Wednesday, January 31, 2018

Today's Wis job losses make punishing the poor seem more absurd

A bad day for Wisconsin job news today, starting with the news that came out this morning when a significant state-based employer announced that Wisconsinites would be among the many people their company will be laying off in the coming months.
Kimberly-Clark is considering closing two manufacturing facilities in the Fox Valley.

The company says it plans to close the Neenah Nonwovens Facility within the next 18 months. It plans to shut down the Cold Spring Facility in Fox Crossing, with final details coming after consultation and negotiation with the plant's labor union and other labor stakeholders.

The closures will affect about 600 employees, the company said. K-C currently employs about 3,200 people in the Neenah area….

The closures are part of a worldwide restructuring plan announced a week ago. Kimberly-Clark plans to cut 5,000 to 5,500 jobs overall, about 12-13 percent of its workforce.
So that “right-to-work will save jobs” meme didn’t happen here, did it, WisGOP?

Another large-scale job loss in Wisconsin was announced later today, when Milwaukee-based Bon-Ton announced it was closing 42 stores nationwide, and 9 in our state.
Younkers at the Fox River Mall in Appleton
Boston Store at the Heritage Village, in Beaver Dam
Elder-Beerman at the Eclipse Center in Beloit
Younkers at the Forrest Mall in Fond du Lac
Younkers at the Lakeshore Edgewater Plaza in Manitowoc
Younkers at Pine Tree Mall in Marinette
Boston Store Clearance Center at 5659 S. 27th St. in Milwaukee
Younkers at Mariner Mall in Superior
Younkers at Wausau Center Mall in Wausau

Bon-Ton has partnered with a third-party liquidator, Hilco Merchant Resources, to help manage the store closing sales. The store closing sales are scheduled to begin Feb. 1 and run for approximately 10 to 12 weeks. Employees will be offered the opportunity to interview for available positions at other store locations...

On Monday, Bon-Ton, which has dual headquarters in Milwaukee and York, Pennsylvania, asked debt holders to approve a three-year restructuring plan that includes closing the stores but also investing in existing stores and improving online sales, which make up only 12 percent of the business.

The Bon-Ton Stores, which has more than $1 billion in debt, failed to make a December loan payment to lenders of $14 million and is running out of options.
Yes, this may be a reflection of structural economic changes in the 2010s, where there is less need for paper products and brick-and-mortar stores. But that sure won’t help the 1,000+ workers that will likely lose their jobs feel better.

And I’m betting they’ll be thrilled to find out that the Wisconsin GOP was holding a hearing today on a bill that would force them to piss in a cup to get their unemployment and FoodShare benefits. You know, because it's the laid-off workers' faults that Bon-Ton took on $1 billion in debt, and that the GOP tax bill made it more worthwhile for Kimberly-Clark to take on the expense of layoffs.

You run on that, Gov Walker, Robbin' Vos, and the rest of you in WisGOP's "Work Makes You Free" crowd. It may be a really bad look given what layoffs may look like by November.

Foxconn will take a lot, what will Lake Michigan receive back?

As if the increasing cost of the Fox-con wasn’t enough reason to dislike that scam, we found out this week about another reason that this development has serious drawbacks. It’s because the facility will drain large amounts of water from Lake Michigan in order for it to operate.
The Wisconsin Department of Natural Resources says it will decide in about 90 days on a request to pump 7 million gallons a day from Lake Michigan as part of a proposed Foxconn manufacturing complex state leaders have pushed as a major job creator.

The DNR on Monday released the Racine Water Utility’s application for an exception from a Great Lakes Compact ban on new or expanded diversions of water to places outside the Great Lakes basin….
The manufacture of LCD panels for televisions and other electronic devices requires very large amounts of water to clean each layer of circuitry as it is fabricated, because even a speck of dust can disrupt the circuit signals.

Under state law, the water would need to be treated before it is pumped back into the lakes. An average of 2.7 million gallons per day would be consumed, mostly through evaporation, the DNR said.

Is this enough "treatment"?

Because the Lake Michigan water would be pumped through Racine, the added volume still would not exceed the amount of water it can legally pump out by law, so the DNR says it would be a legal work-around under the Great Lakes Compact.

Of course, there still has to be water pipe infrastructure built out to Foxconn to pay for all of that water usage, and for over 4 million gallons to return to the lake from a plant that already is exempted from many environmental standards.

“But Jake, the water coming from Foxconn has to be treated, so the lake should be fine.” Well, that’s where I’m going to bring up a second story from yesterday.
The Wisconsin Department of Natural Resources is appealing an October circuit court decision revoking eight high-capacity well permits.

The permits were issued after a 2016 opinion from state Attorney General Brad Schimel prevented the DNR from considering the total impact of proposed and existing wells on nearby waterways.

The environmental group Clean Wisconsin filed the original lawsuit and it maintains the DNR has a constitutional duty to protect state waterways and that these wells can lower the water levels of lakes and streams.

A high-capacity well can withdraw more than 100,000 gallons of water a day, according to the DNR’s website.

In the case of the eight revoked permits, the DNR had found that these wells would be harmful to local waterways before Schimel’s opinion was issued.
But of course, Foxconn’s development is after Schimel’s Koched-up opinion came out. So if Foxconn isn’t properly treating the water at its plant before sending it back to Lake Michigan, would you count on Brad Schimel’s Department of Justice or a Koch-bought Walker Administration to do much about it?

Yeah, me neither. Which is all the more reason in November to boot out Schimel and replace him with Josh Kaul, and get rid of Walker and his lackeys in the Cabinet, and restore some protections to our most needed natural resources.

Also, I encourage you to read James Rowen at the Political Environment, as he has much more (and better) analysis on the environmental side of the Fox-con.

EDIT- The Wisconsin State Journal's Phil Hands delivers again!

Tuesday, January 30, 2018

Walker already flailing on gimmicky tax cut

Within a week of making “bold proposals” in his State of the State address, Governor Unintimidated is already backtracking on one of his biggest plans.

When Scott Walker announced his new $100-a-child tax credit, the plan was to have it go to any parent, regardless of income level or if they owed taxes or not. But now that the public and the GOP-controlled Legislature clearly aren’t head-over-heels for it, Walker says he’s willing to pare the credit back.
Asked why he is proposing work requirements for beneficiaries of public assistance, but proposing cash payments to families with no strings attached in the form of a refundable income tax credit, Walker said he would be "open if the Legislature so deemed to tie it into taxable liability."

Under Wisconsin tax law, families with no tax liability would be eligible for the child tax credit if it were refundable, meaning the state would pay it out to tax filers as part of their annual tax refund. Only two other state states, New York and Colorado, offer a refundable child tax credit. The federal child tax credit is partially refundable.
Of course, the families with no tax liability tend to be low-income, which means they would be the ones that miss out if Walker and the WisGOP Legislature chose to limit the cost by making it refundable. Cute trick, eh?

The Wisconsin State Journal's Matt DeFour also notes that Walker has cut back on the ability for low-income workers to take advantage of another tax credit over the last 7 years, and that this new Child Tax Credit would cost more than that writeoff if all Wisconsin parents were included.
The state already offers an earned income tax credit (EITC), which Walker scaled back in a previous budget. Only families who work and make up to a certain amount of income may receive that credit, which means it primarily benefits low-income workers.

About 253,000 tax filers claimed the EITC in 2015, at a cost of about $100 million to the state, according to the Department of Revenue. The EITC phases out for a two-parent household with two children at about $50,000.

The proposed new child tax credit could cost the state $122 million a year in tax revenue if all 670,000 families with children under 18 qualified. Walker's proposal doesn't include an income-based threshold, as the five state and federal child tax credits do.
Let me add that the cost for the next fiscal year of Walker’s proposal would actually be $244 million, because of the stunt Walker wants to pull where checks of $100 would go out to parents around Labor Day 2018, and then parents can write it off AGAIN when they file their 2018 taxes in early 2019.

Meanwhile, the state's roads continue to crumble and colleges like UW Oshkosh are considering more layoffs and budget cuts due to a drop in enrollment and a lack of funding from the state. Maybe there are bigger priorities for the state that need to be dealt with instead of giving away another one-sided tax cut that will starve services more. Just a thought.

Monday, January 29, 2018

A quick Jan. 30 history

Been reading "All the Presidents' Men" in the last few weeks. The paralells are striking, including the insistence from the White House and other GOP hacks that Watergate was "fake news" or being blown out of proportion. The only difference? More Republicans in Congress to muck things up, a Faux News network and RW talk radio GOP-perganda to trick the rubes, and paid foreign trolls on social media.

And if you look at's list of presidential approval ratings, Donald Trump's approval rating in the mid-to-upper 30s is very similar to Richard Nixon's levels at the time of the Saturday Night Massacre. And Nixon fell into the 20s and never recovered from that moment. Seems quite similar, doesn't it?

Another month of more spending and less saving. Party like it's 2007!

Today’s personal income and saving report had some good news for the current economy, but some bad signs for the future.
U.S. consumer spending rose solidly in December as demand for goods and services increased, but the increase came at the expense of savings, which dropped to a 10-year low in a troubling sign for future consumption and economic growth.

The Commerce Department said on Monday consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.4 percent last month after an upwardly revised 0.8 percent increase in November….

The figures were included in the advance fourth-quarter gross domestic product report published on Friday. Consumer spending accelerated at a 3.8 percent annualized rate in the October-December period, the fastest in three years, after rising at a 2.2 pace in the third quarter.
And that certainly indicates that consumers are feeling good about their current situation, which gives a nice boost to the economy. However, that free-spending mentality comes with a drawback.
Personal income rose 0.4 percent last month after advancing 0.3 percent in November. Wages increased 0.5 percent last month. Savings fell to $351.6 billion in December, the lowest level since December 2007, from $365.1 billion in the prior month.

The saving rate dropped to 2.4 percent, the lowest level since September 2005, from 2.5 percent in November. It dropped to 3.4 percent in 2017, the lowest level since 2007, from 4.9 percent in 2016. The low saving rate is a red flag for both consumer spending and economic growth.

And it wasn’t just in December that we saw that decline in saving. In the last 6 months of 2017, Americans stopped saving to a remarkable level.

June 2017 Personal saving $511.5 billion
Dec 2017 Personal saving $351.6 billion
CHANGE -$159.9 billion (-31.2%)

And while this did boost in GDP growth over the last half of the year, to the point where the country had its strongest 9-month stretch of growth in 3 years, the pattern is scarily reminiscent of what we saw a decade ago.

Also back then, we had the stock market at record highs and housing prices growing out of reach for many individuals. Remember what happened next, once the tunes on the musical chairs stopped playing in 2006-07 and the funny money started to dry up? And is there any legislation coming along that might limit this inevitable Bubble-popping from having bad effects on hundreds of millions of people? Of course not!

In fact, the Trump Administration and his GOP allies are trying to defang the small amount of protections that were put in place for consumers after the crash, particularly now that Trump OMB Director Mick Mulvaney has also made himself the interim director of the Consumer Financial Protection Bureau.
At the end of 2017, Mulvaney ordered a delay to the implementations of the bureau’s prepaid-card rules, which was set to go into effect in April, and would have forced financial institutions to limit customer’s losses in the event of a lost or stolen card, to provide easily accessible account information, and to look into and resolve transaction and account errors. The rule would have put significantly more pressure on the operators of such cards to provide accountability and risk management. In a statement that gave few specifics about what changes would be made, or when final implementation might occur, the bureau wrote, “The Bureau expects, based on its review of the comments received, to further extend the effective date of the 2016 rule.” Though the prepaid rule was finalized in 2016, implementation had been slowed as the agency sought comment for ways to improve it, and address concerns from the financial industry. In June, the agency asked for some specific feedback regarding tweaking the rules in order to prevent fraudulent claims, and to provide more clarity on how prepaid debit cards could be used in digital wallets.

On the same day that it announced a slowdown of prepaid implementation, the agency also announced that it was paring back requirements for the Home Mortgage Disclosure Act, which was put in place in 1975, and the authority to make rules related to the act was transferred to the CFPB via the Dodd-Frank Act. In 2015, the bureau set out to update what is known as Regulation C, the provision that governs how information on mortgages is collected, reported, and disclosed. And soon after, the bureau began toying with the idea of changing and clarifying some of Regulation C’s requirements. As of the first of the year, the agency will no longer ask financial institutions to resubmit erroneous data unless the errors were of material importance, and it won’t assess financial penalties for incorrect data. Going forward, the bureau is considering more significant revisions to the rule to reduce the reporting burden on financial institutions. That helps all types of financial companies that had complained about the difficulty of keeping up with the paperwork, reporting requirements, and fines associated with the rule….

Another telling change that’s come to pass since Mulvaney took over: changing the bureau’s mission statement, which appears on many public-facing documents such as press releases and emails. When Cordray, an Obama-era appointee, ran the agency, its mission statement read, “The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.” In recent weeks, that statement was changed to include language that supports Trump’s broader push for deregulation, a somewhat odd addition for a regulatory body.

In full, the statement now reads: “The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives.”
Huh, that sounds an awful like George W. Bush’s “ownership society” and the tripe that we heard in the late ‘90s when the Clinton Administration and the GOP Congress passed deregulated banks to replace the “outdated” laws behind the Glass-Steagall Act of the 1930s.

I’m not saying you should put your money under a mattress, but I am saying that the lack of savings and the people on charge having a desire to allow Wall Street to run wild sound awfully familiar, and in a very bad way.

Sunday, January 28, 2018

Trump budgeting yet another Don Con

Good stuff this morning from Budget Guy Stan Collender, who reminds us that not only do we not have a completed federal budget for this year, but that the Trump Administration is supposed to release the budget for 2019 in the next week.

First off, Collender notes that the last 8 months of regular spending for Fiscal Year 2018 aren't even paid for, and there is likely extra expenses that also need to be paid for when we face our next shutdown in 10 days.
Regular appropriations aren't even the only 2018 budget decisions that still need to be finalized. Whenever it's enacted, the final funding bill for the current fiscal year presumably will include a still uncertain amount (but something approaching $100 billion) for additional hurricane relief and disaster assistance. There will also be substantial spending for DACA, Trump's wall and any other border security measures included in the final package.
Looking ahead to the 2019 budget document, Collender says that OMB Director Mick Mulvaney is essentially flying blind because of there not being a 2018 budget finalized. And in addition, the GOP-run Congress won't make any funding decisions until after November's elections, which means more lame 2-month extensions, and nothing being able to pass with 50 votes because there won't be any budgets to reconcile to.
First, for the all the reasons explained above, the Trump 2019 budget will have to be revised once Congress makes the final decisions on 2018. House and Senate appropriators are far more likely to wait for the update than to begin with Mulvaney's guesswork.

Second, instead of regular appropriations, a continuing resolution at the start of 2019 -- about one month before the 2018 midterm election -- is about as certain as anything can be in Washington these days so there will be no need for Congress to rush. The 2019 budget and appropriations process will begin late because the current year's process is taking so long. That, combined with the need to get updates numbers from OMB (probably around the middle to end of March), the very limited House and Senate legislative schedule (for example, the House has week-long recesses almost every month and plans to restrict votes to only two full days most weeks it is in session) and the usual congressional preference to delay politically difficult votes until after the election, makes it hard to imagine the appropriations committees being able to move quickly or the GOP leadership wanting them to do so.

The final reason the Trump 2019 budget will be worthless is that Congress is increasingly less likely to do a fiscal 2019 budget resolution this year. Senate Majority Leader Mitch McConnell (R-KY) has already hinted that might be the case, and not having to vote before the election for a budget resolution that projects trillion dollar deficits every year of the Trump administration and beyond will be the increasingly preferable option for most Republicans.
Oh, but those trillion-dollar deficits are going to happen, and that's going to be a problem because Trump also wants to claim he is going to expand infrastructure spending in that budget. But there's no money around to do so, so what does Politico report the Trump Administration wants to do? Make the states, local governments and corporations pay for it.
Instead of the grand, New Deal-style public works program that Trump's eye-popping price tag implies, Democratic lawmakers and mayors fear the plan would set up a vicious, zero-sum scramble for a relatively meager amount of federal cash — while forcing cities and states to scrounge up more of their own money, bringing a surge of privately financed toll roads, and shredding regulations in the name of building projects faster.

The federal share of the decade-long program would be $200 billion, a sum Trump himself concedes is "not a large amount." The White House contends it would lure a far larger pool of state, local and private money off the sidelines, steering as much as $1.8 trillion to needs as diverse as highways, rural broadband service, drinking water systems and veterans hospitals. (Maybe even commercial spaceflight, one recently leaked draft suggests.)

The administration isn't expected to issue full details for two to four weeks. But already, the details that have emerged are unnerving some key infrastructure supporters in Congress, who say it's unrealistic to propose such a mammoth program without money to pay for it. They also note that Trump's budget proposals have called for cutting existing infrastructure programs at the Department of Transportation and the Army Corps of Engineers.

“I think we’re down to minus about $200 billion, because I don’t think they have enough money to fund the current program, let alone anything on top of it,” said Sen. Ben Cardin (D-Md.), who recently sat in on a meeting with lawmakers and administration officials on the plan. “I don’t see any money from what I’ve seen so far at all. Zero. Not $200 billion, certainly not a trillion.”
So when Trump campaigned on $1 trillion in new infrastructure spending, he wasn't mentioning that only $200 billion would be from the Feds, and that you'd be looking at either higher taxes or budget cuts in your own community. Or more toll roads with corporations jacking up the price to make profits. What a deal!

Actually, what a scam, and what a bunch of empty garbage from the White House. But much like we've seen in Wisconsin, what do you expect when you have a con man in charge of the government?

MMAC spending big money on Vukmir's slime and regressive garbage

As if I didn't have enough reasons to hate the regressive mediocrities in the Metro Milwaukee Association of Commerce, I saw this as I awoke.

The findings come from research by ProPublica, who saw that Vukmir's "Wisconsin Next PAC" had $1 million of its $1,050,000 in receipts from two sources.

MMAC $500,000
Diane Hendricks $500,000

So the MMAC wants to back a candidate that is the personification of the regressive, hateful garbage that has made Milwaukee unattractive to many people with young talent? Just like they've backed every initiative from Scott "We Don't Want Wisconsin to be Like Milwaukee" Walker since he was Milwaukee County Executive?

Let me remind you of the Milwaukee Metro area's lousy record in job growth over the last few years, under the "leadership" of the MMAC's buddies in the Wisconsin GOP.

These numbers have slightly improved in the last few months, but the growth rate is still well below the US, and most mid-size metros in the Midwest.

12-month job growth Dec 2016- Dec 2017
Des Moines +2.8%
Minneapolis-St. Paul +2.4%
Madison +1.8%
Indianapolis +1.8%
Detroit +1.6%
Columbus, Ohio +1.4%
Milwaukee +1.2%
Cincinnati +0.7%
Cleveland +0.4%

It seems very telling that the MMAC has been spending a lot more time lobbying and paying off politicians over investing in their home area and learning from the metros that are beating Milwaukee when it comes to job growth and locations for talent to want to move to.

Wonder if all these guys (and they're almost ALL guys) think it's OK to throw $500,000 at ALEC Queen Vukmir, whose top goal as a State Senator (outside of voter suppression and gerrymandering) has been to defund and destroy public schools at every turn. This seems especially relevant in Milwaukee, which has had more money funneled away from public schools and into vouchers as any area in the state. And that's not just true in the City, but also in the suburbs since the voucher program was changed in 2015, raising property taxes and reducing the attractiveness of those areas. (click here to see how your district has been affected).

It's time for a little naming and shaming. Here's the list of the MMAC Officers and Directors.

Briggs & Stratton Corp.

MMAC President
MMAC thanks the business and community leaders that make up it's board of directors for their time and commitment to increasing the economic vitality of the metro Milwaukee business community.

Robert Arzbaecher - Chairman, Fiduciary Management Inc.
David Baumgarten - President/CEO, Bank Mutual
Scott Beightol - Chairman/Partner-Milwaukee, Michael Best & Friedrich LLP
Carl Brown - President, Red Brown Kle Marketing Comm
Tina Chang - CEO/Chairman, SysLogic Inc.
Carla Cross - President/CEO, Cross Management Services Inc
Robert Hillis - President/CEO, Direct Supply Inc.
Gale Klappa - Non-Executive Chairman, WEC Energy Group
David Lubar - President/CEO, Lubar & Co.
Marsha Mather - Owner/President, Laacke & Joys
Richard Meeusen - Chairman/CEO, Badger Meter Inc.
William Mielke - CEO, Ruekert & Mielke Inc.
Ulice Payne Jr. - President, Addison-Clifton LLC
James Popp - President, Johnson Financial Group
Mary Ellen Powers - Executive Vice President, MMAC
Paul Purcell - Chairman, Robert W. Baird & Co. Inc.
Mary Scheibel - Founder/Principal Owner, Trefoil Group Inc.
John Schlifske - Chairman/CEO, Northwestern Mutual - Main
Nancy Sennett - Partner, Foley & Lardner LLP
Tim Sullivan - CEO, REV Group
Paul Sweeney - Principal, PS Capital Partners LLC
Dave Werner - President/CEO, Park Bank
Scott Wrobbel - Managing Partner/Wisconsin, Deloitte

Todd Adams - President/CEO, Rexnord
Michael Aldana – Partner, Quarles & Brady
Kevin Anderson - Milwaukee Region President, Old National Bank - Brookfield
Alan Antoniewicz - COO/President, Spancrete
Joe Bartolotta – Owner, Bartolotta Restaurants
Kurt Bechthold – CEO, Payne & Dolan
Jeff Bradford – Office Managing Partner, Grant Thornton
Dan Cahalane – President, American Roller & Plasma Coatings
Jeffrey Clark - President/CEO, Waukesha Metal Products
Chad Cundiff – President, Astronautics Corp. of America
Jack Enea - Office Managing Partner, Husch Blackwell
Giacomo Fallucca -Executive Vice President, Palermo Villa
Justin Frank – Owner, Frank Beverage Group
David Gay – Partner, Ernst & Young
Christopher Goller - Regional President, PNC Bank
Kelly Grebe - Chief Legal & Corporate Services Officer, MillerCoors
Brian Grossman - Manager Wisconsin, Chase
Jon Hammes - Managing Partner, Hammes Co.
Kathy Hust - President - Scanalytics Inc
Mary Isbister - President - GenMet
Catherine Jacobson - President/CEO, Froedtert Health
Jerome Janzer - Chairman/President/CEO - Reinhart Boerner Van Deuren
Jim Kornfeld - President/CEO, PAX Holdings
Anthony Mallinger - President/CEO, Metal-Era
Gregory Marcus – President, Marcus Corp.
Derrick Martin – President, Lena's Foods
Scott Mayer - President/CEO, QPS Employment Group
Peter McCormick – President, Magnetek
John McDermott - Sr Vice President/Global Sales & Marketing, Rockwell Automation
Daniel McKeithan Jr. - Chairman/CEO, Tamarack Petroleum Co.
John W. Mellowes – CEO, Charter Manufacturing Co.
Justin Mortara – CEO, Mortara Instrument
Cory Nettles - Founder/Managing Director, Generation Growth Capital
Ugo Nwagbaraocha – President, Diamond Discs International
Jonas Prising - Chairman/CEO, ManpowerGroup
Joel Quadracci - President/CEO, Quad Graphics
Ajita Rajendra - Chairman/CEO, A.O. Smith Corp.
Austin Ramirez - President/CEO, HUSCO International
Joseph Rock - Office Managing Partner, KPMG
Bernie Sherry – CEO, Ascension Wisconsin Corporate Office
Patrick Sinks - President/CEO, MGIC
John Splude Sr. – President, JWS Classics
Jeffrey Ticknor - Senior Vice President, BMO Harris Bank
Peggy Troy - President/CEO, Children's Hospital of Wisconsin
Nick Turkal (MD) - President/CEO, Aurora Health Care
John Utz - Executive Vice President, Associated Bank
Scott VanderSanden – President, AT&T Wisconsin
Nicholas Wahl - Managing Partner/CEO Godfrey & Kahn S.C.
Gregory Wesley Sr. - V. P., Strategic Alliances and Business Development Medical College of Wisconsin
Tom Westrick - Vice President/Chief Quality Officer, GE Healthcare
Raymond Wilson - Office Managing Partner, PricewaterhouseCoopers
Robert Valcq - SVP/Regional Manager, Wells Fargo

Huh, I think I've seen Scott Walker at a lot of these businesses for "job announcements" over the years. Imagine that!

Keep this list in mind when it comes to your spending decisions in 2018. And it you certainly should run the other way from any politician that touts the supports of these greedhead oligarchs.

Saturday, January 27, 2018

Lots of tax and spend choices left in Wisconsin, without a lot of money

While Governor Walker's pre-election proposals may have gotten the main part of attention in the last week, that doesn't mean they aren't the only taxing and spending bills the Legislature will take up at the end of this session. There are several bills that have bubbled up from the Legislature that will likely be taken up by Joint Finance in the coming weeks that also look to use the projected budget surplus for other needs.

For example, there is a family-related tax cut making its way through the Legislature that has gotten very little public mention, but could be used by hundreds of thousands of Wisconsinites. Instead of Walker's writeoff for all parents with children, this one is to help defray the expenses they take on when trying to pay the expenses of a family member that needs assistance. As the bill describes it, 50% of the following expenses can be paid back by the state, up to $1,000.
The improvement or alteration of the claimant's primary residence to enable or assist the qualified family member to be mobile, safe, or independent.

The purchase or lease of equipment to enable or assist the qualified family member to carry out one or more activities of daily living.

The acquisition of goods or services, or support, to assist the claimant in caring for the qualified family member, including employing a home care aide or personal care attendant, adult day care, transportation, legal or financial services, or assistive care technology.

What about a tax cut for her?

The Wisconsin Department of Revenue analyzed the proposal, and said that despite the bill limiting the tax credit to single people that make $75,000 and married couples making $150,000, a notable amount of Wisconsinites would still be eligible to take this tax credit. And in fact, the caregiver credit it would give a larger tax break than the $122 million-a-year that would be sent out under Walker's child tax credit.
The AARP Family Caregiving and Out-of-Pocket Costs: 2016 Report, indicates that 78% of caregivers are incurring out-of-pocket costs as a result of caregiving, suggesting that about 363,000 individuals would be eligible for the credit under this bill. The report also indicates that out-of-pocket expenses reflect about 20% of the caregivers' income. A simulation using the 2015 individual income tax model, suggests that the average credit under these circumstances would reduce revenue by about $494 per claimant, or $179 million for 363,000 claimants. To the extent that the bill limits the types of expenses that qualify for the credit, the fiscal effect would be smaller.
This bill passed the Assembly Committee on Mental Health 12-0, and has been sent to the Joint Finance Committee, so let's see if it comes up when JFC next meets.

Om a related note, is also a bill going through the Legislature that would give extra support to foster parents, at a much smaller price tag of $400,000 of additional funding.

The Legislature's Joint Finance Committee is also due to take on a couple of other sizable tax credits when it next meets. One of those involves increasing the writeoff for the Historic Preservation tax credit from $500,000 to $3.5 million. This comes after Governor Walker reduced the cap for these Historic Preservation awards from $5 million per parcel to $500,000 with a veto in the state budget in September, complaining of the high cost of the credit.

The Historic Preservation Credit has been an increasing tool for economic development in the state, as the Legislative Fiscal Bureau says that $156 million in credits were contracted for in the first 3 years since the original cap on awards was lifted in 2014. In looking at the bill, the Wisconsin DOR says increasing the current cap from $500,000 to $5 million would certainly have a cost, but it's nowhere near as much as Walker's child tax credit.
Based on an analysis of rehabilitation projects contracted and/or certified by WEDC as well as the expected project completion timelines for rehabilitation projects in planning/construction phases, the department expects the increased credit cap to reduce revenue by $3.5 million in fiscal year 2019, $8.3 million in fiscal year 2020, and increasing amount annually thereafter,

An example of a usage of Historic Preservation Credit.

This bill unanimously passed the Assembly's Ways and Means Committee 15-0 on Thursday, and previously passed the Senate Revenue Committee 5-0, which means it also is heading to Joint Finance.

Lastly, let's go over where we stand on “Talent Attraction Grants”, which are part of a Walker/WEDC effort to encourage post-college young adults and others to locate to Wisconsin. As the bill describes it-
The [WEDC] shall collaborate with state agencies to develop and implement initiatives for the attraction of talent to and retention of talent in this state, including by leveraging the existing programs of state agencies for those purposes within the scopes of those existing programs.
The way the bill sets it up, $6.8 million would be sent out this year, with that pot of money available to be used in 2018 and succeeding years. Joint Finance will get their crack at discussing the bill soon, after it passed Senate and Assembly committees this week.

So now add this to the bills Walker wants to put in from the State of the State and his other pre-election posturing.

Projected year-end balance FY 2019 $460.15 million

Child tax credit = $244 million (2 payments)
Rural WEDC handouts = $50 million
Obamacare exchange payments = $50 million
Sparsity aid - $6.4 million

Caregiver tax credit $179 million
Expand Historic Preservation Credit $3.5 million
Talent attraction grants $6.8 million


Which means that we can't afford at least $80 million from these bills alone, let alone other items that are being considered (notice that more funding for highways aren't even part of this equation?). The costs for these items would then continue for the next budget, which already has a structural deficit built in, so that would get higher, and you'd hope that fact is also considered.

Which makes it intriguing to see which of these proposals the GOP-controlled Joint Finance Committee pushes ahead with, and which ones die in these next 6 weeks. It'll speak volumes about the priorities these folks have, and how much they care about flexibility for future budgets.

2017 ends with good GDP growth, just like most of the 2010s

While there's a lot of directions your attention may be pulled these days, I want to mention that we got our first look at 4th Quarter 2017 GDP yesterday. And as the Bureau of Economic Analysis told us, GDP growth is still going well, at 2.6% for Q4 2017, and 2.3% for full-year 2017.
Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the fourth quarter of 2017 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent….

The deceleration in real GDP growth in the fourth quarter reflected a downturn in private inventory investment that was partly offset by accelerations in PCE, exports, nonresidential fixed investment, state and local government spending, and federal government spending, and an upturn in residential fixed investment. Imports, which are a subtraction in the calculation of GDP, turned up.
In fact, if you look at this chart from James Hamilton at Econbrowser, you'll see we likely would have broken past 3% except for a small drop in inventories and a significant increase in imports, which reflects the pickup in consumption.

In looking at the income side of things, it looks like that picked up as well at the end of the Q4, but that those gains were immediately spent away, leading to a lower savings rate.
Disposable personal income increased $139.0 billion, or 3.9 percent, in the fourth quarter, compared with an increase of $73.8 billion, or 2.1 percent, in the third. Real disposable personal income increased 1.1 percent, compared with an increase of 0.5 percent.

Personal saving was $384.4 billion in the fourth quarter, compared with $478.3 billion in the third. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 2.6 percent in the fourth quarter, compared with 3.3 percent in the third.
This is a good thing for the overall economy, as consumer spending is around 70% of GDP. But that drop in saving to pre-Great Recession levels should be flashing big warning signs to you once these stock market and housing bubbles pop.

In fact, while real (inflation-adjusted) disposable incomes did rise in 2017, the BEA says that the growth level actually declined in 2017 (1.21%) vs 2016 (1.38%). Still beats a decline, but it's really a continuation of the growth trend we had before Donald Trump's election.

And in looking at the full-year GDP estimates, we see a similar pattern. 2017 was right in line with the growth rates we saw in the previous 7 years of the Obama Recovery, although it was a nice rebound from 2016's slowdown.

Annual GDP growth, 2010-2017, high to low
2015 2.9%
2014 2.6%
2010 2.5%
2017 2.3%
2012 2.2%
2013 1.7%
2011 1.6%
2016 1.5%

Of course, that reality wasn't what people in the Faux News bubble were hearing yesterday.

The question now becomes whether the pickup in consumer spending continues for 2018, and if it's accompanied with real wage growth. I find myself skeptical of that, especially as we see continual stories of corporations using their tax cuts to buy back stocks and boost dividends, along with using those incentives to cut jobs (like we're seeing with Kimberly-Clark here in Wisconsin).

So while the economy ended 2017 on a strong note for topline GDP, sooner than later we need to see real people benefit from that. Or else the story of 2018 will be that GDP growth and standards of living are heading down, once the tax cut buzz wears off.

Thursday, January 25, 2018

Wisconsin GOP continues to show the rest of the nation the way....down

The act of Wisconsin Republicans has been getting nationwide attention in recent days. And as usual, it's not for a good reason.

Let's start with this absurdity that came from a "distinguished gentleman from Wisconsin."

And then we got the buffoonish payoff within 24 hours.

Bruce Murphy used the recent events surrounding Sen Johnson to revisit his excellent article from a year ago where he asked "Ron Johnson Asleep on Russian Hacking?" In the new column that Murphy wrote in Urban Milwaukee today, he calls Sen. Johnson "Trump's Hit Man," adds in the recent developments involving Johnson's (now laughable) conspiracy theory about the FBI, and notes how the state's largest newspaper refuses to look into Johnson's role in the Trump-Russia scandal.
As I wrote a year ago, Johnson had an opportunity to be a patriot and condemn the fact that Russia was engaged in such activities. But he issued no resolutions — not one word — on Russian’s cyber attacks on America.

Worse, he has engaged in a pattern of misinformation on the subject, undercutting a CIA report in January 2017 concluding that Russia meddled in the presidential election to help Trump win election. He issued a statement to the Wisconsin State Journal doubting the report and went on to complain to CNBC that the CIA refused to brief him on Russian hacking, saying “I have not seen the evidence that it actually was Russia,” while failing to note the report echoed the briefing he’d received from other intelligence leaders in September.

Nor has Johnson addressed the evidence that Russian cyber attacks may have had an impact on the election results in his own state of Wisconsin.

Dan Bice and the Milwaukee Journal Sentinel did a flaccid story detailing Johnson’s charges to Fox News and then suggesting it was disputed only by “liberals” and supported by conservatives. The net effect was to give his irresponsible claims credence.

As for the idea that only liberals chastised Johnson, that’s flatly untrue: conservative writer Erick Erickson said Johnson’s comments to CNN made the “made the whole thing sound like a clown show,” while Jonah Goldberg of The National Review offered an entire column noting that “when Senator Ron Johnson got over his skis last night asserting not just bias but “corruption” at the FBI and hyping claims from an “informant” of a “secret society” scheming to do . . . something, I got a bad feeling.” The charges being made by Johnson and other Republicans, he noted, included “an astonishing amount of manufactured outrage, absurd dot-connecting, and near-hysteria.”

This is supposed to be the province of Journal Sentinel Washington Bureau Chief Craig Gilbert, but he steadfastly avoids any such controversies and nearly anything that happens in Washington. Some 16 months after Johnson met with the U.S. intelligence experts to learn about the Russian hacking of U.S. elections, the newspaper has yet to let its readers know this happened.

Why does the word "COMPLICIT" keep coming up in my head when I see (mo)Ron Johnson or Devin Nunes trying to make up crap? It seems pretty evident that these guys are trying to deflect from Robert Mueller's Trump-Russia investigation that has followed the money and connected the dots all the way to the White House...and maybe elsewhere in the GOP?

The other article you should check out is from Ari Berman in Rolling Stone. This one is titled "How the GOP rigs elections", and discusses the combination of gerrymandering, voter suppression and dark money advantages that Republicans use to slant the playing field in their favor.

Most of Berman's article takes place in the state that has gone as heavy for all 3 strategies as any state in the country- Wisconsin. Let's start by recalling the secretive process the GOP used to make up their gerrymandered maps.
In the summer of 2011, soon after activists occupied the rotunda of the Wisconsin state capitol to protest Walker's bill stripping public-employee unions of collective-bargaining rights, Republican members of the legislature visited the offices of Michael Best & Friedrich, the party's go-to law firm. The GOP was in control of the state's redistricting process for the first time since the 1950s, and Republicans were shown to the "map room," where their aides were drawing new political districts in secret following the 2010 census. The legislators signed confidentiality agreements, pledging not to discuss the work with anyone, even though the redistricting was financed with taxpayer funds. "Public comments on this map may be different than what you hear in this room," read the talking points distributed to GOP legislators. "Ignore the public comments."

The new maps had titles like "Aggressive," to describe how they favored Republicans. "The maps we pass will determine who's here 10 years from now," a legislative aide told the Republican caucus. "We have an opportunity . . . to draw these maps that Republicans haven't had in decades."

On July 11th, 2011, the maps were introduced in the Legislature; no Democrat had seen them before they were released. There was one public hearing, two days later, and the reshaped districts were approved the next week on a party-line vote. "This looks fair to me," said [GOP State Sen Van] Wanggaard to the Milwaukee Journal Sentinel. "I don't have anything jumping out at me." (Wanggaard declined to comment for this article.)
Berman also reminds us that GOP voter suppression played a significant role in tipping the state to Donald Trump and Ron Johnson in the November 2016 elections.
The Republican strategy worked as intended. Wisconsin ranked second in the nation in voter participation in 2008 and 2012, but in 2016 saw a 3.3 percent drop in turnout, the largest decrease in voting of any state other than Mississippi. Roughly half of it occurred in Milwaukee. In black neighborhoods, which heavily favored Clinton, turnout decreased by 23 percent. Overall, black turnout dropped by 19 percent in Wisconsin in 2016 compared with 2012, more than four times the national decline among black voters, according to a report by the Center for American Progress.

After the election, registered voters who didn't cast a ballot in Milwaukee and Madison, the state's two most Democratic areas, were asked why. One in 10 nonvoters said they were blocked or deterred by the state's ID law, according to a University of Wisconsin study. That meant up to 23,000 people in two counties alone didn't show up at least in part because of the ID requirement – almost the exact same number of voters by which Trump won the state. Up to 45,000 people were prevented from voting statewide. African-Americans, who voted for Clinton over Trump by an 88-to-8 margin, were three times more likely than whites to be kept from the polls. "Thousands, and perhaps tens of thousands, of otherwise eligible people were deterred from voting by the ID law," said University of Wisconsin political scientist Kenneth Mayer.
I am so done with this state being a political laughingstock, and in "showing how it's done" to the national GOP when it comes to abusing power to make American democracy and decency decline. This Wisconsin-style Banana Republicanism must be ended this year.

Costly Walker pre-election giveaways would handcuff state next year

You may have heard that our Governor announced a few new schemes at the State of the State address ahead of November’s election. So let’s look at how a few of these items would work, shall we? Startong with Walker's plan for a $100-per-child tax credit
Under Walker’s tax credit plan, all parents in Wisconsin with biological or adopted children under the age of 18 as of Dec. 31, 2017, would qualify for the credit. The Walker administration estimates 671,000 families would benefit.

The credit would be paid out through a tax rebate check in the current year to families that fill out an online form and through the typical income tax process in spring 2019.
So they are blatantly trying to buy votes by sending out the check in the months before the 2018 elections, and then doubling that up by allowing parents to write off another $100-per-kid credit during the 2018 tax filing season. Given that the tax bill that got through Congress already increases the federal Child Tax Credit and gives away the farm to the rich and corporate, I’m not sure multiplying those tax cuts at the state level are really the way we need to go if you want to use extra funds to give relief to Wisconsinites.

Another problem with this is that based on how Walker’s plan is described, this won’t cost $122 million in Fiscal Year 2019, but instead would be $244 million. And the effect on the state’s bottom line wouldn’t be accounted for until after the election. How convenient.

Here’s another item that came out with the State of the State speech yesterday.
The rural proposals announced Wednesday include a new $50 million rural economic development fund that would support economic development grants in 56 of the state’s most sparsely populated counties. The program would be overseen by the Wisconsin Economic Development Corp., which Walker created in 2011 to help fulfill his failed pledge to create 250,000 jobs during his first term.
So basically, we’re giving $50 million to set up a separate WEDC handout program for rural areas of the state. And I’m sure this won’t be racked with corruption, cronyism and wasted money like the other WEDC slush fund program do, will it?

When you combine these pre-election stunts with other initiatives that Walker has asked for in recent weeks, the price tag starts adding up.

Child tax credit = $244 million
Rural WEDC handouts = $50 million
Obamacare exchange payments = $50 million
Sparsity aid - $6.4 million
TOTAL COST $350.4 million

I’m not even counting the extra costs that are projected to carry out Walker’s panic move of copying Evan Goyke’s plans to close the Lincoln Hills youth prison and transfer those inmates to regional facilities throughout the state. The price tag I’ve seen on that is $80 million, which’ll likely be paid off over several years in debt, with the first payments not likely to come until after the next budget starts.

And despite the sunny picture that Walker tries to paint about the state budget, there isn't much room to pay for all of this and have any money left over to deal with other needs that may come up between now and June 2019.

Projected 2017-19 budget ending balance $460.15 million
Cost of initiatives $350.4 million
CUSHION $109.75 MILLION (0.63% of total expenses)
Minus required reserves $75 million
TOTAL LEFT OVER $34.75 million

The other thing this would do is turn what is already a $191 million deficit in FY 2019 into something notably higher, both by cutting revenues with the Child Tax Credit, and by the increased spending for these election-year initiatives which will continue in the next budget. And passing all of Walker's initiatives would cost another $456 million in the next budget, which is money that we already may not have. The 2019-21 budget already has a structural deficit built into it, particularly because of the full costs of the Fox-con coming on board.

Also notable is that the added spending is going to very specific populations – rural areas and people who get insurance from the Obamacare exchanges. It’s a crass election-year calculation by Walker that leaves the overwhelming majority of Wisconsinites behind. So while some of these ideas have merit, and would make at least some everyday Wisconsinites better off (unlike most of Walker’s and WisGOP’s bills during the Age of Fitzwalkerstan), I'm not convinced it's a great plan that helps us much in the short or long run.

And giving away this one-time, Bubbly surplus seems to likely to end up in a repeat of what happened right before Walker’s last election in 2014. At that time, a larger surplus was also blown on tax cuts, and it led to budget deficits and significant cuts in early 2015 that ended up cutting the state's job growth in half for 2016.

Maybe instead, we should use the extra money to give a one-time bump in aids that would either help all schools or local governments, and maintain services while keeping property taxes down and not having to see more referenda or wheel taxes. Or we could choose to add investment into the state’s crumbling roads and highways, which would also reduce the backlog of projects that keep piling up and cut into the $1 billion deficit in the Transportation Fund that will have to be taken care of next year.

Of course, we haven’t seen a bill or even a hearing schedule for any of these Walker proposals (other than on sparsity aid, which did get a committee hearing today), so let’s hold back until we see the fine print, and to see what details emerge from the Joint Finance Committee and other legislative discussions. Because given the way these guys operate, you can't count on the simple, easy thing being done without having some kind of unrelated right-wing garbage attached to it.

Wednesday, January 24, 2018

Walker health care plans are shameless flip-flops that show Dems were right

As our Governor gave what had better his last State of the State address today, I wanted to go over some of his pre-election plans for health coverage in Wisconsin.

As you may have heard, our governor now wants the state to pay extra tax dollars to help people get health care coverage, including offsetting the costs of some of the coverage Wisconsinites may get through the insurance exchanges that are part of the Affordable Care Act.

In itself, that sounds like something that could have agreement from a lot of people at the Capitol. But it is a breathtaking stance given that the Governor was throwing out this garbage only 7 months ago.

But now Walker wants to shell out $50 million in state dollars (and another $150 million in federal dollars) to reduce rising premiums for people who get insurance plan through the “collapsing” Obamacare exchanges. And he also wants to make the state’s prescription drug program for seniors permanent after trying to kill and/or screw it up for the last 4 years.
With legislative approval, Walker also plans to request a federal reinsurance waiver in an effort to lower premiums for the more than 200,000 Wisconsinites who are covered under the individual market. He is also seeking a permanent extension on Wisconsin's SeniorCare program, which allows seniors age 65 and older to purchase prescription drugs at a lower rate….

"Seniors have basically had to beg Governor Walker to renew it for the past ten years," [State Sen. Jon] Erpenbach said in a statement. "Again — glad he is finally willing to commit to always renewing the SeniorCare waiver — something he has never been willing to do before."
The other remarkable turnaround deals with Walker now wanting to protect individuals with pre-existing conditions from being charged high prices by insurance companies if the ACA is further deformed and/or repealed.
In his State of the State address on Wednesday, Walker plans to ask lawmakers to approve a set of three proposals he calls his "health care stability plan." One of his requests is for the Senate to pass a bill approved by the Assembly in June barring insurance companies from denying coverage to people with preexisting conditions.
But there’s a giant loophole that this bill has, as the result of an amendment added in by Assembly Republicans as the measure was being debated on the floor. Here’s the explanation from Wisconsin’s Legislative Council.
Assembly Bill 365 specifies that a health insurance policy or governmental self-insured health plan is prohibited from imposing a lifetime or annual limit on the dollar value of benefits provided under the policy or plan.

Assembly Substitute Amendment 1 removes that provision and instead specifies that a health insurance policy or governmental self-insured plan is prohibited from imposing a preexisting condition exclusion under the policy or plan. A “preexisting condition exclusion” means a limitation or exclusion of benefits relating to a condition that existed before the date of enrollment for coverage.

The substitute amendment also specifies that if a person has had continuous coverage for the 12 months before the date of enrollment with no breaks in coverage for any period longer than 63 continuous days, a health insurance policy or governmental self-insured plan is prohibited from considering a preexisting condition for the purposes of setting premiums or cost-sharing provisions.
But if there WAS that break in service, people certainly could be charged more for those pre-existing conditions. And that bait-and-switch is exactly why Democrats voted against the bill when GOPs changed it in June.

Assembly Dem Leader Gordon Hintz and fellow Dem Rep. Daniel Riemer called out that flaw in the current bill, and took their names off of sponsorship of AB 365.
“The changes made to AB 365 took a bill which aimed to stop insurance companies from instituting lifetime and annual limits on coverage, and turned it into a vehicle promoting extreme Republican policies from Congress,” stated Rep. Hintz. “This cynical move has the real life impact of threatening coverage for those who need it most.

“While the Affordable Care act is still the law of the land, it is clear that Republicans will stop at nothing to weaken protections for those with pre-existing conditions. Assembly Democrats stand united in their support for the ACA and the protections it provides, therefore we have requested that our names be removed from AB 365.”…

“The substitute amendment to this bill no longer resembles the legislation I authored or the idea behind it. The changes made would weaken existing protections by allowing health insurance companies to charge people with pre-existing conditions more. Simply put, that is wrong.” said Rep. Daniel Riemer. “Our friends and neighbors with health issues deserve the stability in coverage and premiums. This bill is a direct attack on both of those key elements of quality health care.”
And when this obvious loophole was pointed out to Walker yesterday, Gov Unintimidated got a bit flustered.
"I want to sign the bill that protects preexisting conditions, so I'm not saying it has to be this bill or that bill. I just want them to get it done," Walker said following an event at Stoughton Hospital. "I'm just saying give me a bill I can sign into law that will guarantee we protect preexisting conditions."
So in other words, Walker is desperately asking the Legislature to GIVE HIM SOMETHING that might look good ahead of the 2018 elections because he knows that voters hate the GOP on health care due to their numerous attempts to repeal and deform Obamacare.

These proposals are likely sound (except for the loophole-ridden AB 365), and they would help fill the gaps that have resulted due to the GOP Congress’ refusal to fund risk corridors, and in DC’s lack of desire to impose affordable drug coverage and price regulation at the federal level. But no, Scotty, now that the Black Man is out of the White House and you’re losing in the polls, you don’t get to run from your Bagger past of trying to sabotage the ACA at every turn for the past 7 years, and leaving large amounts of Wisconsinites worse off as a result.

And now that Walker is also calling for a $122-million-a-year Child Tax Credit, passing that gimmick would take away the money available to do all or possibly any of these things Walker wants on health care without being severely handcuffed for the next budget.

Which reveals Walker's pre-election announcements as the not-serious stunts that they are, befitting of a governor who has always cared about politics and headlines over actual results. In fact, it just makes Scotty look like even more of a desperate grifter who is scared to death of having to get a real job for the first time in his adult life.

Tuesday, January 23, 2018

3/4 of "manufacturers" tax credit goes to millionaires that now get even more tax breaks.

Before today’s Assembly session, Dem Leader Gordon Hintz revealed the findings of a memo from the Legislative Fiscal Bureau that updated the costs of the state’s Manufacturers and Agriculture tax credit (aka the M&A credit, MAC, or “The Big Giveaway”).

The LFB says that the price tag has risen for the M&A credit in each year it has been in effect, and it will continue to go up during the 2017-19 budget.
You requested information regarding the estimated fiscal effect of the MAC by state fiscal year since the credit took effect. It is estimated that the MAC reduced state tax revenues by $15.7 million in 2012-13, $80.5 million in 2013-14, $147.4 million in 2014-15, $209.0 million in 2015-16, and $262.1 million in 2016-17. The estimated revenue loss is $275.5 million in 2017-18 and $294.8 million in 2018-19….

As shown above, the manufacturing portion of the credit accounts for approximately 92% of the total revenue reduction and the agricultural portion accounts for 8%. Approximately 78% of the credit is estimated to be claimed under the individual income tax and 22% under the corporate tax.
The LFB also updated its information estimating the income levels of the people taking the M&A credit in their upcoming tax filings. And like before, it’s the mega-rich that are most likely to use this writeoff, and get the most from it.

Income levels and total of M&A credit recipients
Under $100,000- 38.1% of recipients, 2.6% of tax break
$100,000-$250,000- 26.7% of recipients, 5.5% of tax break
$250,000 to $500,000- 13.2% of recipients, 6.5% of tax break
$500,000 to $1 mil- 10.2% of recipients, 11.9% of tax break ($25.6 mil)
$1 mil to $5 mil- 9.8% of recipients, 34.0% of tax break ($72.5 mil)
$5 mil to $10 mil- 1.3% of recipients, 14.6% of tax break ($31.5 mil)
$10 mil to $30 mil- 0.6% of recipients, 12.25% of tax break ($26.5 mil)
$30 mil+ 0.1% of recipients, 12.8% of tax break ($27.6 mil)

That last part is especially shocking, as Wisconsinites making over $10 million are set to get back almost as much money from this M&A tax break as everyone that makes $1 million or below. That’s despite more than 7/8 of the recipients making $1 million or below, vs only 1 in 148 recipients making $10 million or more.

Rep. Hintz noted that the M&A tax credit not only shoveled huge amounts of money to the rich, but that those funds were then unable to be used for services that are much better at creating jobs and improving life in Wisconsin.
“Governor Walker’s track record of prioritizing tax cuts for wealthy special interests is well documented. This giveaway is a glaring example of a Governor who doesn’t understand how the economy works in 2018,” stated Rep. Hintz. “This tax credit was not tied to any job creation benchmarks, making it a ‘nostrings attached’ benefit to those who need it least. $1.3 billion dollars in taxpayer money is shocking on its face, but made even worse when assessing the opportunity cost. This is state money that could have been used on public schools, the UW System, or transportation infrastructure. Between this tax credit and the FoxConn deal, Governor Walker has handed the people of Wisconsin a bill for $5.8 billion.”

That’s backwards and regressive enough, but now this M&A giveaway will be even more unnecessary in future years because the Piece of Shit tax bill in Congress gives even more tax breaks to these rich people and corporations. Why do these corporations and the ultra-rich need help at the state level any more? And given that the needs of this state keep growing, this especially wouldn't be a bad time to reconfigure the state's tax system to reduce the cost of the Big Giveaway.

And the funds collected from reducing and or dumping the M&A tax cut could be used to fix our deteriorating roads and allow for local governments to have an easier time paying for police and fire services, which would prevent the need for even more wheel taxes and local sales taxes. Everyday Wisconsinites have had to shell out millions more for those additional local taxes during the been paying a higher share of while the rich, corporate and connected have been getting the massive breaks from the M&A credit.

It's well past time to reverse that, and to bring an end to the Big Giveaway.

EDIT- And look, we are already seeing how the new tax law is helping one Wisconsin manufacturer

Monday, January 22, 2018

A big drop in earnings ain't really MAGA, is it?

You can talk about the stock market all you want, but the real evidence that things have gotten better in this country under Donald Trump is if wages get better for everyday working Americans. And last week we had a report released that said that is absolutely not what is happening.

The report came from the Bureau of Labor Statistics, and it had information on how much the typical worker made for wages at the end of 2017.
Median weekly earnings of the nation's 114.2 million full-time wage and salary workers were $857 in the fourth quarter of 2017 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported today. This was 0.9 percent higher than a year earlier, compared with a gain of 2.1 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.
Having earnings grow at less than half the rate of inflation is not the way you want to be going, and certainly won't make America Great Again for the "forgotten folks.".

And even worse, those weekly earnings fell off a cliff in the last 3 months 2017.
Seasonally adjusted median weekly earnings were $854 in the fourth quarter of 2017, down from the previous quarter ($866).
That’s $12 decline means a 1.4% drop in 3 months, with the inflation-adjusted decrease being 2.3%. Those are the largest one quarter drops from earnings since at least 2007 (that’s as far back as the records go on this stat), and it erodes all progress that had been made in real median weekly earnings over the last 2 years.

Now maybe this is some weird one-quarter fluke or has been misreported in some way and the numbers will be corrected in the near future. But if that lower 4th quarter figure does hold, shouldn’t a significant drop in weekly earnings be considered a big deal? And why wasn’t any of this covered in our media or mentioned by our politicians?

Keep it on your radar for later this year, because if earnings stay at the lower level that we saw at the end of 2017, the tax cuts that Trump and the GOP will try to talk up will seem very hollow and out of touch with the needs of people with real jobs. Because people don't need tax cuts in America - they need a FREAKING RAISE, and it doesn't look like it's happening after 1 year of the Trump Presidency.

$138 mil more to play with, but it's not really because revenues are booming

Last week, we found out that there is a bit more breathing room in the current Wisconsin budget, as the Legislative Fiscal Bureau said that there would be an extra $137.5 million in the state's bank account, bumping the state's cushion up to $385 million for the next 17 months.

First, how did the projected $137.5 million appear? The LFB document indicates that it’s a combination of slightly better revenue figures, and savings from refinancing more debt as a result of changes in tax law.
The $137.5 million is the net result of: (1) an increase of $76.3 million in estimated tax collections; (2) an increase of $1.7 million in departmental revenues (non-tax receipts deposited into the general fund); (3) a decrease of $97.7 million in net appropriations, and (4) a transfer of $38.2 million to the budget stabilization fund.

The majority ($77.8 million) of the $97.7 million net appropriation reduction is due to reestimates of the amounts necessary to fund general fund debt service. General fund debt service savings are primarily attributable to three 2017 general obligation bond refinancing transactions and partly the result of a slower pace of bond issuance compared to earlier issuance assumptions. Recent changes to federal tax law have an effect on municipal bond refunding transactions. Effective in 2018, interest on a bond issued to advance refund another bond is no longer tax-exempt. This change prompted the state to advance refund bonds before the end of 2017, that were originally scheduled for advance refundings in 2018.
Of course, the problem with doing those refinancings/refundings ahead of time is that many of those new bonds have to be paid off at later dates with future budgets. But it works well in the short-term, and the bond premiums seem to have allowed for a slight reduction of total debt.

As for the total revenues, there’s a slight bump which the LFB credits to slightly faster-than-anticipated economic growth in 2018 and 2019 (real growth of 2.7% and 2.6%), reflecting minor stimulus from the tax plan that got through Congress. The higher growth levels are reflected by the LFB increasing their sales tax estimates, which have another $138.1 million in them, with healthy increases of 4.6% in FY 2018 and 3.4% in 2019.

But interestingly, the LFB says the tax bill also will reduce collections in Wisconsin due to certain income tax provisions intended to match the federal tax code.
Based on preliminary collection information through December, 2017, individual income tax revenues for the current fiscal year are 5.3% higher than such revenues through the same period in 2016-17. These amounts include adjustments for pass-through withholding and for collections that occurred in January, but can be attributed to December because the month ended on a weekend. A lower rate of increase (3.3%) is anticipated over the next six months because refunds and final payments for tax year 2017 are expected to be affected by higher estimated payments at the end of 2017 by individuals anticipating the effects of the federal Tax Cuts and Jobs Act. It is believed that the $10,000 limit on itemized deductions for state and local taxes under the Act, which will take effect in tax year 2018, has induced some taxpayers to accelerate federal deductions for state income taxes into tax year 2017.

Several provisions of the Act related to Section 179 expensing, AMT exemption levels, and the historic rehabilitation tax credit will automatically take effect for state tax purposes in tax year 2018 and reduce future state individual income tax collections, estimated at about -$10.0 million in 2017-18 and -$20.0 million in 2018-19. However, recent growth in collections has created a stronger base than previously estimated that should allow growth in collections that offset these reductions.
It’s worth noting that the state provisions that are getting tax cuts such as the AMT exemption seem to help richer Wisconsinites over typical ones. Interestingly, the LFB report does not go into how much state taxes might go up on everyday people as they file their 2018 taxes as the personal exemption and other deductions go away from the federal side. That's an analysis I'd like to see as we go forward, to see if something can/should be adjusted, since we see richer people catching a break at the state level already.

The other warning sign to me comes from the projections of increased US income growth that the LFB used to base some of its estimates on of better spending and income taxes.

LFB Estimates, personal income 2016-2019
2016 +2.4%
2017 +3.1%
2018 +4.4%
2019 +5.2%

We haven’t seen 4-5% income growth like that in recent years, and given that the lower corporate tax rates will encourage more wage suppression and layoffs, I’m not sure why wages would go up if they weren’t going up before.

Most of the other categories of revenues had slight declines in their projections, particularly in cigarettes and Public Utility taxes (the latter reflects less energy usage in the state). But those were tiny changes compared to the lowered debt costs and counting on the current expansion continuing for its 9th and 10th years. Of course, this $138 million in extra available funds is 0.4% of a General Fund budget that has a combined $33.9 billion in costs over these next 2 years.

Given the proposals out there to add funding to rural schools, the replacement of Lincoln Hills, pothole-filled roads, and now Scott Walker’s new (cynical) embrace of Obamacare, that new money would be gone immediately, even without any economic drawbacks. And that to me is the real story and questions that will develop from these good revenue estimates.

Because the money is apparently there, if we truly care to take steps to solve these problems. Will any of this $138 million be used in the last 2 months of this session, or will it be “banked”, with the needs still needing to be taken care of in the next budget (and possibly a new governor)?

Sunday, January 21, 2018

NFL fans pay it forward in a way that we need more of

With a lot of evil and cynicism ruling in America, I wanted to point out a great story that's happening in several parts of this country. It started 3 weeks ago, after Andy Dalton threw a touchdown on 4th and 12 to beat the Baltimore Ravens and put the Buffalo Bills in the playoffs for the first time since 1999.
Bills fans, thankful for Dalton sending their team to the playoffs and ending the draught, flocked to The Andy and Jordan Dalton Foundation in droves. Endless donations. Endless thanks. Endless publicity. Donations in $17 increments for every year out of the playoffs.

As of noon [January 6], the total was just shy of $345,000 from a whopping 15,000 donors, according to Sarah Sampson, an account manager at PR agency Vehr Community that does pro bono media relations for his foundation.

"The generosity of an opposing team, a fan base that's not even ours -- a team we beat this year, amazing," Dalton said. "It puts it all into perspective. I mean, they made the playoffs not just because we won but they also had to win to get there. But it's a crazy story -- the impact a football game has on people. They were willing to donate to someone else's charity. That shows you how big the game is, how you can use it for good."

Dalton's charity aims to provide support and resources to families, using daily help and experiences to assist those with seriously ill or physically challenged children in his hometowns of Cincinnati and Fort Worth, Texas. A big focus, Dalton said, is the "Pass it on Fund," which provides assistance to families struggling to pay medical bills.
2 weeks later, the Jacksonville Jaguars upset the Bengals hated rivals in Pittsburgh, and after being spurred on by a Cincinnati sports radio host, the Bengals fans decided to pay it forward with nearly $5,000 in donations within 2 days.

And then the most remarkable example happened after the Minnesota Vikings' miracle playoff win on Sunday. Earlier in the game, Saints punter Thomas Morstead threw down the Vikings' Marcus Sherels on a return, likely saving a touchdown. However, Morstead hurt his ribs doing so and was clearly hampered while punting the rest of the game. Morstead was also one of the handful of shellshocked Saints who returned from the locker room to simulate a defense on the post-touchdown kneeldown following Stefon Diggs' game-winning TD.

Viking fans were so impressed by Morstead's toughness and classiness that they found an organized way to respond.
A Vikings fan noticed Morstead’s act of sportsmanship and suggested on the social website Reddit that the purple faithful respond by donating to the punter’s charity, What You Give Will Grow, an organization that focuses on pediatric cancer.

By Wednesday evening, more than 2,500 people had given more than $108,000. One donor gave $10,000, but most gave smaller amounts, including $6, the punter’s uniform number, said Lindsey Mitchell, corporate communications manager for the New Orleans Saints.

Morstead said he’d give the money to Children’s Minnesota — and that he’d fly to Minneapolis to deliver the check personally if donations reached $100,000 by the end of the week.
By Wednesday night, Morstead posted the following video to his foundation's YouTube channel, holding up his end of the bargain.

2 days ago, donations were reported as being over $200,000, leading Children's Minnesota staff and patients to respond in gratitude.

Viking fans keep up that great act, and I'm going to have to stop despising them and making fun of their inferiority complex about the Packers. Of course, if the Vikes win tonight, then they'll be a whole different level of obnoxious for the next 2 weeks. So perhaps all the reason to say "GO EAGLES" right now, eh?

Regardless, those three stories about fans being inspired to assist NFL players' foundations after games are yet another example where the average person/sports fan is well above our elites and elected officials when it comes to doing the right thing. And we need more of "do things because they are right and decent" everywhere in this country these days.