Tuesday, July 30, 2019

GOP Tax Scam failing all around. It didn't make taxes easier, and our debt keeps climbing

2 stories over the last 2 days illustrate how the GOP's Tax Scam continues to come up short of pretty much anything that was promised from it.

To start with, remember how Paul Ryan and company claimed one of the good things about the tax scam reform was that “you could do your taxes on a postcard”? That idea didn’t work out well, and now it’s getting dumped.
But complaints about the changes came quickly: the National Association of Tax Professionals told the IRS in a July 2018 comment letter that it received “overwhelmingly unfavorable” feedback from hundreds of members.

“Treasury Secretary Steven Mnuchin told the media that the administration’s main objective was to simplify the forms,” the association said. “In our opinion, making the form smaller and removing lines only to move them to other schedules does not equate to simplification.”

Scattering information that used to fit on two pages across multiple different attachments required taxpayers and their advisers to toggle back-and-forth and made everything much more confusing, Ellis said.

The IRS heard the concerns and is redesigning the 1040 that people will use to file their 2019 tax returns next year. The agency July 11 unveiled a draft form that looks closer to the Form 1040 that existed prior to 2018 with a two-page baseline form and three schedules, as opposed to six.
This "policy wonk" sure is wrong a lot.

In addition, part of the GOP's “simplifying” of the tax code was why so many middle-class and upper-middle class people ended up having to send checks to the IRS last Spring, because the standard deduction was raised so high that it became pointless to take deductions for mortgage interest and state and local (SALT) taxes.

And no surprise, but we found out on Monday that our “fiscally conservative” White House is going to borrow a whole lot of money in the next couple of months.
The Treasury Department said Monday it expects to borrow $433 billion in the current July-September quarter. That would be the largest quarterly borrowing total since early 2018, as the government replenishes its cash reserves following the expected resolution over raising the debt limit.

Treasury said the $433 billion in borrowing it expects this quarter, through selling Treasury bonds and bills to the public, would be the largest quarterly total since it borrowed $488 billion in the January-March quarter of 2018.

Market borrowing for this budget year is projected to total $1.27 trillion, a 6.5% increase from the $1.195 trillion borrowed in the 2018 budget year.
That last number is not to be confused with the budget deficit, as this reflects the total amount borrowed to pay bills at any point in the year. Other times the government has more money coming in than going out, so the net deficit for the year will be a bit lower - estimated to be around $900 billion - $1 trillion for FY 2019, which ends on Sept. 30.

The other explanation for this extra borrowing is that the debt ceiling deal gives the Trump Treasury Department extra flexibility to pay bills and keep more cash around, now that their credit line has been raised.
The Democratic-controlled House last week approved a bipartisan debt and budget deal that the Senate is expected to pass this week. That measure suspends the current $22 trillion debt ceiling for two years until July 31, 2021….

Treasury had initially estimated it would need to borrow $160 billion this July-September quarter but that was before House Democrats struck a budget and debt deal last week with the Trump administration, ahead of a fall deadline for action.
However, that budget deal doesn’t say how much each department gets in funding, nor does it deal with any tax changes for the 2020 Fiscal Year. That still has to be figured out over the next 2 months. And that's a place where Dems could put their foot down, if they choose to.

After all, when 40% of the nation’s GDP growth is due to government spending (as it was in Q2 2019), it would be a damn shame if that spending didn’t continue and the economy declined as a result. Which is exactly why House and Senate Dems should do their parts to hold up anyone getting anything until something is done about the (in)actions of Trump and Moscow Mitch McConnell on the country’s national security and related corruption.

I’m sure Trump and 22 GOP Senators wouldn't want to face 2020 voters with a slowing and/or recessing economy. So if Republicans continue to cheat and flout the law to avoid accountability, then Dems should be willing to shut things down at the end of September, and throw our already-bubbly stock market into a panic. The prospect of that economic damage, and the added attention to GOP corruption that such a move would draw would probably make the GOP more likely to go along if the Dems made a simple offer of “play by the law and secure our elections, and you get a budget deal.”

The growing deficits and debt offer a political opportunity. So PLAY HARDBALL, DEMS! Unless you’re not in this to win it.

Monday, July 29, 2019

DOT Secretary says more highways need fixing, and more money needs to be found

Wanted to forward you to an interview WisDOT Secretary did with Capitol reporters Steven Walters and Patrick Marley on WisEye’s “Rewind” show on Friday. Lots of things to chew on over this 20-minute discussion.

Here is a quick rundown of the things that grabbed me.

1. On DOT revenues - Thompson says he thinks the gas tax is a better way to get extra funding over the methods WisGOP chose (mostly through increases in small vehicle and title fees), but the added money is welcomed in 2019-21. Thompson also said tolling is in play as a revenue source in the future (!), and that basing vehicle registration fees on miles traveled isn't a bad idea, but that VMT should be uniformly done at the federal level.

2. The one-time $75 million addition from General Fund is a “one-off” is not worthwhile, and ongoing/permanent revenue is a better option than gimmicks designed to get through the next budget. And Thompson responded to GOP complaints about Evers' veto-based changes to the one-time money (described in detail in this post) by saying the Milwaukee streetcar will NOT be part of the $75 million in new funding. Thompson said the City won’t ask for streetcar money and Evers wouldn’t give it to them anyway.

3. Thompson is fine with WisGOP enumerating a project that would expand I-41 between Appleton and GB. But he notes that it'll cost $1 billion, and while 2019-21 is helped with the new money, Thompson says additional revenue increases are going to be needed in the future to continue to pay for these projects over the next few years.

4. Thompson also goes over a number of other projects that are in the pipeline and/or will be completed in the near future.

In SE Wisconsin
I-94 by Miller Park – already spent $2.5 billion between Zoo and Marquette Interchanges, so why aren’t we fixing up the part in-between. But feds need to give another look at what to prioritize, may be in 2021-23, but not sure. On a related note, the Zoo Interchange work should be completely done in 2022.

I-94 by Foxconn – DOT officials looked at “death trap” area, and now crashes are down. Increased marking and law enforcement, and people should SLOW DOWN. Should be 4 lanes by Fall, and will finish up and completed in June of next year.

I-43 north of Milwaukee has been enumerated, and some money has been freed up from other projects ending, so it should start up relatively soon. But Thompson's not sure of exactly when that can be completed.

Madison area
I-39/90 south of the city should be done by mid-2022. And where 39/90 connects with the Beltline, Thompson says WisDOT will go with cheaper options, which would be enough to get us by for the next decade. But the Beltline-Interstate connection will need more work in the 2030s.

On the other end of the Beltline, the long-time Verona Road project and interchange should be done in the next year (FINALLY).

5. The large number of these ongoing projects and others around the state is why Thompson calls for a return of the state's Transportation Projects Commission, which hasn’t met since 2013. Thompson says that Committee should be meeting twice a year to see where we are, and to figure out best use of available funds for all of the state's needs.

6. Marley from the Journal-Sentinel indicates that any veto override set up by the GOP Legislature will likely be a “show vote” more than any legitimate attempt to have their original bill enshrined into law. Neither the Assembly or Senate is 2/3 GOP, and Marley says they likely aren’t coming back until October anyway (but don't worry, the legislators will still be getting paid by us!). That delay makes it even dumber to try an override, since WisDOT is already taking grant applications for that $75 million, and Thompson says he wants to get the money out the door as soon as they can.

I'll also note that Thompson ends the interview by noting that underfunding at the DOT has been going for 15 years, and won’t be solved in a 2-year budget. So this issue will crop up again in future years and in our upcoming elections, because there are a lot of Scottholes and other underfunded infrastructure in Wisconsin that needs to be worked on.

GOP redistricting scheme cuts Evers, most Wisconsinites out of the picture

Among the reasons that the election of Tony Evers in 2018 saved Wisconsin from tumbling further into the abyss and likely past the Point of No Return as a worthwhile state was the thought that Evers could veto new legislative maps following the 2020 census. This would mean that Wisconsin would have court-drawn compromise maps, like we had for the 40 years before the Age of Fitzwalkerstan started in 2011.

Well, Ruth Conniff of the Wisconsin Examiner tells us today that Robbin’ Vos and Scott Fitzgerald are reportedly working on a way around that. Because in WisGOP World, cheating and other tactics is always a better than plan than having better ideas. After all, why work for public support when you don’t need it!
Now Democrats and fair-maps advocates are worried that Republicans might make an end-run around Evers by means of a joint resolution, passing a new map through the Assembly and Senate. Because joint resolutions do not require the governor’s signature, the map could go into effect without any input from the governor.

“We believe that the legislative Republicans are already working with the Wisconsin Institute for Law and Liberty, and they are geared up to do reapportionment in 2021 by means of a joint resolution,” said attorney Lester Pines, who has challenged the constitutionality of laws enacted by the state legislature on voter I.D., abortion restrictions, executive power and other issues. The Wisconsin Supreme Court has already held that redistricting by joint resolution is unconstitutional, but the current court, dominated by Republican-backed justices, might be willing to overturn that 54-year-old precedent, Pines added. “And the Wisconsin Institute for Law and Liberty will be geared up to argue that it is constitutional.”

“I’ve heard about it,” Rick Esenberg, executive director of the Wisconsin Institute for Law and Liberty (WILL), said of the plan. WILL, a legal institute that backs conservative causes, filed a friend-of-the-court brief in the U.S. Supreme Court’s Gill v Whitford redistricting case, siding with the Republican state lawmakers who drew the current map.

WILL is not currently working with Republican legislators on the joint-resolution plan, Esenberg said: “Whether we would have anything to do with it, I can’t say.”…
Given that the Bradley Foundation is usually the ones leading WisGOP to do this type of garbage, it’s a pretty good guess that Sleazy-berg would be pulling a paycheck (at taxpayer expense?) from this stunt.

Basically, the idea is that because “the Legislature” gets to decide the districts, there is no role for the Governor in that as a result (even though ex-Governor Walker had to formally sign off on the last gerrymander in August 2011). In other words, legislators that hold seats in gerrymandered districts would be able to work out another gerrymander for the next 10 years to make it easier to keep those seats.

If this seems fair and functional to you, congrats! You are officially well qualified to join the Federalist Society and/or a Koch/Bradley wingnut welfare outfit. And you're a pile of human garbage (but I repeat myself).

If GOPs try this BS in 2 years, it means others are going to have to spend time and money to make sure the 1.3 million Wisconsinites that voted for Evers get any say at all over who represents them in the Legislature. Given the 5 dishonest crooks on the conservative side of our Supreme Court, it’s far from a sure bet that this partisan power grab would be rejected.
“I’ve tried to raise the alarm myself, personally, that the Democrats should be prepared for this,” said William Whitford, the retired University of Wisconsin law professor who was the lead plaintiff in the U.S. Supreme Court’s Gill v. Whitford partisan gerrymandering case.

Whitford said he has been part of conversations about the possibility of a joint-resolution end-run with Gov. Evers and other elected officials as well as progressive groups. “It’s going to take lawyers to fight it,” he said.
You wonder why these people don’t listen to the general public? Greatest political system in the world, ya knoooow. Just the way the founders imagined it 232 years ago, right?

Wait a minute. Given that our original Constitution was intended to give Confederates and white males disproportionate power over everyone else without making those in power have to work hard to maintain their position, maybe WisGOP really is going back to basics!

This type of Banana Republicanism never ends well. So many Constitutional amendments are needed these days to deal with the mess we have...and that’s the nice way to end the unsustainable situation in our state’s and our country’s politics. The not-so-nice way involves guillotines and people hanging upside down. So let's not get to that point, shall we?

Sunday, July 28, 2019

Hey GOPs, whites struggle, too. Why race-baiting might not work well in Wisconsin for 2020

You have heard our Fair President and his staff trying to dump on the district of Congressman Elijah Cummings because some of it has large pockets of poverty. In addition to being a pathetic misdirection play to distract from the fact that even the GOP-led Senate Intelligence Committee admits Russians tried hacking elections all over America in 2016, it also conveniently ignores the bad conditions in many other, whiter districts in America.

But this type of language targeting urban areas is quite familiar to us in Wisconsin, as noted in a recent article in the brand new (!) Wisconsin Examiner. One example is when GOPs in the State Legislature cut money from Governor Evers' budget that would have helped clean up drinking water in the state's largest city.
Rep. John Nygren (R-Marinette) criticized the proposed state funding for lead remediation, which he described as “people from Marinette funding lead replacements in Milwaukee,” adding, “I’m not sure that that’s necessarily fair from a taxpayer standpoint.”

Co-Executive Director of Milwaukee Water Commons Brenda Coley condemned such statements. “That’s a problem,” said Coley, “that’s racializing water. And water does not have to be racialized. We all deserve clean water.” Milwaukee Water Commons works to inform the public on water-related issues. It also assists and advocates for the installation of a water filter in every home to prevent lead poisoning. “That’s to be installed while they wait for lead lateral removals,” Coley emphasized, “not in lieu of them.”

Milwaukee was also the target of a $14 million cut in state aid given to localities through the state’s shared revenue program. Republicans sought to reduce the amount of money Milwaukee County receives from the state, arguing that the cut was offset by money the state already spends to cover the cost of Milwaukee County’s child welfare programs. Evers vetoed the $14 million cut in the final version of the state budget, to the relief of Milwaukee officials....

Senator Alberta Darling (R-River Hills) highlighted the child welfare issue in a Joint Finance Committee hearing on June 4, saying Milwaukee County should pay more. Darling suggested that instead of allocating state funding to Milwaukee, “What we need to do is to get the community to care about these kids.”

“It can’t happen at the state level,” Darling added, saying she was “disappointed that we keep pointing the finger at someone else.”
The GOP meme of "Milwaukee is a money suck" is dated garbage, but fitting of the mentality of GOP "leaders" like Nygren and Darling. In fact, Milwaukee County is by far the largest attractor of tourist dollars in the state, with nearly $2 billion in visitor spending. The metro area also is the home of numerous corporate headquarters that bring income taxes and other revenue into Madison that then gets shuffled off to rural areas so that opportunities are equal for all communities, not just the ones with lots of people and/or lots of money.

But if Bertie DAHHH-ling says local governments in Milwaukee has to be more responsible for its services, does the GOP Legislature allow the state's largest metro area to raise more of its own dollars to make up the difference for the cuts it constantly tries to impose on it? OF COURSE NOT. Milwaukee is put under the same strict property tax and sales tax limits that are imposed on much of the rest of the state, except most of the rest of the state isn't singled out for cuts in state aids or called out for the conditions its low-income people live under.

And it's not like low-income people don't struggle in other parts of the state. In fact, the areas of Wisconsin most likely to be on the Obamacare exchanges for health insurances are rural ones, as shown by the Kaiser Family Foundation. This includes more than 32,000 individuals in Sean Duffy's Northwoods district in 2017, and you'd think quite a few of those individuals near the poverty line would have benefitted from Medicaid being expanded to give them coverage.

But nooo, we can't talk about that reality, and we can't discuss the many cuts to rural K-12 schools and communities at the state and federal levels. Because that might mean GOPs would have to care about the poverty in their communities, and answer real questions about why they continue to cut taxes for the rich and corporate (who mostly live outside of their rural districts) and continue to funnel hundreds of millions to voucher schools and tax cuts for private school tuition while their local schools struggle to keep the lights on.

Let's ID the sudden concern that GOPs have on urban poverty for what it is - a way to punch down at minorities to distract mediocre/poor white people, so they don't demand more from their GOP representatives. These GOPs don't care about improving opportunities and quality of life of the poor in America - in fact, they need "those people" to be destitute in order to make their constituents feel better about themselves.

But if Trump/GOP want to try that "divide and conquer" routine in 2020 with Milwaukee, it might not work too well. Remember that a main reason Trump was able to win the state in 2016 was low turnout in Milwaukee, as many people didn't see enough of a difference between the policies and outcomes they would see from Trump and Hillary Clinton. This was described in detail in a New York Times article 2 weeks after the elections.
Milwaukee’s lowest-income neighborhoods offer one explanation for the turnout figures. Of the city’s 15 council districts, the decline in turnout from 2012 to 2016 in the five poorest was consistently much greater than the drop seen in more prosperous areas — accounting for half of the overall decline in turnout citywide.

The biggest drop was here in District 15, a stretch of fading wooden homes, sandwich shops and fast-food restaurants that is 84 percent black. In this district, voter turnout declined by 19.5 percent from 2012 figures, according to Neil Albrecht, executive director of the City of Milwaukee Election Commission. It is home to some of Milwaukee’s poorest residents and, according to a 2016 documentary, “Milwaukee 53206,” has one of the nation’s highest per-capita incarceration rates.

At Upper Cutz, a bustling barbershop in a green-trimmed wooden house, talk of politics inevitably comes back to one man: Barack Obama. Mr. Obama’s elections infused many here with a feeling of connection to national politics they had never before experienced. But their lives have not gotten appreciably better, and sourness has set in.
Bet more Milwaukeeans see a difference now between Trump and Dems, especially those of color in that majority-minority city. They came out to vote a lot more in 2018 and 2014, and it was a reason Dems won every statewide election in Wisconsin.

So let the GOPs try the race-baiting in 2020 to try to deflect from the senile, crooked dope in the White House that hasn't made America Great for the overwhelming majority of people in this country. Going full-on racist will likely only tick off more voters (both white and black) who are sick and tired of the double-standards and divisive garbage, and the GOP will basically be trading in one losing hand for another - hopefully one that is even worse than they have today.

GOP fauxtrage at WisDOT more pathetic after SCOTUS wall decision

A recent whine job by Wisconsin Republicans on DOT projects illustrate how GOPs these days have no real core principles other than to grab as much money and power as they can for themselves and "their people", while denying the needs of everyone else.

You may recall that GOP legislators in the Joint Finance Committee refused to go along with Governor Tony Evers' plans to increase the gas tax by 8 cents to help fix the state's crumbling roads, and instead decided to use a one-time bump on tax revenues to add $90 million in General Fund dollars on a one-time basis to the state's roads, with the lion's share of that money earmarked to rural roads. Evers used vetoes to reduce that one-time money by $15 million, and got rid of the rural earmarks in the budget he signed.

Then last week DOT Secretary-designee Craig Thompson announced the parameters of the grant program, and GOPs lost their minds.

It's a free country if Fitz and his fellow GOP legislators want to try to override an Evers veto, and return the money to being roads-only, but that is NOT what the DOT grant program says at all. It's possible that DOT will choose to have all $75 million of that money go to roads anyway, and the grant announcement returns the largest amount of money to rural areas.

Breakdown of DOT funding, new program
Towns $29.3 million
Counties $26.7 million
Cities and villages $19.0 million

It just says transit and bike paths and other projects can be considered along with road projects, because the STREETCAR (not "trolley", Fitz) is a form of transportation. In addition, given that Milwaukee County is by far the largest attractor of tourism dollars in the state (money that gets distributed back to rural areas), maybe Fitz shouldn't complain so much about a form of transportation for a city that often has more people in a 5-block radius than there are in entire counties in other parts of Wisconsin.

Senator Howard Marklein added on this pile of grievance along the same lines.
Nearly 19% of the vetoes, worth $172 million and 34 positions, changed legislative intent and gave unelected bureaucrats in state agencies the ability to decide where the funds will be spent. My biggest concern about this is that the philosophy of the current administration tends to lean toward allocating money and people to Milwaukee and Madison before sending it to rural communities.

For example, one of the most significant vetoes was to cut $15 million from funding that was allocated for local roads and to veto all of the language that described how the remaining $75 million would be distributed to local governments to fix our roads. This put all of the money we allocated for local roads into the hands of unelected bureaucrats at the Department of Transportation (DOT). They were given carte blanche to spend the money! That’s not what we wanted. You elected me to look out for rural Wisconsin and this type of veto takes away my role to represent you.
The dog-whistles Marklein makes about "Milwaukee and Madison" imply that somehow the (many more) residents of those communities aren't Wisconsinites and aren't worthy of funding like Marklein rural constituency is. That's some nice elitism there, Howie.

And Marklein's complaints about “unelected bureaucrats” are laughable - as if a bunch of accountants, realtors and insurance salesmen from nowhere towns and gerrymandered districts have a clue about what makes for the most necessary and cost-efficient transportation projects? It makes the GOPs seem so pathetic and whiny, and why is government the only job where some people don’t want to defer to pros who deal with this stuff every day?

Besides, if GOPs wanted to take "unelected bureaucrats" out of the equation for DOT funding, could have chosen to put this extra money into the already-existing formula of General Transportation Aids. They signed off on Evers' proposed 10% increase for nearly $35 million a year, but GOPs in the Legislature could have doubled that up, and left it up to local areas to figure out what to do with this extra money. But that would mean the extra funding would likely go past this year, and/or couldn’t pork up their districts, so they came up with this one-time gimmick instead to direct more money to their rural areas.

In addition, many of the vetoes Marklein refers to removed money from the Joint Finance Committee's supplemental appropriation, which would have given the 16 JFC members an up-or-down vote on whether agencies can use funds at a later date. Remember when Republicans believed in increased efficiency in government and had no problems with block grants to states to best decide? NOT ANYMORE! Now they want to slow down government and micromanage everything because they want to hamstring Evers while throwing more pork to their parts of the state.

The WisGOPs' act is doubly interesting in light of Friday night's Supreme Court decision which said that Trump could divert money designated to the US military to build a wall at the US-Mexico border.
The money Trump identified includes $3.6 billion from military construction funds, $2.5 billion in Defense Department money and $600 million from the Treasury Department’s asset forfeiture fund.

The case before the Supreme Court involved just the $2.5 billion in Defense Department funds, which the administration says will be used to construct more than 100 miles (160 kilometers) of fencing. One project would replace 46 miles (74 kilometers) of barrier in New Mexico for $789 million. Another would replace 63 miles (101 kilometers) in Arizona for $646 million. The other two projects in California and Arizona are smaller.

The other funds were not at issue in the case. The Treasury Department funds have so far survived legal challenges, and Customs and Border Protection has earmarked the money for work in Texas’ Rio Grande Valley but has not yet awarded contracts. Transfer of the $3.6 billion in military construction funds is awaiting approval from the defense secretary.
After what the WisGOP Legislature pulled with their Power Grab in December, I'm sure they are equally upset that President Trump is using taxpayer dollars in ways Congress did not allow him to, right? Maybe Wisconsin journalists should ask Fitzgerald and Assembly Speaker Robbin' Vos what they think about the expansion of flexibility by the executive branch in DC.

The cynicism and dishonesty is eye-rolling. But it is also fitting of a GOP that has given up on trying to convince everyday people of their principles and the idea of good governance. Instead, they try to abuse government power and funding to help themselves at the expense of everyone else, and whine and complain when that doesn't happen. Which is why this is one of their theme songs in the 21st Century.

"There is no you, there is only me." - Trent Reznor

Saturday, July 27, 2019

GDP report shows debt-fueled spending keeping economy afloat

Wanted to say a few things about yesterday's first look at GDP for the 2nd quarter of 2019.
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the second quarter of 2019 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 3.1 percent….

The deceleration in real GDP in the second quarter reflected downturns in inventory investment, exports, and nonresidential fixed investment.

These downturns were partly offset by accelerations in PCE and federal government spending.
Those two “accelerations” in consumption and government spending added 3.7% to GDP for Q2, but everything else declined by a combined 1.6%, and only half of that was the reduction of bloated inventories from prior quarters.

That’s not what the GOP Tax Scam was supposed to do, especially the fact that business spending went down last quarter.

The fall in exports is especially noteworthy. Real US exports peaked in Q2 2018 at $2.56 trillion (in 2012 dollars) - around the time Trump’s trade wars began.

Flash forward to this report, and let’s see what we have over the last year.

Change in real GDP, US trade. Q2 2019 vs Q2 2018
Q2 2018 $2,559.9 billion
Q2 2019 $2,520.5 billion (-$39.4 billion)

Q2 2018 $3,410.4 billion
Q2 2019 $3,499.2 billion (+$88.8 billion)

Net exports
Q2 2018 -$850.5 billion
Q2 2019 -$978.7 billion (-$128.2 billion)

Fewer exports and a lot more imports. Real US fixed investment (which would go up if more things were being made and consumed domestically) went up $147.3 billion (+4.5%). That sounds like a lot, but is actually less than the 5.2% growth in the 12 months before Q2 2018. So it doesn’t like the tariffs have been very effective up to this point.

In addition, the GDP report featured revisions to the last 5 years, and it turns out things weren’t as strong last year as we originally were told.
The updated Commerce Department data also showed growth in the second and third quarters of last year was not as robust as previously estimated, and the economy grew much more slowly in the fourth quarter than had been reported in March.

Still, the economy’s performance in 2018 was an acceleration from the 2.4% growth notched in 2017. It matched the performance in 2015 during the Obama administration. The economy grew 2.8% in the 12 months through the fourth quarter of 2017.

The data also showed growth in consumer spending peaking in the second quarter and decelerating sharply in the final three months of 2018.

Growth in the first quarter of 2018 was revised up to a 2.5% annualized rate from 2.2%. Second-quarter growth, which prompted Trump’s mission accomplished declaration, was cut to a 3.5% pace from a 4.2% rate. Growth in the third quarter was slashed to a 2.9% rate from a 3.4% pace. Fourth-quarter GDP growth was lowered to a 1.1% pace from a 2.2% rate.
Here’s a particularly interesting revision for the previous years – (pre-tax) corporate profits were much less than originally reported.
Corporate profits were revised up $1.4 billion, or 0.1 percent, for 2014, was revised up $4.3 billion, or 0.2 percent, for 2015, was revised down $23.5 billion, or 1.2 percent, for 2016, was revised down $93.3 billion, or 4.4 percent, for 2017, and was revised down $188.1 billion, or 8.3 percent, for 2018.
Pre-tax profits still rose by 3.4% in 2018, but it wasn’t the blowout growth we were told previously. Those numbers were also inflated for Wall Street as taxes as corporate income dropped by 31.2% in 2018, which means that annual post-tax profits rose by $168.4 billion (10.0%) last year.

So what we're finding with this GDP report is that the economy is slowing, but still growing due to heavy (debt-based) spending by consumers and government. And that 2017 and 2018 had a rebound of two-year growth...back to the annual levels of 2014 and 2015, and the Tax Scam seems to have done little to help the economy beyond that.

And now we're in the hangover phase of the Tax Scam - except that the newest debt ceiling deal allows for even higher spending and deficits over the next 2 years! Just long enough to carry past the 2020 elections. What a coincidence!

Goes to show that "fiscally conservative" Republicans only care about lowering spending and reducing deficits when they're out of power and can limit the economy to damage the electoral prospects of the in-power Democrats. Wonder what GOPs would say if Dems in the House hardballed them on the budget that has to be passed in two months, and had to justify deficit-exploding stimulus measures that have merely staved off a flatlining of growth? Maybe we should find out.

Friday, July 26, 2019

You don't say...

So it was nothing more than PR BS that was intended to sell this garbage giveaway to the rest of the state? NOOOOO!!!!

On the 2-year anniversary of this scam being unveiled, that tweet also links to a good summary of what is (not) happening with Foxconn in Wisconsin.

Thursday, July 25, 2019

Budget Project shows how WisGOPs ended Evers' plans to level economic playing field

I wanted to forward your attention to an analysis done this week by the Wisconsin Budget Project that compared both the original budget submitted by Governor Evers in the Winter, and the final product that was signed into law earlier this month. And when you step back and look at it as a whole, the differences in priorities and who benefits are stark and telling.

To start off, the Budget Project reminds us that Wisconsin’s state and local tax system currently is somewhat regressive, where the richest people pay the lowest percentage in taxes.

Governor Evers proposed to reverse this regressiveness by offering increases in the Earned Income Tax Credit and Homestead Credit in his original budget (which would generally go to lower-income people) and removing Walker-era tax cuts for capital gains and manufacturers, (which overwhelmingly have gone to richer people). The GOP-run Joint Finance Committee removed all of these items in one swoop in May, along with Evers’ proposal to expand Medicaid under the Affordable Care Act.

Interestingly, JFC kept most of Evers’ plans for a lower-and-middle class income tax cut (although it ended up being a bit smaller than Evers had), and allowed for a more-level income tax cut that would offset what people would pay now that more online retailers have to pay sales tax. JFC also removed a gas tax increase that Evers also wanted to pay for roads, and offset much of that with a $10 increase for automobile registrations and a significant jump in title fees.

The Budget Project notes that these moves in Joint Finance hiked the amount of taxes and fees that the poorest Wisconsinites will pay by $80, to the point that they are now paying more than they did before.
The governor’s plan would have helped even out a tax system under which residents with the lowest incomes pay a higher share of their income in state and local taxes than taxpayers with the very highest incomes. Taxpayers with incomes in the lowest 20% by income – a group with an average income of $14,000 – would have received a tax cut under the governor’s plan, but will pay more in taxes and fees under the budget passed by the Legislature.

Taxpayers with the lowest incomes would have paid an average of $65 less in taxes and fees annually under the governor’s budget, representing a decrease of 0.45% as a share of income. Under the budget passed by the Legislature, taxpayers in this group will pay more, with an increase of $15 in taxes and fees on average, representing an increase of 0.11% increase as a share of income.

For middle income Wisconsinites, they would also have been better off under Gov Evers plan, but unlike poorer people, they still will get a tax cut under the signed budget.

But look at how the richest 1% of Wisconsin were protected under the GOP’s moves in Joint Finance and the State Legislature.
Governor Evers’ budget included changes that would have reshaped Wisconsin’s tax code to give less of an advantage to wealthy taxpayers, by reining in tax breaks for the rich and redirecting the benefits to the middle class and people with low incomes. In contrast, the Legislature’s budget will have almost no effect on the wealthiest taxpayers.

The governor’s plan would have raised taxes and fees by an average of $11,681 on average for taxpayers in the top 1% of income, a group with an average income of $1.4 million. That increase represents 0.82% of their income on average. The budget passed by the Legislature increases taxes and fees paid by the top 1% by $71, an amount that rounds to zero as a share of their income.
And these re the same 1%ers that already got a massive tax cut in 2018 out of the GOP Tax Scam from DC. God forbid they give some of that back at the state level!

The Budget Project’s chart of the tax and fee effects on the richest Wisconsinites is telling, as the only increases those people have to pay seem to come from the fact that this tax bracket is likely to own and title fleets of vehicles for their businesses. In addition, they’re the biggest beneficiaries of a move by the GOP Legislature to give nearly $65 million in tax dollars to the state lottery to make property taxes be $4 less than Evers’ original budget would have.

Also remember that the GOP-run Joint Finance Committee not only cut out much of Evers’ proposed increase to K-12 education, but also moved that funding from the state’s General Aid formula (which gives more money to poorer districts), and put it into the School Levy Tax Credit (which gives a bigger boost to richer property owners and districts).

When you lay it out this way, it’s really obvious how the GOP chose to support the needs of richer Wisconsinites over Evers’ plans that were geared more toward poorer and middle-class Wisconsinites. No wonder why there have been a few events around Wisconsin this week demanding a payback of the many gains that the 1% have been able to pull off in recenty years through their friends in Capitols, be they in DC or in Madison.

Tuesday, July 23, 2019

Debt ceiling deal tries to keep things smooth. Which is why Dems shouldn't go for it

Wanted to give a rundown of the budget deal on Capitol Hill, at least as it stands today. Let me forward you to the Congressional Budget Office's summary of what's in the bill that is slated to be voted on in the House this week.
Section 101 would revise the caps on defense and nondefense discretionary appropriations for fiscal years 2020 and 2021 to allow for higher amounts of funding than is permitted under current law caps and budget enforcement procedures. The total proposed caps for 2020 would be $171 billion above the current law caps of $1,119 billion. For 2021 the proposed caps would be $153 billion above the current law caps of $1,145 billion. There are no caps on discretionary funding after 2021. The proposed increase for 2020 includes a new maximum adjustment of $2.5 billion to the nondefense cap for spending for the periodic census.

Title III would temporarily suspend the current debt limit through July 31, 2021. On the following day, the debt ceiling would be raised by the amount of obligations incurred up to that point. Enacting that title, by itself, would have no effect on the federal budget….

Section 402 would extend mandatory sequestration through fiscal year 2029. Compared to current law, the Medicare provision would increase spending for most Medicare benefits by about 2 percent for April through September 2027, reduce spending by 2 percent for October 2027 through March 2029, then reduce spending by 4 percent for April through September 2029.
So most of the “extra spending” in the bill is really the removal of spending caps for the next two years. How much is actually spent for Fiscal Year 2020 is something that can be figured out over the next 2 months, and then the budget for FY 2021 will likely be worked out next year.

Politico had a good rundown of the deal, and some of the reasons why both Democrats and Trump/GOP are going along with it (for now).
Though Trump’s administration has repeatedly proposed massive cuts in its annual budget plans, lawmakers in both parties have laughed off the proposals. Now Trump has agreed to a second sweeping budget deal with Democrats that increases spending by more than $300 billion.

“This was a real compromise in order to give another big victory to our Great Military and Vets!" Trump tweeted Monday night in announcing his support for the $1.37 trillion package.

But some in Trump's party were far less excited, wary that the profligate spending under Trump makes Republicans look like hypocrites….

Speaker Nancy Pelosi (Calif.), who served as the lead Democratic negotiator, and Senate Minority Leader Schumer (D-N.Y.) hailed the deal, saying it met their priorities for more domestic spending while "turning off" the tens of billions in automatic spending cuts slated to go into effect if no deal were reached.

“Democrats have always insisted on parity in increases between defense and non-defense, and we are pleased that our increase in non-defense budget authority exceeds the defense number by $10 billion over the next two years," the two Democrats said in a joint statement. “It also means Democrats secured an increase of more than $100 billion in funding for domestic priorities since President Trump took office."
However, I don't see anything in this deal that reverses any part of the GOP Tax Scam that has done little except blow up the deficit and give a boost to a group of people who didn't need any help to begin with. So a deficit that is already supposed to be around $1 trillion in each of the next 2 fiscal years will go even higher without any new taxes to offset the spending.

So why would a president who promised to remove the national debt within 8 years add to a debt that has already zoomed past $22 trillion? Because GOPs know in their hearts that government spending helps the economy!
Some of Trump’s close advisers, including hard-line fiscal conservatives like acting White House chief of staff Mick Mulvaney and acting Office of Management and Budget Director Russ Vought, pushed for more cuts to spending or a one-year deal at current spending levels.

But Democrats refused to go along with such a plan, and at the end of the day, Mnuchin and Trump believed a happy Wall Street — along with voters who like federal spending and want to see the values of their 401K plans rising — was more important than the deficit, to the disappointment of GOP conservatives.

That last part is exactly why I wanted Dems to hold up this deal until they could get Trump/GOP not to obstruct investigations any more and to answer all subpoenas and come before Congress. The one thing keeping Trump and the GOP halfway afloat at this time is that the economy hasn’t fallen apart yet. The average dope looks around, sees things relatively stable with some signs of growth (in their lives and community, anyway) and says "I guess Trump is doing fine."

If a debt ceiling deal fell apart, there'd be an immediate Wall Street panic. Think a drop of 1,000-2,000 points in the DOW would get the real owners of Capitol Hill knocking on the door and make Trump/GOP start to get in line about following the law really fast. And people would start thinking twice about an economy that's a lot shakier than they want to know.

But of course, the Dems wouldn't dare cause a showdown on the debt ceiling and the GOP Tax Scam before the 2020 elections. Because that would be mean and not the act of a responsible political party. Which means that if a Dem wins the presidential election in 2020, the debt ceiling limit gets hit with the new president's first budget. And a former top staffer to ex-Senate Majority Leader Harry Reid points out that Republicans will not be nearly as responsible or willing to compromise in that situation.

This is why I'd VOTE NO on this deal, and make the GOP (who are opposed by the general public on taxing and spending policy issues) have to respond and justify keeping their deficit-exploding and regressive fiscal policies in place , and actually face consequences for their crookedness and lawlessness. PLAY HARDBALL WITH THESE LOWLIFES, GD IT!

Monday, July 22, 2019

It'll take more than funding apprenticeships to close Wisconsin's "skills gap"

As the Fiscal Year draws to a close, we usually get a list of items where money has to be moved around among various funding sources in a state department to make all of the books balance. The net effect of this is usually $0 for the time being, but it can give a good indication about what needs are becoming ore prominent, and which ones are perhaps being overfunded.

With that in mind, the Joint Finance Committee will have their first post-budget meeting tomorrow, and one of the items they will look at is a request by the Evers Administration to fully fund the state’s youth apprenticeship grant program. The number of enrollees in the program has more than doubled since 2015, reflecting moves made at that time to expand the program and the ability of the Department of Workforce Development to get the money out the door under the state’s Fast Forward program.

Prior to 2015 Wisconsin Act 348, the youth apprenticeship grant program was funded from the Department's annual local youth apprenticeship grants GPR appropriation with base funding of $2,233,700. Act 348 consolidated previously separate GPR appropriations for apprenticeship completion awards, local youth apprenticeship grants, employment transit assistance grants, and youth summer jobs programs into DWD's Fast Forward continuing appropriation. Under Act 348, Page 2 base funding from each previously separate appropriation was added to the base funding level of the Department's workforce training grants appropriation. Increased funding, expanded grant-making authority, and the consolidation of several appropriations into a single continuing appropriation all provided additional flexibility for DWD to fund a variety of programs at the discretion of the administration. In particular, the expanded funding and flexibility of having a consolidated, continuing appropriation permitted the Department to fund the youth apprenticeship grant program at an amount that exceeded the program's prior base funding level of $2,233,700.
The problem is that Wisconsin Republicans and Governor Walker changed this last December with Act 370 (aka the Lame Duck Laws), which earmarked and limited the money for Fast Forward’s specific programs , and now there’s a shortfall.
2017 Wisconsin Act 370 reversed several provisions of Act 348 and split DWD's Fast Forward continuing appropriation into eight separate annual GPR appropriations. The first column in Table 1 shows 2018-19 base funding for the consolidated Fast Forward continuing appropriation prior to Act 370, while the second column shows 2018-19 base funding amounts for each separate annual appropriation, as provided in Act 370. As shown in the table, the Department was given the same total appropriation authority under Act 370 as in prior law ($13,595,900). However, because the workforce training grants and services appropriation was changed from a single continuing appropriation to eight separate annual appropriations, DWD's flexibility to reallocate funding among programs is eliminated and any amount not expended or encumbered from each new annual appropriation account by the end of the fiscal year lapses to the balance of the general fund ….

Starting with the 2018-19 fiscal year, during which Act 370 began to limit the program to an annual amount established by the Legislature, base-level funding of $2,233,700 leaves an estimated funding shortfall of $3,030,900. The 2019-21 biennial budget (2019 Wisconsin Act 9) increases base level funding for the Department's youth apprenticeship grants annual appropriation by $2,766,300 GPR annually for total funding of $5,000,000 GPR. Despite the additional base funding provided under Act 9, the 2018-19 funding gap would remain, should the program continue funding a school year's allocation with appropriations from the preceding fiscal year.
So you’re telling me that when the gerrymandered GOP Legislature slammed through the Lame Duck Laws to remove flexibility from the incoming Evers Administration, and it led to unintended consequences that now need fixing? NOOOO!
The Department has encumbered the entire $2,233,700 amount of 2018-19 state fiscal year base funding for the 2019-20 school year grants, leaving an unfunded balance of $3,030,900. Provision of $3,030,900 in one-time funding, as requested by the Department, would fully fund local youth apprenticeship grants for the 2019-20 school year and provide the full $900-per-student grant amount. If the request is not approved and no additional one-time funding is provided, the Department could prorate the per-student grant amounts. In this scenario, the per-student rate would decrease from $900 per student to an estimated $382 per student, or a decrease of 58%. This option would likely create budget shortfalls for participating local youth apprenticeship consortia, which planned for 2019-20 school year program budgets based on the $900-per-student grant reimbursement rate.

The Department could avoid prorating grant awards by instead encumbering 2019-20 fiscal year appropriations to fund award requests for the 2019-20 school year. While this strategy would fully fund the program in the current year, the Department, beginning in early 2021 for grants in the 2021-22 school year, would be in a position of considering funding requests while 2021-23 budget deliberations are ongoing and the Legislature is determining program funding.
Not funding apprenticeships seems like an especially bad strategy given that employers already are having problems finding skilled labor, and that the gap is projected to grow over the next decade.
All 50 states will have a shortage of workers with at least a bachelor’s degree by 2029. California will face a deficit of over one million workers, while New York will have a shortage of 868,000 workers. For Illinois, the shortfall will reach 522,000.

Same goes for workers with associate degrees or some college, according to AAF. There will be a significant shortage of these workers in New York in 10 years (181,000), Ohio (169,000), and Michigan (170,000). States with the least amount of shortages include Montana (3,000), Wyoming (5,000), South Dakota (5,000). Delaware won’t have any worker shortages among those with at least an associate degree, says AAF [the American Action Forum]….

In total, the U.S. will face a shortage of about 765,000 workers with skills gained from acquiring at least an associate degree or some college. There’s a shortfall of 8.62 million workers, among those with at least a bachelor’s degree. AAF estimates that these figures add up to about 5.6% of the estimated labor force in 10 years.

If left unaddressed, the AAF estimates these massive worker shortages will cost the U.S. $1.2 trillion in economic output.
Wisconsin is among those states that are projected to fall short in workers with both 2–year (55,000) and 4-year (192,000) degrees over the next 10 years.

Let’s not forget to mention that another way to deal with this skills gap is to pay a competitive wage. After the last 8 years of union-busting and wage suppression, and despite (or because of) major tax cuts to manufacturers, Wisconsin has consistently had the lowest manufacturing wages in the Midwest, as shown by the “gold standard” Quarterly Census of Employment and Wages (QCEW).

In addition, Wisconsin Republicans have spent the 2010s deinvesting from public schools and environmental protections that used to make the state a more appealing place to educated workers that have options on where they would like to live. And what a surprise, now we can’t find enough of these individuals to grow companies to our potential. Both the low wages and lower quality of life are trends that need to be reversed if we are going to adequately compete for talent and have our economy grow in the 2020s.

Those efforts go beyond making sure we have enough money to make sure all students can get a grant to help pay for their apprenticeship We have a lot of work to make up for how we fell behind in this decade, we can’t afford to go further into the hole in the coming years.

Sunday, July 21, 2019

New numbers show the Trump expansion isn't hitting states Trump needs

In light of Friday's release of the state-by-state jobs report by the Bureau of Labor Statistics, we now have data through the first half of 2019. And it reiterates a theme I have made since the GOP Tax Scam was signed into law - that the Midwest has been left behind in the expansion that has taken place since the Scam was signed by President Trump in December 2017.

While the US jobs market has maintained decent growth in that time, that's not the case for our part of the country. And that's especially true for the Rust Belt and Upper Midwest states that Donald Trump needs to win in order to stay in office past 2020.

And that's even more true when you look at the last 12 months, as the rate of job growth in the US is between 2 to 5 times the growth in these states.

So what parts of the country are growing in that same time period? The West and the South...and Illinois? Yeah, Illinois.

Reminder, we are looking at non-farm jobs here. So it doesn't account for many of the losses we've seen in that sector of the economy over that same time period, which likely would show an even worse situation. This might help explain why Trump is underwater by 7-16 points in all of these must-win states, and why trying to sell the GOP Tax Scam in 2020 might not work as well as our rich, connected and Coastal media think it will.

It's also why Dems should hammer on inequality and the Bubblicious nature of much of our economy, because it is not working in wide swaths of our country.

Saturday, July 20, 2019

24 hours of whirling weather

Here are some of the views I had over a crazy last 24 hours of Wisconsin weather.

The first group includes an amazing sunset and boat ride following a thunderstorm on Saturday in Vilas Co.

Then, a few items from the drive back, starting with downed trees blocking a lane of traffic on I-39 between Wausau and Steven's Point.

I tried to drop into Plover to see the Oso brewery and draft house, only to find the power was out so the place was closed.

Then, as I got near home, I was greeted with this view about 2 pm.

No damage at the house, but pretty extreme stuff. Now it's time to return to normalcy.

Thursday, July 18, 2019

As policy failures pile up, WisGOP can only play resentment game

2 items from today to riff on.

The first concerns this, as Legislative WisGOPs desperately try to play the resentment game since they can't win on the issues.

And note Fitz's "source", MacIver News, which is extrapolating from this grant announcement by WisDOT which says that the $75 mil that was added to the budget can go to "transportation projects."

This could include roads and bridges, but could also include rail, harbor projects, bike lanes, and yes, transit. Naturally the righties MacIver that into meaning "money for the Milwaukee streetcar", and feeds it into a human centipede that includes AM 620/1130 and WisGOP legislators.

Pathetic and kinda racist, but that's WisGOP in the 2010s for ya. I also have to laugh, because earlier WisGOPs were whining that Evers reduced this one-time funding by $15 million, which meant less pork for their rural communities. "Fiscal conservatism", ya knooow.

The other story I saw reach the Northwoods today was another Wisconsin jobs report that wasn't too hot. This one says that we lost 2,300 more private sector jobs in June (seasonally adjusted basis), lost another 3,400 people out of the labor force, and 4,800 fewer Wisconsinites were described as employed.

This means that after finishing 39th in the country for job growth in 2018, Wisconsin has now lost 3,100 private sector jobs in the first 6 months of 2019. In addition, our labor force and "employed" totals are also smaller than they were at the end of 2018.

As mentioned before, we are far from the only Midwest state that has stagnated over the last 1 1/2 years, which might help to explain why President Trump was 9-15 points underwater in the Rust Belt/Plains states he has to win in 2020. While Wall Street may be liking the casino economy that's re-emerged in this country, it hasn't done much for the Heartland.

Which explains why Trump/GOP is leaning so heavily on racism these days. They can't win on their Tax Scam, so what else do they got? Have to keep the rubes distracted from their real problems, right?

Now it's time to grab a view before it hits 90 tomorrow.

Wednesday, July 17, 2019

Heading North...

Heading to the 715 to an annual family reunion. Great scenery, but I'm not exactly thrilled at the prospect of spending any money for n area of the state that elects guys like this.

I'll be doing some scanning over the coming days, and likely have some reaction to the state's jobs numbers and other financial reports (recent news - retail sales are still good, but housing fell hard in June).

It'll be warm there, too. But upper 80s vs 95 in Madtown, so I think I'll take it. I'll also take these views, which I value, but for some reason the locals don't (at least based on their votes, they don't).

And if you need good comedy, note this tweet. And the heavy ratio of humorous responses below.

Tuesday, July 16, 2019

Food prices on the rise. But how much will it change things?

I certainly didn’t think I’d spend so much time looking at food prices in 2019. But between the farm crisis, a rain-filled Spring that delayed planting in the Upper Midwest, and the widespread discussion of interest rates (and by proxy, inflation), that’s been the case.

And 3 reports from the last week are telling an interesting tale, as food prices are starting to jump, particularly in sectors that had been beaten down by surpluses and trade disruptions. Which means perhaps inflation isn’t as muted as we think, and that rates won’t be able to be cut as much as Wall Street would like.

To start with, let’s go to last week’s Consumer Price Index report. Prices for commodities went down by 0.3% last month, led by a drop , Overall food prices went down as well, but note what did go up in the second paragraph.
The food index was unchanged in June. The index for food at home declined 0.2 percent after increasing 0.3 percent in May. Four of the six major grocery store food group indexes declined in June. The index for meats, poultry, fish, and eggs, which rose 0.8 percent in May, fell 0.7 percent in June as the index for beef fell 1.3 percent. The indexes for cereals and bakery products and for nonalcoholic beverages both fell 0.6 percent in June after rising in May. The index for fruits and vegetables fell 0.5 percent in June, its third consecutive decline.

In contrast to these declines, the index for other food at home rose 0.7 percent in June after being unchanged in May. The index for dairy and related products rose 0.3 percent in June, its fifth consecutive monthly increase. The index for food away from home rose 0.3 percent in June after a 0.2- percent increase in May. The index for full service meals rose 0.6 percent in June while the index for limited service meals was unchanged.
After bottoming out at the start of this year, dairy prices have been making a steady climb, and are finally above where they were 12 months ago (albeit by only 0.6%). Too late for all the dairy farms that have already closed, but let’s see if that slows the pace down from the 3 closings-a-day level that we reached earlier this year.

I was also interested in what corn was doing after numerous reports last month about many farmers being forced to delay planting due to a late Winter and rainy Spring, or not planting at all. It looks like corn is still behind schedule, but if weather stays warm and dry in the key growing areas this month, it might not be so bad.

Oddly, the CPI report does not list corn on its own, but I did see, “rice, pasta and cornmeal” up 1.3% last month. Conversely, the Producer Price Index does list corn, and that report shows the same dichotomy that we see in consumer prices - most US goods had lower prices, but food is now rising after being beaten down for much of 2018 and 2019.
Final demand goods: Prices for final demand goods moved down 0.4 percent in June, the largest decrease since falling 0.6 percent in January. The June decline is attributable to a 3.1-percent drop in the index for final demand energy. Conversely, prices for final demand foods climbed 0.6 percent. The index for final demand goods less foods and energy was unchanged.

Product detail: Nearly 60 percent of the June decrease in the index for final demand goods can be traced to a 5.0-percent decline in prices for gasoline. The indexes for diesel fuel, meats, liquefied petroleum gas, iron and steel scrap, and residual fuels also moved lower. In contrast, corn prices rose 19.9 percent. The indexes for ethanol and residential electric power also increased.
And in looking at the CME futures prices, it seems like the rebound in soybeans and dairy prices will continue over the next few months.

The trend of rising food prices has even started to show in export prices. While most export prices of US products dropped in June, leading to an overall decline of 0.7%, that wasn’t the case for crops and other farm products.
Agricultural Exports: Prices for agricultural exports increased 2.7 percent in June following a 1.1-percent decline the previous month. The advance was the largest monthly rise since the index increased 3.8 percent in December 2018. In June, the advance was led by a 13.5-percent rise in corn prices and a 5.0-percent increase in soybean prices; higher fruit, wheat, and nut prices also contributed to the overall rise in agricultural prices. Despite the June advance, agricultural export prices fell 1.9 percent from June 2018 to June 2019. The drop over the past year was led by a 14.4-percent decrease in soybean prices.
If I wrote this a couple of days ago, I would have been even more concerned about a sizable jump in inflation for the coming months. Not just because of the higher food prices, but also because oil futures had risen by 17% between early June and early July. But oil has now dropped by $2 a barrel this week, so that could keep prices from galloping away (well, by 21st century standards, anyway).

Regardless, let’s see if there is any reference to these emerging prices over the next 2 weeks, which culminates in a Federal Reserve meeting which is expected to deliver the first interest rate cut since the 2008 financial crisis. Wall Streeters bid up the stock market last month in anticipation of there being more cuts to keep the cocaine party going, but rising food prices on the farm and on Main Street could put a stop to that thought sooner than expected.

Monday, July 15, 2019

Evers says what Foxconn won't - it'll be a lot smaller, if it opens at all

Here is the full CNBC report on the Foxconn development, which aired a couple of weeks ago. It mentions the difficulty Foxconn has had in the last year as Apple's iPhones sales have struggled, and Trump tariffs being slapped on their imports. It's also funny to see soon-to-be-leaving WEDC CEO Mark Hogan already ratchet down the expected amount of jobs in an interview, and claim "it's a marathon, not a sprint."

The report also catches an admission from the project's executive director (Peter Buck) that the facility will be a smaller "Gen 6" facility instead of the Gen 10.5 facility that Walker, Trump, Ryan and Foxconn were selling this time last year. Which leads to the report replaying April's statement of new Governor Tony Evers where Evers said the promises of the Foxconn project "was no longer in play", and that the contract needed to be renegotiated.

Then last week, we got a follow-up interview of Evers by UW graduate and CNBC reporter Scott Cohn. You can see the full interview at this link, but what Evers told Cohn is that he had met with Foxconn officials and gone to the site in the last month.

Evers says he thinks there will be something at Foxconn, but it won’t be nearly as big as the thousands of jobs that Foxconn and GOP officials are still claiming will come to Racine County.
He noted that the company is building a much smaller display panel plant than it originally said it would — a fact that has been extensively reported over the last year — and said he visited the construction site in mid-June.

“The good news is we have clarity, we actually understand what’s going to be built and kind of when it’s going to be finished, the first phase,” Evers said.

He said he believed the factory would employ about 1,500, a figure other officials have advanced but which Foxconn itself has not cited.
That jobs number “certainly is less than the original thought,” Evers said, “although I believe that Foxconn is of the opinion that at some point in time they will have larger numbers of employees there.

“But for Wisconsin, 1,500 employees is important, and so we’re looking forward to working with them and make sure that we understand what they’re doing.”
Tony may feel he has to put up a brave face for the time being, but I’ll believe that number when it actually happens. I’m setting the over-under in Racine County at 500.

Evers’ statement also corresponds well with a report in Wispolitics that says Evers sent a letter to the WEDC Board asking it to be open to changing the contract with Foxconn.
In the letter, Evers wrote his administration is “committed to supporting Foxconn’s success in Wisconsin to bring manufacturing jobs to an area of the state that has struggled for many years.” He also again said the company approached the state earlier this year about revisiting the agreement.

A Foxconn spokesman said the company was aware of the letter but didn’t have an immediate comment.

“Because the project has evolved substantially from what was originally proposed, evaluated, and contracted for, it is necessary to review the revised aspects of the project and evaluate how changes can most fairly benefit both the company and our state,” Evers wrote. “Proposed modifications to the Foxconn agreement or terms for a new agreement should be thoroughly and thoughtfully reviewed and assessed by the WEDC and my Administration.”…

WEDC spokesman David Callender said the agency forwarded Evers’ letter to the full board. He said WEDC, the guv’s office and DOA have “routine discussions” with Foxconn. He also noted it is not uncommon for WEDC to amend contracts with companies during the lifetime of the deal. But he said the agency otherwise doesn’t comment on talks with a company before something would be presented to the board.

Evers offered no specifics in his letter on possible changes but noted the company’s plans “reflect a substantially smaller footprint, less capital investment, and fewer manufacturing workers than its original plans.” Foxconn originally proposed what’s known as a Generation 10.5 facility capable of manufacturing screens the size of a garage door. It now plans a Generation 6 facility, which products LCD screens for TVs, cell phones and other devices.
To me, the bigger number you need to keep in mind with the number of jobs at Foxconn is not 1,500, but 520. That’s how many people need to be working in the state for them to collect 15% of the expenses that go into the facility, and 17% of the salaries of those 520 employees. That could net them a few hundred million dollars without much in terms of job growth.

As bad as typical WEDC deals are, at least they only shell out a smaller percentage of the salaries and/or investments. Given that many companies are adding more jobs and investing more than Foxconn, why are they still allowed to get higher incentives, environmental exemptions, and other special treatment? At the very least the contract should be changed to that.

Granted, the other option is to say that the confirmation of the lesser project shows that Foxconn has broken their end of the deal, and that would be the basis of filing suit and hardballing the company. I think that’s still the better option, because Foxconn isn’t to be trusted anything, and even cutting them a check for $50 million to go away would be better than blowing hundreds of thousands per job for a project that might not last long after the contract runs out in 13 years.

One other interesting sidelight with Foxconn is this event from last night.

So does that mean Gou goes back to Foxconn, or is he permanently done with the company and new leadership officially will take over and have different ideas about what (if anything) they do in SE Wisconsin? And will a Foxconn company that's already going through difficulties dump these acres of land after they get a few bucks from Racine County and the State of Wisconsin?

The last 2 years have taught us not to take the words of Foxconn or the GOP. We need to stay on them as the reality of the Fox-con is nothing more than another large warehouse project, and make them pay if they can't even come through with that.