Tuesday, February 5, 2019

No Johnny Nygren, Wisconsin is not prosperous and booming

Despite all Republicans being thrown out of power in statewide offices 3 months ago, Joint Finance Co-Chair John Nygren (R-Marinette) wants to convince you that Wisconsin’s economy is doing great due to GOP policies. I wouldn't take that analysis to the bank.

First off, Nygren compares Wisconsin’s financial situation to Illinois, a state that is Exhibit A of “What not to do” when it comes to fiscal policy – as the FIBs used unfunded tax cuts and constant borrowing against the future to stay afloat in the short term (Dem-led Minnesota and its $1.5 billion surplus is nowhere to be found in Nygren's analysis).

Lame enough, but let's dig deeper into the "evidence" Nygren uses.
Due to Republicans’ sound financial management, Wisconsin’s finances are the strongest in a generation. State debt continues to decline and, after over $8 billion in tax cuts, state revenues have grown over 24 percent. In case of an emergency, our state’s rainy day fund is 190 times larger than it was in 2010, at $320 million. We rolled over a budget surplus of $588.5 million at the end of 2018 that was larger than previously estimated.
I’ll jump in here. Nygren is intentionally confusing property tax relief at the local level with state revenue growth. Much of that “property tax relief “ is actually a shell game where state tax dollars are spent to make up the difference.

State taxes in Wisconsin have not been cut by $8 billion, and Nygren also doesn’t mention the significant increase in wheel taxes in Wisconsin that are a direct result of WisGOP underfunding highways and local governments.

But hey, there's more money in the rainy day fund!

At this point, I want to draw your attention to a great column by UWM professor Jeffrey Sommers and former Milwaukee Area Technical College economics instructor Michael Rosen, which serves as a forceful rebuttal to the rosy picture Nygren and other WisGOPs are trying to paint.

Sommers and Rosen note that Wisconsin Republicans have been pennywise and pound-foolish in the 2010s. They center on ex-Governor Walker and Assembly Speaker Robbin’ Vos in their column, but Nygren has signed on to every one of these initiatives as well.
8) Walker rejected the return of $800 million from D.C. for high-speed passenger rail, forfeiting that additional spending and job creation that would have driven income and business growth in state. Investments in passenger rail also drive up property values, stimulate business creation at station stops, and generate more tax revenues. Oh, he also refused $23 million for high-speed internet designed to bring increased connectivity to rural communities that would have sustained their businesses.

9) Walker, Vos and Fitzgerald rejected the return of a billion dollars of Wisconsin taxpayer dollars from Washington, D.C., for Medicaid expansion. Thus, 60,000 to 80,000 Wisconsinites (enough people to fill most professional baseball stadiums) were denied coverage as a result and the economy was starved of yet another $190 million that would have fueled income and business growth.
Bottom line - WisGOPs have chosen wisely over the last 8 years, and we’re worse off as a result.

Let’s continue with this sentence from Nygren’s column.
Meanwhile, Illinois has a more than $130 billion shortfall in future pension commitments. Wisconsin’s remains not only fully funded, but the best funded retirement system in all 50 states.
Yeah, but Johnny and WisGOP did nothing to improve the solvency of those already fully-funded pensions. All they did was change who paid into the pension by taking money out of the pockets of public employees while giving tax cuts to their corporate benefactors.

Nygren also tells us that WisGOP’s record should go beyond the fiscal picture, but also include the jobs and wage market.
Wisconsin’s strength, however, isn’t measured solely by surpluses and revenue growth. Since beginning our common-sense reforms in 2011, Wisconsin has come roaring back. Unemployment has been at or below 3 percent for 11 straight months. Wages are growing and more Wisconsinites than ever are participating in the workforce. Last year, Wisconsin led the Midwest in manufacturing job growth and was second nationally only to Texas.
Again, you WisGOPs didn’t build that, as the Walker jobs gap shows.

As Sommers and Rosen note, “growing wages” and a low unemployment rate during the Obama Recovery isn’t anything special for Wisconsin. In fact, a closer examination shows another WisGOP failure.
2) During the Walker years, Wisconsin's average hourly wage growth was been poor. In 2018, his last year in office, Wisconsin trailed all but one of its Midwest neighbors. Meanwhile, neighboring Illinois and Minnesota already had higher wages than Wisconsin and they rose by more than twice Wisconsin's paltry growth rate of 2.2 percent. (I alluded to this recently, citing a report from the Bureau of Labor Statistics that said Wisconsin ranked 43rd in the nation for wage growth).

3) Twenty percent of Wisconsin workers (675,000) make a poverty-level wage of less than $11.95 an hour. To add insult to injury, Walker and his Republican allies refused to raise the minimum wage even as 29 states raised theirs, and the GOP made it illegal for local communities to enact living-wage ordinances. Currently, the federal (and Wisconsin's) minimum wage is at 1950 inflation-adjusted levels.

4) Walker and Vos like to point to the unemployment rate as evidence that the economy is strong. Walker came into office with an unemployment rate 1 percent below the national average. He left office with it slightly under 1 percent of the national average. In short, Wisconsin even slightly lost ground by this national benchmark. Wisconsin’s low unemployment rate is partly a function of young people leaving the state for better opportunities. Wisconsin is among the top 10 states people leave. As they leave the unemployment rate is artificially reduced.
Lastly, the “manufacturing job growth” Nygren props up has already been shown to be BS based on the “gold standard” Quarterly Census on Employment and Wages (QCEW). As a result, the monthly jobs figures that Nygren bases his “manufacturing jobs are booming” statement will also see that manufacturing growth be revised down in the coming weeks with the annual benchmarking process.

In their column, Sommers and Rosen rightfully note that WisGOP’s happy talk is cynically intended to set up Governor Evers and other Wisconsin Democrats for blame as the US economy slows in the coming years. And it will slow - we’re already overdue for a recession after 10 years of growth in the US.

Combine that fact with the sugar high from the GOP’s Tax Scam in DC wearing off and being paid back with smaller tax refunds in 2019 (something Wisconsin will be especially hit by), and it’s a recipe for things to fall to earth fast.

So no, John Nygren and the rest of the GOP hasn't led us into prosperity. But they can screw us over in the coming years due to unfunded tax cuts at the state and federal levels. Just the way Grover Norquist and the Kochs would draw it up.

1 comment:

  1. In addition to the Wheel taxes there are the numerous school referendums which provided voters with the horrible choice of either raising property taxes or cutting school budgets (resulting in lost property values). Those on fixed or declining incomes really were put in an awful position. And of course increasing voucher schools made these referendums even more necessary.