Sequester ooga-booga!

Well, the sequester has now been put in place, at least for the time being. So what are these billions in budget cuts really going to do, both for the country, and for our backyard? A couple of releases from this week can give us a clue.

First of all, the Congressional Budget Office gave an update on the changes to GDP and the budget deficit if the sequester was to stay in place. When combined with the tax increases on the rich and on Social Security payroll taxes, it will reduce the size of the recovery that currently rolls on, with the sequester causing more damage on a "bang-for-the-buck" basis.

The fiscal tightening in 2013 is mostly a result of two developments: the expiration of certain tax policies that will lead to an increase in tax revenue (relative to 2012, payroll tax rates are higher and tax rates on income above certain thresholds have increased); and the automatic spending reductions scheduled to occur under current law (the sequestration). In the absence of those policies, real GDP would grow about 1¼ percentage points faster between the fourth quarter of last year and the fourth quarter of this year, CBO estimates. (The remaining ¼ percentage point reduction in economic growth due to fiscal tightening comes from other, smaller changes in spending and taxes.) The expiration of those tax provisions and the automatic spending cuts account for about equal portions of that 1¼-percentage-point effect. The spending changes have a smaller budgetary impact than the tax changes, but they affect GDP by a larger amount per dollar of budgetary cost.

In the absence of sequestration, CBO estimates, GDP growth would be about 0.6 percentage points faster during this calendar year, and the equivalent of about 750,000 more full-time jobs would be created or retained by the fourth quarter.

Given that there's only 10 months left in the year, that means about 75,000 fewer jobs a month will be created due to the sequester- pretty stupid in a time when the country is still at 7.9% unemployment, and has barely come back to the job levels of 5 years ago.

But if you're into deficit reduction above all else, the sequester and the tax increases doe help. As CBO notes

In fiscal year 2013, by CBO’s estimates, federal revenues will rise and outlays will decline as shares of gross domestic product (GDP), resulting in a federal budget deficit equal to about 5.3 percent of GDP (compared with 7.0 percent last year).

This 5.3% is nearly half the deficit as a percentage of GDP that Obama had to deal with in September 2009, and is down near the levels of the Reagan Administration deficits of 1983-1986. Still not optimal, but when high unemployment and low wage growth still persist (past the levels we had in the '80s), I'd say the deficit is still in third place when it comes to dealing with priorities.

It's not like government spending is out of control. Anything but, as this week's GDP revision confirmed. This revision showed US growth was indeed continuing, instead of the contraction it showed last month, but the Government sector continues to shrink and take away from GDP.



With this in mind, along with interest rates on the 10-year note staying below 2%, we really don't need to worry about government spending as a "problem", and we still need investments and economic stabilizers to keep this economy moving. The alternative is to go into a European-style recession, illustrated again this week as the UK officially announced that it was in a triple-dip recession with manufacturing output shrinking fast. I don't think recession is an acceptable option at this point.

Know another group that'll feel some pain from this sequester? Scott Walker and the WisGOPs that are trying to pass a budget for the next two years. The first reason deals with the slower economic growth, as this will slow income and sales tax growth, and was not assumed to kick in when the LFB did their revenue estimates a few weeks ago. So start shrinking that alleged surplus for the 2011-2013 budget, and start lowering revenues for the deficit-ridden next one as well.

In addition, the sequester cuts the amount of money sent to state and local governments, to the tune of $188 million over the next 2 years for the State of Wisconsin. This was not put into the Walker Administration's budget that was sent down to the Legislature last month, so add another $188 million in budget holes to be filled by the leggies.

Oh, and there are also direct aids that go to schools in the form of Title I funds, colleges for work-study, and Head Start providers. The Obama Administration spelled out the estimated effects to Wisconsinites in this sheet released last week.

Teachers and Schools: Wisconsin will lose approximately $8.5 million in funding for primary and secondary education, putting around 120 teacher and aide jobs at risk. In addition about 10,000 fewer students would be served and approximately 50 fewer schools would receive funding.
o Education for Children with Disabilities: In addition, Wisconsin will lose approximately $10.1 million in funds for about 120 teachers, aides, and staff who help children with disabilities.
􀂾 Work-Study Jobs: Around 550 fewer low income students in Wisconsin would receive aid to help them finance the costs of college and around 420 fewer students will get work-study jobs that help them pay for college.
􀂾 Head Start: Head Start and Early Head Start services would be eliminated for approximately 900 children in Wisconsin, reducing access to critical early education.

That's on top of any cuts the Walker Administration will give to schools and other services. You can see where keeping the sequester long-term becomes a major double-whammy for a lot of places in the next year.

So while we may not see an immediate crash, it looks like keeping the sequester in place would lead to slow-motion train wreck as services deterioriate and the cuts come gradually throughout the coming months. But these cuts would hurt, and if it's not remedied, things will look very different and gloomy for 2014.

I think I'm like a lot of people: I'm tired of a substandard economy, and don't want to see us fall back any time soon. With that in mind, I'd hope the sequester fix is tucked into the full-year budget negotiations that must be completed by March 27 (if that March 27 deadline isn't met, you will see an immediate crash). And I think we still need to emphasize job and wage growth as the first priority, and go for deficit-reduction policies at a later point, when unemployment is down and incomes are going up. That ain't happening enough right now.

This week in media failures

Want to know why the only institution that has an approval rating as low as Congress is our political media? This week gave 3 good indications why.

1. Bob Woodward- exposed as a Villager assclown. Washington Post reporter Bob Woodward got his Depends in a bundle when his insider discussions with Obama economic officials on the then-upcoming sequester resulted in a difference of opinion. Woodward spent the next few days whining to any media outlet that would have him (usually Faux News or some other rightie-sympathetic organization) that the White House "threatened" him. And then the emails were released, and Woodward looked like a whiny little pussy. Here's the horrible threat given to Woodward from White House adviser Gene Sperling.

But I do truly believe you should rethink your comment about saying saying that Potus asking for revenues is moving the goal post. I know you may not believe this, but as a friend, I think you will regret staking out that claim. The idea that the sequester was to force both sides to go back to try at a big or grand barain with a mix of entitlements and revenues (even if there were serious disagreements on composition) was part of the DNA of the thing from the start.

Speaking of regrets, I bet Woodward really regrets trying to turn this debate into being about him, because he sure looks bad on it. And not just for the whininess, but also because Sperling is largely accurate on this- the sequester was never intended to actually take place, it was a "poison pill" inserted to get a DC Villager-approved "Grand Bargain" in place to get the country's deficit down. And Obama has consistently called for a mix of revenues and spending cuts, unlike the Congressional GOP.

It took a real news journalist from outside of DC to tell the truth about how absurd Woodward looked- Jon Stewart of the Daily Show. Jon gets going on this around 1:00.

The Daily Show with Jon Stewart
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"Because access means never having to say you're sorry." Killer line, and it accurately sums up the complete lack of accountability Woodward and other DC media have, where they can constantly get stories wrong, but continue to get prime seats at the table on Sunday morning shows.

2. Blowing up AM1290 in Milwaukee If you're an ass-kisser, right-wing or both (like Woodward), you're a lot more likely to get that access. That was reiterated in Milwaukee this week, as one of the very few stations with any progressive voice at all in that town had that point of view silenced in a format change at AM1290, WMCS. This included the firing of morning host Eric Von, and the replacement of talk with "Martini Radio" - Rat Pack and other Big Band-type music. Now I can dig the Rat Pack, but I can also get that on a whole lot of satellite stations and oldies-type formats. While the only place you can now get anything resembling progressive radio over the air in Milwaukee is through AM820 out of Chicago, if the signal reaches that far. Shame on the Milwaukee Radio Alliance for failing to promote a station in a majority-minority city that had one of the few shows with an actual minority point of view, and in failing to get quality programming around the local talk to drive listenership (this is the real secret behind 620's and 1130's ratings - it ain't Sykes and Belling, it's Brewers, Packers, and Marquette getting people to lock on the station). So now, the only African-American talk show voice appearing on Milwaukee's airwaves is off-the-rails absentee Sherriff David Clarke - and he's not really a good representative of the community.

And if you don't think having a point of view on the radio matters, check out this quote from State Sen. Dale Schultz this week when he appeared on Sly's show on FM 93.7 this week (interestingly, it seems like Sly has more reach at this station than he did before the Thanksgiving Eve massacre at WTDY), where Schultz said WTMJ makes GOP legislators "shake in their boots."



This backs up what someone who worked in Schultz's office told me a few years ago. If they got a phone call from the 262 and 414 area codes, they knew these people had heard some BS from Sykes or Belling, and weren't going to be rational. And these losers don't vote rationally either, which skews the results of small-turnout elections like local common councils and Republican primaries, which explains why we have Glenn Gross-man in the State Senate instead of Mary Panzer. Now, the types who listen to Milwaukee RWNJ radio are small, but our media is so in fear of being labeled as biased, even when they tell the truth on a subject (like how Scott Walker has decimated public schools or failed at job creation), that they don't call out these plain falsehoods spouted on the AM dial every day, and the lies take hold in people's minds.

Of course, the Democratic Party of Wisconsin isn't up-front enough on doing this either, and that leads to fail number 3 for the week.

3. Graeme Zielinski making an ass out of himself after Gov Walker gets over on John Doe. Look, I'm disgusted that the Milwaukee County DA's office wussed out and chose to not pursue charges against Walker like anyone else who saw those emails and believes in rule of law. But that's no excuse for DPW Communications Director Graeme Zielinski to let out a series of tweets comparing Walker to Jeffrey Dahmer, and complaining that Walker won't go to jail while Dahmer did. This is an idiotic statement for a couple of reasons.

A. The analogy is way off. The correct analogy for Walker is MOB BOSS, as someone who is able to allow others take the rap for him in exchange for favors down the road. This seems a lot closer to what John Doe was than Dahmer's situation. See, Dahmer committed the crimes on his own, got caught, and got thrown in prison. Walker had others commit the crimes for him, didn't get prosecuted (for now), and won't face prison time.

B. Graeme is representing the DPW with these tweets, and it makes him and the party look petty and childish. Now, sometimes I don't mind it, like when he Pearl Harbored WTMJ for having their right-wing radio programming color JournalComm's news coverage (it worked because what he said was true). But yesterday was not the time or place to make yourself the story, and it certainly was not the right tone (he should have shrugged and said something like "Guess Walker knew nothing and just hires criminals and other losers. Interesting.") The fact that Graeme and Mike Tate aren't understanding that Zielinski is hurting the party when they obsess on John Doe and act out in this way goes helps to explain why WisGOP gets the monopoly on power that they do, despite having opinions and attitudes that very few people in the state like. It is time for Graeme to go, and I said as much in an email to the DPW yesterday.

It also illustrates another issue that comes up with lefties not having the talk show access that WisGOP and the right-wingers do. Walker and the RPW (other than Gross-man, David Clarke and a couple of other dopes) don't have to say the outrageous thngs they think, because they can send those talking points to Chuckles the Clown, Icki, and Belling to say for them (it's well-documented that Walker's staff scripts Scotty's interviews with these guys). Other than Sly in SW Wisconsin, where's a similar outlet for the left to have on the state's airwaves? It doesn't exist, and therefore the frustration becomes more likely to come out through officials like Graeme Zielinski. Graeme should be on a talk show instead of having this DPW gig, and I think he'd be good at it, but no such outlet exists in much of the state for him to get his views out. All the more reason to confront these stations and demand some semblance of balance be brought back to their airwaves, with the legitimate threat of economic pain to those who advertise on such destructive, right-wing stations.

When you look at what happened this week, it's no wonder people are skeptical of our political media in DC and in Wisconsin. We know these guys that are purported to be fact-finders and experts are far from it, and that frustration is a big reason why I started writing more 3 years ago. And apparently it's going to have to be us to hold these fools' feet to the fire and expose them as the access-driven frauds that they are, because the traditional media don't have the skills and/or guts to stand up to those that they rely on for their stories and their paychecks.

"Tools" can't fill school budget holes in Brookfield

I was going to comment on this, but I see Capper beat me to it in his blog. Numerous Wisconsin school districts are already reporting huge budget deficits for next year, now that Gov. Walker's budget refuses to raise the revenue caps put in place in 2011. I'll let you read Capper's post for the big details, but I want to add a few words on one of those deficit-ridden district in particular.

The $2.3 million deficit in Elmbrook Schools always has relevance to me, as a Brookfield Elementary alum (class of '86 BIYATCH!). Those pro-Walker communities in Waukesha County gladly imposed Act 10 on their schools as soon as they could, cut its school property tax levy by $5.9 million that year and claimed that it received $5.3 million in savings from the measure by using Act 10 to dump those costs onto its teachers. And at the time I said those folks in Brookfield and Elm Grove were slitting their own throats with these short-sighted moves, and sure enough, there was a major run on retirements in Elmbrook after the 2010-2011 school year.

Fast-forward two years, and the damage is even worse than I feared. One Elmbrook elementary school closed before the start of this year, and parents were angered when they found out their children were in classes of 30 or more. Hope you suburban Baggers enjoyed that 1-year break on your taxes, because now you're out of tools from Act 10 to use, and your boy Scotty used your simple-mindedness at the voting booth to throw money money at voucher schools instead of the public schools your kids are attending.

Oh, and don't think of leaving either. Your home value is probably tanking if you live in a community like Brookfield or Elm Grove. In fact, the stupidly-red WOW Counties around Milwaukee were standouts in Wisconsin for home sales prices in the most recent Wisconsin Realtors home sales report, and not in a good way.

Year-over-year median sales price change, January 2012-January 2013
Statewide change +3.4%
Waukesha County -6.9%
Washington County -10.8%
Ozaukee County -11.2%

When you think about it, this shouldn't surprise you. Let's face it, other than some nice shops in Port Washington, many people wouldn't choose to live in any of these three counties except for 2 reasons:

1. To live in a community with like-minded, fearful white people.
2. High-quality public schools that your kids can attend, which also stabilizes home values.

Now, smart young families don't have Number 2 as a reason to go to these places, given that Walker wants to destroy this state's previously-strong schools. And they really don't want to hang around people that decided on Reason 1, so I hope you empty-nesters enjoy trying to sell your oversized home over the next few years, because I got a feeling the young families you need to replace your aging selves with are heading somewhere else.

But hey, you guys wanted to bash public school teachers and save $18 on your property tax bill for one year. I have no sympathy for you either, because you did it to yourself


In Brookfield, Glendale, Sheboygan, and several other places all over Wisconsin, the increases in property taxes and fees are coming now and for the next few years, along with school cuts that will deteriorate communities all over the state, encourgaing more people to leave. Expect this ugly cycle to continue for as long as the Age of Fitzwalkerstan is allowed to fester, and as long as pro-Walker suburbs like Brookfield refuse to invest in the one advantage their town had- quality public schools.

#wiright Journalism- all the speech with none of the accountability!

Hey, look who was back in the news today- the loser GOP operative who tried to claim he was bullied by Mark Pocan's husband and got beaten up by "intolerant lib'ruls," but was later found to be lying about the whole incident. Now this POS is looking at jail time for his idiocy.

A former volunteer for a Republican congressional campaign who had claimed to be the victim of a politically motivated assault has been charged with obstruction.

In late October, Kyle Wood, 29, reported to Madison police that he was attacked in his home. Wood claimed the attack was politically motivated. He told police his face was smashed into a mirror and he was choked during the attack....

According to court documents obtained by WISC-TV, five days after the alleged attack while police were questioning inconsistencies in his story, Wood told police, "You're right -- I did it to myself."

For one of his injuries, to his eye and forehead, Wood told police he used a rock from an aquarium, one that looked most like a fist, placed it in a sock and struck himself with it, according to the criminal complaint.

The complaint said Wood told police he hit his own head against a mirror, causing injuries to his forehead and eye.

The complaint also said Wood used a guitar string to create marks around his neck.

Those GOP campaign operative types are such well-adjusted folks, aren't they? Right, Tim Russell, Kelly Rindlfeisch, Hooters Girl, Keith ("I don't want a scrap of paper on this incident") Gilkes, and the Waukesha GOP campaign worker that was pulled over with a bottle of vodka in her car? WINNING!

But remember that there was a second part of this story, one that I find a lot more significant. That was where Media Trackers and Charles Sykes and Christian Schneider all used their media megaphones to give Kyle Wood publicity about being "attacked" in an attempt to smear Pocan and promote Republican chances. Schneider in particular was odious, as I cited at the time, because he printed Wood's false account of the alleged incident, and when he was called out on it when Wood was proven to be lying, kept the article online for a while with a "my bad" on it at the end.  Later, Schneider was even more cowardly, getting the whole slanderous article to be taken off the J-S site so others couldn't find it. Bruce Murphy of Urban Milwaukee followed up on this BS, and allowed the Journal-Sentinel's David Haynes to contradict himself in the span of two paragraphs.

Editorial page editor David Haynes says the Purple Wisconsin columnists are not paid and are not edited or fact-checked by the paper. (By contrast, it pays Schneider a fee for his newspaper columns which are edited by the paper.) Yet Schneider in the past took down a Purple Wisconsin post he did, saying he needed to check the facts, and at the bottom it was notated “-Management.” Schneider did not reply to my email asking about this; Haynes says he suspects Schneider “was referring to himself.” That’s strange.

Haynes also says that had Schneider not taken down his erroneous story about Wood, “I would have done so. I see no value in continuing to circulate information that we have reason to believe is untrue. Christian’s follow-up post gave a sense of the original, which should satisfy curious readers.” But since when does the newspaper expunge erroneous stories? And if Haynes is not editing Purple Wisconsin columns, why would he be making decisions about whether to take one down?

    

Yep, still smarmy d-bags. And allowed to be smarmy d-bags.

Given that Schneider hurt the Journal-Sentinel's reputation by publishing this false garbage on its editorial pages, we can assume he was punished and had his role diminished by the Journal-Sentinel in an attempt to regaing the trust of the public, right? OF COURSE NOT. In fact, Schneider's role seems to have been expanded in recent months, including this absurd column promoting Walker's stupid income tax plan (guess he didn't read what I had to say about that), and Chrissy was allowed to use "unnamed sources" in a "news" story that let him leak Gov. Walker's decision not to take the expansion of Medicaid funding under Obamacare. (Gee, wonder why the Walker Admin sources chose ol' Chris to leak it to instead of someone who could do, you know, do journalism?)

Brian SiKKKma and Media Trackers? They're still putting out their BS, too including their attempted misdirection play on Obamacare's impact on Wisconsin's Medicaid budget (which the J-S included as part of its story on the the Walker "Work Makes You Free" plan until they were called out on it), and the J-S ran with Trackers' recent article on the Bad River Reservation's EPA issues on a wastewater treatment plant, as if it was somehow relevant to the giveaway of a mining bill that Walker and WisGOP is trying to shove through the State Legislature and impose on the Bad River Chippewa.

Of course, Charles Sykes still has his TV and radio shows peddling hate and GOP talking points day after day, and has even branched out into his own propaganda site at RightWisconsin (apparently overwhelming the J-S editorial page and intimidating its reporters wasn't enough for these guys). Chuckles the Clown is allowed to emcee events from Wisconsin Manufacturers and Commerce and other pro-GOP organizations, complete with Republican candidates making campaign speeches.

At least Kyle Wood is suffering consequences for his pathetic actions, but I'm curious to know where Christian Schneider or Brian Sikkkma or Charles Sykes or any of these right-wing media types get held accountable for relaying these lies, and the horrible results that come out of the lies and deceptions that they choose to air. In the real world, if we screw up, we have to face the music and learn something from the screw-up. But in WisGOP bubble world? Not so much. They can keep selling their hate and BS and have it go unchallenged in the state's largest newspaper and over the airwaves in the state's largest market. And the corporate heads at JournalComm stand by and condone this unacceptable behavior because they're so terrified of the Milwaukee oligarchy abandoning them.

Given, that JournalComm doesn't to do their job, we'll do it for them. We must confront these lie peddlers and propagandists at every turn, exposing them as frauds to bystanders who do not have the time to look into these things themselves. And we must continue to denigrate the Journal-Sentinel, AM620, and TMJ-4 as the corporate, right-wing shills they are, and expose the money and scummy groups that are hiding behind these "news" organizations (I'm looking at you, Bradley Foundation), until they have no choice but to clean up their unaccountable act.

No, Walker's tax cuts won't help most of Wisconsin

To the surprise of no one paying attention, the Legislative Fiscal Bureau confirmed that Scott Walker's proposed income tax cuts will do next to nothing to the average Wisconsinite, and only give a boost to those who make big money.

The tax cuts would appply to all dollars of income up to $161,180 for single people or $214,910 for those married filing jointly, and dollars of income above those levels will stay at the same marginal rate as before. The LFB report reiterates that the tax cuts would be tiny reductions of marginal rates, but they'll add up to a big bill for the state.

In AB 40, the Governor proposes to reduce the rates that apply to the three lowest tax brackets, beginning in tax year 2013. The respective rates would decrease from 4.60% to 4.50%, from 6.15% to 5.94%, and from 6.50% to 6.36%. The Administration estimates that the proposed reductions would cause individual income tax collections to decrease by $172.6 million in 2013-14 and $170.6 million in 2014-15...the tax rate changes for 2013 would apply retroactively to January 1.

Then the LFB goes on to break down various income levels in Wisconsin and the amount of the tax cut they'd get. Here are a few selected ones for you, and I assume the LFB uses 2014 in their examples because they want to show a full-year effect.

Average income tax cut in Walker budget, 2014
$27,500 AGI, married jointly- $11
$27,500 AGI, single- $25
$55,000 AGI, married jointly- $63
$55,000 AGI, single- $71
$100,000 AGI, married jointly- $129
$100,000 AGI, single- $133
$200,000 AGI, married jointly- $239
$200,000 AGI, single- $223
$300,000+ AGI, married jointly- $303
$300,000+ AGI, single- $221

You can see that for lower-level Wisconsinites, this cut is virtually nothing (about $6 a month for the median income earner), but once you get to the higher incomes, they start becoming somewhat meaningful. However, it also slants the tax cuts toward the top incomes in the state, and the LFB illustrates that skewing as well (this will combine single and joint filers).

Distribution of tax cuts as % of tax returns.
$25,000 AGI and below 2.1% of tax cut, 16.9% of returns
$25,000- $50,000 AGI 4.7% of tax cut, 16.8% of returns
$50,000 AGI- $70,000 AGI 9.9% of tax cut, 14.5% of returns
$70,000 AGI- $100,000 AGI 22.4% of tax cut, 20.8% of returns
$100,000 AGI- $150,000 AGI 31.0% of tax cut, 18.9% of returns
$150,000- $200,000 AGI 14.0% of tax cut, 6.1% of returns
$200,000+ AGI 17.8% of tax cut, 6.1% of returns

So despite the fact that only 1 out 8 Wisconsin tax filers have over $150,000 in income, they stand to get nearly 1/3 of the the proposed Walker tax cut. Conversely, the bottom 48% of filers (those at $50,000 AGI and below) get 1/6 of the total tax cut. Nice distribution, isn't it?

And given the small amount that will go to the lower half of Wisconsin income-earners with these tax cuts, and that the changes in withholding probably won't come until at least July, two experts say this won't change much in terms of growing the economy.

"The governor has argued that by putting more money in people's hands, the tax cuts will spur economic growth in Wisconsin," said Andrew Reschovsky, a UW-Madison professor of public affairs and applied economics. "There is no evidence that the tax cut will do much to encourage growth and job creation."

Mark Schug, a UW-Milwaukee professor emeritus who now consults in the area of economic education, agreed such a cut is not likely to be an economic boost.

"I do tend to think that the income tax reduction is not sufficient," Schug said.

You know what would be sufficient? 1 of 2 things.

1. A tax credit for all 2012 tax filers- Probably of something like $200-$300. And the best way to do it would be paid would be as a rebate that goes directly to taxpayers immediately, instead of having to wait to file taxes the next year in order to receive it (a big mistake made in the stimulus). And you don't have the long-term deficit problem caused by keeping the rates at the lower levels, and the pain in the ass required to raise them back once the deficits sprout up.

Of course, this still means more cuts that we can't afford to make in Wisconsin for the next two years. So I'd prefer to do...

2. Send that $340 million to back to the schools, local governments, and universities that suffered cuts in the last budget. Not only are these better places to invest state funding in (due to the continued employment it would ensure in these fields and the higher productivity from a better-educated work force), but it also can limit the potential tuition hikes, property tax increases and fees that are resulting from Walker's cuts now, and will continue in the future (tax increases that will more than offset any Walker income tax cut for 2013-2015).

But this would go against Gov. Dropout's plan to funnel money to his rich contributors, and FUBAR state services by robbing it of revenue, causing it to have to be sold off to more campaign contributors. Plus, he wants to cynically say that he tried to lower taxes, no matter what it does to our state's budget deficit (the GAAP deficit is slated to rise another $600 million over these 2 years).

Heck, making things worse in the long-term just to strike some Confederate-style "low-tax" poses is a win-win for ol' Scotty, since it'll be harder for the Dem that replaces him to clean up his mess, and because this delusional fool thnks he can run for president in 2016. The dingbats who vote in GOP primaries love to live in Fantasyland, and this type of big-talk, small-result tax cut is right in their wheelhouse.

Granted, it could be difficult to run for president if he's in a jail cell or having it come 1 year after getting run out of office by angry voters, but when has reality gotten in Scott Walker's way before? And this idiotic tax cut that has the vast majority of benefits going to the richest Wisconsinites is just another example of it.

Trickle-down failure, pt. 35128

As if we didn't already know this, but another report came out recently proving the failure of trickle-down economics, and the inequality that these policies have caused.

Thomas Hungerford of the Congressional Research Service (a non-partisan organization that does policy studies for Congress) points out that the lowering of capital gains taxes from 1991 to 2006 were a huge driver in the increases in inequality that have happened over the last 20 years. The time frame is important, as capital gains were taxed at 28% in 1991, but that rate had dropped to 15% by 2006, giving an indication of how the changes in policy affected outcomes.

Clue number 1 comes from the declining importance of wages when it comes to overall output and income.

Wages are by far the largest source of income, but accounted for a smaller share of income in 2006 (77 percent) than in 1991 (92 percent). In addition, the wage share appears to be counter-cyclical—the share is higher in the recession years of 1991 and 2001 than in the expansion years of 1996 and 2006. Interestingly, the decline in the wage share during the economic recovery after the 2001 recession (2001 to 2006) was considerably larger than the decline during the years after the 1990–91 recession (13 percentage points versus 4 percentage points).

That last point is VERY interesting, because in the 1990s, President Clinton had tax rates raised on the richest earners, while in the 2000s, President Bush had the income tax rates cut for the highers earners.

And the flip result happens for capital gains as a percentage of income- it went up as the tax rates on the rich went down.

Capital gains and dividends as a share of income increased from 5.4 percent in 1991 to 15.6 percent in 2006—a 287 percent increase. The capital gains and dividends share appears to be pro-cyclical, increasing during the expansions and falling during recessions. Business income also greatly increased as a share of income between 1991 and 2006 by 265 percent (from less than 2 percent in 1991 to over 5 percent in 2006). There does not appear to be a strong cyclical pattern to the trend in the business income share. Overall, income from capital increased as a share of income from 16.7 percent to over one-quarter over this 15-year period.

So when tax rates on the rich have been higher, workers tend to receive a bigger share of income than if tax rates are lower, and the rich are more likely to hoard or speculate their added incomes on things that generate capital gains instead of paying the workers that made it possible. In other words, the exact OPPOSITE of trickle-down happened in the 2000s- the extra money went away from those who work, not toward them.

And Hungerford lays this out in simple terms later in the paper, describing the effect of tax policies on the Gini Coeffifienct, which measures inequality in a country (the higher it is, the more unequal the distribution of income is).

Consequently, changes in wages had an equalizing effect on income inequality (i.e., reduced the Gini coefficient). Most of the equalizing effect occurs over the final 5-year sub-period. Changes in capital gains and dividends are the largest contributor to the rise in income inequality over the 15-year period, with most occurring between 2001 and 2006. Changes in taxes had an equalizing effect on overall inequality between 1991 and 2006. Most of this equalizing effect occurred between 1991 and 1996 due the [Clinton] tax increase; the 2001 and 2003 Bush tax cuts had a disequalizing effect between 2001 and 2006.

This trend toward higher inequality has continued since Obama has taken office, in no small part since the Bush tax rates have also stayed in effect during this time. The left-leaning Economic Policy Institute released a study last month showing that the richest Americans have been virtually the only group to have their incomes grow during the first 2 years of our recent recovery.

Those at the top are seeing their wages rebound quite strongly in the recovery. Following a 15.6 percent decline from 2007 to 2009, real annual wages of the top 1.0 percent of earners grew 8.2 percent from 2009 to 2011.

The real annual wages of the bottom 90 percent have continued to decline in the recovery, eroding by 1.2 percent between 2009 and 2011.

The study goes on to note that this continues a trend that started with the Reagan years where the richest 1% of income earners grab more and more of the pie.



And the same disconnect between wages and incomes is happening here in Wisconsin. Almost every bit as important as the Walker Administration's admission that even their favorite job stat shows Wisconsin's year-over-year job growth was cut in half in the 3 months after the recall election, is the fact that it also showed a drop in wages.

Wage information: Total wages by covered employers, including private and public, experienced a 1.8% decline in the 13-week third quarter of 2012 as compared to the 14-week third quarter of 2011. Included is a 6.2% percent decrease in covered government employer wages, reflecting the phase-in of additional public employee retirement and health insurance contributions for state and many local government employers during the third quarter of 2012.

So you might think that a results-oriented administration would try to do things that would lessen inequality and increase the chances of funds going to the working class over the idle rich. And when it comes to the Walker Administration, YOU WOULD BE WRONG, MY FRIEND. In fact, these assclowns want to increase this losing trend.

Check out the rundown from the Wisconsin Budget Project as Walker's first budget was on the verge of passing in 2011.

The first investor tax break provides a deferral on capital gains taxes if the profits are reinvested in Wisconsin businesses. Under this provision, investors can sell off assets and reinvest the proceeds without being taxed on income from profits. Investors would only have to pay taxes on these profits after the new, Wisconsin-based assets are sold. The cost of this provision is $36.3 million over the next two years and $197.9 million over the next 10 years.

Under the second tax break, investors would pay no state taxes on profits resulting from the sale of Wisconsin assets if purchased in 2011 or later and held for at least five years. Because of the five-year holding rule, this provision would not cost taxpayers until fiscal year 2017, when the state would lose $6 million in revenue. The full price-tag of this provision will come into effect in fiscal year 2021, when it is expected to cost $79.4 million annually.

We can predict who would take advantage of these new tax breaks by seeing who benefits from similar tax breaks that already exist. Under current Wisconsin tax law, 30% of capital gains are exempt from taxation (60% in the case of farm assets). The chart below, based on our analysis of data from the Wisconsin Department of Revenue and Legislative Fiscal Bureau, shows how much individuals of different income levels take advantage of the current exclusion on capital gains.

•Those making $200,000 or more make up less than 2% of all tax filers, but account for more than 46% of all profits excluded from taxes.
•Those making $90,000 or less – 88% of all tax filers – account for only 36% of all excluded profits.

And this doesn't even include the tax increase given to low-income working Wisconsinites in 2012 due to the lowering of the Homestead and EITC credits.

Walker has now added to this trickle-down foolishness by sticking his nose into the federal fiscal fights, and saying that the sequester isn't the best way to handle the country's deficit (I'm sure this has nothing to do with the $188 million hole that would open up in his budget if it were to go through). No, Scotty would rather cut Social Security and Medicare benefits to the same individuals who have had their pensions slashed and stolen. And they were slashed and stolen by the same lucky few who have greatly benefitted from the last 30 years of "profit-over-pay" tax policy that has gone a long way toward explaining the mess that we're still trying to drag outselves up from.

The jury has been back on this one a while- trickle down economics does nothing but steal from the vast majority of us who actually do work and gives money to those who don't need the help. But politicians like Scott Walker (who has never had a real job for pretty much his whole adult life, and has only created jobs for cronies who kiss his ass) are still trying to cling to this failed philosophy. It needs to be put into the dustbin of history NOW.

See ya, Denny

A week after Gov. Walker releases a Medicaid plan that has cost Wisconsinites more tax dollars to cover fewer people, DHS Secretary, gutless liar, and mistress-hirer Dennis Smith has abruptly resigned to "pursue an exciting opportunity in the private sector" (which we now know is a position at a DC lobbying firm). Hmmmm, guess this guy figures he's FUBARed Wisconsin's previous-strong health system enough, and now needs to grab some wingnut welfare. That, or Scotty just threw a guy under the bus for his failures in the health care issue. Guess Scotty has to do something as his administration reveals job numbers that are even worse than the "42nd in the nation" jobs report.

In honor of Mr. Smith (in name only) and his 25 months on the job. I recommend a little Radiohead on this. This is what you'll get, when you mess with us.



Hope you and your mistress have a good time in DC as you make big bucks lying for a living. D-bag.