Wednesday, October 31, 2018

Marquette follow-up. Guv is tied if old RW Republicans vote. But if other Sconnies do...

As I predicted yesterday, the headlines in the Wisconsin media about today's Marquette Poll say "Scott Walker and Tony Evers are tied" (and Tammy Baldwin is cruising to victory over Leah Vukmir). And as I mentioned yesterday, for the Governor's race, you need to check the crosstabs to get the real story.

If you look at those crosstabs, you see Charles Franklin’s electorate is significantly older than what exit polls indicated was the turnout in the 2014 and the 2016 November elections in Wisconsin.

Turnout by age, Wisconsin
2014 exit poll
18-44 40%
45+ 60%

2016 exit poll
18-44 39%
60+ 61%

MU Law Poll late Oct. 2018
18-44 29.4%
45+ 68.4%

And that older electorate changes the results by quite a bit, because Evers dominates among younger voters.

18-44 Evers 54.2–28.1
45+ Walker 50.3-45.1

If you turn the age breakdown into the pro-Trump 2016 electorate, the race becomes Evers 49.2-43.1. And it likely becomes more pronounced if young people recognize the state and country's desperate situation, and understand their voice can decide who wins.

I also noticed that Walker continues to do horribly with self-described moderates, much as he has in the last 2 Marquette Polls.

Moderates, Marquette Law Poll
September 2018
Evers 53-32

Early October
Evers 56-30

Late Oct. 2018
Evers 57-32

A consistent lead of 20-25 points for Evers with that group. But again, Chucky F’s Bradley Foundation-funded poll has a lot more conservatives and fewer moderates than we are used to.

Turnout by age, Wisconsin
2014 exit poll
Conservative 35%
Moderate 41%
Liberal 23%

2016 exit poll
Conservative 34%
Moderate 40%
Liberal 25%

MU Law Poll late Oct. 2018
Conservative 42.8%
Moderate 27.3%
Liberal 26.3%

It seems logical that liberal turnout would be a bit higher in 2018 due to higher Dem enthusiasm and better Dem performance in every other election in Wisconsin so far this year. So we’ll keep that part but the huge spike in conservatives doesn’t ring true. So move that mix of ideology to a more typical 38% conservative, 28% moderate and 26% liberal, and the result is….50-46 Evers.

Bottom line - if young people, moderates, and pretty much anyone with an ounce of decency and knowledge shows up at the polls, Tony Evers is likely to become the Governor of Wisconsin with the new year. But if not, then WisGOP and Walker can steal it.

So let's overwhelm the bad guys in 6 days (if you haven't already voted), and get a Governor and a government that actually cares about the Wisconsin they leave behind.

Vouchers now over $300 million in Wisconsin. And your taxes are up as a result

Yesterday, the Wisconsin Department of Public Instruction put out its annual report on vouchers for the 2018-19 school year.
Enrollment in the Wisconsin, Racine, and Milwaukee programs is determined by student counts taken on the third Friday in September and may change through the audit process. Across the three programs, 39,381 students received a voucher to attend one of the 279 participating private schools. This is an increase of 3,164 students and 43 schools compared to the prior school year. Full-time-equivalent (FTE) enrollment is 38,186.6 students, an increase of 3,037.5 FTE from 2017-18….

For the 2018-19 school year, voucher payments are $7,754 per FTE in grades kindergarten through eight and $8,400 per FTE for students enrolled in grades nine through 12. The cost of the three programs combined is estimated at $302 million for the 2018-19 school year, which is an increase of about $33 million (12.3 percent) from the prior year.
That’s $302 million in additional state dollars that come on top of what we pay for public K-12 schools.

Also I’ll note that parents who make too much to have their private school student qualify for a voucher (for a family of 4, this is over $54,000 outside of Racine and Milwaukee, and over $73,800 in those two cities), can write off their kid’s tuition for private school in addition to getting a credit for the property taxes that pay for PUBLIC schools in the district.

In an update of a notorious stat for Wisconsin’s voucher program, over 85% of the students (by FTE count) that receive a voucher weren’t in public school last year, a number that has been consistent since the voucher program went statewide 3 years ago.

What’s worse about this is that outside of Milwaukee and Racine, the vouchers are funded by cutting the aid to the district the kid lives in, even if the child never attended a class in those public schools. And this means districts that have the most voucher students lose the most money.

In Wisconsin, that means Green Bay will lose over $5 million in state aids, and several other districts will lose significant money as a result of the voucher system for this year.

But these aid cuts aren't just in those districts. Note this quote in the Journal-Sentinel's rundown of the voiucher figures.
"Last year, $42.8 million in aid was deducted from public schools for the Wisconsin and Racine programs. And this year, that's grown to $68.3 million," said Dan Rossmiller, government relations director for the Wisconsin Association of School Boards. "The school board has a choice then, to essentially cut programs or raise property taxes."
So not only are the low revenue limits squeezing schools and often leading to higher property taxes via referendum, but so are vouchers. And many of you will see that reflected in your property tax bill in the coming weeks.

Make no mistake. If this state is foolish enough to return Scott Walker and WisGOP too power, they will continue to funnel taxpayer money to reward Betsy DeVos and other right-wing donors, and take them out of our community schools. In fact, they'll probably do something like "vouchers for everyone", which has been a longtime ALEC and DeVos goal, which will out our already-crippling racial and class disparities in K-12 education on steroids.

Tuesday, October 30, 2018

It's not just the answers in the Marquette Poll, it's also who answers them

Wisconsin's political media will no doubt be transfixed by the toplines of the poll Charles Franklin will do at the Marquette Law School tomorrow. But the bigger factor in whoever "leads" may be the electorate that Franklin constructs for the poll. Chris Hayes' show on MSNBC yesterday had a segment with Obama pollster Cornell Belcher and 538 poll analyst Nate Silver, and both noted that who is voting goes a long way toward deciding who wins elections these days.

With that in mind, let me remind you how Walker "closed the gap" vs Evers in the last Marquette Poll.

Party ID with Leaners – likely voters
September Marquette Poll (Evers +4)
Dem 47.1%
GOP 45.9%
Indy 7.0%

October Marquette Poll (Walker +1)
Dem 44.9% (-2.2%)
GOP 47.6% (+1.7%, GOP +3.9% net change)
Indy/Other 7.5%

A main reason was simply that Charles Franklin put more Republicasn in survey, claiming "Golly gee willikers, that's who was answering the phone."

I noted at the time that the crosstabs of that poll were not telling such good news for Walker. And the best example was that Scotty was doing even worse in,the October poll among self-described "moderates."

Moderates, Marquette Law Poll
Evers 53-32

Evers 56-30

But there were fewer moderates in October's poll, and well below the typical exit poll total for a November. Let's see if that changes tomorrow.

There were also some interesting moves among the age groups in the last two polls. Younger people slanted more toward Evers, but older people slanted more toward Walker, and since older voters were more of the electorate, it allowed Walker to "gain".

Age, Marquette Law Poll
Evers 52-38

Evers 44-38

Evers 47-38

Evers 45-42

Walker 58-39

Walker 52-41

Again, let's see where that goes, and how much Franklin thinks young voters will be part of the electorate.

And here's one other crosstab I'm going to pay attention to out of that poll and any others that come out soon.

GB/Appleton media market
Walker 60-31

Evers 47-45

Layer those Marquette poll results on top of this poll that was revealed yesterday.

Wisconsin's 6th district includes a sizable amount of the Green Bay/Appleton media market and is a district that Trump won by 17 points in 2016 and Romney won by 7 in 2012 - or about 14-16 points more Republican than the state. If the statewide races are near even there, TURN OUT THE LIGHTS, it's a Dem landslide on the way.

So my advice for tomorrow, if you choose to pay attention to the Marquette Poll at all, is this. Din't fall for the big headlines from the sheep-like media on the Marquette Poll. Dig into the crosstabs and get the real story that Chucky Franklin's bosses at the Bradley Foundation isn't allowed to admit to.

The great cost and stupidity of the Fox-con gets a national spotlight

I want to give a shout out to Urban Milwaukee's Bruce Murphy, who has written a large-scale story on Foxconn for the Vox-associated website "The Verge". Murphy takes his already-strong work at Urban Milwaukee on this scam, and gives it a national spotlight...or lowlight.

The whole thing is great (click here to read it), but let's start with Murphy's analysis of the tax subsidy and write-offs, which go well beyond the $3 billion price tag that was mentioned when the bill was discussed in the Wisconsin Legislature in September 2017.
The size of Wisconsin’s subsidy quickly began to grow, as spelled out in state legislation passed about six weeks later and implemented by the Walker administration. By December 2017, the public cost had grown to include $764 million in new tax incentives from local governments in Racine County, which is just 40 minutes south of Milwaukee where the plant was to be located. Other additions included $164 million for road and highway connections built to service the plant, plus $140 million for a new electric transmission line to Foxconn that would be paid for by all 5 million ratepayers of the public utility We Energies. With other small costs added, the total Foxconn subsidy hit $4.1 billion — a stunning $1,774 per household in Wisconsin.

Back when the subsidy was $3 billion, Wisconsin’s non-partisan Legislative Fiscal Bureau estimated that it would take until 2043 for taxpayers to recoup the subsidy. This long payback period was due to Walker and Republicans effectively cutting the state’s corporate income tax for manufacturers to zero in 2011. This meant the subsidies to Foxconn would not be a tax write-off, but billions in cash that would be paid back by state income taxes paid by Foxconn workers. At $4.1 billion, the payback date for the state was likely 2050 or later.

Look at Gou. He knows he suckered these guys.

In fact, that 2050 date may be understating the payback date of the Fox-con, because it assumes that employment from Foxconn isn't taking away work from other places in the state. That seems highly unlikely given the state and country's near-full employment status, and because we already know road projects have been cut in other parts of Wisconsin to pay for those upgraded highways near the Foxconn plant.

Murphy goes on to note that Walker massively overpaid for Foxconn when compared to other states, especially because Foxconn were the ones that were in need of natural resources because of the type of product they make. That reality makes Wisconsin look like a bunch of chumps today.
In retrospect, it’s clear that Walker had a strong hand to play in negotiations with Foxconn. The company had to locate in a Great Lakes state because of the huge amount of water needed to clean the glass used in manufacturing LCD screens. And no other Great Lakes state came close to offering the $4.1 billion Foxconn is getting. Michigan came the closest, offering $2.3 billion, but it was partly a tax subsidy rather than cash. As for Ohio, fellow Republican Gov. John Kasich condemned the Wisconsin deal. “I’ll tell you one thing,” he said, “it’s not going to take us 40 years to make back the investment we make. We don’t buy deals.”
It's obvious today that the Foxconn project isn't turning out to be what was promised when Walker made his deal on the back of a napkin. Foxconn has downgraded its plan for a Gen 10.5 plant that would have made giant panels for large-screen TVs, with the need for a glass plant included. Instead, it'll be a smaller, Gen 6 plant, which makes products that might be obsolete in a matter of years, and little need to add the on-site manufacturing jobs that were trumpeted last year.
And even the Gen 6 panels might not be manufactured in Racine for long. “We are not really interested in television,” [Foxconn Executive Assistant Louis] Woo told the [Racine Journal-Times], though he said the company wants to build America’s first thin-film transistor (TFT) fabrication, which can be used in LCD products. Rather, Woo said, workers at the Wisconsin plant will be focused on figuring out new ways to use Foxconn’s display, cellular, and AI technology, building out an “ecosystem” Woo calls “AI 8K+5G.”

All this means Foxconn needs far fewer assembly line workers. “If, six months ago, you asked me, what would be the mix of labor? I would pull out the experience that we have in China and say, ‘Well, 75 percent assembly line workers, 25 percent engineers and managers,’” Woo said. But “now it looks like about 10 percent assembly line workers, 90 percent knowledge workers.”

Almost all the actual assembly line work, he added, will be done by robots.
And then Murphy details the worst part of the deal - Wisconsin taxpayers are on the hook for a lot of money even if Foxconn never opens its plant or makes one screen. This is especially true for the Racine area that was supposed to be the great beneficiary of this deal, but who keep seeing the local job totals decline while their $764 million TIF district costs the same price.
In reality, there is little pushing Foxconn to invest as much money or create as many jobs as promised because Walker squandered his leverage over the company. Yes, the full subsidy promised comes in increments, as the capital investments are made and jobs created by Foxconn. But all the other subsidies, worth more than $1 billion, will be paid regardless of money invested or jobs created. A smaller plant with fewer workers could lower the total tax bill considerably, but it would actually cost the state more on a per-job basis.
In fact, a less-populated plant would be the worst of all worlds, because Wisconsin taxpayers would have to pay 15% of all construction costs for the plant (whose costs for a robot-filled plant might not be much less than one with people working in it), and we'd still have to pay 17% of all salary costs for the jobs that were there, regardless of whether they are $90,000 advanced degree jobs or a handful of $14.50-an-hour line work gigs.

And the biggest cost of the Fox-con is money that isn't being spent. The $469 million that slated to go out the door in the next budget and $600 million in the one after that could have been used in so many other ways that would have done a better job in improving our economy and our quality of life.
The deal, says Matthew Rothschild, executive director of the good government group Wisconsin Democracy Campaign, “is a ridiculous way to do economic development. It exposes a lie we’ve been told over and over that the cupboard is bare, that we don’t have enough money for our schools or our roads or our health care. But then when a company from Taiwan comes knocking, all of a sudden there’s $4 billion of taxpayer money to shell out. We could have helped a whole lot of small businesses for that kind of money.”

Yep, the Governor that's never held a real job in his adult life has sure left this state in a mess due to his deal with Foxconn. And the only way we start climbing out of that ditch is to remove Governor Dropout and the GOPs who voted for this garbage, and at least make Foxconn live up to its terms of the deal with a WEDC that offers real oversight.

But honestly at this point, it would just be better to give Foxconn a $150 million check and tell them to go away. I bet they'd take it, grifters that they are, and it would save Wisconsin a helluva lot of money and environmental messes in the coming years.

Monday, October 29, 2018

Walker Admin still sitting on money that locals need, so Scottholes continue

Even as our Fair Governor promises more aid to help local communities fix their roads if the voters of this state are stupid enough to give him another term, an article was out over the weekend saying that the Wisconsin DOT won't even give out the money they are supposed to give locals today.

The Daily Reporter notes that WisDOT isn’t talking to local governments about the source of money for various projects, and isn’t revealing when other money that WisDOT has promised them will be sent their way.
Local governments say one of their biggest questions concerns whether they will be placed under costly federal regulations by WisDOT’s Local Bridge Improvement program, which calls for spending $115 million on 183 bridges in the state. Another is whether WisDOT has placed any sorts of internal limits on its contributions to those sorts of projects.

Some officials say the agency’s silence has been all-too typical as of late. Local governments have been waiting for a year and a half to learn whether a WisDOT program that pays for rural road projects will get off the ground or not, said Dan Fedderly, executive director of the Wisconsin County Highway Association. Separately, officials are similarly frustrated by a WisDOT policy change that caused $43 million to go missing from local budgets this year.
You may recall that story about the missing $43 million from last month, which was a result of WisDOT not releasing money intended for local planning organizations to help pay for various projects. WisDOT claims that money will be “doubled up” with money from this year, but Fedderly’s comments are not reassuring.

As for the question regarding federal rules, they take effect if funds allocated by Congress and passed through the state are used for some kind of project. But local communities only have to abide by state rules (which include ALEC provisions such as a lack of prevailing wage requirements) if only state money is involved.

Seems straightforward, but the problem is that Walker’s WisDOT isn’t telling the local communities which funds are available, federal or state, or if there will be any money available at all. The Daily Reporter story notes that La Crosse County has two multi-million dollar bridge projects that Highway Commissioner Ron Chamberlain says has to be fixed, but WisDOT has failed to give guidance on rules, or even reveal to the county how much money they will contribute to the project.

In the meantime, the Scott-holes on those bridges are still there and has to be fixed.
Chamberlain said local officials have yet to hear back and are no longer waiting. Safety demands that they move quickly. Of the bridges in La Crosse County that need repairs, one has a hole in its deck whereas another is on a heavily traveled road.

Even so, beginning these projects without answers to some basic questions is a risk. Local officials, for instance, might learn after beginning work that they were relying on the wrong design and construction standards. If that were to happen, they might also find that, because WisDOT’s contributions are capped, they have to cover the cost of making the necessary changes.

“Do I have concerns with how these projects will proceed? Yes,” he said.

That lack of confidence in WisDOT paying their share helps to explain why La Crosse County voters are facing a variety of referendum questions next week on how to pay for the roads, including wheel taxes of up to $56, a new sales tax, or the ability to raise more property taxes.

This also makes me do another double-take when I look at the Transportation Fund's situation in the most recent Annual Fiscal Report. It not only showed that more Federal money was being used for highway funding to inflate the amount of State money available at the end of the 2018 Fiscal Year, but also indicates that a lot of Scott Walker’s proposed increases in aids (if they aren’t complete BS) would come from money that we should have already spent to fix Scottholes and other road needs.

While state media often ignores these types of local stories, if you start to piece it together, you can see the full picture of deception and negligence that has happened at Scott Walker’s WisDOT in recent years. And why? To say “look, I didn’t raise taxes or fees!” and stay on the good side of DC oligarchs like the Kochs and Grover Norquist (you that are paying new wheel taxes in the last 4 years might disagree about the "no new taxes" part).

This can’t go on, and we need a responsible leader put in place in 8 days. Or else the lack of support from WisDOT will multiply along with the Scottholes if the Age of Fitzwalkerstan continues. Worse, what you pay as part of the costs for those roads won’t be any less anyway, if you account for the extra wheel taxes and car repair costs. So why not pick Evers and do it right, and not see local governments left in the lurch like what’s happening today.

Both Walker and Evers need more money to get what they want in the next budget

Before an election, there are always aspirational ideas about what can be done if a certain candidate is elected. But after November, when we say "SHOW ME THE MONEY", we find out it isn't doable.

With that in mind, longtime Capitol reporter Steven Walters went over the wishlists for both Tony Evers and Scott Walker, and compared it to the amount of funds that may be available. Walters notes a main problem is that there are a lot of pending bills and built-in budget increases waiting for whoever wins the Governor’s election on November 6.
$900 million in IOUs – past spending commitments for the two-year 2019-21 budget cycle that start coming due after July 1.

Topping the list of spending promises on that costs-to-continue list include the first installment of tax credits and tax breaks to Foxconn, if it can show it has met specific investment and hiring goals at its Mt. Pleasant manufacturing plant now under construction, according to the Legislative Fiscal Bureau.

State general-fund tax collections totaled $16.14 billion last year – a healthy 4% one-year increase. If there is no recession, and tax collections went up by that much again this year, it would bring in $645 million more. And, the state treasury had a $588-million surplus on July 1.
The problem is that much of that $588 million will be blown by June 30 due to Walker/WisGOP pre-election gimmicks such as the one-time child tax credit, the sales tax holiday in August, and one-time bumps in K-12 spending. The original amount of overspending for this year was $365 million, but since it looks like the Annual Fiscal Report tracked and credited the child tax credit payments to the 2018 Fiscal Year, that $93.6 million should be taken off of next year’s deficit.

So if I’m looking at it right, there should be around $317 million left over on June 30, if all numbers stay as budgeted, meaning about $600 million is needed just to pay for those IOU’s. Walters then adds in the various proposals that would then add to that $600 million deficit for 2018-19.
*Medicaid: +$494 million. State Department of Health Services officials submitted a 2019-21 budget that would require $494 million more in state tax dollars by mid-2021.

By that 2021 budget year, Medicaid is expected to cost a record $11 billion. State taxpayers pay about 31% of the cost of Medicaid, which provides health care to more than one in five Wisconsin residents.

If elected, Evers said last week his first budget will propose applying for additional federal dollars to expand Medicaid, which he said could bring in “hundreds of millions of dollars” more to pay for the program.
At least under Evers, you’d likely see a significant savings to take care of those extra Medicaid needs due to the expanded Medicaid. With Walker, not only would Wisconsin likely be on the hook for that extra $494 million, but it could be much more if his fellow Republicans in DC are allowed to cut their share of Medicaid funding to try to pay off the higher deficits that have resulted from their Tax Scam.

Whoever wins will likely have to trim that wish list.

Walters also notes that given both Walker and Evers have promised to restore 2/3 funding to K-12 public schools, which'll cost $130 million a year, and Evers wants an additional $1.14 billion for K-12 on top of that to pay for other needs like special ed. It seems clear that there will need to be other cuts and/or quite a jump in revenues from economic growth to make up the difference.

Now Walters notes that if we continue to get 4% revenue growth with an expanding economy, then that’s another $680 million a year or so (since total General Fund revenues are slated to exceed $17 billion by the end of Fiscal Year 2019), that it could take care of most of these wants. But that’s a risky proposition given that 2/3 of economists are saying the country will fall into a recession at some point during the 2019-21 budget.

In addition, there are income tax cut proposals from both Walker and Evers. Walters notes that Evers’ plan is basically revenue-neutral, since around 85% of the tax cut will be paid for by getting rid of “The Big Giveaway” tax cut for the rich and large corporations.
*Cut income taxes? Evers said he will propose a $340-million “middle class” income tax cut, which would help individuals with taxable incomes of less than $100,000 and couples with taxable incomes of less than $150,000.

About $300 million to pay for that tax cut would come from new income limits on who can qualify for the manufacturing and agriculture tax break – a tax break that will cost the state treasury $570 million in the current two-year budget.
So most of Evers' proposed middle-class tax cut is paid for. By comparison, Walker has thrown out proposals to expand the Homestead Credit, Child Tax Credit, and an incentive program to keep Wisconsin college graduates in the state. The price tag for all of these ideas would cost $184 million million for 2019-21 (and much more when fully phased in for the next budget). None of those Walker proposals ID the cuts or raised taxes to make up the difference.

And let’s not forget that there’s another $1 billion in unmet needs that have to be taken care of in the Transportation Fund. It is unlikely that there will be enough pork from DC to bailout our costs like we had in Fiscal Year 2018, so unless we want to see Scottholes multiply even more and/or see our already-huge highway debt explode, there will have to be a tax hike or transfer of extra money from the General Fund to take care of that as well.

So yes, while on the surface we might have a lot of money to take care of these candidate wish lists, the prior austerity and can-kicking in the Age of Fitzwalkerstan (including $368 million that was just refinanced last week) bites us in the backside enough that there still isn’t a lot left to throw around. This is assuming the 9-year economic recovery somehow stays afloat for the next 3 years, and that's something that seems unlikely as the Earnings Bubble pops and millions of Americans end up paying more to Uncle Sam when they file their taxes in the coming months.

If the country and the state fall into recession in the near future, then not only will there not be enough money to pay for all of these wishes, there are going to be even more spending that needs to be cut, barring a bailout from DC. And that's something almost no candidates want to admit, but will likely have to deal with.

Sunday, October 28, 2018

Trump was supposed to help the Rust Belt. So why is Wisconsin worse off under his tariffs?

It's been a pleasant surprise to see the local Wisconsin newspapers make the occasional effort to discuss issues in-depth over the last year. A recent example is Rick Barrett's series on the effects of Trump’s tariffs on Wisconsin businesses.

There was a PR event at Husco in Waukesha this week where manufacturers and other businesses discussed the changes that are resulting, with the biggest one being the increase in input costs, and the profits that get reduced as a result.
GenMet, a metal fabricator in Mequon, says the price it pays for stainless steel has jumped 62 percent since February...

Raw material prices are now unpredictable, and some materials are in short supply, according to [GenMet President Mary] Isbister.

“How can you invest in product development when you don’t know, from week to week, what the cost of goods will be? We used to have six months to a year of pricing in place, that we could plan on and forecast around,” she said.

The article includes this graphic which shows the notable jump in the amount of money that has been collected in recent months as a result of the Trump tariffs being levied on companies in Wisconsin that have been importing these products.

And these businesses don’t seem too keen on switching to American manufacturers to deal with the situation, which means the point of the tariffs is backfiring.
Manufacturers say they’re looking at every option to mitigate trade war damage, including sourcing products from countries not caught up in the disputes.

Husco International President Austin Ramirez said higher tariffs this year have cost his company $1 million a month.

In the long haul, “it’s really impacting our competitiveness and future growth. That’s the scariest part for me,” he said.

Some have argued that tariffs are a necessary hammer in negotiating trade agreements. Ramirez said there are better ways to deal with countries and companies engaged in unfair trade practices, using targeted policies to punish offenders without bringing down everyone else.
Time for a quick aside- this is funny to hear coming from Husco, where Ramirez and other executives are longtime GOP donors who have frequently had Scott Walker over for “job photo op” events, especially around election time. Their words on "competitiveness" come off as empty when you recall that Husco also announced layoffs of 100 workers just months after announcing an alleged expansion and getting $800,000 from WEDC. And that giveaway was on top of the M&A tax break and wage-suppressing measures from their boy Scotty. So maybe it’s not just the tariffs that explain why you’re struggling, Gus.

But there is little question that state manufacturers are being squeezed by the higher prices resulting from the tariffs, and the transition to the new playing field is causing a lot of strain. Which makes you wonder if we’re going to see job and production cutbacks in the very near future, especially when you combine that with the reality that any “savings” resulting from the GOP’s Tax Scam have already been used up.

Isbister and other manufacturers indicate that they've been able to pass on some of the higher materials cost to individuals, but also are eating some of the extra costs for the time being. I can't see that situation lasting much longer, which means expect job losses, significant price increases, and/or even more wage stagnation in the coming months for these industries.

And there's the flip side of the tariffs, which were the countermeasures that were put on American exports. Those seem to have been more effective, as Friday's GDP report says that exports of goods dropped by more than $32 billion on an annualized basis in the 3rd Quarter of 2018, taking 0.6% off of the growth totals for the US (in fairness, some of this was rushed ahead into Q2 to beat the tariffs).

These aren't leaving the US anytime soon

As crop prices have plunged in the recent months due to the lack of markets, the Trump Administration has decided to spend $12 billion in subsidies to try to allow farmers to get by in the short term. This represents another cost to Americans, and it doesn't seem to be doing much to stop financial stress on farmers, as shown by the 1,000 closed dairy farms in Wisconsin since Trump's election.

I've said before that I don't oppose tariffs as a method of evening the playing field for US producers, which can encourage higher wages in this country as it takes away the advantage of cheap foreign labor and materials. But that hasn't been happening with the Trump tariffs, because the idiot in charge randomly threw the duties together with little time to allow companies to transition. And that's because Trump made those moves to get headlines instead of surgically placing them in spots where we could get better outcomes for the workers and producers in this country.

And Wisconsin in particular is already paying a significant price for that recklessness, and that cost is likely to go up in the very near future. You'd like to think that the farmers and business owners that backed Trump might be having second thoughts about supporting the MAGA agenda as a result, but I bet most of them are either too pig-headed, greedy or partisan to care. Hopefully the people that work for a living see through that, and outvote the Wisconsin corporate dopes so we can replace the dopes in the Capitols in both DC and Madison, so we can get back to a smarter economic strategy.

Saturday, October 27, 2018

GOP lies and hate keep killing this country and state

Some of this is everyday lies and spin, but some of this is far worse and harmful.

And now some overarmed MAGAt has shot up a synagogue on the day of a baby's bris, killing several people. This is a natural result of a president, GOP politicians and GOP media that is glad to stir up lies and hate to get votes.

Scott Walker has also played this 2-step, including the loosening of gun restrictions after a different racist white guy shot up another place of worship in Wisconsin in 2012.

Screw thoughts and prayers. It's time that these purveyors of hate pay a consequence for what they have enabled. And they'd better pray that all that it's limited to losses at the ballot box on Nov. 6. If not, it'll get much worse for a lot of people on all sides.

GDP good but shaky, and Wisconsin is even lagging that

Yesterday morning, we got our first look at US GDP for the 3rd Quarter of 2018. And the numbers were good...sort of.

3.5% GDP growth sounds pretty strong, but if you analyze the figures further (as Reuters did) there were two big issues that the nice topline number hid.
Farmers front-loaded shipments to China before the tariffs took effect in early July, boosting second-quarter growth. Since then, soybean exports have declined every month, increasing the trade deficit. There were also decreases in exports of petroleum and non-automative capital goods. Strong domestic demand, however, sucked in imports of consumer goods and motor vehicles.

The widening trade gap chopped off 1.78 percentage points from GDP growth in the third quarter. That was the most since the second quarter of 1985 and reversed the 1.22 percentage point contribution in the April-June period.

Some of the rebound in imports reflected a rush by businesses to stockpile before U.S. import duties, mostly on Chinese goods, came into effect. Imports are a drag on GDP growth. But some of the imports likely ended up in warehouses, adding to the stockpile of inventory, which adds to GDP.

Inventories increased at a $76.3 billion rate after declining at a $36.8 billion pace in the second quarter. As a result, inventory investment added 2.07 percentage points to GDP growth, the biggest contribution since the first quarter of 2015, after slicing off 1.1 percentage points from output in the second quarter.
Take the inventory factor out of the equation to reflect actual sales and payments to the public, and growth was only 1.4%, which is a significant slowdown from the 4.3% increase we saw in Q2.

Also what’s intriguing is that a key boost to the GDP numbers was increased government spending from the “small government” GOP. Q3 was the 4th quarter in a row when real government spending grew, with its highest amount yet this Summer, adding 0.56% to overall GDP. See, Republicans do believe in using government to grow the economy – they just don’t want you to know about it.

It's why James Hamilton at Econbrowser accurately described the report as "Strong GDP growth, weak fundamentals," noting the weak investment and export figures, and included this chart as visual evidence.

Another reason why it may not feel like a booming, 3.5% growth economy is because Wisconsin continues to lag far behind the recovery happening in the rest of the country. That was reiterated by the most recent release of the Philadelphia Fed’s coincident index for all 50 states. This shows Wisconsin to have the weakest economy in the Midwest over the last 3 months.

Growth in Phlly Fed Coincident Index, Jun-Sep 2018
Minn +1.33%
Mich +1.30%
Iowa +0.87%
Ill. +0.83%
U.S. +0.76%
Ohio +0.63%
Ind. +0.33%
Wis. +0.24%

It shows that the economies of both the state of Wisconsin and the US seem shaky as we head into the midterm elections. Both are endangered due to reckless GOP policies in the Capitols of both DC and Madison, and the Republicans that put that idiocy in place need to be taken out to have adults in charge to deal with the "Trump Recession" that seems likely to hit in 2019.

Friday, October 26, 2018

New memo on "Big Giveaway" to rich makes Evers plans look even better

A couple of weeks back, we had a decent amount of talk about Wisconsin’s “Big Giveaway”, the Manufacturing and Agriculture tax credit (MAC). As part of that discussion we were using estimates from the 2017 tax year that showed the credit slanted heavily to the richest Wisconsinites and corporations, and that the cost to taxpayers was exploding.

In the wake of that information, Democratic candidate Tony Evers proposed to limit MAC to tax filers that make $300,000 or less, with the idea that it continues the credit for the overwhelming majority of people, while removing most of the cost of MAC. Then the money could be used to cut the income taxes for middle-class Wisconsinites.

So this week, Dem Assembly Leader Gordon Hintz asked for and received an update on the MAC numbers from the Legislative Fiscal Bureau, to reflect what it looks like for 2019.

Let’s plug in those figures from the memo and connect it to Evers’ proposal to limit MAC to those with incomes of $300,000 or less. What we find is that while 2/3 of the Wisconsinites receiving MAC would still get the tax credit, the cost to taxpayers would be cut by more than 93% - nearly $232 million out of $248.5 million to be given out in the next tax year.

Hintz then broke down the numbers further and noted just how much the super-rich are going to get from MAC.
Today, Assembly Democratic Leader Representative Gordon Hintz (D-Oshkosh), released a new memo from the state’s non-partisan Legislative Fiscal Bureau detailing the increasing price tag of the Governor’s so-called Manufacturing and Agriculture Tax Credit. The memo estimates that 21 individuals making $30,000,000 or more are receiving $38,939,267, or an average of $1,854,251 each from the credit in 2019….

· 79% of the benefit will go to individuals with adjusted gross incomes of over $1 million.
· By the end of 2019, this tax credit will have cost the state $1.3 billion since its inception.
· In a memo from January 2018, 15 individuals making $30,000,000 received $27,586,130, or an average of $1,839,075. The 2019 estimates show the credit is further concentrated to the super wealthy top earners of our state.
And do not forget that the super-rich and corporate also got most of the benefits of a GOP Tax Scam that has been passed since MAC took effect, which is yet another reason to dump this Big Giveaway.

As I've mentioned before, it’s not like this “Manufacturing and Agriculture” tax credit has done much to help spur jobs in manufacturing or agriculture. In the 3 years that have been measured by the “Gold Standard” Quarterly Census, manufacturing jobs (or jobs in general) in Wisconsin haven't grown by more than the rest of the nation, and we have the lowest weekly manufacturing wages in the Midwest. In addition, dairy farms continue to fold up in Wisconsin, including over 1,000 since the end of 2016.

I dare Scott Walker and Leah Vukmir to defend MAC over this last week-and-a-half and explain to Wisconsinites why we’ve chosen to give all of the benefits to the well-connected instead of using those funds on infrastructure, schools, and other public goods that we all can benefit from. The excuse-making and gobbledy-gook would be epic.

Thursday, October 25, 2018

WEDC, Foxconn, and the need for the return of good government in Wisconsin

Just because State Sen. Kathleen Vinehout finished 4th in the Dems’ gubernatorial primary 2 months ago, it doesn’t mean she has been taken off the scene of Wisconsin politics and government. Sen. Vinehout wrote her most recent column to remind us that the Wisconsin Economic Development Corporation (WEDC) still is not forthcoming about how what happens with taxpayer dollars after they go to businesses to locate and/or expand in Wisconsin.

Vinehout has been on the Joint Audit Committee for the past few years, and despite numerous reports, legislators and the public are still in the dark over well these tax-funded incentives have been working, and why those tax dollars are handed out to certain companies over others.
After four nonpartisan audits over six years, we still cannot answer the questions I raised about state money used for job creation. WEDC is still under scrutiny by the LAB. A new audit is likely to be released in the spring of 2019.

WEDC was created to be the state’s lead economic development organization, however it is not a state agency. It is funded primarily with state funds and has awarded hundreds of millions in loans, grants and tax credits. WEDC is outside the normal rubric of state government which created many problems, resulted in federal penalties, and produced a lack of transparency for lawmakers and the public.

Partly because of this opaque structure, lawmakers have not gotten answers to the most basic questions about state funds used for job creation. Nonpartisan audits provide one of the few windows into what is actually happening with state money. The facts show, for many years, auditors could not corroborate job creation success in numbers used by the governor’s office and WEDC’s own publications.

The three secretaries who disapproved of the governor’s actions shared insight gained from experience in their open letter to the public, “Governor Walker has consistently eschewed sound management practices in favor of schemes or cover-up and has routinely put his future ahead of the state. The result is micromanagement, manipulation and mischief. … It’s time to build a more open and transparent government to ensure the integrity of our public agencies and institutions.”

The Secretary’s letter did not include specific details about the problems which lead them to share their disapproval. But we do know WEDC’s top official publically refused to follow the law after a long history of detailed, audit work showing noncompliance. This should give taxpayers no confidence that the public’s interest was followed.

As usual, I recommend that you listen to her.

The prospect of details and results-oriented public servant like Sen. Vinehout being part of a Tony Evers’ Administration should be yet another reason to back the Dem on November 6. Especially when you contrast it to what The Atlantic has today from former Walker's former Secretary of the Department of Financial Institutions, Peter Bildstein. Bildstein says that Scott Walker could not care less about day-to-day operations of state government, and instead (and I know this will shock you), Walker cared about the needs of donors over what was proper, or even over what might work better.
After he won his recall election, Walker rarely attended cabinet meetings anymore, and radically reduced the number of one-on-one’s with cabinet secretaries. He took more far-right positions, probably because he thought they would play well with the Republican base. Funding for public education and our University of Wisconsin system was cut dramatically. Our infrastructure continued to deteriorate to the point that we ranked 49th in the nation in the quality of our roads and bridges….

Throughout 2014, Walker was traveling the country, gearing up for a presidential run. He was a regular on Fox News, and courting big-money donors. Our marching orders, meanwhile, were to play up each and every administration “success,” and to take care of special interests. Our agencies became politicized.

Wisconsin has some of the laxest laws in the country when it comes to small-dollar lending like payday and auto-title loans. Of the states that allow payday loans, we’re one of just eight with no interest rate cap of any kind. The average interest rate charged on a payday loan here is 585 percent, and some lenders charge as much as 1,000 percent. But my department was not given room to regulate small-dollar lenders during the Walker administration, a fact I attribute to heavy political contributions to the governor and the Republican-controlled legislature by vested interests.

When a lobbyist for the payday lending industry asked to meet with me to discuss yet another request for regulatory “relief,” I rebuffed him. Fifteen minutes later, I got a call from the governor’s office directing me to give full consideration to the lobbyist’s requests because he represented big supporters of the administration. I did, but it was another straw on the camel’s back. It seemed to me that, for Walker, political friends and donors came first.
This seems to be worthy to note when you remember WEDC has oversight of the billions in incentives related to the Foxconn development. That agency and most of the Walker Administration continue to promote the project and overpromise on its economic impact, and Dem Assembly Leader Gordon Hintz called out Walker’s Administration Secretary for lying about Foxconn’s costs and impacts during a tax-funded campaign stop in Tomah.
Under the very best case scenario, expenditures (cash payments) will exceed all direct and indirect state tax revenue through the year 2032-33. The total deficit over the next 15 years is estimated at $1.041 billion.

“I don’t understand how the Secretary of the agency tasked with overseeing the state budget doesn’t think $1 billion diverted from funding state programs is not going to have an ‘impact on entities around the state.’ Secretary Nowak’s comments about Foxconn’s fiscal impact on our state budget are objectively false. It is impossible for the Governor to give billions of dollars in cash payments to a foreign corporation and not have that decision directly impact funding for our public schools, roads, and universities.”

In addition, the Walker Administration has already raided $134 million from statewide highway rehabilitation projects in order to fund local roads supporting the Foxconn project.
And we saw similar lies being spewed by our president last night.

That claim needed some rebuttal.

Facts matter. Dealing with the reality that comes from those facts matters. And having independent, honest government matters. Scott Walker and the rest of today’s GOP doesn’t want to deal with any of those 3 concepts. And they need to be replaced by people who do on November 6.

Dairy farming continues to decline in Wis, and Trump and Walker aren't helping

You may have heard our president gave a little talk yesterday in our state . And our Fair Governor was more than happy to roll out the welcome mat and hide behind Trump on an issue that's not breaking the GOP's way.

As usual, Walker was BSing if not outright lying, and using the occasion to kiss up to deplora-trash that have backed Trump. But hours before the event at the airport hangar, people who know more than Trump and Walker said the big talk about "fixing NAFTA" is likely to generate next to nothing for the people in need of help.
The renegotiated trade agreement between the U.S., Mexico and Canada is of little use to the dairy farmers President Donald Trumpinsisted on helping, Federal Reserve banks in the Midwest are reporting.

"Gains from the new agreement are seen as "too small and too far in the future to help dairy farmers," the Chicago Fed reported in the central bank's periodic report on economic conditions across its 12 districts.

The Minneapolis Fed reported that "a substantial number of dairy operations have exited the business since the beginning of the year." The report, called the "Beige Book," was released Wednesday.
And few places have seen this more than Wisconsin. The state has lost more than 1,000 dairy operations since Trump's election, and more farms have closed so far in 2018 than they did in all of 2017.

The Midwestern Fed offices note that while there is a slightly opened Canadian market for milk, the restrictions for many other agricultural products are still in place, causing the prices that farmers get to keep plummeting.
Before, U.S. dairy farmers faced strict import quotas and tariffs. Under the new agreement, which still needs to be approved by Congress, Canada agreed to drop restrictions, allowing U.S. producers to supply up to 3.6 percent of Canada's dairy market.

Even so, the Chicago Fed reports "dairy farmers continued to struggle," and Canada and Mexico kept their tariffs on pork, dairy and other agricultural products that they imposed in retaliation for Trump's tariffs on steel and aluminum products imported to the U.S.
And yet the overwhelming majority of the major Agri-business organizations are supporting a Governor who has encouraged the CAFOs and other overproduction that has driven so many of these farms out of business.

In addition, Walker took the stage last night with a president who wants to massively curtail the immigration and residency of many of the foreign-born workers that dairy operations depend on. Note this passage from a report earlier this year by UW-Extension Agricultural Agent Trisha Wagner in the Wisconsin Agriculturist, where dairy farmers admit that immigrants are the only people they can find to do the work.
Farmers interviewed in UW surveys reported difficulties finding U.S.-born workers willing to fill dairy farm jobs. Farmers said many young people in rural Wisconsin have little desire to work on dairy farms, and it is hard to find U.S.-born people willing to work long hours, night shifts and weekends.

One Wisconsin dairy farmer said: “So as our last two children entered high school, and I realized that soon I would have no family labor to rely on, we moved our farm to all hired labor. I have not been able to hire an American citizen since 1997. I have tried! The way I see it, if we didn’t have Hispanics to rely on for a workforce, I don’t believe I could continue farming.”

Farmers insist that this demographic shift in the dairy labor force is not an effort to undercut the local wage rate but, instead, to find “reliable,” hardworking, year-round employees willing to work the demanding hours and do the necessary tasks.

In the words of another Wisconsin dairy farmer: “It’s not about Hispanics. It’s about who wants to do the job. We don’t get a lot of applications from people who want to do the job. There are lots of myths out there. … In our area, you hear from some people that these people [Hispanics] are taking jobs away. But the fact of the matter is that there is nobody here who will work for those wages. The folks in ag cannot afford to pay those wages.”
The real Wisconsin farm scene.

In addition, immigrant workers and their families keep the already-declining populations of rural Wisconsin from falling off a cliff, and likely keeps some of the local schools open. You can bet a lot of the (Anglo) people that went to last night's hate rally in an airport hangar in Mosinee don’t recognize that, nor how fragile things really are for them and their communities.

But they should. Because the only chance those people have in breaking the downward spiral of farming and small-town losses is to reject the deregulatory, “big business over everyone else” mentality that Donald Trump, Scott Walker and Leah Vukmir share. And they need to do it this November, before it is all gone.

Wednesday, October 24, 2018

More evidence that Fitzwalkerstanis have injured UW in many ways.

Noticed this thing in the Wisconsin Business Journal recently, where UW-Madison Chancellor Becky Blank was complaining about a lack of funding for the campus' building projects.
[Blank is] concerned because the state has funded “very, very little” in the last two bienniums compared to historical levels. Projects funded by UW-Madison that require several million dollars or more need the approval of the entire state Legislature and the governor.
That means these projects end up as “political footballs,” which she believes are “incredibly damaging” to the university.

“The constraints I have on capital projects are unprecedented compared to any of my peers… and almost unworkable at this point in time,” she said….

“We’re going to really try to get the ability to issue our own bonds for at least some small part of our projects,” she said, referring to program revenue-funded projects. Those include any projects where the university generates the income to pay the bonds.

Last year, the state turned down “almost all” of UW-Madison’s program revenue projects, even though they were fully funded, Blank said.
In the previous biennium, the Legislature didn’t provide funding for new buildings or for maintenance, Blank said. That has led to a growing list of deferred maintenance, assessed over the past year. The assessment found the university had more deferred maintenance and lower capital investment in building projects over the last five to 10 years than the other Big 10 schools.

“I despair at times as to whether we will be able to do what we need to do, for being a 21st century research institution, without more control over that,” she said.
Well, I bet that won't happen with the anti-academic ALEC crew that's been in charge. So maybe Becky shouldn't be playing kissy-face with Foxconn and the WisGOP Legislature, and work to get people in power that'll allow Madison the freedom to compete with other big-time universities. Or she can continue to be handcuffed like this. Her call.

But at least UW-Madison still has increased name recognition, increasing enrollment and a large donor base to handle many of the constraints the state has put on it. That cannot be said for many of the other 4-year campuses, as this recent article from the Wisconsin State Journal notes.
Last fall, UW-Superior suspended more than two dozen academic programs in what faculty said was an abrupt announcement that did not seek their input through the shared governance process.

A few months later, UW-Stevens Point proposed a plan to eliminate 13 academic programs — including English, art, history, philosophy and foreign languages — and create “high-demand career paths.” Facing backlash, university officials formed a work group focused on crafting budget and curricular changes that will submit recommendations to the chancellor in mid-November.
And just last week, we found out that UW-Oshkosh is also going to be dealing with disruptions due to a lack of funding and enrollment. So now Oshkosh will dump adjunct instructors in order to cut into a large budget deficit.
Announced last week to staff by the acting dean of the College of Letters and Sciences, Colleen McDermott, the proposal is the latest example of University of Wisconsin System schools’ cost-cutting as they grapple with a budget deficit stemming from a decline in student enrollment, cuts in state funding and frozen tuition rates for in-state undergraduate students......

Facing a $9.5 million budget deficit, [UW-Oshkosh Chancellor Andrew] Leavitt announced last winter a three-year “fiscal transformation” plan. The 2019-20 academic year marks the period when the most severe of the cuts, about 50 percent, will be made.

Of the 205 faculty members within the College of Letters and Sciences, 187 received a “curriculum modification,” a technical term that allows professors to teach 18 credits per academic year as opposed to 24 credits. The additional six credits are designated research time that involves students…

Starting next fall, faculty will teach at least 21 credits and can receive a maximum of three credits’ worth of research time, according to the dean’s letter. Faculty in their first two years at the college, however, can be eligible for six credits worth of research.

“This is a fundamental shift in practice and culture of our institution,” UW-Oshkosh environmental studies and history professor Jim Feldman said.
And let me guess, they won’t be paying more to the faculty in order for them to teach more classes. I’m sure THAT will have people with Master's degrees and PhD's lining up to take jobs at Oshkosh in the future, won’t it?

There's a lot of noise with the election fast approaching. But let's not forget how badly the UW has been treated in the Age of Fitzwalkerstan, and how the damage is starting to increase exponentially, especially at the non-Madison schools that don't have the donor or research base to fall back on as the Legislature defunds the System.

It's yet another thing that has to be ended in 13 days, or else it'll be FUBARed.

Tuesday, October 23, 2018

Is the Profit Bubble and the alleged "Trump Boom" bursting?

An article this week from Yahoo! Finance asked a question I've wondered as well. Is the US seeing the bursting of the Profit/Earnings Bubble?
With profit growth poised to slow sharply in 2019 for a number of reasons – chief among them less of a jolt from the Trump tax cuts – the market swoon happening today likely reflects the bottom line reality ahead.

“The market is pricing in the [earnings growth] slowdown now,” Blackstone vice chairman Byron Wien tells Yahoo Finance.
You mean an artificially-inflated Bubble caused by a Tax Scam and record stock buybacks is popping, now that there’s no wage growth underneath it to sustain the real economy? You don’t say!

Sure enough, Caterpillar announced its earnings this morning, and there was a notable selloff for the company immediately thereafter.
Global construction equipment giant Caterpillar (CAT) announced quarterly results that were a bit better than expected. However, management kept its full-year earnings guidance unchanged. Shares sold off following all the news.

Q3 revenue climbed 18% to $13.5 billion, which was slightly better than the $13.3 billion expected by analysts. Earnings came in at $2.86 per share, up from $1.95 a year ago and a penny better than expected.

Shares were down 6% following the announcement.
Also interesting is that Caterpillar said that it was starting to deal with higher material costs due to Trump’s tariffs, and they way they plan to deal with those changes seem ominous.
“Order rates and backlog remain healthy,” management said. “In the fourth quarter, price realization, operational excellence and cost discipline are expected to more than offset higher material and freight costs, including tariffs.”
“Cost discipline”? That sure sounds like layoffs and other cuts to me. But if they have order backlogs, Caterpillar is going to have to find a way to hire people to get those items cranked out. Something doesn’t add up there, and it feels like either higher inflation or reduced output is on the way.

Those results and comments from Caterpillar and other corporations tanked the market as much as 500 points today, before recovering to only close down 126. But it's continuing a trend of declines for October, and if we go back to that Yahoo story on US profits, we find much of the “gasoline” that fired up the economy and earnings earlier in 2018 is what’s going to make this Profit/Earnings Bubble pop.

Interest rates have bee rising largely due to the massive amount of debt that had to be issued to pay for the GOP’s Tax Scam (today was an exception, as people bought bonds because stocks were going down the tubes). And the “steady jobs market recovery” is actually the result of an unnatural stimulus in a time when unemployment was already below 5% when the Tax Scam came into place. We should have expected slower job growth in 2017 and 2018 due to the low unemployment rate and the country’s aging demographics, and that was happening before the Tax Scam was passed in December 2017.

12-month job growth, US
Sept 2016 2.70 milllion
Sept 2017 2.01 million
Dec 2017 2.19 million
Sept 2018 2.54 million

That pace of 200,000 jobs a month doesn’t seem likely to last in a time of 3.7% unemployment. So now what we need is accelerated wage growth for the 99%ers and increased investments and resources to improve quality of life. But we are seeing very little of either in this country right now, just more greed and widening inequality.

And regular economic growth also seems to be running out of steam. 3rd Quarter GDP is projected to be near 4%, but the Atlanta Fed’s projection indicates that 60% of that growth is going to be due to inventories that stack up on the shelves. The Atlanta Fed projects actual sales to only grow by 1.6% for the 3rd quarter, and private sector growth only growing atg 1.4%. If that underlying sales number doesn’t improve, hundreds of millions of dollars in election spending goes away, and then Trump and/or Congress decides to cut the country’s exploding deficit by reducing government spending, it’s pretty easy to see where GDP growth goes down the tubes and/or declines within a few months.

I admit, I’ve been wrong on this before, and there has been a short-term pickup in economic activity in 2018, even if it’s in a temporary, unhealthy way. But the economic reckoning feels like it’s coming sooner than later, and it probably needs to, because the more the profit and employment Bubbles blow, the worse the recession will be. And that, along with the likelihood of Dem wins against an unpopular GOP Congress and President, is why it feels like 2006 in more ways than one these days.

Not just schools. Other local govt services also have to go to referenda

I’ve mentioned several times about the increasing number of Wisconsin communities that have had to put in wheel taxes to fix their roads because the state has failed to adequately give them enough resources and flexibility since Scott Walker and the Wisconsin GOP came to power in 2011 (click here to see the growing list).

But that’s not the only area where local governments are asking its citizens to pay more just to keep the same level of service. As David Wahlberg tells us in today’s Wisconsin State Journal, two Wisconsin counties have referenda that ask to raise taxes in order to keep operating county nursing homes. And it’s a trend that’s likely to continue as cash-strapped local governments keep running out of money to handle increased service needs that the state and federal governments won’t chip in for.
Thirty-one of the state’s 72 counties own nursing homes, with Dunn County operating three and La Crosse, Trempealeau and Wood counties each having two, said Sarah Diedrick-Kasdorf, deputy director of government affairs for the Wisconsin Counties Association…
Many of the counties subsidize their nursing homes, but only a few have sought voter approval to increase levy limits to help pay for the facilities, said John Sauer, CEO of LeadingAge Wisconsin, which represents nursing homes. A few counties have held advisory referendums on whether to keep operating nursing homes.
Given that the Walker/WisGOP agenda has strangled local government by dumping more of these costs onto them without giving them the ability to pay for them, Portage and Green Counties are now asking its residents if they can raise property taxes to keep their county homes open. It’s a trend that’s likely to continue in order to handle increased service needs that the state and federal governments won’t chip in for.
In Green County, this is the third time officials have sought voter support for expenses at Pleasant View Nursing Home in Monroe. Voters approved $890,000 a year in 2009 and $790,000 a year in 2014, with more than 73 percent passing both measures.

This year, voters are being asked to continue the $790,000 a year for the 110-bed nursing home. The money is needed to make up for a shortfall in payments from Medicaid, which insures two-thirds of residents, said Cindy Miller, the facility’s life enrichment supervisor.

Portage County is asking voters for up to $1.4 million a year, for four years, for the Portage County Health Center in Stevens Point. It’s the first such referendum in the county, said County Executive Chris Holman.

Of course, the ALEC crew would love it if counties couldn’t afford to continue to operate these homes, and would instead sell them off to private contractors. More profit to be made there and less reason to care (and invest in) people with needs that don’t have the ability to pay for them. And it’s especially lousy if you live in a low-density and/or low-income area and need a home with those kinds of services.

Scott Walker can claim “your property taxes are low” due to this method of “governance”. But as we see with these funding questions and the numerous school tax referenda on the ballot next month, property taxes either won’t be going down (if the referenda are approved), or we are dealing with a significant dropoff in services for the people most in need of them.

The cracks in local government’s abilities to provide help for its citizens are becoming more numerous under our feet, and it isn’t just from the roads. If the Age of Fitzwalkerstan continues past November 6, those cracks will open up and swallow a lot of people. It’s gotta be ended.

Monday, October 22, 2018

Don the Con tries for tax, spending cuts that are literally impossible

This is what you get when a minority group of dumb, weak people are allowed to hire a senile, foolish con man for President.

THAT IS NOT HOW IT WORKS, DONNY! Jerkoffs like Trump have already been so rich and connected they think policy is all a game, and as long as enough rubes and vapid fucks buy their BS and allow them to stay in power and enrich themselves, who cares about the consequences for anyone else?

Budget Guy Stan Collender has called out two of Trump's empty statements on the increasingly messed-up budget in recent days. Collender notes that passing any kind of tax cut in the post-election lame duck session is nearly impossible, partly since Dems have 49 votes in the Senate, so Trump's transparent gimmick would be laughed at and filibustered.

And then once Trump Tax Scam 2 is filibustered via cloture, Collender says it would be delayed more because the GOP-controlled House and Senate haven't passed a budget resolution. And why is that? Because they didn't want to have people remember their part in the Tax Scam 1 ahead of the election. So they'd have to go through all that before we even try to consider passing this absurdity in a time of trillion dollar deficits.
3. But reconciliation may only be done if both houses of Congress adopt a budget resolution conference report with reconciliation instructions ordering it…and neither the House nor Senate have passed a budget resolution yet this year. The House Budget Committee has approved one but there has been no activity in the Senate.

4. Therefore, before a new Trump tax plan could be considered, a budget resolution with its projected trillion-dollar deficits would have to be adopted. That will be much easier to do after than before the election, but still won’t be a simple vote for some GOP members even if it would make a tax cut easier..

5. And it will take time. Even with a truncated process, adopting a budget resolution is likely to take at least two weeks…and probably closer to three or four.

6. Meanwhile, votes become less reliable the longer a lame duck continues as retiring and defeated representatives and senators become less interested in their current job and more concerned about what’s next. If the past is any guide, some will even stop coming to Washington entirely.
But hey Stan, Trump indicted last week that he wanted to cut spending in all federal agencies by 5%, and maybe that will keep us afloat, allowing this tax cut to work out.

Leaving aside the immediate recession and hardship that would be forced on a lot of people if those cuts were ever to happen, Collender notes that such talk "shows that Trump's weak," as he's making a pathetic pose that wouldn't do anything for nearly a year anyway.
1. The plan isn’t for the current year (fiscal 2019); it’s for 2020, the budget that Trump is legally required to submit to Congress early next year and won’t start to be implemented almost a year from now. In the meantime, Trump’s own Department of Treasury and Office of Management and Budget project that the deficit will grow by $306 billion to almost $1.1 trillion. Trump isn’t proposing to do anything about that.

2. Trump could have proposed that Congress “un-appropriate” spending in the current year by using the impoundment control procedures specified in the Congressional Budget Act. He didn’t.

3. Trump’s pronouncement was that his cabinet come up with a plan to reduce “discretionary” spending within their agency or department. That’s only about 25 percent — roughly $1.1 trillion — of the total amount expected to be spent in 2019.

(Note: The $1.1 trillion in discretionary spending is roughly equivalent to the total projected 2019 deficit. Trump would have to propose to eliminate all of it to completely balance the budget this year.)

4. If Trump had wanted to propose something impactful he would have included most of the rest of the budget — mandatory spending other than interest on the national debt. But just before the election that would have subjected him to the very politically damaging charge that he was going to propose cuts in Social Security, Medicare and veterans benefits.

Then again, Mitch McConnell just admitted last week that Republicans want to use the growing deficit as an excuse to cut Social Security, Medicare, health care and other earned benefits, so maybe that's hidden in Trump's future plans (not that Don the Con would ever say so).

I'm so sick of the GOP cynicism, two-steps and fiscal insanity. I'm less distressed by the fact that con men like Trump and Walker are floating unaffordable tax plans before an election than I am about the fact that they think enough gutless rubes will buy it. Let's do better than that on November 6, shall we? And let's get some adults in office that actually want to deal with reality before things completely collapse.

Real wages finally above 0%, because farmers are struggling

One item I’ve harped on for the last year is the fact that while the US economy continues to add jobs and have its unemployment rate drop to a near-50 year low, wages haven’t risen during that same time. In fact, the only thing that has gone up is the rate of inflation, while 12-month changes in wages have remained stuck between 2.5-2.9% since Donald Trump took office.

This means that “real” wages have been around, at or even below 0% for the last year. But there was a glimmer of hope in the most recent hourly wages report.
Real average hourly earnings for all employees increased 0.3 percent from August to September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.3-percent increase in average hourly earnings combined with a 0.1-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.2 percent over the month due to the increase in real average hourly earnings combined with no change in the average workweek.

Real average hourly earnings increased 0.5 percent, seasonally adjusted, from September 2017 to September 2018. The change in real average hourly earnings combined with the 0.6-percent increase in the average workweek resulted in a 1.1-percent increase in real average weekly earnings over this period.
That’s the best real wages have been in (a year), although it’s more because of a temporary decline in inflation than any wage growth. 12-month nominal wages are up 2.8%, which is no different than we’ve seen for 20 months, but it was the September Consumer Price Index that gave some help with that small 0.1% increase, and dropped 12-month inflation to its lowest level since February.

Digging into the CPI report, we find the reasons behind that leveling in inflation were related to price relief seen at the grocery stores, at the gas stations, and at the used car lots.

Change in CPI, September 2018
Food at home -0.1%
Energy -0.5%
Used cars and trucks -3.0%

Doing crude math, it shows that everything else in the CPI report (which is around 82% of the basket of expenses) went up by 0.3%, which isn’t so muted. But we’ll take it for now…at least until the recent increase in oil prices starts showing up at the gas pumps.

The flip side is that those food prices may not be coming up any time soon. That’s nice if you’re shopping, but it’s horrible if you’re a farmer struggling to make ends meet. Look at the Producer Price Index report, which tells you what producers are getting from stores and suppliers.

Change in Producer Price Index, Sept 2018
Dairy Products -0.7%
Oilseeds (soybeans) -3.9%
Fresh and dry vegetables -6.1%

And that continues a year-long trend of declining prices for those products

Change in Producer Price Index, Sept 2017 - 2018
Dairy Products -3.0%
Oilseeds (soybeans) -15.5%
Fresh and dry vegetables -12.7%

On the energy side, there was an odd split where some types had significant declines, while some heating items had major jumps.

Change in Producer Price Index, Sept 2018
Gasoline -3.5%
Residential Natural gas -0.5%
Home heating oil +8.7%
LP gas +18.0%

But go back one step, to the unprocessed goods stage, and both main types of energy were going up.

Change in Producer Price Index, Sept 2018
Natural Gas +1.1%
Crude petroleum +8.7%

So expect to paying that in a couple of months.

Still, there should be a small respite where real wages take a nice bump up for September and October. And if you aren’t working in agriculture, you might think things are looking up in the short term. But I wouldn’t recommend spending any small gain in real wages in the hopes that it’ll continue, because higher prices and reduced tax refunds are likely to both be on the docket in the next few months.