat by our lousy population growth, which is likely related to regressive WisGOP policies driving people out of the state. In fact, the newest figures estimate that the number of people “employed” in Wisconsin dropped by nearly 1,700 last year. The unemployment rate only got lower because the Wisconsin labor force was estimated to have fallen by even more (9,200+).

2. No mention of where the “new businesses are up 7%” and “exports have increased by 3.2%” are from, or the time period involved. Are the “new businesses” the Boy Scout clubs that Walker used to count? And if exports are up 3.2% in Wisconsin since 2011, that doesn’t mean much when US exports are up 23.2% nationwide in the same time period, and 6.8% in the last 12 months measured.

3. Increased tourism spending and fewer foreclosures doesn’t really reflect Wisconsin’s policies as much as it reflects a US economy that’s been growing for each of the last 10 years. As with the other statistics, where is your “THANKS OBAMA”?

The cynical WisGOP “things are great because of us” spin continues.
….Wisconsin is on a roll and Republicans will not allow it to slip backwards. We’re committed to keeping your taxes low, the state pension fully funded and our budget balanced. We can increase our investment of K-12 education to two-thirds funding, without raising income or sales taxes.
1. The state pension has been fully funded for decades, and the only way it won’t stay that way is a multi-year bear market or a WisGOP raid on it.

2. Budgets have to be balanced at the end of the year on a cash basis, and have been for each of the last 16 years (although Scott Walker had to skip debt payments to do so in a couple of those years).

3. The question is not whether we can get to 2/3 funding for K-12 schools, but what we do with that funding. As the Legislative Fiscal Bureau noted last month, we are nearing 2/3 today, with funding reaching 64.9% last year. But what Evers wants to do is actually put more money into the classroom instead of having it go to a property tax cut, which is the direction Vos and the rest of WisGOP have chosen in the Age of Fitzwalkerstan.

Let’s now move into the “high-minded BubbleWorld crap” part of Vos’ response.
As President Ronald Reagan once said, “As government expands, liberty contracts.” He also said, “Freedom is never more than one generation away from extinction.” Republicans in the legislature won’t forget Ronald Reagan’s sentiments. We won’t let government grow out of control and we won’t let socialism to take root in our state.”
Jud Lounsbury of the Progressive had the perfect response for this last night.

In addition to ending the Fox-con, does this also mean that all of those Vos constituents who were threatened with having their land taken from them by eminent domain and other local government actions for the (now-delayed) Foxconn project can get their homes back?

Here’s more of Napoleon Vos' double-talk.
I promise you: Republicans will fight for and protect your freedom, from unnecessary red flag gun laws to the expansion of government-run and controlled health care. We will keep spending in check, continue our successful school choice programs and most importantly, protect the unborn.
Let me repeat another point I made yesterday – How is expanding Medicaid, which pays for services that individuals usually get through PRIVATE PROVIDERS, “government-run and controlled health care”? It’s not. It just keeps working-poor individuals from being left to the mercy of insurance companies for their coverage (wait, that is a bad thing in Koch/ALEC-World, isn’t it?)

And the party of Foxconn, WEDC handouts, numerous tax-funded lawsuits to protect gerrymandering and other sketchy GOP acts, and unlimited vouchers are saying they’ll “keep spending in check”? COME ON.

By the way, when Vos claims vouchers are “successful”, what does he mean by that? The only way they’ve been successful in Wisconsin is by defunding public schools and funneling those tax dollars to Robbin’s Betsy DeVos-associated donors.


It’s also rich to see the thrice-married Vos pandering to the fundies with talk about “protecting the unborn” (dude, we have the Google). Vos also feels a need to fluff the gun nuts, which puts him out of touch with the results of November, where Dems made big gains in suburbs around America partly due to the GOP’s cowtowing to the NRA, including the Milwaukee area. See how well both of those strategies work for you in 2020.

Then there’s this idiocy.
This past week, Assembly Republicans moved forward on a middle class tax cut using the governor’s framework. Unlike Governor Evers’ original proposal, our plan doesn’t raise taxes on farmers or manufacturers. It uses the GOP surplus to pay for it. The tax cut is targeted to families making under $150,000 and individuals making under $100,000. It saves a married couple with a median income more than $300 annually. We can make this middle class tax cut a reality.
There is no “GOP surplus”. There may be some extra money left over in the state’s checkbook at the end of this Fiscal Year, but as the Wisconsin State Journal’s Matt DeFour reminds us, it would blow a hole in the budget unless other things happen that make up the difference.



Given that costs of prior Walker/WisGOP spending commitments and debt keep going up, there is no extra money lying around that can be given away in a tax cut. Taxes could be re-prioritized and/or other spending can be cut, but it can't just be given away. Go back to 2014 for proof, when a pre-election GOP tax cut led to a revenue shortfall and a $2.2 billion deficit in the budget that started in 2015.

Vos then turned around and told reporters last night that Evers' proposal to offset the tax cut by reversing prior tax cuts would be building a budget on a “house of sand”. WHAAAA??? Sorry Robbin, but a “house of sand” is giving the one-time money away and hoping for another 2 years of economic expansion to pay for everything. These guys truly think “up is down.”

Lastly, Napoleon doesn’t seem to understand that clever map-making does not make for a mandate for GOP policies.
Tonight Governor Evers said he expects the legislature to take up the budget that he crafts quote “by and with the people of our state”. We will consider the ideas in his budget but unfortunately, his ideas are only focusing on one side of the aisle and not the vast majority of Wisconsin. If his budget is merely a tax-and-spend wish list, one that would never pass this legislature, his budget would amount to political gamesmanship and the words of bipartisanship he said tonight will ring hollow. Every person who runs for public office wants to change their part of their world for the better.
In 21st Century GOPspeak, “focusing on side of the aisle” means “not giving the GOP everything we want.” The party that engineered a lame-duck Power Grab before Evers could take office has lost any right to talk about “political gamesmanship” and “the words of bipartisanship.” Tony Evers got a helluva lot more votes in November than Robbin’ Vos, as well as the combined vote totals of the gerrymandered GOP Assembly, so I think he’s earned the right to ask for some things.

By the way, what is a budget if it’s not a “tax-and-spend wish list”? You do need taxes to pay for services, you know. Now, Robbin’ and his fellow ALEC/GOPs can change what they like out of that and we’ll see what we end up with when/if that budget makes it out of the Legislature. But I dare them to name the cuts that they will have to put in without the $360 million or so in savings from Medicaid expansion, or show us how they plan to further neglect local governments that have had to hold pass numerous referenda and wheel taxes just to stay afloat.

I noticed those realities weren’t mentioned in Robbin’ Vos’ speech last night. Not surprising when you have a 2010s GOP that has made operating in cynicism and bad faith their trademark. And WisGOP’s contempt for voters shows in the easily-debunked rhetoric one of their leaders tried to throw out there last night.
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Tuesday, January 22, 2019

Robbin' Vos makes a big response!

I didn't care to hear twerpy Robbin' Vos give his response to Tony Evers' State of the State address. But apparently there is big news!



Sweet! Robbin' also recognized that the pork of Foxconn-related roads and infrastructure in his district was an inefficient use of state resources, and is giving it all back, right?

By the way, why does Robbin' insist that expanding Medicaid, which frequently has its services carried out by PRIVATE providers and private sector workers, is "government-run health care." Does he not know that, or does he think he can pull that BS over on voters?

And I do love hearing Evers say he will order AG Josh Kaul to pull out of the lawsuit to wreck the ACA. Tony's calling the bluff of Napoleon and the rest of the gerrymandered GOP Legislature, and that's the only way to deal with these crooked, lawless lowlifes. Game on.

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Too much cheese is giving farmers not enough cheese. And shutdown makes it worse.

We've got a serious problem that's hitting a lot of Wisconsinites, and it's only gotten worse since Stephen Colbert reported about the issue nearly 3 years ago.



That's right, cheese is piling up everywhere and the Wisconsin Public Radio notes it's only gotten worse since then.
While Americans consumed 37 billion pounds of cheese in 2017, the nation’s surplus of cheese reached 1.4 billion pounds late last year, a record high since the United States Department of Agriculture has been keeping track.

Measuring in at 900,000 cubic yards, that mountain of cheese is equivalent in size to the U.S. Capitol building…
So, how did it happen? In short, the oversupply of milk is driving it.

The U.S. has increased milk production by 13 percent since 2008, yet at the same time the days of drinking milk with every meal are long gone as more Americans are opting out or replacing it with nut milk alternatives. In the 1970s, Americans drank about 30 gallons of milk a year, today, it’s closer to 18 gallons.

To pick up the slack of declining milk consumption, excess milk is turned into cheese because of its longer shelf life. While cheese consumption hasn't been able to break even with production, cheese consumption in the U.S. has remained strong — even increasing marginally each year.
Given the circumstances, we probably need to go further than the last Governor’s method of helping family dairy farms, which as basically this.


Overproduction is the main problem here, particularly among mega-farms who have a better chance of affording to crank out more product at a lower price due to their economies of scale. It’s this economic reality that makes it sensible for Tony Evers to limit the Manufacturing and Agriculture tax credit to the first $300,000 of income, as it’s the small farmer that is struggling the most in this era of milk and cheese surpluses, not the CAFOs.

We may also need to do more to stabilize these farms, and/or reduce the amount of product on the market. This report from earlier this month indicated that Wisconsin farmer groups want to see a national program to limit dairy production Both the Wisconsin Farmers Union and the Wisconsin Farm Bureau Federation have signed off on the idea, which proponents say is similar to a Canadian program that is intended to raise milk prices.
"We are willing to consider a dairy supply management system," said Joe Bragger, a Buffalo County dairy farmer who sits on the board of directors of the state’s Farm Bureau Federation. "The organization historically has always been very strong free market supporters, but I believe the delegates wanted all options on the table."

But Bragger said he doesn’t believe Wisconsin farmers want to copy Canada or any other country that manages agricultural supply and demand chains.

"Make it unique to the U.S. and maybe take some responsibility in managing that supply," he said. "A lot of discussion will have to go on, but the door is now possibly open."

Mark Stevenson, a dairy industry expert, said supply management programs like those in place in Canada and other countries can be effective.

"If you restrict the amount of milk that gets to the marketplace, you can keep prices much higher, but if you do that, there has to be a lot of restrictions in place," said Stevenson, director of Dairy Policy Analysis at the University of Wisconsin-Madison College of Agriculture and Life Sciences. "The state of Wisconsin, for example, couldn’t decide to do that because we would be inundated with milk from outside the state. It has to be done at the national level."
Hey, could you back off a little?

Speaking of the national level, another form of help isn't coming for many already-strapped farmers are being kept from needed help due to the federal government shutdown. Tim McGreevy is the CEO of the USA Dry Pea and Lentil Council, and notes that farmers have already lost revenue from lower prices, and now are in danger of not getting insurance payments that were intended to make up the difference.
Chinese tariffs on U.S. agriculture, imposed in response to U.S. duties on goods from China, have caused crop prices to drop. For pulse crops — dry beans, dry peas, chickpeas and lentils — that means a cut of 30 percent to 60 percent, [McGreevy] told CNBC on Monday.

However, last spring about 60 percent of pulse farmers took out what's called revenue crop insurance, which protects against price drops like this, he said on " The Exchange ."

"We expect to have a fairly significant revenue insurance payment, but we have to have the harvest prices announced," he said.

Those are supposed to be announced on Friday [January 15], resulting in payouts by the end of January. However, the analysts who analyze the data are on furlough. That means a delay for farmers waiting for much-needed funds.
Yep, the subsidy payments that the Trump Administration claimed would help farmers through this time of tariffs are one of many casualties of the Trump-supported shutdown in DC. Note this story in the Washington Post from a couple of weeks ago.
U.S. Agriculture Secretary Sonny Perdue said Tuesday that the government would extend the application deadline for support payments beyond the Jan. 15 deadline due to the shutdown, while urging Congress to pass a bill Trump would sign to “end the lapse in funding so that we may again provide full services to our farmers and ranchers.”…

About $5.2 billion in checks already have gone out since the program began, including 360,000 payments collectively worth $3 billion since the government shut down, according to Tim Murtaugh, a USDA spokesman. But farmers who did not certify their crop production before the shutdown began cannot do so until the government is running again because the offices of the Farm Service Agency, which is administering the bailout, are closed.

“A lot of these farmers had late harvests, so being able to submit that was a real challenge,” said Mike Steenhoek, executive director of the Soy Transportation Coalition, which works with soybean farmers. “There’s a lot of worry.”

The bailout checks have “made a significant difference” for farmers facing not only the trade war but also lower commodity prices after a bumper year for soybean crops, said Arlan Suderman, chief commodities economist at INTL FCStone Financial, a global financial services firm.
And while it may be freezing here for the next week, it’s still going to be planting season in a few months, and decisions will be made soon enough on farms about what to do in 2019. That’s true whether the US Department of Agriculture is open or not.

There's a lot of squeezing going on in the farm economy, and we already saw well over 600 Wisconsin dairy farmers decide they couldn't go on last year. If cash help and more responsible practices aren't coming soon from DC and Madison, you'll likely see more going under in 2019.
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Now Foxconn will cost locals in Racine Co more, while adding less.

Add another item to the file titled "Is this a problem? It seems like a problem."
In the summer of 2017, Racine County and Mount Pleasant officials estimated it would cost them $763 million to execute the Foxconn Technology Group development. The new estimate is about $912 million, according to numbers provided by the village and county.
Uhh, really? Why is that? The article from Ricardo Torres in the Racine Journal-Times indicates several reasons. The first is that the cost for Mount Pleasant and Racine County to acquire land has cost nearly $170 million, while Foxconn only put up $60 million of that cost.

And while the cost of buying land has been more than expected, but the amount of land that has been developed for Foxconn has been much less than expected, which is driving up interest costs for the local communities.
Originally, the village and county took short-term loans on Areas II and III in expectation that Foxconn would begin to develop those areas within the next five years. But plans for the project changed, and those short-term loans were refinanced into long-term loans, a major factor in the increase in interest payments.

To pay for the interest on the debt, the village has issued a special assessment on Foxconn, which is scheduled to be paid back to the village every year for the next 20 years totaling roughly $202 million.
Of course, what happens if a multi-national corporation like Foxconn laughs at these local yokels in Racine County and says "Come and get us in court"? Yeah, I wouldn't count on getting that money back if Foxconn never develops.

In addition, local communities like the Village of Caledonia are hooking up to the new sewer and water lines that are being sent out to Foxconn, which is a cost their taxpayers will have to pick up over time. And that total investment is now expected to cost $185 million, and not the $160 million that was originally projected.

And I wouldn't count on Foxconn developing Areas II and III any time soon, if this recent article from Bloomberg News is any indication.
Foxconn Technology Group may hire workers at a slower pace for its new Wisconsin plant, adding to mounting gloom over the state of the technology industry and global trade.

The biggest assembler of Apple Inc.’s iPhones, known as Hon Hai Precision Industry Co. in Taiwan and Asia, said it has adjusted the timeframe for recruitment and hiring at its $10 billion manufacturing facility in the U.S. state....

The announcement comes amid mounting signals demand for Apple’s iPhone is flagging. Apple is said to plan hiring cutbacks for some divisions.

In November, Bloomberg News had reported that Foxconn is planning steep reduction in its expenses in 2019.
It may stay this way for a while.

Even worse is that Torres notes in the Racine newspaper article that Foxconn could get money back from the local governments if they don't build.
There is no guarantee that Foxconn will develop Areas II and III, but they have up to 10 years to begin working on that property.

If the 10 years elapse and no work has been done, the village can then sell the land to other interested parties; however, according to village officials, that money would go to Foxconn to reimburse them on its payments on the special assessment for that land.
So Foxconn either gets billions in jobs credits, or they get millions from the land that was gifted to them, and later is sold to other. Nice win-win for our foreign friends, isn't it?

And remember, the Legislative Fiscal Bureau's memo on Foxconn from last year notes that there's a 40% moral obligation pledge put into the Foxconn legislation to help to bail out these local communities. Which means if Foxconn fails, state taxpayers would be out $360 million as it stands today.
The Act specifies that, recognizing its moral obligation to do so, the Legislature expresses its expectation and aspiration that, if ever called upon to do so, it would make an appropriation to pay no more than 40% of the principal and interest of a local governmental unit's municipal obligations, if all of the following apply: (a) the local governmental unit's municipal obligation is issued to finance costs related to development occurring in or for the benefit of an EITM zone; and (b) the DOA Secretary designates the moral obligation pledge for the local governmental unit's municipal obligation before the municipal obligation is issued, based on a plan that the local governmental unit submitted to DOA. The Act also permits the DOA Secretary to contract with a local governmental unit to implement the moral obligation pledge.

A state moral obligation pledge for local governmental municipal obligations can be viewed as a credit enhancement mechanism that could assist in the marketability of debt issued by a local governmental unit. Because of this pledge, debt not previously issued by a local governmental unit, or issued in larger amounts than before, may be issued at a lower interest rate due to the Legislature's moral obligation pledge to repay a portion of the outstanding principal and interest if the local governmental unit is unable to make such payments. The moral obligation pledge is not legally binding. Rather, it is a statement made by the current Legislature that it expects a future Legislature to, if called upon to do so, make an appropriation to assist in the repayment of outstanding debt issued by a local governmental unit.
As I said last week, just give Foxconn a check for $100 million, tell them to go away, and hit the reset button. And if Foxconn doesn't take that deal, have new AG Josh Kaul (or outside lawyers like Matt Flynn) take Foxconn to court for breach of contract, and dare the GOP to try to recall a guy for holding Foxconn to account in a deal no one outside of BubbleLand likes.

Given the massive amount of money that local Racine County taxpayers are on the hook for in this boondoggle, why aren't there recall petitions flying against the local crooks that sold out their community's futures for this flashy Fox-con failure? Seems to be in order after what we have found out in the last week.
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