Ventings from a guy with an unhealthy interest in budgets, policy, the dismal science, life in the Upper Midwest, and brilliant beverages.
Monday, December 31, 2018
End of 2018 - Lot of Foxconn, and other corruption. But it's at least a Start to better things
As the crazed year of 2018 draws to an end, I wanted to go over our most-clicked posts, and give a little further review.
3 of these 5 came in August 2018, and 2 dealt with the same subject - the ongoing ripoff known as Foxconn.
1. "Foxconn jobs shrinking by the day, but the costs remain huge.">
August 23, 2018
3. "Fox-con water deal seems to soak Racine Co taxpayers even more."
August 19, 2018
As we found out throughout this year, not only is the Foxconn project going to be far too expensive for what the state might get back in economic activity, but the number of jobs that might appear at the Racine County plant continues to decline, and instead will be performed by robots who will work on smaller screens.
There seems to be a group of people that are clued into all news related to Foxconn (I see them re-post my work on Facebook), and they helped to lead to high levels of viewership for those posts and others that continue to talk about an albatross that will continue to be a mess for this state in the coming years. I want to give an extra shout out to you guys, and keep coming back here in 2019, as we are sure to see more crookedness and wastefulness from the Fox-con and WEDC next year.
Another one of the bad aspects of the Fox-con was the removal of environmental and wetland protections at the state level. And that deregulatory mentality came home to roost in another way in August when the state got hit with record flooding. Which led to this post.
2. "Walker and WisGOP chose ALEC and other donors over Wis local govts. Record flooding is a result."
August 27, 2018
That post also featured this great picture from Isthmus, which came during a Walker photo op that happened a few days after Scotty pointedly ignored the floods that hammered the Madison area.
Isn't it going to be nice to have a Governor with college degrees and a DNR that believes in science for 2019? And we need it, because Walker and the Koch/ALEC Crew really set us back when it came to being prepared to handle the effects of our more severe and changing climate.
Another ongoing topic in 2018 was the plummeting of dairy prices and the record number of dairy farm closings in Wisconsin in this year. And that manifested in this widely-read post.
4. "As dairy prices collapse and Wis farms go under, Big Ag and WisGOP make it worse."
September 18, 2018
Another Walker/WisGOP-encouraged problem that will be on Evers' desk in 7 days. For 8 years (and frankly, for years before that), the State of Wisconsin has maintained a "bigger is better" mentality that looked the other way at abuses by mega-farms, and led to overproduction that has made milk prices too low for many farmers to survive. Combined with Trump tariffs that limited exports, and you have a massive surplus of product.
There is little that seems likely to come to change that from DC and the commodity markets (and now the relatively small farm subsidies from the Trump Administration are being delayed due to the government shutdown), so the improvements are going to have to come from the state level. And that could prove difficult with a WisGOP Legislature that is bought by Big Ag.
Lastly, there was one post related to the scandal-plagued White House that made my our most-read list for this site. And it had a special Wisconsin connection.
5. "Why Ron Johnson may be a key part of #TrumpRussia, and how SCOTUS plays in."
July 10, 2018
The SCOTUS part dealt with the then-recent nomination of Brett Kavanaugh, and how he got that nod because he was likely to try to limit and/or compromise the Mueller probe against President Trump. But the Ron Johnson part is the one that many in the state still have not caught on to, and they should.
Why? Because Homeland Security Chair Johnson has tried to knock down and/or obstruct the Russia probe several times in the last year (although he has shut up in recent months as more indictments and details drop), and was one of 7 GOP Senators to travel to Russia for the 4th of July last year. And we know Johnson was in the room with Mitch McConnell and Paul Ryan when President Obama told them of Russian hacking efforts before the 2016 election, and Johnson did not let Wisconsinites know about it.
And why was that? Likely because we will find out more about how the Russia-NRA laundromat helped RoJo win his Senate race vs Russ Feingold that year, and how it helped Trump win Wisconsin in the process. Watch that space in 2019.
Lastly, thanks to all of you for continuing to read. This is just something I do to try to throw ideas up a flagpole and keep from having my brain implode, but it takes you that read these rantings that get it noticed by people I still can't believe read me. All I'm trying to do is demystify a lot of things that the everyday person with more interesting hobbies might not know about government, policy and the economy. Because frankly, the evildoers thrive on you not understanding these things, since you don't know how wrong it is, or why it is so messed up.
And there's no way I'm stopping in 2019. Not with a new direction possible in both Madison and Washington DC. It's not going to be a magic wand where everything changes just because Dems are in charge of a few more areas of government - the rot of bad faith and abuse of power and previous damage from Republican actions at all levels has put us in a major hole. And it will take more than a few actions to get us out of that hole, and the GOP will be more than willing to keep things down in that hole, so people get disgusted and take out their frustrations on the new Dems in power.
But as a public employee who gives a crap about the state and country that he lives in, I see a minor light in the distance, and the possibility of finding a way to a better place. And that's a nice improvement from what I was feeling 1-2 years ago. Let's stay on that improving path for 2019, shall we?
"It's not important for you to know my name
Nor I to know yours
If we communicate for two minutes only
It will be enough.
For knowing someone in this world feels as desperate as me
And what you give is what you get"
In today's episode of "How dumb does the GOP think we are"?
It sure seems obvious to me that @GovWalker and the @WIAssemblyGOP did a great job growing jobs in our state! https://t.co/q8frrqGUHu— Robin Vos (@repvos) December 31, 2018
And the chaser.
Read farther: pic.twitter.com/NBvL8rSYtr— Todd Brunner (@shuga_c) December 31, 2018
Once again Robbin' - if we had simply kept up with the rest of the US while you guys were in charge of Wisconsin, we'd have another 150,000 jobs. So where is your #ThanksObama for keeping us out of a depression?
These guys never acknowledge the existence of the awful Bush years, or the Obama Recovery, because it's an inconvenient context. And I bet come 2022, they won't be acknowledging the Trump Recession either.
Do NOT let them spread the BS that "things in Wisconsin were great when Evers took office." The fact is that Walker and WisGOP held us back in the 2010s. This is not a debatable subject.
Sunday, December 30, 2018
One thing the new Dem House should do - MAKE THE HOUSE BIGGER!
In addition to trending the population totals for 2020, EDS also included a second scenario.
On November 11, 2018 the editorial writers at the New York Times suggested an increase in the size of the US House of Representatives to 593 members in order to bring down the size of each district. Election Data Services, Inc.’s apportionment calculator allows us to change the number of seats to be assigned, as well as allowing the District of Columbia to gain a Representative. Changing the number of seats in the House and running the apportionment program allows us to see how many seats would go to each state under that scenario. As expected, most states would see an increase in their representation in a 593-member House of Representatives. California would gain 19 seats, Florida an additional 13 seats, and Texas an additional 17 seats. All other states are single-digit seat increases and no state would lose any representatives from their current allocation. Only the states of Alaska, Maine, North Dakota, Rhode Island, Vermont, West Virginia and Wyoming would stay with the number of representatives they currently have in 2018. A table of these results are included in this packet.Now this is what I’m talking about! This "Wyoming plan" (so called because Wyoming is the state with the smallest population), is a more even House of Representatives that is in line with population trends. Under it, Wisconsin would get 2 more House members, running our total to 10.
To back up a bit, there is no Constitutional requirement for how large or small the House of Reprsentatives should be, and it could be changed at any time. That being said, the House has been set at its current 435 member amount since 1911 (outside of the years when new states came in, where they would add 1 member for those states until the new Census came around). In that time, the US population has grown from just more than 92 million in 1910 to an estimated 333 million by 2020, and the country has added 4 states over those 100+ years.
In addition, the method of determining how many Reps come from each state has been in place since 1941. If you want to dig deeply into how they assign seats, feel free to click here, but it basically looks at the population-per-district of every state, and splits the difference between the final 2 seats. For example, 8-member Wisconsin had 5.673 million people in their 2010 Census. If you divide that amount between 7 and 8, then the average of those 2 numbers came out to just under 761,500. That’s above the 710,000 average that Minnesota had to grab the final seat in 2010, but the average in Wisconsin between 8 and 9 was just over 671,500, so we couldn’t get another seat.
In this case, the Wyoming Plan gives an edge to larger states, as the difference in people-per-district is less with states with more people and seats, so they “pick up” more seats as the House gets bigger. This is how Illinois can add more people than any other Midwestern state despite their declining population in the 2010s.
Interestingly, the “next seat up” under the Wyoming Plan is Wisconsin, meaning that if population growth increases enough in the rest of the country to make the House 594 seats instead of 593, Wisconsin would get that seat and have 11 people in the House, and not 10. But even if Wisconsin were to remain at 10 seats after 2020 under this plan, it would cause a notable difference in how our Congressional map might look. Here is an example
And compare it to what we have today.
"But Jake, even if the House approved of the Wyoming Plan, it still has to go through the Senate." I actually think the merits of the Wyoming Plan could get through the Republican-controlled Senate as well, even with smaller states getting less of a boost. There are two reasons - 1. It doesn’t change the amount of seats in that chamber (we deal with that later). 2. This plan also adds more seats and Electoral Votes in states Donald Trump won in 2016 (71) than in states won by Hillary Clinton (67).
Now, do I think Mitch McConnell would approve of anything that might bring fairness and integrity to a system that he is able to take advantage of in its currently rigged state? Not really, but a guy can dream.
I know that there is a lot the new Dem-run House has to clean up from the mess that Paul Ryan has handed them. This includes ending the government shutdown, and finally holding this outlaw and compromised Administration to account. But something else they should do is pass the Wyoming plan to be in effect after the 2020 Census, along with provisions to expand voting rights and end gerrymandering (which they have already said they would do).
Bringing up the Wyoming Plan could be part of that reform initiative, and will make the average citizen start asking why we accept the same method of apportionment that we've had for more than 100 years. Many people think that the House is set up at 435 people "because that's the way it is", and what the new Dem House could do is make people realize that it doesn't have to be that way.
And that's how you start a movement that leads to changes which improve a US political system that has become perverted well beyond how we want it to operate.
GOP governance - "There is no you, there is only me."
Mick Mulvaney: "[President Trump] was trying to point out a political reality which is, let's face it - northern Virginia, southern Maryland, D.C., are heavily Democrat areas. Many of the government workers live in these heavily Democrat areas." https://t.co/hgZX7p5XSU pic.twitter.com/GwoZ06Xi1N— The Hill (@thehill) December 29, 2018
There's a lot wrong with that statement, starting with the fact that TrumpWorld is trying to claim Nancy Pelosi and the rest of the House Dems are somehow responsible for the current shutdown, despite the fact that the GOP still is in control of the House for the next 4 days (Which reminds me - has anyone seen Paul Ryan lately?).
There's also the fact that most Federal employees are not in the places Mulvaney mentioned.
As of the start of FY2018, only 15% of federal government employees were located in the Washington, DC area. https://t.co/j6LqXiiOgB— Andrew Rudalevige (@rudalev) December 30, 2018
But the worse part is how it reveals a mentality with today's GOP where anyone outside of their inner circle doesnt matter.
It's similar to the garbage the Wisconsin GOP has been shelling out on a daily basis since Dems won all statewide elections in November. Where somehow their constituents in their little towns are the only ones who should matter.
It is also noteworthy that all JFC Democrats represent Milwaukee or Madison, no outstate voices. They have become the party of Milwaukee and Madison. https://t.co/kKGKTA12b3— John Nygren (@rep89) December 14, 2018
.@SpeakerVos: "He did not get a mandate to turn Wisconsin into Madison. He got a mandate to govern, but that means he's going to do it with us -- not in spite of us." https://t.co/HOtmTZ6bDW— Molly Beck (@MollyBeck) December 19, 2018
It lays bare what the GOP really thinks government is for - a mechanism to steer money toward their donors and cronies, and away from those who arent part of The Club. There is no concept of public good or governance.
There are no "good ones", and they must be battled in the short-term, and removed from all levels of powers ASAP.
Saturday, December 29, 2018
A good November finally puts Wis at 250,000 jobs...4 years too late
The Wisconsin Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) revisions for the month of October and preliminary estimates for the month of November. The data showed that Wisconsin added a statistically significant 9,900 private sector job from October 2018 to November 2018. From November 2017 through November 2018, Wisconsin added 40,500 private-sector jobs, 19,000 manufacturing jobs and 8,400 construction jobs, all of which were deemed statistically significant by BLS. Wisconsin's unemployment rate for November remained at 3 percent, a record 10th straight month that the rate has been at or below 3 percent.And a Governor (who for some reason is still trying to sell his record to Wisconsinites after being thrown out of office) was glad to mention it.
Wisconsin’s unemployment rate has been at or below 3% for 10 straight months! We also added nearly 10,000 Private-Sector Jobs in November, bringing the total jobs created since we’ve taken office to over 250,000.— Governor Walker (@GovWalker) December 20, 2018
And a check of the figures shows it's true - we are finally at 250,000 private sector jobs added since January 2011! Of course, there are 2 problems with Walker's statement about job growth.
1. The "250,000 jobs" claim was supposed to happen in 4 years, not 8. And as late as August 2013, Walker was claiming that hitting the mark oin 4 years was still the goal.
Then after that didn't happen, Walker "shifted" into caring about improving the work force for employers, which really hasn't happened either.
2. If Wisconsin had kept up with the job growth in the rest of the country, we would have hit 250,000 private sector jobs in less than 5 years, and we would have surpassed 400,000 jobs last month.
And Walker's DWD followed that up with this release on Friday, that trumpets "Unemployment Rates in Racine and La Crosse Metros, Numerous Cities and Counties Set Record Lows." Well sure, when jobs are (slowly) being added while populations stagnate, the unemployment rate will drop. It's happening all over an America that has a Bubblicious 3.7% unemployment rate.
What we should care more about is the underperformance in Wisconsin's largest metro area, which keeps getting "otherized" by a Wisconsin GOP that has run the state for the last 8 years. While most metro areas have thrived in the 2010s (including booming Madison, Wisconsin), the Milwaukee area has trailed the US rate of growth by more than 2 to 1.
Job growth, Nov 2010 - Nov 2018
Madison Metro +46,700 (+12.69%)
Milwaukee Metro +59,500 (+7.26%)
Isn't it nice that we're getting a Governor in power that actually seems to care about Wisconsin's largest city and economic engine? Seems well overdue and needed.
It's also obvious what the WisGOPs' game is for the coming 4 years. They want to claim that things were great under Scott Walker and that it got worse under Tony Evers, with WisGOPs trying to sabotage Evers as much as possible to make the state dysfunctional and declining. Then the WisGOPs plan to use that disillusion to return to power in 2022. What people need to know is that we were held back by WisGOP's regressive policies in the 2010s, and we only stayed afloat due to the Obama Recovery.
By comparison, Evers comes into office at a time when regressive GOPs in Washington that have blown Bubbles with a stupid Tax Scam that will lead to an economic slowdown and/or outright recession in the coming years. And this will be especially true in Wisconsin, as many residents are likely to write surprise checks to the IRS in the next few months due to a lack of deductions that get taken for the 2018 tax year (interestingly, you'll be able to write off many of the same items at the state level, so keep your receipts).
When that happens, we need to be comparing how Wisconsin holds up compared to the rest of the nation and mention that the problems are being caused by irresponsible Republicans. Because you know the GOP and their spokespeople on AM radio won't want you to think about that over the next 4 years.
Friday, December 28, 2018
No, I don't get the markets. But I don't like it
The phrase "dead-cat bounce" comes to mind.
I also worry about the long-term picture. Note this chart, which shows that post-tax corporate profits are still up because of the one-time bump from the GOP Tax Scam. But the underlying profits are slipping, and while wage growth has ticked up a bit, it still isn't much.
The effects of the Trump/GOP tax cuts, in one chart.— Greg Sargent (@ThePlumLineGS) December 28, 2018
Note the flat line in the middle.
Via @jimtankersley:https://t.co/7tSwOPIUCr pic.twitter.com/rPX8x3JTVn
And now with no tax cuts coming in for 2019, those earnings amounts are going to decline to the "before-tax" line. Uh oh.
No, I don't trust what I'm seeing, and combine this with a loss of incomes from Trump's silly shutdown and the surprise many will see from having to pay the IRS when they file their taxes in a few months, and there's the shock to the economy that turns a slowdown into something worse.
When it comes to my stock market analysis, it's usually worth what you paid for it (I have an everyday job for a reason). But what do we see that would keep the economy going at 3% GDP growth and 2 million jobs added, other than spending ourselves into oblivion and making the inevitable recession that much worse?
Wednesday, December 26, 2018
An opening for Evers - ending Act 10 in Corrections
Much of the opportunity for Evers on Corrections relates back to the last 7 years of Republican policy choices, including the decision to apply Act 10 to Corrections staff. In addition to the union-busting elements of Act 10, the lack of pay and respect from the Walker Administration has led to understaffing in a dangerous job.
Unions have complained that the 2011 law increased the exodus of experienced guards, leaving vacancy rates that led to punishing mandatory overtime that costs the state tens of millions a year.We saw similar concerns come up after assaults on staff were reported at the Lincoln Hills juvenile facility. Let me remind you of the words of Pandora Lobacz, a teacher at Lincoln Hills who looked like this after an inmate attacked her in October 2017.
A rule put in place by the Department of Justice under Republican Brad Schimel, who lost the November election to Democrat Josh Kaul, made matters worse, [former Corrections Secretary Ed] Wall said. The rule allowed guards at state correctional facilities to transfer to county jails without additional training, Wall said. The state’s sheriffs, he said, pushed the change.
“By that simple stroke of the pen we were training guys and they would complete their training with us, get certified and leave to go to the counties where many of the counties were paying $3 to $4 (per hour) more than Corrections is,” he said. “It was a gut punch to us.”..
But the core problem is pay. Prison guards in the Wisconsin prison system start at $16 an hour after an 80-cent raise in 2016. That’s not enough for an extremely difficult job, Wall said. And Republicans haven’t proposed any further increases.
“Those vacancies have to be filled, and you’re not going to fill them by paying people what they could make going to Wal-Mart,” Wall said. “Those jobs are dangerous, they’re stressful, and I’d like to see a legislator go in there and try to live off of a corrections officer’s pay for six months while they’re getting urine and feces thrown on them.”
"Your front line staff that's supposed to be protecting the other students and protecting each other are working 70 to 80 hours of overtime every pay period and that's within two weeks," she said.I also note that insurance premiums are projected to rise by more than $3.5 million a year, which is likely related to the increasingly dangerous situation that these understaffed facilities have led to. These ideas of the extra costs from INaction should be connected to an Evers budget proposal of extra staffing and in bringing back collective bargaining rights for Corrections staff, and dare the “law and order” Republicans to go against it.
She blames that on Gov. Walker's Act 10 and Right to Work laws for taking power away from unions Lincoln Hills staff relied on. She added Walker's consolidation of all the state's youth prisons in 2011 happened before Lincoln Hills could hire enough workers for the amount of juveniles they would hold. She said they have never been able to have enough workers since.
The DOC confirmed Wednesday 16 Lincoln Hills employees are not working due to "various work-related issues."
"I'm putting my tiny little neck out there to try to get change because I could have been dead if I didn't have my YC's coming to my rescue," she exclaimed. "He could have actually killed me. And then DOC would be looking at a whole other level and the Walker Administration would be looking at a whole other level of how they're going to deal with this and suppress what's going on there."
This is where Evers has an opportunity to take care of two needs with one move. He should propose removing Act 10 provisions for prison guards and related Corrections staff such as instructors at the state’s juvenile facilities, and advocate for a pay raise for those workers. Not only would this send the message that Act 10 went too far and can be tweaked (while not going through the controversy that repealing the whole thing would result in), but it also points out that Walker/WisGOP policy failed in Corrections staffing and safety, and that there is a better way to govern.
It also may be more fiscally responsible. The pre-election budget request by the Department of Corrections to soon-to-be-ex-Governor Walker was basically an exercise of “throw a bunch of stuff against the wall.” It called for a reduction of general costs of $57.5 million for staff, while adding $8.5 million a year in night and weekend pay.
And then there was this part, as explained by the Legislative Fiscal Bureau.
In addition, request overtime of $62,241,400 GPR and $2,438,300 PR annually. It should be noted that in the calculation of full funding of salaries and fringe benefits, costs associated with overtime and night and weekend differential are removed. Thus, those amounts represent the Department's estimated total cost for overtime and night and weekend differential.So the Walker Administration’s plan was to have $14.6 million MORE each year in OT pay in a time when Corrections staff is already burdened with excessive overtime and short-staffing. You can’t tell me that a base pay raise and increased staffing isn’t a better (and likely cheaper) option than that, along with reducing the prison population for non-violent offenders and/or elderly prisoners.
In 2018-19, the Department's total overtime was budgeted at $48,203,800 GPR and $1,808,500 PR.
In addition, juvenile offenders will be closer to their homes instead of hauled off to Lincoln Hills in the near future - a reform that passed after Walker desperately looked for a way out after things had blown up on his watch.
Unlike Walker, the Dems taking power have the chance to get it right the first time on Corrections. Both Governor-elect Tony Evers and Attorney General Josh Kaul can mark major changes in approach while restoring worker rights and competence at the top. At the same time, they should make Republicans in the Legislature have to answer why we shouldn't do things differently when the GOP status quo is failing.
Census figures show Wisconsin population growth better, but still slow
That’s a slower rate than the US’s level of 0.62%, and it’s only 27th in the nation. But the good news from Wisconsin’s standpoint is that we have finally started seeing our population growth pick up in the last 2 years, after stagnant growth for the 6 years before then.
Wisconsin population change
2010-2016 (average per year) +14,329
However, this still leaves us only in the middle of the pack for the Midwest for growth in both 2018 and the 2010s as a whole, and we are well behind Minnesota, who has added 2 ½ times more people than Wisconsin has in the 2010s. But hey, at least we aren’t losing people like Illinois has for the last 5 years!
Wisconsin has benefitted from that drop in Illinois population. The Census Bureau has tracked state-to-state migration up through 2017, and if it wasn’t for FIBs moving North, Wisconsin would have had little to no population gain at all over the last 5 years.
Wisconsin net migration with Illinois, 2013-2017
One other sidelight is that the increased population growth in Wisconsin over the last two years has taken us off the bubble for losing a seat in Congress after the 2020 elections, according to Election Data Services. Given how slow things were going here for much of the 2010s compared to the rest of the nation, this was starting to become a question, but EDS now says that Wisconsin is now projected to have a cushion of over 160,000 people by 2020.
Interestingly, Minnesota and Illinois get the last two seats under the projections based on population changes of the last 3 years, and both are noteworthy as Minnesota has been projected to lose a seat for much of the 2010s, and Illinois is now in significant danger of losing 2 seats due to their losses in recent years.
To summarize, Wisconsin's population has finally started to grow a bit in the last 2 years, and that's a trend that's going to have to continue if our aging, cold-weather state is to grow for the rest of the 2010s. We could do a lot better (as shown by Minnesota's big growth), and it's noteworthy that even with more population in the astate, a majority of counties in Wisconsin have lost people in this decade. But a stagnant population is not as blaring a concern as it was 2 years ago in Wisconsin.
Tuesday, December 25, 2018
A minor Christmas miracle
Given what we've had for weather, this dusting of snow is a Christmas miracle!
I'll try to take a few hours away from these crazed times to enjoy the day off with family and friends. Hope you are enjoying it as well.
And hey! At least the market's closed so we can't lose more today!
Monday, December 24, 2018
People still shopping and spending as of now. Will they in 2019?
A new report from Adobe Analytics finds this year’s holiday spending has jumped nearly 18% from a year ago, with a record $110.6 billion spent on online shopping since November 1, CNBC reported.
Holiday sales so far have made the 2018 holiday season the biggest online shopping period in U.S. history, according to Chain Store Age. The states with the most items in their online shopping carts were Wyoming, Alaska, California, Montana, and Washington, with mobile transactions accounting for $33.3 billion worth of the total sales. Mobile transactions have jumped by 57% since last year, as foot traffic at retail stores slow.
Last year at this time, there were $93.9 in online sales, for the period starting November 1.
Adobe predicts that online holiday sales will only continue to grow in the week leading up to December 31, and will reach at least $126 billion.
That's well beyond the already-strong 10-11% annual increases for "non-store" (usually online) retail. The big question is whether it translates into decent sales at brick-and-mortar stores, whether via pick-ups of online orders, or strong in-store sales themselves.
And while the market was falling apart last week, we got a national report which indicated a consumer sector which still makes up the overwhelming majority of the US economy, started strong in the 4th Quarter.
Personal income increased $40.2 billion (0.2 percent) in November according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $37.8 billion (0.2 percent) and personal consumption expenditures (PCE) increased $54.4 billion (0.4 percent).In addition, October's consumer spending was revised up by nearly $22 billion, making a 0.6% increase jump to 0.8%.
Real DPI increased 0.2 percent in November and real PCE increased 0.3 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.
The flip side is that income growth is mediocre. The $40 million increase last month was the lowest since April, and it was even more inflated because it included nearly $15 million in farm subsidies that is basically a transfer of tax dollars.
What that means is that personal saving continues to decline, below the rate that we had at the end of last year, before the GOP's Tax Scam was supposed to raise disposable incomes and savings rates. Instead, we are down to the lowest savings rates in nearly 6 years.
This is OK for now as long as job growth continues. But at 3.7% unemployment and a tanking stock market, how long are those things going to last? And how long are consumers going to keep spending like they have during this Holiday season?
That seems like the big question as to whether we officially fall into recession in 2019. Consumers can either spend more and save less, and possibly keep the economy afloat. Or the jobs start to be shed, people stop spending money due to unemployment concerns and their net worths plummeting, and it becomes 2007-08 all over again.
I'm not liking the odds of which outcome I think will happen. And neither is a good prospect for the long-term economy.
"Crisis, what crisis?," says Trump Administration. Which makes me say "Uh oh."
Today I convened individual calls with the CEOs of the nation's six largest banks. See attached statement. pic.twitter.com/YzuSamMyeT— Steven Mnuchin (@stevenmnuchin1) December 23, 2018
If you're holding phone calls from your vacation in Cabo with bank CEOs on a Sunday 2 days before Christmas, THAT'S NOT NORMAL!
Wall Street certainly was not reassured, especially with no trading tomorrow to make people want to be caught short if more bad things strike in the next 36 hours. The DOW dropped another 653 points today, bringing the total loss over the last 3 weeks to more than 4,000 points.
We'd already seen mumblings before the market tanked about the high level of corporate leverage that was at risk if interest rates went up and/or markets tanked.
They were once models of financial strength—corporate giants like AT&T Inc., Bayer AG and British American Tobacco Plc.It brings back this great scene from "The Big Short", which was about the last time we had overleveraged companies and borrowing, and the credit agencies covering up just how shaky things really were. (I also love the little details, like when Carell says "That's very racist" or Gosling is making his presentation and says "Where's the trash?")
Then came a decade of weak sales growth and rock-bottom interest rates, a dangerous cocktail that left many companies feeling like they had just one easy way to grow: by borrowing heaps of cash to buy competitors. The resulting acquisition binge left an unprecedented number of major corporations just a rung or two from junk credit ratings, bringing them closer to a designation that historically has made it much more expensive to fund daily business and harder to navigate economic downturns.
In fact, a lot of these companies might be rated junk already if not for leniency from credit raters. To avoid tipping over the edge now, they will have to deliver on lofty promises to cut costs and pay down borrowings quickly, before the easy money ends....
Companies have had little reason to keep their credit ratings high during a decade of easy money, as investors worldwide shifted trillions of dollars into riskier bonds in search of higher yields. A company that was looking to borrow debt for seven years would pay just 0.5 extra percentage point in interest annually if it were rated in the BBB tier instead of the A tier, according to Bloomberg data. That amounts to just $5 million more a year for every additional $1 billion the company borrows. In October 2011, that difference would have been almost twice as high.
The result has been a surge in debt issuance in the lowest rungs of investment-grade—the biggest share of it driven by corporate acquisitions. There’s now about $2.47 trillion of U.S. corporate debt rated in the BBB tier, more than triple the level at the end of 2008. It now makes up a record 49 percent of the investment-grade bond market and has eclipsed the entire U.S. junk bond market, according to Bloomberg Barclays Index data. In 1993, for example, just 27 percent of blue-chip corporate bonds were rated at the BBB tier.
We haven't seen the consumer slow down or jobs start to get shed with the market imploding over the last few weeks, so we're not seeing the jenga pile turn over yet. But instability reigns in DC on all fronts, and combine that with the lower 401ks and the shock that middle-class and upper-middle class people will get when they start writing checks to the IRS due to fewer people needing to take housing and SALT deductions and...yikes!
When the Wall Streeters in charge of the Treasury and Trump Administration say that "we don't see any problems with the banks and people shouldn't worry", that tells me there are problems with the banks and we should probably worry.
Sunday, December 23, 2018
Paul Ryan gets a fitting sendoff to a horrid career
Let's start with Bill Lueders’ annual year-end “Cheap Shots” column in Isthmus.
Good Riddance Award: Paul Ryan
It was always a bit baffling why this smarmy rich kid from Janesville was seen as a rising Republican star, tapped to run for vice president and serve as speaker of the House. But there was no mystery at all why he decided not to seek reelection this fall: He knew his party was about to get clobbered in the midterms, in part because of his ineffectiveness. But Ryan’s political shortcomings are nowhere near as serious as his moral ones, from his antipathy to programs for people in need, to his pusillanimity toward Trump’s daily outrages, to his indifference to the slaughter of children in Yemen by a U.S.-backed Saudi-led coalition. His chief failing wasn’t being an inept politician, but being a terrible human being.
And here's a great case in point, where Pau-lie makes a massive own goal with his fake and transparent attempts to show his "class" and "legacy" as he leaves Congress.
Sure - thanks for aiding and abetting their furlough, too, @SpeakerRyan https://t.co/ztBbx5lecz— Marivic Hammond (@MsL84AD8) December 22, 2018
And here's Chris Hayes reminding us of the fiscal fraudulence of Purty Mouth Pau-lie, noting that Ryan was a partisan hack who only cared about the US budget deficit when Barack Obama was president, and stopped caring about it whenever Republicans were in power. He is then joined by Ruth Conniff of Madison's Progressive and Marquette graduate Charlie Pierce of Esquire, two people who have always seen through Ryan's flim-flam.
Let me finish with a few more words from Charlie Pierce, who has despised his fellow Irish Catholic for years, and gave Pau-lie a notorious nickname that still applies today.
Speaker Paul Ryan, the zombie-eyed granny starver from the state of Wisconsin, has spent this week bidding farewell to Our Nation's Capital, and taking both his prodigious ego, and parading the tattered remnants of his utterly undeserved reputation down the boulevards of Washington. To complete the metaphor, somebody should have walked behind him with the shovel and a bucket. Ever the charlatan's charlatan, and in keeping with the spirit of the season, his prolonged valedictory was as full of shit as the Christmas goose.Interestingly, I happened to be in Janesville with my wife and friends for their great lights display at their Rotary Botanical Gardens, and had a very good dinner at the city's Milwaukee Grill. I bet I showed up at those places last night more than Paul Ryan will in the next decade. There's no way that guy is coming back to Wisconsin to live - he is DC Swamp all the way.
It began on Tuesday, when we all paid for a six-part miniseries on the electric Twitter machine chronicling Ryan's rise from his poor but humble origins as the scion of a family that got rich on government construction contracts, to his hardscrabble years when we all paid for his needs through the Social Security survivor's benefits he received (you're welcome again, bumblefck), to his career in politics, which latter episode contained this monumental fireworks display of unadulterated mendacity.
As a kid from Janesville, Wisconsin, I never thought I'd work on Capitol Hill, let alone be a member of Congress. I feel very blessed to have had these opportunities to make a real, positive difference in the lives of so many Americans.Jesus H. Christ at a Friday night fish fry, is there no end to this man's utter fraudulence?
He aimed at that particular spot on earth from the time he got his first John Galt footie 'jamas. He wanted to get there so he could pull up the ladder on teenagers who suffered the same tragedy he had. He aimed himself at Capitol Hill as surely as Apollo 11 aimed itself at the moon. He’s bragged about how he used to discuss the gutting of Medicaid at his college keggers. ("Jesus, Trey. Who invited that guy? He’s bumming me out, man.") He was a star in the College Republicans and volunteered for John Boehner's campaign.
Upon graduating from Miami (O), the first thing he did was take a job in the office of then-Senator Bob Kasten of Wisconsin. So the first real permanent job he had was on Capitol Hill. Then he worked for Jack Kemp, then he worked for Sam Brownback, then he got elected to Congress and the rest is misery. I guess now we're supposed to believe that, on his way to the Parker Pen factory, he got knocked on the head, stuffed in a sack, and dropped on the sidewalk of Constitution Avenue.
Paul Ryan's career is a classic example of how media confuses "tone" with "decency", and he stayed in office because average people confuse "jargon and a convincing face" with "actual knowledge" (some nice gerrymandering after 2010 also helped).
Good riddance, indeed.
Saturday, December 22, 2018
1 year later - we've seen all the good of the GOP Tax Scam. And now we're getting the bad
"I don't think I'm going to have to travel too much to sell it. I think it's selling itself. It's becoming very popular," Trump said.Yeah, I don't quite think that happened, Drumpf. The Republicans were running away from their support of the Tax Scam by September because the public wasn't buying it, and they lost the House of Representatives and numerous state offices this November.
But maybe it was just a "messaging problem", and this is actually working out. Let's go to the numbers, shall we?
On the macroeconomic level, there is a bit of evidence that the Tax Scam bumped up activity in the short term, although incomes weren’t helped much.
Personal Income change, last 12 months
Nov 2017 +4.62%
May 2018 +4.32%
Nov 2018 +4.57%
Average Hourly Wage change, last 12 months
Nov 2017 +2.5%
May 2018 +2.8%
Nov 2018 +3.1%
Employment change, last 12 months
Nov 2017 +2.193 million
May 2018 +2.424 million
Nov 2018 +2.443 million
Personal consumption expenditures, last 12 months
Nov 2017 +4.76%
May 2018 +4.92%
Nov 2018 +5.46%
The Tax Scam also inflated earnings by corporations, due to the lower corporate tax rates. Much of those extra earnings were used to buy back more than $1 trillion in stock this year, which you’d think would pump the market even higher.
In the first 3 months, the first post-tax cut Bubble in the stock market burst, dropping stocks in the short term. It seemed like a blip though, as the stock market recovered over the next 6 months as the stimulative provisions in the Tax Scam took hold.
DOW Jones Industrial Average
Dec 22, 2017 24,754.06
March 22, 2018 23,957.89
June 22, 2018 24,580.89
Sept 21, 2018 26,743.50
But the last 3 months has taken all of that stock buyback and profit Bubble back and then some.
Sept 21, 2018 26,743.50
Dec 22, 2018 22,445.37 (-16.1% last 3 months, -9.3% last 12 months)
And the DOW covers the largest companies. It’s noticeably worse when you look at the wider Russell 2000 index, which captures small-cap stocks. The Russell Index ran up sooner than the DOW, had its Bubble burst sooner, and has fallen farther, all the way into Bear Market territory.
Russell 2000 Index
Dec 22, 2017 1,542.93
March 22, 2018 1,543.87
June 22, 2018 1,685.58
Sept 21, 2018 1,712.32
Dec 22, 2018 1,292.09 (-24.5% last 3 months, -16.3% last 12 months)
Lastly, let's compare the budget deficits for the various months, to see if the Tax Scam "paid for itself", as GOPs have claimed for years, and let's use the most recently-updated CBO projections from this month.
That rising deficit ties the hands of both the Fed and Congress from being able to handle any downturn in the economy with more stimulus.= Also remember that jobs are usually the last things to start turning down in a recession (they’re also the last to pick up when growth resumes). Ruh roh.
Yeah, I don't think this Tax Scam is working out well 1 year later, do you?
Friday, December 21, 2018
GOPs can't govern. Gerrymandering and The Bubble keeps them from accountability
As @benwikler recounts, during the last government shutdown fight over the DREAMers, progressive groups presented Democrats with private polling.— Greg Sargent (@ThePlumLineGS) December 21, 2018
It showed that Trump and Republicans would bear the blame for the shutdown:https://t.co/3s8ksYYnJz pic.twitter.com/I133CN55Nv
4) After this, Democrats caved in two days.— Greg Sargent (@ThePlumLineGS) December 21, 2018
But @benwikler’s explanation for *why* this happened is eye-opening:https://t.co/3s8ksYYnJz pic.twitter.com/rQnQalRTzY
5) Dems privately told progressive groups that they couldn’t withstand the mainstream media heat over the shutdown.— Greg Sargent (@ThePlumLineGS) December 21, 2018
But this gets at a much bigger issue: An extremely important asymmetry in our politics.
This dispiriting quote gets to the heart of it:https://t.co/3s8ksYYnJz pic.twitter.com/iK46Vq2JaQ
This explains why Republicans care more about symbolic poses than actual governing. They worry more about what the goofballs and media grifters in BubbleWorld than they do the majority of Americans. Because of gerrymandering, keeping the attention and approval the base dimwits matter more to these guys than the people outside of their districts that represent the Silenced Majority.
You see the same dynamic in Wisconsin, where WisGOP slime from the 262 suburbs and our state run to the shelter of KLAN Radio 1130 (especially) and the more "respectable" race-baiters on 620. Meanwhile, the majority of us who put Dems in power and don't live in those resentful communities are ignored, because gerrymandering allows the GOPs the luxury to do so.
The GOPs are rotten and filled with bad faith in DC and in Madison. Neither should be respected or negotiated with until they grow up and deal with the mess that GOP recklessness has resulted in.
Meanwhile, bad things are Also happening outside the Capitol.
Just leaving this here #TrumpResign pic.twitter.com/6k0EoYBwuG— BlockchainProf (@BlockchainProf) December 21, 2018
So what about 3,400 points in 2 1/2 weeks? (Shakes head)
Thursday, December 20, 2018
Is this bad?
Shoutout to this MSNBC chyron for handling 4 crises at once. pic.twitter.com/Llp7mwnr0w— Leon Langford (@MasonLLL) December 20, 2018
At this point, screw it. Shut it down, go home, and come back in 2 weeks when adults are in charge of the House, instead of lightweights like Paul Ryan and dingbats who get their "facts" from AM radio.
The Fox-con is bad enough - now WEDC can't even follow its own rules on it!
But I still didn’t expect to read this yesterday.
Taxpayers could pay Taiwanese tech giant Foxconn for work done outside of Wisconsin unless changes are made to how the state's jobs agency issues tax credits, a state audit shows.WHAAAA? Let’s take a look at that audit on Foxconn, and see where LAB came up with that possibility.
The Legislature's Audit Bureau is recommending the Wisconsin Economic Development Corp. make changes to its procedures to avoid awarding tax credits to Foxconn Technology Group for work that isn't being done in the state.
In November 2017, WEDC established program policies that were approved by its governing board. Although these policies contain information about how WEDC will award program tax credits, they do not specify how WEDC will ensure that program tax credits are awarded only for the wages of employees who perform services in Wisconsin. WEDC established written procedures that specify in greater detail how it will award program tax credits. WEDC’s governing board does not approve written procedures. These written procedures allow WEDC to award program tax credits for “any employee that does not live in Wisconsin and is designated as ‘remote’, ‘working at home’, or ‘sales’” as long as these employees are paid in the zone. These written procedures do not comply with statutes or WEDC’s contract because they allow WEDC to award program tax credits for the wages of employees who do not perform services in Wisconsin.
WEDC indicated that it intends to award Foxconn program tax credits for the wages of employees who are directed from and paid in the zone. It indicated that it plans to do so based on s. 71.25 (8) (b), Wis. Stats., which pertains to the determination of corporate income taxes and indicates that a corporation’s state payroll includes certain employees who are not residents of Wisconsin and do not perform services in Wisconsin. However, ss. 71.07 (3wm) and 71.28 (3wm), Wis. Stats., and WEDC’s contract require WEDC to award program tax credits based on the zone payroll, which is a subset of the state payroll and includes only the wages of those employees who perform services in Wisconsin. We note that employees who are directed from and paid in the zone may not necessarily perform services in Wisconsin.
When awarding program tax credits, WEDC should ensure that it will comply with statutes and its contract, which require that program tax credits be awarded for the wages of employees who perform services in Wisconsin. WEDC should also modify its written procedures to require it to award program tax credits only for the wages of employees who perform services in Wisconsin. Doing so will ensure that its written procedures comply with statutes and its contract. Given the amount of tax credits that may be awarded through this program, WEDC should provide its modified written procedures to its governing board, which may review them and ensure that they comply with statutes and its contract. WEDC should then follow its modified written procedures when it awards program tax credits.
The LAB audit also noted that WEDC’s contract with Foxconn didn’t even follow WEDC’s own policies, which could leave taxpayers on the hook for payments even if Foxconn fails to live up to its end of the bargain.
First, statutes indicate that WEDC may require a recipient of program tax credits to repay any tax credits that a recipient claimed for a year in which the recipient failed to maintain contractually specified employment levels. WEDC’s policies require a recipient to maintain all created jobs for which it received program tax credits for the duration of its contract with WEDC. However, WEDC’s contract does not require Foxconn to repay any program tax credits if it does not maintain all created jobs during the first five years of the contract.I’m absolutely sure these were innocent oversights from WEDC, and they’ll get right on to fixing that. #headdesk
Second, WEDC’s policies indicate that if award recipients do not create at least a contractually specified minimum number of jobs annually, the program tax credits that could have been awarded for these jobs cannot be carried forward and awarded in future years. However, WEDC’s contract allows unawarded program tax credits for creating jobs to be carried forward, even if Foxconn does not create a contractually specified minimum number of jobs annually. After we identified this discrepancy between the policies and the contract, WEDC indicated that it plans to modify its policies so that they comply with the contract.
And via this report by Channel 11 in Green Bay, we saw another post-contract complication pop up in a WEDC-assisted handout.
Green Bay Packaging announced in June it was investing $500 million in a new paper mill, which would more than double its production compared to its current 71-year-old mill.And then we found out this week that the pipe can’t be run above the ground, and instead had to be put underground along with a lift station to get people back to ground level.
In fast-track votes to start construction and keep the company from moving elsewhere, the state agreed to chip in $60 million in tax credits (via WEDC in a 12-year deal similar to the Kimberly-Clark deal from earlier this month). The city of Green Bay agreed to $23 million in tax assistance and Brown County agreed to $5.3 million for a retention pond and a pipe between the mill and the sewerage district.
As a result, the project is now estimated to cost an additional $6.5 million, with Brown County paying another $2.9 million, and GB Packaging will pick up the rest.
“Complications happen,” said Patrick Evans, a Brown County Supervisor who is also running to be Green Bay’s next mayor. “It's the county's fault, so I mean what do you say? No, I'm not going to support this?”Yeah, funny how that works, isn’t it? It’s also funny how top GB Packaging executives are sizable donors to Scott Walker and WisGOP.
Supervisor James Knieszel doesn't blame the county's engineers because he says they were given an unrealistic timeline to price out the work.
“I also believe that if Green Bay Packaging was using its own money to pay for this infrastructure that you better believe they would have done the work necessary to make sure that $5.3 million was an accurate cost estimate before proceeding,” said Kneiszel.
I’ve got a suggestion. MAYBE WE SHOULD HAVE THESE INCENTIVES DEBATED OUT IN THE OPEN, and allow these contracts to take effect only after an organization like the Legislative Council or the State Legislature and Governor sign off on them. This might increase the chances of these “errors” being caught before we have to change signed contracts, redo deals and spend more money as a result.
Oh, but then it wouldn’t be so easy to use WEDC as the right-wing slush fund of tax dollars that it’s been since Scott Walker invented it in 2011. And now you know why the WisGOP Legislature tried to prevent Tony Evers from making immediate changes in WEDC oversight and governance as part of their Power Grab earlier this month.
END THESE BOONDOGGLES NOW! That goes for both Foxconn and WEDC.
PS- Now add this one to the list.
Business was given $7 mil by WEDC 5 years ago ahead of Walker re-election to move 20 miles from Ill to Kenosha. Tax writeoffs end next year, and owner will turn a nice profit.https://t.co/0DsAxY6EUa#wiunion #wipolitics #wiright #wigov @WisDems— JakeEdwards (@JakeMadtown) December 20, 2018
Wednesday, December 19, 2018
Wisconsin's lower tax burden only applies to business, not people
#Wisconsin’s tax burden has fallen again. It's now at its lowest level in nearly 50 years according to @WisPolicyForum. #WIForward https://t.co/7qCLDQWQsS— Speaker Robin Vos (@SpeakerVos) December 19, 2018
And several other WisGOP legislators along with Governor Walker followed up with similar statements. But let's take a look at that Wisconsin Policy Forum paper on Wisconsin's tax burden, and see what it really tells us.
First of all, here is the part of the report that is the basis of Vos and the other WisGOPs' statements.
STATE-LOCAL TAXES The state-local tax burden relative to personal income has fallen steadily for many years. In 2011, the combined state-local burden was 11.7%; in 2018 it was 10.5%. The decline has been driven by restrained growth in local tax collections and, more importantly, by rising personal income. The local tax burden dropped from a high of 4.4% in 2011 to 3.7% in 2018, while the state’s share fell from 7.3% to 6.8% over the same period. Personal income growth far outpaced tax collections during those years. Looking at nominal dollars, total state-local tax collections increased 13.9% from 2011 to 2018 while personal income increased 27.8%.Of course, the increase in personal income didn’t only happen in Wisconsin over that time period, as personal income in the United States rose by 31.6% from June 2011 to June 2018 (take a look here if you don’t believe me). I don’t see a “Thanks Obama” coming out from WisGOP on that one.
But the state and local tax numbers certainly reflect on Walker/WisGOP policies, and given that rising incomes should push people into higher tax brackets, you’d think that would cause the tax burden to rise a bit, although that would be counteracted by the fact that higher incomes pay a lower percentage of their incomes in state-local taxes in Wisconsin. And that didn't occur.
So what’s happening here? Let’s start at the state level, and remind ourselves what types of taxes we are talking about.
State taxes and fees totaled $19.3 billion in 2018, up 2.5% from last year. The major state taxes are individual and corporate income taxes; the sales tax; the unemployment insurance payroll tax; the gas tax; the hospital assessment tax; “sin” taxes on tobacco and alcohol; and vehicle registration fees.If you look at this chart from the Policy Forum, you’ll see that income and sales tax revenues have risen along with the economy in recent years (although you’ll notice the effect of 2014 income tax cuts), while corporate taxes have not.
And the Policy Forum paper says corporate taxes have lagged because of a “Big Giveaway” that Gov-elect Evers ran on repealing for large companies.
Corporate income tax collections peaked in 2015 at just over $1 billion and have been decreasing every year since. In 2018, collections were $893.9 million, down 2.9% from 2017. A likely contributor to the decrease in recent years is the phase-in of the manufacturing and agriculture tax credit. The credit lowers the effective tax rate for manufacturing and farm profits from 7.9% to 0.4% for the corporate income tax and effectively lowers the marginal individual income tax rate by a similar amount (from 7.65% to 0.15% in the top bracket).In addition to the corporate tax cuts, the alleged decline in state and local tax burden comes from another source related to the growing national economy.
[Unemployment insurance] tax collections fell 16.2% in 2018, to $629.8 million. This is the sixth consecutive decrease, with UI collections falling 50% since 2012.What, your paycheck didn’t shoot up after employers had all that extra money to play with after their UI taxes went down by nearly $440 million over the last 3 years? Funny that…
If you look at the differences in state tax payments over the last 4 years, you can see that the increase in taxes that everyday people pay compared to the cut for businesses. I’ll also include the assessments given to Wisconsin hospitals to help pay for Medicaid, as that also declined by nearly 10% in 2018.
While corporations and other businesses in Wisconsin have been paying less, individuals have been paying more in taxes. And it gets worse when you go down to the local level. The largest source of local tax revenue is one many of you get extra familiar with this time of the year – the property tax. Net (post-credit) property taxes account for nearly 94% of the local tax revenue under the Policy Forum’s definition, and they have risen by relatively small amounts in each of the last 3 years (including 1.6% in 2018).
But the property tax has not been enough for local governments to survive upon in recent years, and it has led an increasing amount of taxes being levied at the local level.
The same economic forces affecting the state sales tax also impact the 66 counties with a 0.5% sales tax. County sales taxes generated $384.2 million in 2018, a 6.3% increase. The healthy increase in collections reflects, in part, the enactment of the sales tax in two new counties: Brown (effective January 2018) and Calumet (April 2018). (Sheboygan County also added a local sales tax in January 2017) Local sales tax collections grew just under 23% over the past five years, but the increases have been larger recently as more counties adopted the tax….And of course, individuals likely are paying a higher percentage of their incomes on these new sales and wheel taxes, while businesses got a brand new property tax break for a 2018 Christmas present, due to a 2017-19 budget provision that removed of the state’s personal property tax on machinery and many types of equipment.
Wheel taxes have been an option since the 1970s, but were seldom used until recently. Our 2018 Focus #10 noted in 2011, only four communities had wheel taxes, but as property tax levy limits have tightened and state aids to local governments have lagged in recent years, more communities have adopted them. In 2019, 20 municipalities and eight counties will collect the fee. Due to this increased use, revenues have grown significantly. In 2018, local wheel tax collections jumped 64%, to $33.9 million. Over the past [two] years, collections more than tripled.
In addition, deinvestment in the Wisconsin highways caused the state’s road quality to be among the worst in the nation (and led to all of the wheel taxes to make up the difference). And a Walker/WisGOP failure to build up Internet technology for several years led Wisconsin to end up in the bottom half for internet speed and access, particularly in rural areas that continue to bleed jobs and people.
So while Republicans may portray today’s Wisconsin Policy Forum report as a positive sign, it actually illustrates why this state fell behind in the Age of Fitzwalkerstan, and why Republicans lost in all non-gerrymandered elections last November. Gov-Elect Evers needs to start leveling the playing field back, and make this state’s corporations and businesses chip in the same way the rest of us have been in the 2010s.
Not only did typical Wisconsinites get a very small amount of the “reduced tax burden” that Robbin’ Vos is bragging about, but how did this strategy of cutting taxes on corporations help us economically? Wisconsin has badly trailed the economic recovery in the US over the last 8 years, with 29 straight quarters in the bottom half of the country for job growth, and wages that are well below many of our bordering states, including the worst manufacturing wages in the Midwest.
Wisconsin's oligarchs were given the chance by the GOP to show that trickle-down and austerity could work in our state, and they failed miserably at it. In addition, the rich and corporate just got additional massive breaks from the GOP Tax Scam in DC, while many of us in Wisconsin will be facing Federal tax PAYMENTS in the coming months due to limits on the deductions for many of the state and local taxes that the Policy Forum described in their study.
Now it’s time for the WisGOP puppetmasters to pay up for what they’ve been taking from the rest of us.
Fed does what it should, and Wall Street doesn't like it
Oh, the Federal Reserve met today, and the coked-up hedge funders didn’t like what they had to say.
The Dow Jones Industrial Average fell 351.98 points and closed at its lowest level so far this year at 23,323.66, erasing a 380 point gain that came prior to the Fed decision. The broad S&P 500 index also closed at a 2018 low, falling 1.5 percent to finish at 2,506.96 as technology and banks stocks rolled over. The Nasdaq Composite fell 2.1 percent to 6,636.83, its own 2018 closing low with shares of Apple losing more than 3 percent.I think the Fed had to raise rates, or else it would send the message that financial markets (and to a lesser extent, the economy) are already on the edge of disaster. And the trim of the Feds outlook for hikes in 2019 seems to be an admittance that a sizable slowdown and/or recession is a real possibility for next year (a view that is growing more common among economists).
For traders, the Fed’s statement and Chairman Jerome Powell’s subsequent press conference did not suggest that the central bank would slow its pace of rate hikes as quickly as some hoped. Markets took a leg lower during Powell’s comments that the central bank would continue to reduce the size of its balance sheet at the current pace.
The Dow and S&P 500, which are both in corrections, are on track for their worst December performance since the Great Depression in 1931, down more than 8 percent and 9 percent, respectively, this month. The S&P 500 is now in the red for 2018 by 6.3 percent.
The Fed decided to hike its benchmark overnight lending rate by one quarter point on Wednesday to a target range between 2.25 to 2.5 percent.
The Fed did however trim its 2019 outlook for rate hikes to just two increases from three previously.
And the action on the benchmark 10-year Treasury note did nothing to dissuade me from my belief that Wall Street is thinking recession, as it dropped as many as 8 basis points after the Fed announcement, before closing at its lowest yield in 7 months.
Not really the mark of confidence in an economy when you’re buying up 10-year Treasuries while the short-term rates go higher. It leaves us the closest we’ve been to rate inversion yet, with less than 0.4% between the 3-month and 10-year note, and only 0.14% for the 2-year/10-year spread.
The reason I bring up inversion is that it has a correlation with recession that hasn’t failed for decades.
As I saw more red streaking across the stock market this afternoon after the Fed made its announcement, this song came to mind.
We shouldn't be in full-fledged panic mode at this time, but you can see that train coming.