Friday, November 30, 2018

How more sales tax online might cause a regressive income tax cut

In addition to the power-grabs they are going to try to pull off (and I'll have plenty on that soon enough), the WisGOP Legislature also might try to sneak in a tax cut while they're ramming thrrough their lame-duck bills next week. However, this one is for a much less nefarious reason than the rest of those disgusting plans - it's to deal with the fact that more of us have been paying sales tax when we buy online.

Of course, sales tax is supposed to be paid on any purchase, but many online and mail-order purchases didn’t add it in when the person bought a product. Technically, the individual is supposed to add that sales tax amount when he or she files a state income tax return, but many people don’t (or don’t report all of the tax they have due), so theoretically, the state and Wisconsin localities miss out on that money.

In June, the US Supreme Court ruled in a South Dakota case ( South Dakota v. Wayfair, Inc.,) that allowed states to apply sales tax to any business that sold a certain amount of product to state residents, even if the business did not have any stores in the state. The Legislative Fiscal Bureau filed a report soon after explaining how that ruling could apply to Wisconsin, and how the state’s budget might be affected.
Current Wisconsin Law. Because Wayfair overturned Quill's physical presence requirement, the manner in which state law is "otherwise limited by federal law" has been modified with regard to extending nexus to remote out-of-state sellers. DOR indicates that current law now requires it to begin collecting tax on remote sales. However, unlike South Dakota, the Wisconsin statutes do not specifically provide for an electronic nexus threshold. Therefore, it is unclear that requiring out-of-state vendors to collect tax without changes to the statutes or administrative code would comport with the Complete Auto test. DOR is currently reviewing this issue.

Fiscal Impact. Based on information supplied by DOR and the U.S. Census Bureau, it is estimated that expanding sales and use tax collection obligations to out-of-state vendors in compliance with the Wayfair decision would increase state sales and use taxes by $120 million on an annual basis. This estimate is expressed in 2018-19 dollars and assumes Wisconsin would utilize a safe harbor provision for remote sellers similar to the economic thresholds enacted by South Dakota. If changes were made to the administrative code or the statutes such that DOR could extend nexus to remote sellers beginning October 1, 2018, it is estimated that state sales and use tax revenues would increase by $90 million in 2018-19 and $120 million in 2019-20. Further, it is estimated that county and professional stadium park district sales and use tax collections would increase by $7.7 million in 2018-19 and by $10.3 million in 2019-20.

Can't duck the sales tax any more

Sure enough, on October 1, the Wisconsin Department of Revenue implemented a new rule that automatically collects sales tax from any business selling online to Wisconsinites, except for
…sellers who do not have annual sales of products and services into the state of (1) more than $100,000, or (2) 200 or more separate transactions.
Scott Walker’s Department of Administration assumed that extra sales tax when it provided its revenue estimates for the next state budget. and from my limited experience, it seems like most online retailers do charge sales tax these days, so that part seems to be working out.

But there’s a second part that may have to be dealt with due to the added online sales taxes, and it relates to a provision inserted by the GOP Legislature a couple of budgets back. Basically, it could trigger an offsetting income tax cut for all Wisconsinites, which makes the net impact on the budget to be $0.
Under a provision created in 2013 Wisconsin Act 20, as amended by 2017 Wisconsin Act 59, state law establishes procedures for reducing state individual income taxes by modifying the rate and Page 4 bracket structure if certain conditions are met. The provision specifies that additional state sales and use tax revenues resulting from "any federal law" that expands the state's ability to require out-of-state sellers to collect and remit tax on remote sales to Wisconsin residents be used to reduce income tax rates. First, DOR is required to determine how much additional revenue has been collected by the state during the first 12 months following the date on which the state begins collecting additional taxes as a result of the federal law. Second, DOR is required to determine how much the individual income tax rates could be reduced in the following taxable year so that income tax revenues would decrease by an amount equal to the estimated increased state sales and use tax revenues (excluding any increased county or professional stadium park district revenues). The individual income tax rate reductions must be calculated in proportion to the share of gross tax attributable to each of the tax brackets in effect during the most recently completed taxable year. After DOR has prepared these estimates and tax rate calculations, DOR is required to certify the revenue estimates and new tax rates to the Secretary of the Department of Administration, the Governor, and the Legislature. The new tax rates would take effect in the taxable year beginning after DOR's certification.

At the time Act 20 was enacted, there were Congressional efforts to override the Quill decision by permitting states to impose the sales and use tax on retailers who lacked a physical presence in their state. The Act 20 provision likely presumed a Congressional law change would serve as its trigger. Nonetheless, given that the law of Quill has been reversed, the U.S. Supreme Court's Wayfair decision could reasonably be construed as "any federal law" triggering the Act 20 provision. Assuming additional legislation or an administrative rule change is needed before the 12-month sales tax collection period can begin, income tax changes could occur as early as tax year 2020, but could occur in tax year 2021, or thereafter….

For tax year 2017, statewide gross taxes are estimated at $9,745.8 million, and the estimated tax shares generated by the four rates range from 10.7% for the 4.00% rate to 55.7% for the 6.27% rate. Based on these percentages, the Act 20 provisions would have allocated proportionate reductions to each rate or bracket that total $120 million statewide. Each rate would be reduced by an estimated 1.2%, and those rates are reported in the column labelled "Estimated Tax Rate." Although the percentage reduction is uniform, the absolute reduction, reported in the last column, increases with each rate.
That last sentence is key, as the LFB estimates that single individuals that make less than $11,230 (based on the 2017 state tax brackets) would get about $3 per person, and most married couples in the working, middle and upper-middle classes were estimated to get an average income tax break of $55 (equivalent to the sales tax of $1,000 a year in online sales). But married couples who make above $330,000 would get an estimated income tax break of $592. Those individuals would have to spend over $200 online each week to not be better off in this scenario.

Granted, that the extra sales tax (and offsetting reduction) is only expected to be $60 million a year instead of $120 million, now that some more data has rolled in. But that could change again as Christmas shopping season will give us a better idea on the overall effect. Also, in their summary of the newly-released lame duck bills, the LFB says the GOP wants the offsetting income tax cut to happen even sooner.
Based on the additional sales and use tax revenue that DOR determines has been collected, require the Department of Administration (DOA), in consultation with DOR, to determine how much individual income tax rates will be reduced, rather than requiring DOR to make that determination. Specify that the tax rate reduction take effect for the taxable year ending on December 31, 2019 (tax year 2019), as opposed to the tax year following the 12-month period for which the additional sales and use tax is determined. Require the Secretary of DOA to certify and report the additional sales and use tax revenue and income tax rate determinations to the Governor, the Joint Committee on Finance, and the Legislative Audit Bureau no later than October 20, 2019, rather than requiring DOR to make that certification to the Secretary of DOA, the Governor, and the Legislature after DOR makes the tax rate determination.
But since the lower income tax rate wouldn't be in effect for much of 2019, you wouldn't see a benefit until you file your taxes in early 2020 (if you see any benefit at all). Quite convenient, isn't that?

The WisGOP Legislature likely won’t care about the regressiveness of this tax swap, and they’ll use this maneuver to claim they have cut the tax burden even more on Wisconsinites. And I suppose you can claim that always collecting sales tax online will push more people into entering brick-and-mortar stores and possibly prevent more closings and dead malls, which I agree would be a good thing all around.

But given the early reports on Christmas shopping, it seems people increasingly are choosing the online option for convenience over going inside the stores, which means more online sales tax can be expected going forward. It won't get the attention of the vote-suppression and power-grab parts of the lame-duck bills, but many of us will pay slightly more while the rich end up better off in the long run in the tax shift that's buried in the legislation.

Thursday, November 29, 2018

Good income and spending numbers have a lot of "buts" attached to them

Today featured a raft of US economic data, and among it was October’s personal income and spending report. And the topline numbers for income and spending indicate the economy might have kicked into another gear last month.
Consumers boosted their spending in October at the fastest pace in seven months, while their incomes rose by the largest amount in nine months — both good signs for future economic growth.

Consumer spending rose a sharp 0.6 percent last month, the Commerce Department reported Thursday. It was the biggest increase since a similar gain in March and was three times faster than the 0.2 percent September performance. Incomes, which provide the fuel for spending, were up 0.5 percent in October, a significant pickup from a 0.2 percent September gain.
So why did the stock market stop its 3-day rally and turn downward on Thursday and why did the 10-year note fall under 3% at one point (well, other than the legal walls crumbling around our crooked President)? Because if you dig into the report itself, it shows that there was one particular anomaly that inflated the growth in income.
The increase in personal income in October primarily reflected increases in wages and salaries, proprietors’ income, and government social benefits to persons (table 3). Farm proprietors’ income increased $11.6 billion in October, which included subsidy payments associated with the Department of Agriculture’s Market Facilitation Program.
Reports have indicated not all of those farm subsidies seem to have reached their targets, and the checks that have come in aren’t doing much to stem larger farm losses in Wisconsin and other places. Also intriguing is that non-farm “proprietor income” rose by $13.6 billion after a decline of $9.7 billion in September. That indicates that perhaps some of these October figures are related to October 1 falling on a Monday, and moving incomes into that month instead of the end of September (the same thing happened for government spending figures in DC).

Take out all factors outside of proprietor’s income, and the increase from September was 0.37%. That’s not bad, but it’s also no different than we’d been seeing in most of the Summer. Even with that inflated proprietor income, October marked the 8th straight month that personal saving declined in the US, with Americans saving nearly $160 billion less than they did in February. This is despite incomes continuing to nominally rise, which usually would lead to some portion of that extra money being saved.

In fact, Americans saved more money in Oct 2017, before tax cuts allegedly gave them more disposable income to save, than they did last month. Which means that the rate of saving is at its lowest levels in 5 years.

Now, you could argue that this is a good thing, as consumer spending is 2/3 of the country’s economy and that it indicates confidence in current and future economic conditions. But we’ve been down this road of individuals, corporations, and the US government spending beyond their means and being over-indebted. It usually doesn’t last for long, and it doesn’t tend to end well.

Wednesday, November 28, 2018

More corporate and US debt, and Fed trying to keep party going = mid-2000s all over again

I’ve mentioned a few times this year that I’ve been getting flashbacks to 2006, and not just because Dems won big during the midterm elections. I got more of those memories from headlines like this one from this week “Fed urged to get more serious about U.S. corporate debt risks.”
Bankers, executives and investors are warning Federal Reserve officials behind closed doors that record leveraged lending to companies from lightly-regulated corners of Wall Street could make any economic downturn harder to manage.

With the second-longest U.S. expansion in its advanced stages, the worry is that a key part of the credit market could be particularly vulnerable to a slowdown, as highly-indebted companies face a greater risk of default.
Well, that seems like a problem. Tell me more.
Scott Minerd, managing partner at Guggenheim Partners, said President John Williams and some of his colleagues at the New York Fed were "taken aback" when he told an advisory meeting that he did not think the Fed could safely avoid a messy recession in the face of the credit build-up and other risks.

"Because it is now so extreme, any attempt to rein in credit expansion is going to ultimately blow up," Minerd said at the Reuters Global Investment 2019 Outlook Summit this month.

Credit spreads - or the difference between government and corporate borrowing costs - have already widened to a two-year high for both investment-grade and high-yield debt. In what could be a taste of things to come, General Electric Co's bonds tumbled this month as it scrambled to raise cash.

Minerd said the Fed and other regulators did not yet seriously consider a scenario in which credit spreads would rise much further prompting regulators to force liquidations at insurers and other firms that had bought so-called collateralised loan obligations, or CLOs. Like the CDOs behind the housing crisis, CLOs bundle corporate loans into a single security.
So because there is so much corporate borrowing out there, Minerd seems to be saying to the Fed “Keep rates low so we can keep the musical chairs game going with all this debt, or else some companies will go under.” That doesn’t seem especially healthy.

And then I got a break in my work around Noon (1pm Eastern) today, and saw the markets doing this.

So what happened around Noon Eastern? Federal Reserve Chair Jay Powell spoke to a bunch of rich elite types in NYC, and it caused the speed freaks on Wall Street to start buying.
In a speech before the Economic Club of New York on Wednesday, Powell said, “Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy‑‑that is, neither speeding up nor slowing down growth.”

In October, Powell suggested the Fed was a “long way” from neutral…

Powell’s speech also follows the release of the Fed’s financial stability report on Wednesday morning, which called out what the Fed sees as valuations in financial markets that are “generally elevated” and show investors exhibiting a “high tolerance for risk-taking, particularly with respect to assets linked to business debt.”

The report adds that, “debt owed by businesses relative to gross domestic product (GDP) is historically high, and there are signs of deteriorating credit standards.”
So if interest rates are kept relatively low, it lessens the chances of loans costing more, and allows corporate America to keep borrowing with fewer consequences.

Of course, what it also will do is drive this credit Bubble to become even bigger, since there are no underlying increases in the real economy to back up the added activity, and there will either be a return of inflation (from too much demand and money flying around), or the Bigger Bubble pops and the inevitable recession becomes even worse to deal with.

And there’s a counter-pressure on the Fed right now. Not only is there a lot of corporate debt out there that needs to be paid back, but Uncle Sam is also trying to get money to pay for his massive budget deficits, and foreigners don’t seem as willing to send money to the US to help him out.
Some auctions since late October had the weakest foreign participation rates in nearly a decade, a Reuters analysis of U.S. Treasury sales shows. At the same time, auction sizes are rising fast, with bond issuance this quarter projected to set a record of $83 billion after deducting maturing debt.

“We do worry about where demand for Treasuries is going to come from, given the ongoing significant increase in supply,” said Torsten Slok, chief international economist at Deutsche Bank….

Foreign investors - both private funds and official entities such as central banks - have been lynchpin participants in the $15.3 trillion U.S. Treasury market for years. And while overall foreign holdings have remained steady at roughly $6.2 trillion, their participation has not grown materially in several years.

The Treasury market, meanwhile, has mushroomed in size, leaving foreigners to account for just 40.5 percent of the market as of September versus nearly 50 percent in January 2013.

A sustained slackening in foreign demand for Treasuries could hurt the U.S. economy. Lower demand means the government must increase the interest it pays out to attract buyers. Those higher federal borrowing costs not only add to the U.S. budget deficit, they also tend to push lending rates higher for consumers and corporations, which could knock the second-longest U.S. economic expansion off track.
Hey, I got a weird thought. Maybe we shouldn’t have passed a GOP Tax Scam that blew up our deficit, which put upward pressure on interest rates while allowing corporations to have more money floating around that they could leverage into the casino of secondary debt, and basically be used for anything BUT job creation? Nah, that’s crazy talk!

That being said, the Fed Chair's hints at fewer rate hikes combined with concerns about “cracks in the US economy’s performance” in the future seem to have caused a “flight to quality”, with the 10-year bond yield dropping from 3.23% earlier this month to less than 3.06% today.

While those lower long-term rates might make long-term borrowing a better deal and help the flagging housing market stay afloat for a bit, shorter-term rates are still higher and likely to stay there, making us closer to the “inversion” which has been followed with a recession every time in the last 40 years.

As of today, the blue line is at 0.25%, and the red line is at 0.66%. But the 30-year bond actually rose by 2 basis points, partly reflecting those deficit pressures. Which brings me to mention one more headline today that gave me flashbacks to the years right before the Great Recession - "U.S. New-Home Sales Fall in October, Missing Projections".
Sales of new U.S. homes fell in October to the weakest pace since March 2016 as rising borrowing costs and elevated prices keep buyers out of the market.

Single-family home sales fell 8.9 percent from the prior month to a 544,000 annualized pace, according to government data Wednesday. That was below all estimates in Bloomberg’s survey of economists, which had called for 575,000, and compares with September’s upwardly revised pace of 597,000.

The median sales price dropped 3.1 percent from a year earlier to $309,700, the lowest since February 2017, though still out of reach for many potential buyers.
Yep, it’s very 2006-ish these days, for all the good and bad reasons.

All of a sudden, Wisconsin is getting some action with casinos

As we rightfully cast our eyes toward what kind of chicanery Republicans might do before Tony Evers takes office as Governor in January, this bit of news came as a surprise to me this week.
Gov. Scott Walker and the Forest County Potawatomi have signed off on an agreement that puts Wisconsin on the hook for up to $250 million if the tribe were to suffer losses from a competitor’s casino being built.
Indian gaming deals being signed 6 weeks before Walker leaves office? This seems worthy of a deeper look.

Here’s a quick recap of how Indian gaming interacts with Wisconsin’s budgeting (the Legislative Fiscal Bureau’s Informational Paper on Indian gaming will give you a lot more). Wisconsin basically gets a cut of the various tribal casinos’ “win total” – profit from the games they have. A certain amount of that money is designated for duties such as oversight of the state’s casinos, tribal-related state programs such as health care, workforce development, transportation, and higher education aid for tribal members, and certain UW programming in and around tribal lands.

The rest of it goes into the state’s General Fund (about $27.7 million in Fiscal Year 2018), and what Walker signed dealt with how much money would have to be paid back to other tribes in case a rival new casino opened in an existing casino’s “territory”.

You may remember that Walker rejected a proposed Menominee casino near Kenosha in 2015, which was a pathetic pander to Iowa fundies as Scotty was gearing up for his disaster of a presidential campaign. That veto was done despite an OK from the Obama Administration and the Bureau of Indian Affairs, and despite Menominee tribal members walking 155 miles to Madison in the winter of 2015 to ask Walker to approve the project.

Maybe the new Governor will be more likely to listen.

When he vetoed the Menominee casino, Walker hid behind the provision requiring compensation to the Potawatomi if the Kenosha project was built. The issue dates back to when Jim Doyle approved of compact changes in 2003, which cleared the way for more gaming at Potawatomi's casino in Milwaukee, and how it allowed for a radius of protection from similar gaming competition.
The state originally agreed to liability for losses at tribal casinos because it guaranteed, through tribal gaming compacts, geographic exclusivity for casinos in exchange for payments from tribes, also known as revenue sharing. The state uses some of that money for regulation of the casino industry....

Though that plan was approved by the federal government in 2013, Walker rejected it in 2015, blaming Doyle for the 2005 compact that made the state liable for losses at the Potawatomi’s Milwaukee casino.
So this is where the agreement that Walker and the Potawatomi signed yesterday comes in, as it gives a fixed dollar amount for repayment to the tribe if projects like the Kenosha casino happen.
Doyle had originally approved a 50-mile zone of exclusivity for the Potawatomi’s Milwaukee casino in 2003, but it was rejected by the Bureau of Indian Affairs. In response, the state had then agreed to help make up for losses if a casino were ever approved between 30 and 50 miles away from the location.

But under that arrangement, the state and tribe would need to enter into arbitration where a panel would decide the state’s liability.

Department of Administration Secretary Ellen Nowak said in a statement the new agreement provides more stability for the state and tribe because the state would be locked into $250 million in liability for losses without an arbitration tribunal having to weigh in.
The flip side of this is that if I’m reading this right, Walker’s new agreement means that the state would HAVE to pay up to $250 million if a Kenosha casino were to be built, as it would fall into the 30-50 mile zone. It sure seems to be a good way to tie the hands of Gov Evers if a Kenosha casino was going to be shoved through in the coming weeks or months.

Interestingly, a Beloit casino is outside of that 50-mile range from Milwaukee, and the plans for a Ho-Chunk casino and resort in that town advanced earlier this month on a couple of fronts. The Bureau of Indian Affairs signed off on a draft Environmental Impact Statement for the Beloit Ho-Chunk casino on November 9, there will be a public hearing on the project in 2 weeks, and the end of the 45-day comment period will come on Christmas Eve.

On the governmental side, Gov-elect Evers has said he would sign onto an agreement with the Ho-Chunk for the Beloit casino and resort, and theoretically, that one could be breaking ground in just over a year.

Ho-Chunk South?

By the way, current state compacts do not allow for sports gambling to be part of any Indian casinos in Wisconsin, so any new projects would be limited to table games, slots, video poker, bingo, and so forth. The compacts would have to be reopened for sports betting or other forms of gaming to be allowed at tribal casinos, and I have seen nothing indicating that's coming down the pike. (Illinois may be a different story, although a lot of details still need to be worked out in Springfield).

It sure does look like there may be some new casino action in Wisconsin in the near future, especially in the southern end of the state, and with it will be the jobs and related issues that’ll have to be dealt with. Keep an eye on it going forward.

Tuesday, November 27, 2018

More dairy farms folding and Wis farmers going bankrupt means Evers has more to clean up

This headline accompanying a recent story from Rick Barrett in the Milwaukee Journal-Sentinel is pretty alarming “Wisconsin dairy farmers barely hanging on as crisis deepens with no end in sight.”
As of Nov. 1, the dairy state had lost 660 cow herds from a year earlier, and the number of herds was down nearly 49 percent from 15 years ago. The number of dairy cows in Wisconsin has remained steady even as the number of farms has fallen. That’s because the remaining dairy operations are, in many cases, much bigger. But even some of the bigger farms have not survived.

For many farmers, it’s no longer a matter of how they’re going to endure a fourth year of financial hardship. Rather, it’s how they’re going to exit the business and get on with their lives.
And the rate of failure in those farms have been picking up. 87 went out of business last month alone, the most in 7 1/2 years last month in Wisconsin.

The Journal-Sentinel article also describes the situation of Emily and Brandi Harris, who operate an organic dairy farm near Monroe. Their cooperative is looking at a 33% cut in what they get for milk after their current contract runs out in May, and they’ve reduced their herd total from 50 to 30 while Brandi has gotten an off-farm job to make ends meet.

Emily Harris says that she plans to stick it out, but not because it’s a workable living.
"There's just nothing in dairy farming that makes any money right now," she said.

"A lot of our income needed to make repairs, or to do something like replace a roof, used to come from selling 20 heifers for about $20,000. Now, heifers aren't worth $300 each. We've lost any extra income we used to have."
In addition to Wisconsinites walking away from their dairy farms, the Minneapolis Star-Tribune noted over the weekend that many farmers are officially going broke on top of this.
Farm bankruptcies are on the rise in Minnesota and across the Upper Midwest.

Eighty-four farms filed for Chapter 12 bankruptcy in Wisconsin, Minnesota, North Dakota, South Dakota and Montana in the 12 months that ended in June, according to a new analysis from the Federal Reserve Bank of Minneapolis. That’s more than double the number over the same period in 2013 and 2014, and the number of bankruptcies in Minnesota doubled over the past four years from eight to 20.

Banks are also seeing more farm borrowers fall behind on their payments, and the worst is likely yet to come.

“Current price levels and the trajectory of the current trends suggest that this trend has not yet seen a peak,” Ron Wirtz, an analyst at the Minneapolis Fed, wrote.
And as the report from the Minneapolis Fed notes, Wisconsin is where the majority of those bankruptcies are taking place.
Not surprisingly, bankruptcy numbers inversely follow the rise and fall of commodity prices. After a comparatively steep spike in chapter 12 filings during the Great Recession—that 2010 peak—ag prices started rising across the board, and bankruptcies logically pivoted and started to decline. Farm bankruptcies bottomed out in 2014, but again pivoted as high prices reversed and have remained low (Chart 2).

But not all states are feeling the same effects. Wisconsin, for example, is seeing about 60 percent of all bankruptcies among Ninth District states. It appears that bankruptcy filings have been particularly high among dairy farms there. Though the state is the country’s number two milk producer, it still has many small farms, which tend to be more exposed to large price fluctuations. The average dairy herd in Wisconsin is still just 153 cows; in California, the average herd is 1,300.

It’s clear that unless there is governmental action taken soon in Wisconsin, the state’s dairy farms and many other agricultural industries are going to be in a full-fledged depression, if they’re not there already. And the “bigger is better” mentality of Governor Scott Walker and Attorney General Brad Schimel is something that likely added to these bankruptcies and lost dairy farms, as overproduction lowered prices and deregulation and economies of scale gave even more advantages to mega-farms that were allowed to cut corners.

Which means Walker and WisGOP has dumped another mess on the desks of Tony Evers as Governor and Josh Kaul as Attorney General that they're going to have to clean up. The everyday small farmer are the ones in need of assistance and stabilization, not the mega-farms, so targeting aid to the everyday farmer that's struggling seems like something that should be emphasized by Evers when he takes over in 6 weeks.

And it seems like that's a much strategy than literally continuing to give away the farm to Big Ag donors companies who have had their tax rates lowered to near zero due to the M&A “Big Giveaway”. Evers called for getting rid of the M&A credit for all companies and individuals making $300,000 or more during this Fall's campaign, and the deepening farm crisis makes this an even better idea today, in order to level a horribly slanted ag economy in the state.

New "gold standard report" runs Wis's subpar jobs streak to 29.

The latest edition of the “gold standard” Quarterly Census of Employment and Wages gave its first look at jobs and wages on the Wednesday before Thanksgiving. Because it only includes the topline figures for states and the largest counties, it didn’t get a lot of notice in the media, but even this smaller bit of data showed that Wisconsin continued to trail the nation as our 7th year as a right-wing lab experiment continued in mid-2018.

While we don’t have the full breakdown between various sectors of the economy and the rural areas, we still can get a good idea about where Wisconsin and its largest metro areas stood in total job and wage growth. In the June 2017 to June 2018 time period that the recent QCEW covers, Wisconsin extended its streak to 29...consecutive quarters in the bottom half of job growth. This time we were 33rd with an increase of 0.86% - well below the US’s total job growth of 1.52%.

Granted, it’s not all awful news, as the state was 3rd out of 7 in the Midwest for those 12 months, a rare top-half showing in that statistic. However, that underscores how much of the region is struggling in the Age of Trump while much of the rest of the nation continues to chug along.

Midwest job growth, all jobs, June 2017-June 2018
Mich +1.35%
Ind. +1.13%
Wis. +0.86%
Ill. +0.78%
Minn +0.764%
Iowa +0.763%
Ohio +0.68%

Those figures are even more disconcerting when you realize June 2018 was before crop prices plunged further and yesterday’s news of GM closing auto plants in Michigan and Ohio.

Stretching it out over the Age of Fitzwalkerstan, Wisconsin looks even worse. We slip to 5th in the Midwest for the 7 years since Scott Walker’s first budget was passed in June 2011, with Wisconsin’s job growth being less than 2/3 the US rate over the same time period.

Wage growth is similarly bad for Wisconsin over the last 7 years. Wisconsin is also 5th in this statistic with a growth rate in the average weekly wage below 17.9% over the last 7 years (before inflation), which is also less than the 18.4% wage growth in the US.

Comparing these two years also shows that Wisconsin workers still make lower wages than most of our neighbors, and that this gap grew between us and states like Minnesota and Illinois, as well as the rest of the country.

Average weekly wage, June 2011 vs June 2018

Not that this is surprising, but that whole “open for business” trickle-down mentality that WisGOP foisted on us? Yeah, it hasn’t quite worked out when it comes to increasing jobs or wages in Wisconsin. In fact, it’s quite clear that GOP rule has held us back held us back.

If the gerrymandered GOP Legislature thinks that they can keep doubling down on these failing strategies, they’re going to be following Scott Walker's path in another way - in getting kicked out of the door of the Capitol as the US economy worsens and their gerrymandering goes away over the next 4 years.

Monday, November 26, 2018

Will online holiday shopping mean even more dark stores?

Now that Thanksgiving has come and gone, it’s time to look at what’s going on for the Holiday Shopping season, to see if consumer spending is looking good at the end of 2018. And the early signals from last weekend seem positive.
Cyber Monday kicked off on the heels of a record-breaking Black Friday online shopping spree, according to data from Adobe Analytics. Online sales on Black Friday advanced 23.6% from last year, totaling $6.22 billion. This Black Friday was the first time in history more than $2 billion in sales originated from smartphone purchases, Adobe noted. Shoppers chose mobile over the malls this year, with in-store traffic down 1.7% on Thanksgiving and Black Friday compared to last year, according to data from ShopperTrak. Likewise, Salesforce Commerce Cloud reported 13% year-over-year growth on Black Friday, with mobile devices accounting for 67% of digital traffic.

“E-commerce sales as reported by numerous sources indicate solid holiday sales for the Thanksgiving weekend and holiday season to date and we remain comfortable with our expectation for mid-teens e-commerce holiday season growth,” said Aaron Kessler, an analyst with Raymond James. Based on the data skewing toward digital sales, he retains a “positive bias on Amazon and Google shares,” Kessler added.
But note the bolded part, as sales in actual stores declined as people chose to shop at home. And if that trend contimues for the holiday season, it means that we are likely to see more brick-and-mortar stores closing, and malls becoming even deader.

Which makes Wisconsin's “dark store” issue all the more crucial to resolve, since the stores and malls that remain will have more dark stores to point to in as they try to lower their assessments. Recall that if existing stores and facilities are allowed to use the dark store loophole, then the property taxes of homes and other properties go up, since they take up a larger proportion of the tax base.

More of this to come?

Wisconsin voters who were asked overwhelmingly wanted to get rid of the “dark store” loophole in this month’s elections, but the greedheads at Wisconsin Manufacturers and Commerce (WMC) are going to try to keep this extra tax break going through their puppets in the WisGOP Legislature. This is all the more disgusting because businesses are getting another tax break in this year with the repeal of the personal property tax on most types of equipment,

Not only will that move cost Wisconsin taxpayers an estimated $74.4 million (as a shell game that pays the difference in property taxes to localities), but it’s yet another property tax burden shifted over to homeowners. This seems like an area where Gov-elect Evers could put WisGOP on the defensive by putting a repeal of the dark-store loophole in his first budget, and possibly match it with a repeal of this personal property tax shell game, and make the WisGOPs defend raising the property taxes of homeowners while spending $150 million+ as part of another giveaway to businesses.

Let’s see how Wisconsinites react as their property tax bills come in the mail in the next couple of weeks, as the cost of the dark store loophole and other property tax disparities are getting worse by the year. And given that more retail stores seem to go away with each Holiday Shopping season, it’s something that is going to have to be dealt with in coming months in one way or the other.

Sunday, November 25, 2018

Why is MLB donating to racist Senate candidates? Same reason as most greedy corporations

The shot

The chaser

But why would MLB want to buy influence from a racist dingbat in Mississippi in the first place? That's the more interesting story to me, and the reason why MLB lobbies and donates to politicians came up again in court cases from this Summer. And yes, it involves a certain mega-donor to Scott Walker's campaigns.
The U.S. Supreme Court refused to reconsider rulings that give Major League Baseball a broad exemption from federal antitrust laws, turning away two appeals.

The justices rejected arguments from two major league scouts who claimed the 30 teams were colluding to suppress wages. The court also declined to hear from property owners who say their rights were violated when the Chicago Cubs and owner Tom Ricketts blocked some rooftop views of Wrigley Field.

The dual rebuffs leave intact a line of Supreme Court rulings, dating from 1922 to 1972, that largely insulate the business side of baseball from antitrust lawsuits. Congress overturned the rulings with regard to players and their salaries, but left the exemption in place in other contexts....

"This court has consistently held that if the exemption is to be altered or curtailed, only Congress can do so," the league and its clubs argued.
The Cubs said Congress made a decision to keep most of the exemption when it passed a 1998 law to let players file antitrust suits.

"Congress explicitly stated that the act leaves this court’s exemption jurisprudence in place in all respects other than major-league player employment," the Cubs and Ricketts argued.
And if MLB can buy off potential members of Congress, no matter how racist and foolish they may be, then they can continue to make more money for their business due to the lack of competition from this anti-trust exemption.

It's especially ironic that the controversial MLB donation involved a race in Mississippi, because it was a player for the Brewers-affiliated Biloxi Shuckers that drew attention to another sketchy MLB business practice earlier this year.

Perrin is an interesting case, as he has a History degree from Oklahoma State, has gotten into the Law School at the University of Kansas, and is a licensed Financial Investment Advisor. After his statements about the low wages of minor league players, he expounded on those comments in an interview this April with UW-Madison student radio WSUM, and said that many other minor leaguers are barely making minimum wage.
[Jonathan Perrin]: … In the minor leagues, you play a 140-game schedule and that’s from April to the first week of September. You’re playing 140 games in basically five and a quarter months, so it’s 140 games in 160-165 days. If you think about that, a normal person goes, works their Monday through Friday, you get the weekend off, 40-hour-per-week type deal, so in baseball, you’re going 10 to 15 to 20 days between off days and then you get one off day and usually that off day is more often than not a day where you’d be on the bus traveling and going to your next site, so a lot of times, it’s not even a true off day and then you take into account that we’re at the field for a 7 o’clock game– most guys are going to show up at 1 p.m., 1:30 p.m. or 2 o’clock at the latest and you’re not going to get out of there once you’re showered up until 10:30 or 11 o’clock at night. You’re looking at 10 hours a day, six to seven days a week, so it’s a very grueling travel schedule. It’s a very grueling day-to-day schedule with not a lot of off days during the season.”

[Jacob Swanson, WSUM]: Brandon Lawson of the Rays’ minor league season tweeted that he’s making $1,180 a month. Is that just during the season. That’s just March through September?

[Perrin]: “Right. It kind of scaled depending on what level you’re at. I think, just being in the Brewers organization, we start at $1,100 a month and now with the new act that got passed, the Save America’s Pastime Act, it’s like a $60 raise, so the minimum salary in baseball is like $1,160 or $1,180. It equates to $7.25 an hour at 40 hours a week per month, the absolute minimum you can pay according to the 40 hour times $7.25 rule. That’s basically the starting salary for a minor league player would be right around $1,100 a month.”
And if Major League Baseball (as the overseers of the minors) were forced to adhere to minimum wage and/or overtime provisions, especially in places where minimum wage is higher than $7.25 an hour, they'd have to pay those minor league players more. But with the antitrust exemption and other (in)actions from Congress and the White House, they don't have to worry much about that.

Pitching more than just sliders

Milwaukeeans won't see much from Perrin any time soon unless you follow him on social media, as he was traded from the Brew Crew to the Royals' organization last August. But let's see if his comments from last Spring on underpaid minor leaguers come back up as more people ask why MLB was giving money to a horrible Senate candidate in Mississippi.

Now we can't even beat Minnesota in football?

I get back into town from a family Thanksgiving trip, and THIS is what I get?

Minnesota has been beating us in practically every economic and quality of life statistic during the 2010s, but at least we've had better football than them. Now we lose the Axe for the first time in 15 years?

If the Pack don't come through vs the Vikes tonight (and I am not counting on it), looks like a long winter of nothing for both of this state's football teams. And yet another way we are sinking in the Midwest in 2018.

Friday, November 23, 2018

In Wisconsin, a redder town usually = a dying town

Start with this.

Then compare to this.

And then combine it with this.
According to turnout estimates analyzed by Tufts University's Center for Information and Research on Civic Learning and Engagement, under-30 voters supported Evers by a 23-point margin on Nov. 6. That's a significant expansion from 2014, when under-30 voters supported Democratic candidate Mary Burke by just four points more than Republican Gov. Scott Walker.

Evers defeated Walker by 1.1 percentage points in an election with record voter turnout: about 59 percent of the state's voting-age population, or more than 2.6 million people, cast ballots. In its early analysis, CIRCLE estimated that 31 percent of eligible young voters (ages 18-29) voted nationwide. In five states with competitive gubernatorial races combined — Wisconsin included — youth turnout was 35 percent this year, according to the CIRCLE estimates....

In student-dominated wards in La Crosse, turnout was up 45 percent from 2014, according to data provided by NextGen. Evers took about 70 percent of the vote in those wards. Stevens Point's student wards saw a 10 percent increase in turnout and a 10 percent increase in the Democratic margin, with Evers earning 71 percent of the vote. In River Falls, turnout in student-focused wards rose by 36 percent, with an increase of 7 percent in the Democratic margin.

In Oshkosh's student-dominated wards, Evers won about 63 percent of the vote. Turnout in those wards increased by 7 percent from 2014, but the margin for the Democratic candidate increased by 19 percent. Evers won 61 percent of the vote in Green Bay's student wards — a 14 percent increase in the Democratic margin from 2014, and a 19 percent turnout increase.
The correlation seems pretty clear to me. Maybe the places in the purple need to stop voting Red at the state level, because they have lost a lot during the GOP-dominated Age of Fitzwalkerstan. And younger adults don't want to live in those dying, GOP-voting towns.

Then again, maybe that was the intelligence of WisGOP's design.

But you can see where that's not a long-term winner for WisGOP, especially if those younger Wisconsinites don't move out of the state now that the Evers Administration will be in charge.

Combine that with the GOP's gerrymander being set to be broken after 2020, causing more land in the purple/red-voting areas to be taken up by fewer districts, and no wonder why WisGOP is trying to rig things to try to stay in charge. The ALEC crew can see how the thinking and growing parts of the state are turning against them, but they'd rather change the rules than adjust to the changing reality.

They must go down as a result, and GO DOWN HARD.

Thursday, November 22, 2018

Talk about your turkeys on's the latest on Foxconn

Yeah, about that...
Foxconn Technology Group, the biggest assembler of iPhones, became the latest Apple Inc. supplier to warn of anemic demand, with an internal memo suggesting that expenses will be cut by almost a half next year.

The contract manufacturer aims to cut 20 billion yuan ($2.9 billion) from expenses in 2019 as it faces “a very difficult and competitive year,” according to an internal document obtained by Bloomberg. The company’s spending in the past 12 months is about NT$206 billion ($6.7 billion). The shares of Hon Hai Precision Industry Co., as Foxconn is known in Taiwan and Asia, rose less than 1 percent in early trade in Taipei on Thursday.

“The review being carried out by our team this year is no different than similar exercises carried out in past years,” Foxconn said in an emailed statement in response to Bloomberg queries. It’s designed to ensure the company’s teams and budgets “are aligned with the current and anticipated needs of our customers, our global operations and the market and economic challenges of the next year or two.”

Foxconn’s iPhone business will need to reduce expenses by 6 billion yuan next year and the company plans to eliminate about 10 percent of non-technical staff, according to the memo. The moves are likely to add to the gloom enveloping Apple and suppliers for the iPhone, its most important product. Just last week, four suppliers on three continents cut their revenue estimates because of weak demand. That set off a rout in technology stocks that has spread to the broader market in recent days.
Oh? You mean they're going to cut the "non-technical staff" that would be manufacturing LCD screens? Like the type they're supposed to make in Racine County?

Meanwhile, Wisconsin taxpayers are putting up 15% of the costs to build this.

At this point, aren't we better off just giving Foxconn $100 million (instead of paying $490 million for this boondoggle in the next budget), letting them sell that building, and then telling them to go away? Isn't that better for everyone at this point?

Wednesday, November 21, 2018

We can't get everything in the next budget, but DOT is likely the bigger problem

I'm on the road with family, but wanted to give a little context for the detailed headline you may have seen yesterday that proclaimed "State officials predict $1 billion budget shortfall if all spending plans are approved despite higher tax revenue."

That figure comes from yesterday's release of the Wisconsin Department of Administration's summary of budget requests and revenue estimates. This comes out every 2 years on November 20 (after the elections, conveniently), and gives a big-picture idea of what might or might not be achievable in the upcoming budget.

Despite the fact that he and all other Republicans in statewide races were given the boot by Wisconsin voters 2 weeks ago, Scott Walker's DOA still lays on heavy spin to claim things are great in Wisconsin going into the 2019-21 budget. This is just a small taste of the crap they dish out in this document (on our dime, no less).
The fiscal condition of the State of Wisconsin is the best it has been in at least a generation. The state completed fiscal year 2017-18 with a positive General Fund balance of $588.5 million. As a result, the state entered fiscal year 2018-19 with the second largest opening balance since the year 2000. The 2018-19 gross ending balance is estimated to be even larger, $622.6 million which is $440.9 million higher than previously estimated in the final Chapter 20 schedule.
Wait, how did we go from $181.7 million to $622.6 million left over at the end of this budget? The first reason is that Walker's DOA expects tax revenue to rise strongly next year.

Projected General Fund tax revenues, 2017-19
2017-18 (actual) $16,144.2 million
2018-19 (projected) 16,816.0 million (+4.2%)

That's an increase of $137 million compared to what the Legislative Fiscal Bureau estimated for the 2018-19 Fiscal Year back in January. But it is worth noting that we beat the LFB projections for revenue by $19 million for the last fiscal year, and while the 4.2% rate of growth is more than the 3.4% growth the LFB predicted for this year, it's also not much more than the 4.0% growth we had in 2017-18.

Then on the spending side, Walker's DOA says that costs should come in $84 million lower than what was expected in January. This is largely due to savings in Medicaid, which the DOA says is projected to spend at least $149 million less in state tax dollars than budgeted due to lower caseloads (fill in the blanks as to why) and various cost-containment measures. Ironically, the cost savings are somewhat offset because of a larger expected deposit in 2019 for the Budget Stabilization Fund, because of the larger-than-projected revenues.

Walker's DOA claims tax revenue will keep rolling in for the 2019-21 budget as well.
Projected General Fund tax revenues, 2019-21
2018-19 $16,816.0 million
2019-20 $17,412.1 million (+3.5%)
2020-21 $17,801.7 million (+2.3%)

This is despite few projected changes in tax policy (other than a couple of pre-election proposed Walker tax gimmicks that would cut revenues by $52.9 million), and despite Wisconsin already being maxed out on the number of people working (at 3.0% unemployment), and likely to continue to have the slow population growth that has plagued it throughout the Age of Fitzwalkerstan (at least in the short term).

But hey, maybe they're assuming new Governor Evers will actually get Wisconsin into the top half of job growth for the US for the first time since 2011, and they just didn't want to admit it (tricky, tricky guys!).

DOA also claims that the US economy will keep growing at 2.7% for 2019, 2.1% for 2020 and 1.6% for 2021. Color me skeptical on all of these economic assumptions, given the demographic issues in this state and the fact that 2/3 of economists in a survey last month said that they expect the US to be in recession in the next 2 years.

Now let's go over to the spending side.

Projected General Fund expenses 2019-21
2018-19 (projected) $17,264.3 million
2019-20 $18,248.2 million
2020-21 $19,687.9 million

That's a $1.4 billion increase for 2020-21, well above the rate of revenue increases, even with the rosy projections from Walker's DOA.

So put it together, and it means the budget would look like this, if you assume the revenue and expense increases for 2019-21, along with what is carried over from the end of this Fiscal Year.

While there is a minor decline in 2019-20, you can see the real imbalance is in 2020-21, which is a $1.35 billion deficit for that year alone. Now understandably, all of these spending requests will not be funded. You can bet the ALEC crew in the Legislature will be especially unwilling to fund public education to the level and manner that Evers requested in his current job as State Superintendent of Schools, which is about half of that $2.4 billion in added spending in 2021 vs 2019.

But there are also some items that need to be paid for. Health Services is supposed to rise by $430 million by 2021 just to continue with the same services they have today, Corrections would need to increase by $93 million in those 2 years, and the UW System asked for $83 million more. It's also worth noting that these requests do NOT include road projects from the Transportation Fund. That's projected to be another $1 billion or so more than what we will have to take care of Scottholes and try to get delayed projects back on track.

So to review, we will have some budget constraints in the next budget, and the Walker DOA is hoping for economic growth that may not happen, and that may make it worse. However, I also wouldn't panic about the "$1 billion deficit" headline about the General Fund (because that is largely based on a wish list) as much as I would be worried about the looming deficit and rising debt in the Transportation Fund. DOT is the bigger hole that Walker and WisGOP have put us in at this time, and the one with more immediate needs.

Tuesday, November 20, 2018

Consumer and housing concerns are starting to bubble up

With the Holiday shopping season annoyingly underway looming, it seems like a good time to see what might be going on with consumer spending. And there was some cause for confidence when we saw last week’s US Retail Sales report for October, as the topline figures looked strong.
Advance estimates of U.S. retail and food services sales for October 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $511.5 billion, an increase of 0.8 percent (±0.5 percent) from the previous month, and 4.6 percent (±0.5 percent) above October 2017. Total sales for the August 2018 through October 2018 period were up 5.0 percent (±0.5 percent) from the same period a year ago. The August 2018 to September 2018 percent change was revised from up 0.1 percent (±0.5 percent)* to down 0.1 percent (±0.2 percent)*.

Retail trade sales were up 0.9 percent (±0.5 percent) from September 2018, and 4.3 percent (±0.5 percent) above last year. Gasoline Stations were up 16.2 percent (±1.6 percent) from October 2017, while Nonstore Retailers were also up 12.1 percent (±1.4 percent) from last year.
Overall, that sounds pretty good. But note that gasoline figure, and remember that retail sales do not account for inflation.

According to the most recent Consumer Price Index report, gasoline prices rose by nearly 17% over the same time period, and was up 3% in October 2018 alone.

What this means is that these allegedly strong retail sales numbers aren’t as hot, although they’re still not bad.

Retail sales minus gasoline
Oct 2018 vs Sept 2017 +0.5%
Oct 2018 vs Oct 2017 +3.6%
Aug-Oct 2018 vs Aug-Oct 2017 +3.1%

And now that gasoline prices have fallen hard in the last month, it seems logical that retail sales might also “decline” for November, and people panic instead of looking underneath and seeing how much that drop is due to lower gas prices. But what both months may indicate is that consumer spending growth could be moderating from the strong 4.0% pace reported for 3rd Quarter GDP (and the downward revisions for September indicate that 4% figure could also end up lower).

There also is some iffiness with the housing market, as higher prices and higher interest rates might be putting homes out of reach for many people, even with low unemployment and a minor pickup in wage growth. Note this story from last week.
Mortgage application activity decreased 3.2% from one week earlier as interest rates rose to eight-year highs and refinancings fell to an 18-year low, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Nov. 9 found that the refinance index decreased 4.3% from the previous week reaching its lowest level since December 2000. The refinance share of mortgage activity increased to 39.4% of total applications from 39.1% from one week earlier.

The seasonally adjusted purchase index decreased 2.3% from one week earlier reaching its lowest level since February 2017, while the unadjusted purchase index decreased 5% compared with the previous week and was 3% lower than the same week one year ago.
On a similar note, the Wisconsin Realtors Association reported over the weekend that fewer homes continue to be sold in Wisconsin compared to last year, while prices of those homes kept rising well past the rate of inflation or wage growth.

The right-wing Realtors tried to claim the overall economy was still good, but even they had to admit that rising prices and rates were taking its toll on their business.
"Prices continued their upward trajectory and mortgage rates also increased by just under one percent over the past year, so affordability has definitely slipped," said WRA President & CEO Michael Theo. The Wisconsin Housing Affordability Index shows the fraction of the median-priced home that a buyer with median family income can qualify to purchase, assuming 20 percent down and the remainder financed using a 30-year fixed-rate mortgage. The index fell from 219 in October 2017 to 196 this past October, which is a 10.5 percent reduction in affordability over the last 12 months. "The strong economy has kept affordability from dropping further," said Theo. Median family income in the state is estimated to have increased just over 5 percent since October of last year. "The flip side of a strong national economy is that the Fed will likely continue to hike interest rates, which will translate into higher mortgage rates over the next year" he said. Rising prices and rising mortgage rates will continue to put pressure on affordability so considering a move in the winter may turn out to be a good decision in the long run.
But Wisconsin wages and job growth are hardly booming, no matter how Theo wants to spin it, and the rising home prices and increasing number of school referenda indicate that the claim of Scott Walker and the Wisconsin GOP that “your property taxes will be lower” is unlikely to be the case when you get your bill this Fall.

Now combine that squeeze with the fact that many middle-class Americans will get another surprise when they file their federal taxes and realize that it won’t be worth it to write off their mortgage interest or property taxes because the increased standard deduction is larger and the State and Local Tax (SALT) deduction is limited to $10,000 per couple. It makes me wonder if there’s a real danger of a bubble popping in housing which tightens up the wallets of Wisconsinites and others in the coming months.

Which makes it notable that there was another warning out yesterday about the housing market, and it played a role in tanking the DOW Jones Industrial Average by nearly 400 points yesterday.
Confidence among U.S. homebuilders plummeted by the most since 2014 as the highest borrowing costs in eight years restrain demand, adding to signs of a cooling housing market that will weigh on the Federal Reserve’s debate over how far to raise interest rates.

The National Association of Home Builders/Wells Fargo Housing Market Index dropped eight points in November to 60, the lowest level since August 2016, according to a report Monday. That compared with the median estimate of economists for a one-point drop to 67.

Shares of homebuilders initially fell and 10-year Treasury yields erased gains following the report, which represents one of the first breaks in elevated levels of business and consumer confidence that have persisted since Donald Trump was elected president in November 2016. While the index remains in positive territory, the group called on policy makers to take note of the housing situation as a possible warning sign about the broader economy.
But the country’s high budget deficits mean that central bankers might not want to limit their plans to keep raising interest rates, as it becomes difficult to get enough money to finance our increasing debt if bond-buyers can’t get a good rate.

I’m not saying we’re in stagflation yet, but you can see how things are set up where a number of small annoyances barriers can add up to an economic slowdown and/or recession in the near future. And the way out of that economic slowness will not be fun or easy, since we’ve already shot most of our weapons to fight those problems as a result of the GOP Tax Scam and wage growth that still doesn’t seem able to overcome the growing debt and expenses everyday people continue to have.

Which brings us back to Holiday shopping, as it seems like those figures could go a longer way than normal toward indicating whether our economy is OK heading into 2019, or is in big-time danger of going over the edge.

Monday, November 19, 2018

Evers got just enough voters to swing back to become Guv

I wanted to follow up from my pre-election analysis to see just how much the votes shifted from GOP to Dem to allow Tony Evers to become our state's next Governor.

The biggest shifts happened in the Milwaukee Metro area. Not only did Evers benefit from a big shift to Dems in the Milwaukee County suburbs and increased turnout in the City of Milwaukee, but he also held down Walker’s margin of victory in the WOW Counties, as Walker basically split the difference between himself in 2014 and Trump in 2016.
Note- all of these maps will use "Dem% - GOP%" as the baseline.

If you look at the largest counties in northeastern Wisconsin, while Walker won every one of those 6 counties, Evers outperformed Burke in all of them, and improved on Hillary Clinton’s 2016 results in 2/3 of them. This kept Walker from running up the massive margins in the 920 that were keys to his prior victories.

As WisGOPs seem to bemoan every day, central to Evers’ win was a 150,000+ vote advantage in Dane County, which was 50,000 more votes than what Burke won the county by in 2014. Tony won Dane by a comical 51%, and he also did better than either Burke or Clinton in 4 other typically blue counties that border Dane.

Another area where Evers (generally) did well in was the southwestern corner of the state. Not only did he become the first Dem to win Grant County since 2012, but he also more than doubled Burke’s win in La Crosse, and gained back rural counties that were lost badly to Trump in 2016.

For Trump to win Wisconsin in 2020, he needs this area to vote like it did in 2016. If that’s not happening (and it didn't in November 2018) the GOP’s losses in the larger metro areas will be too large to make up. So this is worth keeping an eye on.

Similarly, the area along Highway 29 in Central and Western Wisconsin was one I identified as a key tale-teller for 2018 and 2020. And as you can see, Evers made gains vs 2014 and 2016 in 3 of them, but that the Wausau area stayed strongly red.

This has big downticket implications, as it indicates Sean Duffy’s lucked into a House seat that is much easier for him to win than it was when he first won it in 2010. It also helps explain how Jeff Smith got a surprisingly easy 6-point win to keep Kathleen Vinehout’s Eau Claire-area State Senate seat in Dem hands, and the shift toward Dems in both Dunn and St. Croix Counties could help Dem Patty Schachtner hold her State Senate seat in 2020.

Lastly, let me give you this map from J. Miles Coleman at Decision Desk HQ. As you can see, Walker actually did better in some rural counties in 2018 than he did in 2014. But the more populated southern half of the state shifted harder towards Dems, and that's what did Scotty in.

Sunday, November 18, 2018

Feelings vs facts- RW snowflakes don't get the difference. Don't waste time on them

One thing that has bothered me about the 2010s is how so many right-wing politicians and media figures refuse to act in good faith, and that Dems and "legitimate" media are so inept in countering these dishonest lowlifes.

Along those lines, In Vox's Sean Illing talked with Cal-Berkeley professor George Lakoff, who notes that it's a mistake for media and politicians to repeat Donald Trump's tweets and false claims. Even if it's to say "Donald Trump is lying when he says _____," Lakoff says it's a losing strategy that allows Trump's BS to fester in people's minds.

While I find Lakoff and followers to be simplistic at times, I think he is largely spot-on here. Lakoff says that instead of reporting in Trump's statements, media and politicians should use "truth sandwiches" that use a word structure "facts - why Trump is lying about these facts - and reiterate the facts."

A mistake that Lakoff says Democrats and others make with right-wingers is that they assume all people make their opinions based on facts and are flexible to new inputs, instead of being likely to stick with what they want to believe.

(George Lakoff:) People think in terms of conceptual structures called frames and metaphors. It’s not just the facts. They have values, and they understand which facts fit into their conceptual framework. You can’t understand something if your brain doesn’t allow it, if your brain filters it out in terms of your values.

Democrats seem not to understand this, and they keep trying to employ reason as a persuasive vehicle. I wish Enlightenment reasoning was an accurate model for how most people think and judge, but it isn’t, and we better acknowledge that fact.

Sean Illing: So on some level, you’re saying that Democrats have to accept that they’re playing a different kind of conversational game, in which truth and falsity are irrelevant. If that’s the case, what use is there for a free press, or for discourse at all?

George Lakoff: Well, that’s why the truth sandwiches are important. Let me say one more thing that’s really crucial in this respect. Kellyanne Conway talked about alternative facts at one point, so the phrase comes from her. When I heard that, it occurred to me that there’s a sense in which she’s right.

If you’re someone who shares Trump’s worldview, there are certain things that follow from that worldview. In other words, certain things have to be true, or have to be believed, in order to sustain that worldview. The things that aren’t actually true but nevertheless preserve that worldview are “alternative facts” — that’s what Conway was getting at, whether she knew it or not.

The conservatives use those alternative facts all the time, and so does Trump. If he’s talking to his base, he’s talking to people who have already bought into a picture of the world, and his job is to tell them things that confirm that picture — and he knows they’ll believe it for that very reason.

I think we have to understand “alternative facts” in this way, and understand that when Trump is lying, he’s lying in ways that register with his audience. So it may be lying, but it’s strategic lying — and it’s effective.
With this in mind, I wanted to also note this part from Saturday Night Live's open, where Kate McKinnon played Faux News host Laura Ingraham, and explained to us to the concept of "feel facts".
“Later on in the show: Celebrities in California are whining about wildfires while our heroic president is under constant attack from rain,” [McKinnon] said [as Ingraham]. “But first, let’s talk about the rampant voter fraud that allowed democrats to literally steal the election. Some have claimed that suburban women revolted against the Republican party. But doesn’t it feel more true that all Hispanics voted twice?”

The Ingraham character added them to her list of “feel facts,” which “aren’t facts but they just feel true.”

What the SNL skit and Lakoff's comments illustrate are reasons why we shouldn't waste our time arguing with people weak enough to still support Trump or get their "facts" from hate radio AM 620/1130/1310. All you can do is to mock them and repeat facts in different frames so that bystanders don't get tricked into thinking that Bagger trash shooting their mouths off actually have a clue.

The sooner we concentrate on the wants and thoughts of the honest 70% of this country that cares about independent facts and results, the better off we will be. And the more likely it will be that we can isolate and diminish the gutless 30% that are left.

Shouldn't we fund public schools vs having constant referenda?

I wanted to catch up on another trend that happened at Wisconsin ballot boxes this November - the increasing amount of school referenda throughout the state that voters approved of.

In addition to the former teacher they chose to be their new governor, Wisconsin voters around the state also chose to raise their own taxes to keep their public schools running.
Wisconsin taxpayers voted to pour at least $1.3 billion more into their local public schools on Tuesday, raising their own property taxes in most cases to pay for it and making 2018 another record year for school district referendums.

Capping an election cycle in which education issues dominated the governor's race, voters approved 77 referendums by school districts asking to borrow money for capital projects or exceed their state-mandated revenue limits to maintain or expand programming. They rejected just five, totaling almost $44 million.

All 23 ballot questions passed in southeastern Wisconsin, totaling $556 million, according to an analysis of data reported by the Department of Public Instruction. Those included a $124.9 million ask by the Wauwatosa School District — the second largest referendum Tuesday — which is expected to raise property taxes on a $250,000 home by $470 a year for the next two decades.
Wisconsin Public Radio also had a on the numerous referenda, mostly concentrating on the large number of smaller, rural districts that felt they had little option but to ask the voters for more funding in order to survive.
According to the Wisconsin Policy Forum, the increase in rural districts asking for funding help is generally tied to decreases in enrollment. But the state's competitive education landscape could also be playing a role in the increased number of referendums, according to Dan Rossmiller, the director of government relations for the Wisconsin Association of School Boards.

Options like open enrollment and the state's voucher program give students options outside of their school district.

"Districts are finding that they're having to make certain improvements to be more competitive in that competitive environment and keep those students where they currently are," Rossmiller said.
I don’t buy Rossmiller's argument at all. These aren’t college dorms that get spiffier to attract students. The referenda is often going into everyday classrooms and other facilities that are falling apart, along with paying bills to keep the lights on. I think it's more a reflection of 8 years of defunding and devaluing public education by the ALEC-GOP crew that has been running things at the State Capitol.

Where vouchers play into this equation is because of the ALEC/GOP funding mechanism that literally takes away money from the public school district where the voucher student lives, even if the student has never attended a day of classes in public school. I note that Wauwatosa is the Milwaukee suburb that seems to have turned hardest toward Democrats in the last few years, because they know that the voucher scam is wrecking their community's schools and quality of life, while raising their own property taxes in the process.

And all of these factors matter when it comes to keeping their community vibrant and worth living in, which explains why SOS (Save Our Schools) was a common sign I saw in Wauwatosa yards as I increasingly headed to Milwaukee in September and October for the Brewers' playoff run.

This seems like something Governor-elect Evers should fix in his first budget, along with reiterating his call for looser revenue caps, which will lessen the need to go to referendum in the first place. And perhaps we should use some of the $1.6 billion+ in tax dollars that we spend on writeoffs for property taxes associated, and put that money into the classroom and the buildings instead.

Lastly, WisGOPs have spent the last several years trying to starve K-12 public schools into submission. Maybe it's time to reverse that trend and start cutting off these voucher schools from the taxpayer teat. After all, if they believe in competition and "survival of the fittest", maybe they should stop getting so much of our money and get by on their rich benefactors and tuition that can be written off on rich people's taxes.