Saturday, February 29, 2020

Dimwitted Duey and WisGOP spins foolishness on income taxes

Saw this comment from a certain GOP loudmouth on Joint Finance, and figured I'd send it ahead to you, even after Governor Evers sent back these plans with a veto last week.

Stroebel is using the information from the LFB analysis of the GOP's latest tax scheme. And when you look at those numbers, you see that this 36% tax cut doesn't mean much.

$37 dollars in a YEAR? And 57% of people in that tax bracket would have gotten ZERO. I pointed out this lameness on my lunch hour this week.

Know what else would do more to help these lower-income Wisconsinites? Passing Badgercare expansion to increase job options for people in that income range (so they don't fall off once they get above poverty). In addition, maybe Stroebel and his fellow Republicans shouldn't have turned down Governor Evers' budget proposal to expand the state's Earned Income Tax Credit, which the Wisconsin Budget Project noted would have given a much larger benefit to these lower-income individuals.
Unlike the Republican plan, the Evers plan cuts taxes for working parents who have low incomes by expanding the state’s Earned Income Tax Credit. The expansion proposed by Evers would put $27 million a year back into the pockets of working parents who are struggling to make ends meet. Working parents with incomes of about $12,000 who received the increased credit would get about $200 more in their tax refund that they could use to cover expenses like getting their car repaired or buying groceries. Helping low-wage workers by increasing the EITC would be a positive step in reducing racial inequity in our state because people of color comprise a disproportionate portion of the working poor.
Soon afterwards, Stroebel chose a different group of people to sell the tax cut for.

At least the targeting is correct here, a bit more money for a relatively middle-class income in Wisconsin. But what Duey's not telling you is that this extra money wouldn't been in anyone's pocket until this time next year. Because it wouldn't have done anything for paychecks, and instead would only have manifested itself in the form of higher tax refunds of 2020 taxes in early 2021.

Know what would get the money into those pockets at a faster rate?

1. Changing the withholding tables, which apparently the Evers Administration is planning to do later this year. I think Evers should have waited till after the New Year to make this move, and put a new Legislature on the spot, but as a result, the tax cuts signed in 2019 will result in larger refunds in the coming months as well as higher paychecks in July.

2. Do a one-time tax rebate check that goes to all taxpayers. You could give away an average of $150 to all 3.17 million tax filers in the state, and it would cost as much as the GOP's proposed tax cut would have over the next 2 years. It also doesn't depress revenues for future years, when we might well need the cushion if/when the economy declines.

Know what else could have helped? Giving property tax cuts to homeowners and not businesses. Which Evers' proposal would have done, and which the gerrymandered Republican Legislature could sign on to if they choose to end their 10 1/2 month paid vacation.

But let's face it, today's Republicans have no coherent idea on how to handle specific economic circumstances. They just throw up the same answer to any issue, even when it has nothing to do with tax policy.

Friday, February 28, 2020

Spending, income and GDP show an economy that had blah growth before this week

It may be less relevant given the wreckage on Wall Street in the last week, but we got new income and spending totals for January on Friday, which indicated things were OK before we heard the word “coronavirus.”
Personal income increased $116.5 billion (0.6 percent) in January according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $101.4 billion (0.6 percent) and personal consumption expenditures (PCE) increased $29.6 billion (0.2 percent).

Real DPI increased 0.5 percent in January and Real PCE increased 0.1 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

The increase in personal income in January primarily reflected increases in compensation of employees and social security benefit payments (related to annual cost of living adjustments), and other government social benefits to persons, which includes the Affordable Care Act refundable tax credit (table 3).
That last paragraph is important. A 0.6% increase in income for a month looks good, but this is a one-time bump that won’t be counted on to continue in the future months. December’s income growth also declined from 0.2% to 0.1% before inflation, so nothing too special there.

What's a bit worrying is something I noticed last week - job growth in the Summer months of 2019 were overstated by nearly 350,000, and that ended up reducing the totals for wages and salaries in the last half of the year by $68 billion.

So maybe there's a reason that the "booming economy" talk isn't something that rings true to you. Because these numbers keep getting revised down, so it wasn't that great to begin with.

The spending totals for January were modest, with the revisions being a mixed bag. December revised up by 0.1% but November taken down by 0.1%, and combined with the 0.2% pre-inflation increase for January, it indicates that consumer spending growth was minor as 2020 got underway, much like we saw for the 4th Quarter of 2019.

Speaking of economic growth for Q4 2019, the revised figures from that were released on Thursday, and proved me wrong. I figured we would see real GDP growth fall below 2% given the new information of higher imports and other developments from December’s data that usually reduce GDP. But that wasn’t the case.
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth quarter of 2019 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP also increased 2.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was also 2.1 percent. In the second estimate, an upward revision to private inventory investment was offset by a downward revision to nonresidential fixed investment…..

In the second estimate, the fourth-quarter growth rate in real GDP was unrevised from the advance estimate. Private inventory investment, exports, federal government spending, and residential fixed investment were revised up. These upward revisions were offset by downward revisions to nonresidential fixed investment, PCE, state and local government spending, and an upward revision to imports.
One other “boost” to GDP was the price index that accounts for deflation, which was revised down by 0.1% to an annual rate of 1.4%. Given how the price of commodities and related products have plummeted with the stock market in recent days, low inflation (or outright deflation) might be something that makes GDP look better than it seems in real life. Well, at least until the layoffs begin, which is usually what has to happen for businesses to survive when revenues aren’t coming in.

So put these two reports and their revisions together, and you have a US economy that seems to have downshiftedfor growth in the last half of 2019 and in January of 2020. Now throw in crashing stocks and supply chain disruptions from this coronavirus scare, and combine it with the job market likely being maxed out? Ruh roh.

Thursday, February 27, 2020

Wall Street says "DONNIE, SHUT UP!"

So, what did investors think about President Trump's new task force to take on coronavirus, now that it's headed up by a guy who once claimed that "smoking doesn't kill", and thinks a person can pray away the fact that they are gay?

You wanna know what the Wall Street crowd thinks about the prospects of the US economy due to the mess that Drumpf and the rest of this Wrecking Crew is leaving for us for the coming years?
The 2-year note rate, which tracks expectations for monetary policy, slipped 4.6 basis points to 1.099%, its lowest close since Nov. 2016.
So Wall Streeters think that getting 1.1% for the next 2 years is a worthwhile investment. 1.1% BEFORE INFLATION. And the 5-year note was even lower, at 1.08%.

Bad things, man. Bad things.

PS- It doesnt seem to be letting up. The 10-year note isn't much higher.

The Brewers have a lot of business, but do they ADD business? And should taxpayers add more?

I wanted to take a bit to discuss the recent economic impact study of Milwaukee's Miller Park, which was put together by Convention Sports and Leisure (CSL) for the Metropolitan Milwaukee Association of Commerce (MMAC).

The timing of this is interesting, as 2020 marks the 20th year of Brewers baseball at Miller Park, and the 0.1% sales tax in the 5 counties in and around Milwaukee will end on August 31 as the construction debt and maintenance costs are finally going to be paid off. Which makes you wonder if there is an extra agenda with this report beyond merely figuring out how much the Crew boosts the state and local economy.

In the study, CSL says they looked at information from ticket purchasers, and also got input from random fans at the game.
In addition to reviewing historical Team and Ballpark data and operations, CSL’s study methodology relies on primary data collected and analyzed to determine the economic impact of the Team and the Ballpark on the City, County, and State. Random, on-site surveys were conducted with attendees at Brewers home games in order to capture information regarding visitor spending by fans attending events at the Ballpark during the 2019 season. This surveying was conducted in order to understand the full extent of out-of-town visitation and spending, and are representative of the various opponents the Brewers play throughout the season.
One area the study credits Miller Park for is increased lodging in the Milwaukee area.
As shown, approximately 75 percent of overnight patrons stay in a lodging facility within the City of Milwaukee, while 87 percent stay within Milwaukee County (12 percent of spending occurs within the County, but outside the City) and 100 percent stay within the State of Wisconsin (13 percent of spending occurs within the State, but outside the County and City).
Related to that, if you want to say that Miller Park is a worthwhile investment, you can point to this statistic regarding “out-of-ballpark spending”, which includes lodging, as well as food/drink, shopping and other expenditures. You can see that the people who travel to Milwaukee from out of state spend quite a bit outside of Miller Park.

Another claim in this report is a bit more questionable – the idea of “Miller Park led to a ton of development”.
Prior to opening, the land on which the Ballpark was constructed met the State’s definition of “blighted,” with environmentally tainted and contaminated soil due to abandoned manufacturing operations. Through careful development planning, the Ballpark became the center of revitalization for the area west of downtown Milwaukee.
The report goes on to basically credit Miller Park for any development that happened along those 3 miles, including Potawatomi Hotel and Casino, the Harley Davidson Museum, and everything built in West Milwaukee and the Menomonee Valley. Color me skeptical that Miller Park is the biggest reason those developments happened.

Overall, the report for the MMAC says that Miller Park leads to over $100 million in extra economic activity for the County and the City, and has had an overall impact of over $1 billion for the State, City and County over the 20 years this facility has been constructed and open.

Bruce Murphy at Urban Milwaukee has long criticized the Miller Park deal and other arrangements made for the Brewers in Milwaukee (including having the ballpark be off the property tax rolls). And Murphy wasn’t buying the findings of the study, saying it didn’t look at whether people deciding to spend their entertainment dollar at Miller Park was taking away from what they would have spent elsewhere.
CSL is clearly aware of this critique and has come up with a crafty way to head off the criticism, surveying a “randomly selected” sample of Brewers fans. Given that they are supposed to be representative of the 51.3 million fans who attended Brewers games over a 19 year period, it would be useful to know how many such fans were surveyed, in what year or years, as well as including the raw data on their answers to questions, none of which is included. Whatever the number surveyed, they were asked how they would have spent their money if not on the Brewers and would you believe it, 47 percent said they would have saved or invested it! Another 9 percent said they would have spent it on something outside the state.

So the study concludes only 43 percent of the spending at Miller Park would have happened anyway, leaving 57 percent it can count for the stadium’s economic impact. Leaving aside the question of whether it wouldn’t be better for our economy if these Brewers fans had invested their money, say in some productive companies that truly drive the economy rather than relying on huge tax handouts, the idea of taking their word for it that only the Brewers could have captured their entertainment dollar seems a shaky way to estimate spending that is then hiked up through an economic multiplier whose details are murky.
Speaking as part of a couple who has a 20-game Brewers package, I certainly don’t think the choices we have boil down to “invest this $1,600 and go to Brewers games.” We’d likely be going on more trips or shows or something, and maybe saving a bit more. But most of it would be spent somewhere else.

Murphy also notes the study has information that shows people like me, that travel 80 miles to get to a Brewer game and make a day of it in Milwaukee, are likely the exception when it comes to attendees at Miller Park.
The more solid numbers here, from Brewers historic attendance data, shows only 14 percent of fans come from out-of-state, and just 41 percent of that group stayed overnight (according to that survey) suggesting most drove up from Illinois. As for those who stayed overnight we don’t know how many are tourists to Milwaukee who would have come anyway, and decided to attend a Brewers game. As for the 48 percent of fans who were Wisconsinites from outside Milwaukee County, we aren’t told what percent of them are from southeastern Wisconsin, most of whom probably drive back and forth from Miller Park without spending any [other] money in the city.
Murphy goes on to note that the MMAC study didn’t look at another form of “displacement” spending – other ways that the tax dollars that went to Miller Park could have been utilized for.
Also missing from the study is a discussion of the “opportunity costs” — what that $605 million in taxes and half-billion in tax exemptions might have been spent on instead. The government, for instance, could have spent the money on infrastructure (airports, potholes, highways, and bridges) which could increase productivity by reducing the cost (in time and money) of transporting goods and people. Or imagine if just half of that $605 million had been spent instead on support for startup businesses: how much greater would the economic impact be?

It’s sad to see the Metropolitan Milwaukee Association of Commerce, which is supposed to be teaching the community about the value of business, standing up for such a piece of puffery as this “study,” which will join a long line of reports meant to justify the blackmail of local citizens forced to subsidize their monopoly sports team or lose it to another city.
Is it sad, Bruce? I’d say it’s expected. All the MMAC cares about is using government to maximize its profits, whether through direct subsidies or sweetheart legislation that gives their oligarchs advantages that the rest of us aren’t able to get. So of course, they’d hire a consultant to tell them that Miller Park leads to great growth in Milwaukee, instead of being a questionable (at best) use of resources.

For the record, I do think Miller Park has helped more than it has hurt for both Milwaukee and the state, especially since the tax never extended outside of the Milwaukee metro area. But it's not anything near to the sure-fire net positive that the MMAC wants you to believe it has been. And MMAC President Tim Sheehy told the Milwaukee Journal-Sentinel, the Brewers might ask for more subsidies in the near future.
“The funding of Miller Park up to this point, we haven’t dropped it. We’re carrying it forward. It’s something the community is going to have to think about again because the solution that is Miller Park, and the financing that went into supporting that, gave us this lease period.

He added: “As we come to the end of that and look forward, we’re going to have to think about what we do as a community to make sure there is baseball being played here in 2040. We tried to do our part when we got the baton, and somebody else is going to have to pick it up.

“We’re not trying to scare anybody. But we’re going to have to continue to make that kind of investment because it never ends.”

Well, which investment are we talking about, Tim? Do you mean the Brewers as a team, paying big money to keep and obtain players and continue to contend for postseason play? Or us taxpayers? Because if you ask the taxpayers to fund another stadium project 20 years after the last one opened (either through some kind of renovation, or a new stadium itself), I think you're barking up the wrong tree.

But hey, it worked for the Bucks, so why not keep asking us to pay up? After all, the MMAC exists to make sure you pay for the things that make it easier for their businesses to survive.

Wednesday, February 26, 2020

Evers drops vetoes on GOP tax scheme. Now he needs to stick to it

I was hoping our fair Governor would veto WisGOP’s latest tax scheme, and sure enough, he did on Wednesday. Thank you, Tony.

As he vetoed the GOP’s bill, Governor Evers also indicated he was willing to go along with some of what the GOP had in their multi-part bill, as long as they included his provisions for K-12 education.
Along with upping state aid to schools, Evers’ plan would’ve resulted in a $130 million reduction in property taxes. In vetoing the GOP bill during a ceremony in suburban Milwaukee, Evers said he was willing to work on a compromise with Republican lawmakers.

Evers said he would support legislation with an income tax cut and larger rainy day fund payment, but it must include a property tax cut and increased school funding.

“It’s time for the Republicans to put politics aside so we can do what’s right for our kids, our schools, and of course, our property tax payers,” Evers said. “I’m ready to work across the aisle to get this done, and I’m willing to come to a compromise that works for everyone.”

GOP legislative leaders didn’t immediately respond to a request for comment….

The GOP package, which passed largely along party lines, included reducing income taxes by $247.7 million, paying off $100 million in state debt and sending $44.7 million to local governments to offset lost revenue from an expanded property tax break for businesses.

It’s worth noting that there might be enough money available for both items, because if you look at January’s revenue report, the state is still seeing strong growth.

Revenues, Jan 2019 vs Jan 2020
Income tax (adjusted) +4.9%
Sales and Use tax +7.5%
Corporate tax +168.8% (+$48.7 million)
Excise taxes +11.1%

That increase in corporate taxes continues the impressive jump that we’ve seen for over a year now, which the Legislative Fiscal Bureau indicates is due to many businesses becoming “corporations” in order to take advantage of the GOP’s Tax Scam at the federal level. Corporate tax revenues are now up nearly $246 million for Fiscal Year-To-Date 2020 vs FYTD 2019 (+71.3%), and are a main driver behind overall revenues being up 7.5%.

(Side note – if Wisconsin corporations are paying $246 million in additional state taxes, can you imagine what kind of windfall they are pulling from the tax cuts at the Federal level due to redefining their business?)

Then add in the fact that there is likely to be at least $137 million available because Foxconn won’t create the jobs or construction that was promised, and the funding should be there for a $600 million package that would include Evers' K-12 spending and property tax cut, along with some kind of income tax cut.

Now, the obvious risk with any kind of income tax cut is that the economy tanks over the next 18 months, the projected revenue growth fails to materialize, and a budget deficit opens up. I’ll also note that we don’t even know how much Wisconsinites will get from the income tax cuts associated with the state budget, which was signed into law by Governor Evers this Summer. That won't be determined until Wisconsinites file taxes over the next 2 months, as the tax cuts show up in the form of larger refunds vs anything extra in the paycheck (unless you’re enough of a dork to know to adjust your withholdings when Evers signed those tax cuts).

With that it mind, it makes sense for Evers to stick to his guns, and sign nothing unless it includes the K-12 assistance and associated property tax cut. Evers can wait it out until the next session while WisGOPs have to explain to voters why they thought was more important to give a property tax break to businesses instead of to homeowners (which raises property taxes for homeowners), and to continue to throw more money at voucher schools but not to public schools.

Hey WisGOP, why are you playing this game?

It also opens the door for Evers to allow Wisconsinites to get more money into their pockets without having to deal with the gerrymandered WisGOP Legislature. How? Evers can order the Wisconsin Department of Revenue to adjust the withholding tables for Wisconsin income tax to reflect the tax cuts from 2019. It's the same thing Scott Walker pulled in 2014 and if Evers does this in early 2021 when the new Legislature is in session, then Wisconsinites will more money coming in at that time in two forms. One is higher refunds in 2021, and the other is through the adjustment in the withholding tables meaning less is taken out whenever people get paid.

The best part about the "do nothing and adjust withholding tables" option is that Evers doesn’t have to give in to the WisGOP Legislature to do this, but still can appear to be a tax-cutter without tying the hands of the pre-election 2021-23 budget. The advice is worth what you paid it, but given today's veto and the fact that extra money may be solidified after Tax Season ends in the next 3 months, it’s worth gaming out the next steps once that happens.

Tuesday, February 25, 2020

GOP income tax cut may be well-targeted, but Noah Williams can't convince me it's a good idea

Wanted to take a few moments to discuss the latest "analysis" from Koched-up UW Professor Noah Williams. And I’m sure this will shock you, but Noah thinks that the Wisconsin GOP's income tax cut is a good idea.

Much of the paper reiterates what the Legislative Fiscal Bureau said in its summary of the GOP's tax cut bill – that the income tax cut would give a little bit more of refund to Wisconsinites in the working and middle classes, while phasing out entirely for the upper 10-15% of incomes.

Williams' opinion of the tax cuts is typical Koched-up BS, and I won't relay that here. The more intriguing part of the paper is where he goes into this analysis of Marginal Tax Rates (MTR), showing what an additional dollar of income is really taxed at in Wisconsin. And because of variety of changes in the standard deduction, EITC and other tax credits, and regular income tax rates, Williams says the MTR can be very different based on your income level.

While this is flattened under the GOP's income tax plan, rhere still are notable differences.

How is there a larger MTR for people making lower incomes than richer ones, even with a state that has a progressive income tax structure? Williams says it’s because incentives change at varying levels of Wisconsin Adjusted Gross Income (WAGI).
For WAGI between $31,367 and $36,576, the effective MTR is about 5.74%. The statutory rate of 3.86% is finally effective. The phase-out of the standard deduction raises the rate to about 4.62%. The phase-in of the married couple credit brings it down to about 3.42%. Finally, the phase-out of state EITC raises it to 5.74%.

For WAGI between $36,576 and $40,000, the effective MTR is about 7.16%. Relative to the previous phase, the statutory rate increases from 3.86% to 5.04%. The phase-out of the standard deduction raises the rate to about 6.04%. The phase-in of the married couple credit brings it down to about 4.84%. Finally, the phase-out of state EITC raises it to about 7.16%.

For WAGI between $40,000 and $49,934, the effective MTR is about 8.36%, 1.2 percentage points higher than the last phase because the married couple credit is now flat. Specifically, the statutory rate is still 5.04%. The phase-out of the standard deduction raises the rate to about 6.04%, and the phase-out of state EITC raises it further to about 8.36%.

For WAGI between $49,934 and $53,330, the effective MTR reaches its highest level of about 9.83%. Relative to the last phase, the statutory rate increases to 6.27%. The phaseout of the standard deduction raises the rate to about 7.51%, and the phase-out of state EITC raises it further to about 9.83%.
Which perhaps can lead a discussion on general income tax reform in Wisconsin, where we look at the incentives and the bracket changes and various deductions, and see if there's a way to have it be more cohesive. So there is a use for this analysis, just not in the way that WisGOP wants it to be.

And just because the data is interesting, it still doesn't mean that the WisGOP tax package is a better way to use our one-time shot of extra money. We still don't know how much the income tax cuts in the current state budget will reduce revenues by, because that money isn't being recouped until Wisconsinites file their taxes. So it seems quite risky to pile on another one without letting the first one take effect.

In addition, the reduction of personal property taxes on businesses is absurd, particularly because it will raise the property taxes of homeowners. Conversely, Evers wants to reduce property taxes that homeowners would pay for schools, and as Tamarine Cornelius of the Wisconsin Budget Project notes, Evers' bill had more in property tax cuts than he had in extra money that schools could spend.

You'd think Republicans would want a property tax cut that doesn't allow K-12 schools to spend the money....and if Scott Walker had proposed it, they probably would be OK with it. (Pathetic)

I'm hoping Evers sets this GOP tax package on fire and orders them back to the Capitol for another Special Session in a couple of months. When he does, you can bet Noah Williams will be tasked to create something that tries to make the GOP's BS seems sensible. And hey, it's gotten Noah a lot of money and attention, so who needs intellectual balance when you can do that!

As Trump World flails, the Bubbly stock market goes with it

The tragi-comedy of foolishness from the hacks in TrumpWorld as coronavirus got worse today, and the stock market matched the wreckage.

You can trace the start of today's meltdown to our President talking out of his backside while in India overnight, in a pathetic attempt to soothe the stock market.
...Trump spoke about the coronavirus at a news conference in India, saying it is "very well under control in our country."

"I think that whole situation will start working out. Lot of talent, a lot of brainpower is being put behind it," Trump said.
The DOW Jones Industrial Average was poised to start the day up by around 100 points after Monday's 1,000+ point selloff, but quickly turned negative as it became obvious that coronavirus is still spreading, with nearly 80,000 infected worldwide.

And then the person in charge of organizing immunization strategies at the (gutted) Centers for Disease Control made a classic gaffe, meaning she told the truth. While Trump was saying "all was well", this person was saying things were in no way OK.
"Ultimately we expect we will see community spread in this country," Dr. Nancy Messonier, director of the CDC's National Center for Immunization and Respiratory Diseases, told reporters on a conference call. While the CDC has been preparing for a possible outbreak, Messonier said hospitals and schools should be doing the same.

"These are things that people need to start thinking about now," Messonier said. "We are asking the American public to prepare for the expectation that this might be bad."
Soon after Messonier was giving her warning of "community spread" in America, another Trump official went on TV and said there was nothing to worry about.

How would a hedge funder like Larry Coke-blow have a clue about whether the virus is contained? Where'd he get his medical degree, Trump University?

As usual, when Larry Kudlow says something, YOU RUN THE OTHER WAY. As Kudlow BSed on CNBC, the DOW was down around 580 points. An hour later, it was down 930, and ended up closing with a decline of 879 points, bringing the 2-day decline to more than 1,900.

A couple of headlines from overseas with relatively small effects on the US economy in the near-term causes the market to tank? If that isn't proof we were in a stupid Bubble, nothing does. And now people are cashing in profits and running to safety now that there isn't "hope and optimism" to hide the lack of fundamental growth in our economy.

Another tell that the markets aren't trusting our economy is that longer-term interest rates continue to plummet. Look at what the 2-year note has done in the last week.

That's a drop of nearly 25 basis points, and at times today, there were companies and people figuring that getting less than 1.2% for each of the next 2 years (before inflation, mind you) was a better bet than the stock market or other options. That sure seems like a bad sign for the rest of the economy from the allegedly smart money.

The thing is, we still don't know how much coronavirus might damage our economy, if it damages it at all. Yes, a disruption in the supply chain can be a significant issue, and if a company has significant exports to Asia, that seems like a problem. But there haven't been many cases, and fear and uncertainty could be a bigger concern than any actual decline in capacity or output.

But what it does show is that the Trump Administration has far from "the best people" on the case, nor will they make the effort to invest in the human and financial resources to make sure they can get the best response to a crisis. Which is what happens when you a corporate executive who values ass-kissing over competence, and a GOP that values political poses over positive results.

Now combine that with the fact that the plummeting stock market shows that the "Trump economy" is a hollow shell that really doesn't have a lot of actual strength left in it, and that we are increasingly likely to be slowing down that speeding up in 2020. Not a pair of good arguments to give to the voting public in November, for an Administration that has few positive arguments to make outside of our overstimulated, Bubbly economy.

Monday, February 24, 2020

Hey Donnie, maybe cutting disease control wasn't such a great idea.

It's truly amazing that Republicans were trying to promote a cut to the Centers for Disease Control as recently as 2 weeks ago.

But it's not the first time that Trump/GOP measures have hurt the nation's preparedness for a major health crisis. Joan McCarter has an excellent rundown in Daily Kos that describes how the groundwork for the fiasco that we have today was two years in the making by the Trump White House. And it's in the classic GOP tradition of "deconstruction" of government services and effectivness.
Let's start back in April 2018 when then-national security advisor pressured Tom Bossert, who was in charge of the Department of Homeland Security's global health efforts, to resign along with his whole team. Then a month later, the White House forced out Bossert's counterpart at the national security council, Rear Adm. Timothy Ziemer, and eliminated his entire team which was responsible for leading the U.S. response to deadly pandemics. There is no senior administration official now solely responsible for global health security, coordinating and directing the various departments among the agencies responsible for public health and epidemic response. That's barely the beginning of this administration's failures, though.

Even before that, the Centers for Disease Control was forced to cut 80% of its efforts at preventing global disease outbreaks because its funding had been so severely reduced. The cuts to staff were so drastic that the number of countries the CDC was working in reduced from 49 to just 10. The cuts to the CDC and other health programs would continue in the latest Trump budget: a 10% cut to Health and Human Services; another 16% cut to the CDC; cuts to the World Health Organization of 53% and to the Pan American Health Organization of 75%; and $3 billion from global health programs among agencies.

What the cuts that have already been made to CDC mean is that it is hampered in screening for coronavirus. Right now, there's a problem with the CDC's test for the virus, so only three of the more than 100 public health labs around the country have verified the CDC's test for use. Right now, the test is also very expensive at $250 a pop and the HHS doesn't have the funds readily available to cover that as well as the rest of the response to the outbreak. The administration is planning to request emergency funds from Congress, but it could be as little as $1 billion. That's not going to go very far when just one screening test costs $250. In comparison, the Obama White House requested $6 billion to fight the 2014 Ebola outbreak, receiving $5.4 billion from Congress.

Add on top of that simple and gross mismanagement by the administration, when the State Department was allowed to overrule the CDC and allow 14 passengers from the Diamond Princess who were infected but without symptoms to fly home to the U.S. with uninfected passengers. Even with that happening a week ago, it was clear that asymptomatic people could transmit the virus.
See, that’s the thing about spending money to prepare for disasters – if you don’t pay for it, it’s not there when you need it. And if you don't have staff making those preparations, or hire a bunch of hacks that you tend to screw it up once.

Instead, this is what Trump's point man on dealing with coronavirus was doing today.

This is the problem that results from having a President and a GOP that has no interest in governing, just in grabbing power by any means necessary, and making decisions based on cruelty and trolling vs any kind of positive outcome. And a main part of this involves taking away the funding and influence of bureaucrats who put the needs of the American people ahead of needs of political hacks.

Compare that response to what someone who actually believes in governance sounds like.

I did notice today that Trump was desperately saying that he would ask Congress for an additional $1 billion in funding to fight coronavirus in the US (hey, at least the scare over this disease has made it dirt cheap to borrow more money). ut that's far too late at this point in the game, both here and in other countries.

And Trump’s main concern with coronavirus has nothing to do with an increasing amount of people suffering from an ailment that we are struggling to stop. Instead the real problem in Trumpworld is the fact that this disease is hurting the global economy, which was a big reason the DOW plunged by more than 1,000 points during Monday’s trading.

See, Trump/GOP knows that if our current stock market Bubble pops for good, and continues to tumble throughout 2020, it takes any chances Trump has of re-election with it. Because in GOP World, it's all about elections and the use of power. Stabilizing and improving the country once they gain office? HAH!

PS- I swear I had not read this guy's tweet when I said that Trump's bigger concern about coronavirus was because of what it would do to Wall Street.

More Wisconsin farm struggles in the news - locally and internationally

I wanted to go over a couple of recent news articles that indicated Wisconsin's farm crisis is far from over.

The first was an article in The (UK) Guardian from Dominic Rushe. It centers on Jim Goodman, a farmer in western Wisconsin who had to sell his farm and his land in recent years because of the losing situation that he and his industry was facing.
[Jim] Goodman was born on the farm. Growing up, local towns would have their own grocery stores, a drugstore, car dealers, machine dealers, says Goodman. “Our little town down the road [Wonewoc in Juneau County], had a movie theater, lumber yard. You know, they were all doing well.”

As those farms have gone so have the businesses. School districts don’t have enough children to stay open. “Now you can drive through any small town and if they don’t have a good share of their main street boarded up, they’re doing really well.”

The economics are tough. Milk prices have come back recently to about $17.55 per hundredweight in February 2020, but that is still way down from around $25 in 2014. Prices are expected to rise but in the meantime global forces have battered farmers. Feed prices rose as ethanol production took more crops, China bought more soy and tariffs increased equipment prices. For too many small farmers even as prices recover from a long slump, the cost of producing milk exceeds the prices they can sell it for.
And if you look at the USDA report that Rushe mentions, that $17.55 per hundredweight figure is well below the $19.33 that farmers were getting in December, and futures for milk have dropped by 10 percent in the last month.

Goodman also notes that his 50-cow herd has little chance of competing with mega-farms, both in-state and out-of-state. Even when he shifted over to organic milk in 2014, because even that got undercut by the huge producers.
The huge farms were shipping organic milk from Texas into Wisconsin for a lower price than Goodman was getting paid. “You know, you can’t compete with that,” he says.

As prices collapsed a planned sale fell through. He sold the land and then the cows. “I guess for me, that may have been harder than actually selling land because here you tend to be pretty attached to your cattle.”
It seems noteworthy that after $23 billion was handed out in farm subsidies last year by the US Department of Agriculture, and with Trump saying he might give out more money for this year, that nothing is being done by Republicans to support prices for small farmers or limit supplies. They just throw money in the short term, hope some of that money reaches the small farmers to keep them in business, and later on the conditions will improve…somehow.

This leads to the other article I saw today on Wisconsin dairy farmers a Milwaukee Journal-Sentinel article that included Washington County farmer Ross Bishop claiming that Trump’s tariffs and related trade policies are “good things for America.” (SUCKER!)

But even with the MAGA on the brain, Bishop and others in the article admit that current market fundamentals are failing farmers.
“Trump money is what I call it,” Bishop said. “If not for all that assistance from the federal government last year … farmers would have been broke in 2019.”

But for many farmers, it wasn’t nearly enough to offset the hardship they experienced.

The trade group Wisconsin Farmers Union said a 55-cow dairy farm stood to receive a one-time payment of $725 but would lose between $36,000 and $48,000 in 2019.

An 80-cow dairy would get $889, barely enough to cover its electric bill for a month. Meanwhile, it would lose $35,000.

Farmers say the underlying causes for low milk prices and the dairy crisis — including runaway production — haven’t been addressed by government or the industry.
We can hope that the worst of the farm crisis has passed in Wisconsin, but I'm not counting on it, given the recent plunge in prices and ongoing higher costs for family farms. And while a property tax cut for Wisconsin farmers and some industrial policy to boost exports might do something (assuming it passes the Legislature), if the market fundamentals aren’t changed, how much good will that really do?

Sunday, February 23, 2020

Bernie wins, and the super-rich and connected don't want to know why

I was getting ready to meet friends downtown before Rutgers-UW hoops on Sunday, but this segment came on MSNBC in light of the Nevada caucuses, and I had to watch.

Anand Giridharadas is one of the people that I stop and listen to, as I think he one of the few people able to cut through the BS and identify the oligarchy that we are in. He went on Joy-Ann Reid's show today, as Reid was trying to make sense of election results that did not make sense to an insider like her. Giridharadas responded by saying the strong support of Bernie Sanders and other anti-establishment politicians indicates how everyday people have caught on to how a handful of rich people have outsized influence, that they do not have our interests in mind, and they want a world that is better than what elites claim "the way things are."

Anand notes that the power elites are refusing to try to understand why everyday people are feeling the way they do, and instead those elites are more concerned with holding on their societal position over dealing with reality. The clip is a bit split up, but you'll get the idea.

[Among elites] "There is no curiosity, 'Why is this happening?' What is going on in the lives of my fellow citizens in this country [where] they may be voting for something that I find it so hard to understand? What is happening? What is happening? This is a moment for curiosity in America.

I think about this network, which I love and you love. We have to look within as to why is a lobbyist for Uber and Mark Zuckerberg on the air many nights explaining a political revolution to us. Why is Chris Matthews on this air talking about the victory Bernie Sanders, who had kin murdered in the Holocaust, analogizing it to the Nazi conquest of France? The people who are stuck in an old way of thinking in 20th Century frameworks, in gulag thinking, are missing what is going on. It is time for all of us to step up, rethink and understand the dawn of may be, frankly, a new era of American life."

-Anand Giridharadas
Giridharadas stuck around for Reid's next segment where he was joined by 4 other panelists discussing why Bernie was winning and what it may mean for the rest of the 2020 campaign. That starts around 10:00, and it featured a stunning sequence where the New York Times' Jonathan Capehart seemed to be near tears after Giriharadas called out Michael Bloomberg, who Capehart used to work for and whose husband is currently working for.

I think Capehart reacted so strongly because Anand was revealing a big reason why Capehart was able to rise above the barriers of being both gay and black to have such a great place in society. It is because Capehart was able to hang out with the monied and powerful elite, and not rock the boat too much when he got there, which is how far too much of how our corporate media acts.

That Insiders' Club is supposed to represent an elite few who are supposed to have some kind of special knowledge and insight that sets them apart from the rest. What the last 20 years has shown is that these people aren't very special at all, other than perhaps being more sociopathic and self-promoting than the rest of us, and they DON'T know better than the rest of us.

This is especially true in the highest reaches of the Democratic Party establishment in DC, where Boomers like Chris Matthews and James Carville are finding out that they are out of touch with most Democratic voters, and instead of adjusting to that reality, lash out against that. Because those changing demands are a threat to the position that they schmoozed and talked their way into, and is a threat to the corporatist establishment that has made them very rich. The thought of the gravy train coming to an end and being exposed as clueless and irrelevant scares the hell out of them.

I say this as someone who isn't supporting Sanders myself (at least at this point), but seeing the fear that his victories have ignited in the LOSERS who "led" the Democrats to so many failures for Dems in the 21st Century is something that makes me grin.

2020 - a time when many think cheating is worth it

Michael Baumann has a great column in The Ringer that starts with sports, but hits on the same problems we have in politics and business - the people at the top feel that cheating is worth whatever minor punishment may follow.

Baumann begins by discussing the recent suspension of English soccer team Manchester City getting a 2-year ban for exceeding salary caps on signing players, and championship-winning rugby team Saracens for also breaking the salary cap. And he includes the Houston Astros sign-stealing scandal which gave them a title in 2017, but now has disgraced them.

Baumann notes that it's not surprising that sports teams bend the rules, because they and other teams got rewarded for their sketchiness.
Having three high-profile cases in such rapid succession, across national and sporting boundaries, makes it look like this is some kind of high-water mark for brazen rule-breaking, but this is not a novel concept. How many times have the New England Patriots been caught sticking a video camera or an air compressor in the wrong place at the wrong time, only to receive a slap on the wrist? It wasn’t too long ago that the Seattle Seahawks built an entire defensive system around the idea that there’s a limit to the number of penalties referees are willing to call, and that limit does not change with the number of penalties a team actually commits.

If there was ever a time when the spirit of a law dictated behavior, that time has gone. Now it’s no longer about the letter of the law, but about what a given actor believes the authorities are willing to enforce. And within this specific amoral framework, crime pays. What do the Astros, Man City, and Saracens have in common, apart from suffering penalties severe enough to merit six-column headline type? They’ve won, constantly and inexorably, and flags fly forever. So, too, for the Seahawks and Patriots.
Baumann goes on to note that this type of rule-bending (and outright breaking) goes well beyond sports these days, and is central to the strategy of our largest corporations.
So, too, to the peril of society at large, have disruptive commercial and industrial institutions similarly benefited by greed and regulatory capture. It’s now a billion-dollar business to find creative ways around—or uncreative ways through—rules designed to ensure public safety, or to protect workers and consumers. The proof is in Uber, and Amazon, and investment banking.

Athletes cheat, and have cheated since time immemorial, because they want to win. Businesspeople—the kind of folks who now run organizations like the Astros, Manchester City, and Saracens—cheat because they can. Avoiding the rules, or avoiding punishment for breaking them, has the same effect as following the rules, and absent the values of fairness and justice that inspire such rules in the first place, the ethical consequences are the same as well.
And is it any surprise that we see the same effect in our politics. We have a lawless GOP that only cares about grabbing power at all costs, and will gladly cover up crimes by this White House and look the other way on foreign interference on elections as long as it helps them stay in power.

And if there is no accountability to this type of system-rigging, why would they stop? Until our elite politicians and corporates get tossed out en masse for their cheating and amoral scumminess, and/or get thrown in jail and face massive fines for going around our laws to gain an advantage, we will continue to spiral down the drain.

Which reminds me - in light of the explosive reports about how the Trump Administration wants to bury information about Russian agents misinforming people for the 2020 elections, is the Wisconsin Senator that chairs the Homeland Security Committee going to have hearings to expose this to the American public, and make sure we have fair and free elections this Fall?

Who ya with, RoJo? Legitimate democracy, or a slanted system that might allow you to keep your status, no matter how illegitimate it is?

Saturday, February 22, 2020

Both Dems and GOPs are fired up in Wisconsin for 2020. So why are polls counting more GOPs?

Craig Gilbert in the Milwaukee Journal-Sentinel gave his rundown of the primary election results for the Wisconsin Supreme Court, and focused on the fact that there were a lot more votes than we are used to seeing for this time of the year.
Wisconsin’s February election was the first hard indicator of what many people in both parties have long suspected — that this could be a year of unusually high voter turnout.

More than 700,000 votes were cast in Tuesday’s state Supreme Court primary, an exceptional total for a nonpartisan statewide February race. It’s easily the highest turnout of the seven Supreme Court primaries that have occurred since the year 2000….

The six other Supreme Court primaries that have been held since 2000 generated an average of a little over 400,000 votes, with highs of 567,038 votes in 2016 and 534,980 in 2018.

The top finisher in Tuesday’s court primary, conservative candidate Daniel Kelly, got more than 350,000 votes, according to unofficial returns. In the six previous court primaries, no single candidate received more than 253,000 votes.

Tuesday’s second-place finisher, liberal candidate Jill Karofsky, also topped that previous high, attracting more than 260,000 votes. Another liberal candidate, Ed Fallone, received about 89,000 votes.
Some of this higher turnout reflected the contested local races in both the city of Milwaukee and Milwaukee County as a whole, but that was counteracted with the competitive Republican primary in Wisconsin’s 7th Congressional district, as that WI-7 race drove a massive jump in votes from Northern Wisconsin.
The last time Wisconsin held a February primary in 2018, only 3,363 people voted in Oneida County.

This year, 9,469 people cast ballots in state and local primary races marking a more than 280% increase.

Hartman said the increase in votes is all about who's on the ballot.

"We were expecting an increase with the Congressional seat primary on there, we knew the voter turnout would be better. But this, I think, was higher than what any of the clerks were expecting," said [Oneida County Clerk Tracy] Hartman….

Marathon County also saw high voter turnout Tuesday with 23,908 ballots cast. That's a more than 252% increase from 2018.
If you want an indicator of Dem engagement, note that Dane County had almost no local races of note, but still had more than 87,000 votes on Tuesday vs slightly more than 77,000 in 2018, and 80% of those votes went to the more liberal candidates. So if anything, Dems are even more engaged than they were at this point in 2018.

And yet, despite the 50-50 nature of the vote totals and the inflated turnout in Northern Wisconsin, recent polls in Wisconsin only seem to account for this high voter turnout among Republicans, and not among Democrats. This has been reflected in a consistent slant toward the GOP in the Marquette Law School Poll, which had an electorate of GOP +4 in its most recent release.

It was even worse in Quinnipiac University’s “swing state” poll of Wisconsin. I’ll use the closest matchups of Joe Biden and Bernie Sanders vs Donald Trump as the examples here, although all the cross-tabs with all Dem candidates will tell a similar story.

Quinnipiac Poll of Wisconsin, president. Feb 2020
Dems- Biden +91 vs Trump, Sanders +88 vs Trump
GOPs- Trump +90 vs Biden, Trump +91 vs Sanders
Independents – Biden +1, Sanders Even

Seems like it would be a close race in a 50-50 state, right? Nope.
Trump defeats Senator Bernie Sanders 50 - 43 percent;

Trump is ahead of former Vice President Joe Biden 49 - 42 percent.
Why? Here’s why.

Former Russ Feingold press secretary and Progressive writer Jud Lounsbury points out that this is a simple flaw of doing polls via phone in 2020.

Then add in the fact that many younger voters aren’t registered until Election Day in Wisconsin, and that many highly educated, mobile individuals that moved to Wisconsin still have phone numbers from other states, and you have the makings for garbage inputs that don't reflect who will actually be voting in both April and November.

I don't understand why pollsters are allowing themselves to publicly release these things when prior and current events indicate there isn't going to be a pro-GOP electorate in Wisconsin for 2020. I understand that it's hard to control who picks up the phone from weird phone numbers these days, but when you're not adequately adjusting your sample to match reality, you're going to have a faulty product.

Which I'd blow off, except that lazy media reports these faulty polls as fact, and lazy low-info voters are influenced by these polls, as they like being associated with a winner. And that's why we have to call out any poll that is so badly slanted, and put public pressure on them to correct themselves as the election gets closer.

Friday, February 21, 2020

As February wears on, the real economy gets shaky, as the housing market gets Bubblier

On Friday, I saw a surprising report that indicated the overall US economy actually declined in the first part of February.
Adjusted for seasonal factors, the IHS Markit Flash U.S. Composite PMI Output Index posted 49.6 in February, down from 53.3 in the opening month of 2020. Although only fractional, the decrease in business activity brought to an end a near-four year sequence of expansion following a contraction in service sector output and a slower rise in manufacturing production amid supplier delays following the outbreak of coronavirus….

New orders received by private sector firms fell for the first time since data collection began in October 2009. The fractional decline in new business stemmed from weak client demand across the service sector and the slowest rise in manufacturing new order volumes for nine months. Private sector companies continued to struggle to attract foreign client demand as new export orders fell for the second month running.
That’s not promising whatsoever, and except for a one-month blip due to the government shutdown in October 2013, it’s the first decline in the PMI composite index in a decade.

The bigger alarm is that February’s decline was driven by services.
The seasonally adjusted IHS Markit Flash U.S. Services PMI™ Business Activity Index registered 49.4 in February, down from 53.4 in January. The latest data signalled the first decline in business activity for four years and a notable turnaround from the solid output expansion seen in the opening month of the year.

The contraction in output was in part driven by a renewed decrease in new business across the service sector. Although only fractional overall, the rate of decline was the strongest in the series history (since October 2009). New export orders also fell as firms reported greater hesitancy among clients to place orders amid speculation regarding coronavirus.
Maybe the coronavirus is causing a one-month blip, but it adds to a list of iffy economic reports in recent days. This includes a mediocre retail sales report for January, a decline in job openings to a 2-year low, as well as new data that shows job growth for 2019 will be revised down by another 300,000.

Put those uncertainties together along with the Federal Reserve continuing to throw money into the market, and interest rates have plummeted in recent weeks, with the 30-year bond at its lowest levels ever, and the 10-year note losing 45 basis points in the first 7 weeks of 2020.

One of the few things keeping the economy afloat? A Bubbly housing market, which continues to ride the low interest rates which have allowed prices to rocket higher in recent years. Friday’s report from the National Association of Realtors reiterated that trend continued in January.
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.3% from December to a seasonally-adjusted annual rate of 5.46 million in January. However, for the second straight month, overall sales substantially increased year-over-year, up 9.6% from a year ago (4.98 million in January 2019).

Lawrence Yun, NAR’s chief economist, finds the outlook for 2020 home sales promising despite the drop in January. “Existing-home sales are off to a strong start at 5.46 million.” Yun said. “The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales.”…

Single-family home sales sat at a seasonally-adjusted annual rate of 4.85 million in January, down from 4.91 million in December, but up 9.7% from a year ago. The median existing single-family home price was $268,600 in January 2020, up 6.9% from January 2019.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 610,000 units in January, down 1.6% from December but 8.9% higher than a year ago. The median existing condo price was $248,100 in January, an increase of 5.7% from a year ago.
It's worth noting that the home price increases are jumping at a rate that's more than twice the US's 3.1% increase in wages over the last 12 months, and property taxes are likely rising with those higher prices. Which sure doesn't seem very sustainable for the long term, even with the lower interest rates making it slightly less costly.

We're not at the massive debt loads that we saw in the mid-late 2000s. But any growth in the 2020 economy seems to be increasingly based more on speculation and asset values than on growth in wages, jobs or demand. And when we get in this Bubbly stage without legitimate growth underneath it, the ultimate POP of that Bubble never ends well, and hurts the real economy below it.

Thursday, February 20, 2020

WisGOP should be branded for latest tax scheme

A few thoughts from the Democratic Leader of the State Assembly, as GOPs plan to call for a 10 1/2 month paid vacation after a marathon session today.

By comparison, the GOP's latest Tax Scheme will end up raising property taxes on homeowners while cutting them for businesses, and giving a pittance of an income tax cut that not everyone will get. All while doing NOTHING to invest in our roads and schools.

When that bill gets to Gov Evers' desk, he should take a page from the book of former Montana Gov Brian Schweitzer.

Then call a Special Session in March or April, and tell Robbin' Vos and Scott Fitzgetald to get serious.

New figures show US job growth sliding, with Wisconsin near zero

I wanted to go over some of the findings from today’s release of the “gold standard” Quarterly Census of Employment and Wages (QCEW) for September 2019.

First of all, we got more indications that 2019’s US jobs total has been overstated. While we saw some of those gains revised down due to benchmarking earlier in this month, it was only benchmarked to the QCEWs that had been released. That only got us through June, and as you can see, the growth for the last 6 months actually were revised UP by 71,000 jobs.

However, the new QCEW shows those figures for September were also too high.

Sept 2018 - Sept 2019 US job change
Monthly Job Reports +2.020 million (+1.35%)
QCEW totals +1.674 million (+1.14%)

So if you drop the job growth to 1.14% for the monthly job reports, it would translate to more than 300,000 jobs going away. That would mean that growth declines to a seasonally-adjusted 1.7 million, the lowest levels of job growth since mid-2011. So watch for that as the Summer goes on and the initial benchmark reports hit around August.

Wisconsin is a similar story, except our decline is much worse. We have flatlined to near zero, with barely more than 2,000 jobs added between Sept 2018 and Sept 2019, which likely means our monthly job totals will be revised down by a few thousand when the state benchmarking happens in 2 weeks.

The QCEW figures continue a trend where our job growth started going down in 2016, and got worse throughout most of the Trump presidency.

This puts the state as a horrible 43rd in the US for job growth in this time period, with only Illinois doing worse than us in the Midwest. And no state in our part of the country fared well compared to the rest of America.

Job growth, Midwest Sept 2018-Sept 2019
U.S. +1.14%
Minn +0.38%
Ohio +0.34%
Ind. +0.31%
Mich +0.24%
Iowa +0.09%
Wis. +0.07%
Ill. +0.05%

Seeing Minnesota at the top of that list reminds us that the jobs gap between Minnesota and Wisconsin in the 2010s got bigger again. If you go back to September 2010 (right before Wisconsin was taken over by Republicans and Minnesota chose a Democratic governor), Minnesota added more than 100,000 more jobs than Wisconsin did, and had nearly 24,000 more jobs overall by September 2019, despite a lower population.

While we don’t have a complete data set of sectors or counties from the QCEW at this point (that comes in a couple of weeks), we do have a list of the counties in urbanized areas. And there is a startling contrast between how things are going in Madison compared to the rest of the state.

Job growth, September 2019
Dane County +6,347

Dane County +6,347
Waukesha Co. +1,586
Outagamie Co. +640
Racine Co. -547
Winnebago Co. -948
Brown County -1,432
Milwaukee Co. -2,871

Our wages aren't rising as much as the rest of the country either, with average weekly wages up a whopping $28 compared to last year (aka 70 cents an hour). Only 7 states had a lower increase for this time period, and we are now nearly $180 a week behind Minnesota's average wage. An exception to that was Dane County, which had wages go up by $35 a week while Minnesota's average increase was $32 a week.

I have a thought on this, and it’s one you’ve likely heard before in this space. Why aren’t we trying to make the state emulate the successes we see in Dane County and Minnesota? And why would we continue to have WisGOPs guiding the state’s economic policies, when those people are actively opposing the high quality of life, higher-skilled jobs and higher wage levels that those areas have?

Don’t buy the hype that Coastal media is trying to sell you regarding how things seem. The economy is decent, but it’s nothing special and is clearly slowing down on the job front, particularly in the Midwestern states that Donald Trump needs to hold onto this November.

And just like how our economy isn’t matching up the story that the GOP and the nation wants to believe, we aren’t going to have an electorate anything near R+6 in November, so throw that “Trump leads in Wisconsin and people are people are thrilled with how things are going” narrative on the scrap heap as well.

Wednesday, February 19, 2020

Some farm aid likely to go through in Wisconsin, even if they have some flaws

I wanted to give a run down of the farm bills that passed the Joint Finance Committee this week are will likely get votes in the State Legislature before it goes on its 10 1/2 month paid vacation.

The biggest-ticket item was thrown in by Republicans that increases the write-off for farm buildings, which unanimously passed the JFC on Tuesday and is slated to go to the full Assembly as part of their session-ending extravaganza on Thursday.
But when the Legislative Fiscal Bureau dug into the bill, it noted that it may be difficult to separate a "farm building" from the homes and other structures on the property.
Further, when residential property is valued as part of farm set, its value would not be delineated from the other farm buildings as part of the improvements listed on the tax bill and reported to DOR. However, using information filed on the state income tax form used for the calculation of a taxpayer's property tax/rent credit, DOR estimates that approximately 70.2% of value included in the agriculture-other property classification is associated with farm residences. Based on this percentage, and accounting for the income limitation and maximum credit, DOR estimates that the refundable farm buildings credit would increase GPR expenditures to pay credit claims by $27.3 million in 2020-21, 2021-22, and 2022-23. The credit would sunset after tax year 2022, and minimal GPR expenditures are estimated beginning in 2023-24.

DOR also notes that, to the extent some farm residences are actually classified as residential rather than agriculture-other, the cost would be higher. That is, farm residences would make up less of the agriculture-other classification, which would increase the value of farm buildings used in the calculation of the credit. DOR further indicates that to the extent that some of the agriculture-other improvements do not satisfy the exclusive farm use requirement, the fiscal effect could be smaller. It is possible that, in response to the availability of the credit, claimants may change title to jointly own buildings and improvements assessed as agriculture-other under state property tax law. Thus, the fiscal effect may increase to the extent multiple claimants can separately claim credits of up to $7,500 on the same property.
Further, the LFB says there is a scenario where the largest benefit of this bill would go to CAFOs and other mega-farms, although the bill's maximum tax break of $7,500 keeps the benefits from being slanted too far to the large farms.
In order to qualify for the maximum credit of $7,500, a claimant would have to own agriculture-other improvements, excluding the value of residential property, valued at $631,900. DOR notes that most farms would likely receive a credit below the $7,500 maximum credit limit. Rather, DOR indicates that large dairy farms or confined animal farming operations (CAFOs) permitted by the Department of Natural Resources (DNR) will be impacted by the limit. DOR indicates that a sample of large dairy CAFOs would receive a median farm buildings credit of $19,400, before the $7,500 credit limitation is applied. For such CAFOs, the limitation would lower their credit by about $11,900 on average.
It feels like that could be improved, and/or there might be better ways to lower property taxes in rural areas, like through Governor Evers' proposal to increase sparsity aid and providing property tax relief for school funding. But I'd imagine this goes through as part of a group of bills designed to at least give the appearance of helping our state's struggling farmers.

Another bill is designed to help on the knowledge side of the agricultural economy, in the form of an additional $1 million a year for ag research at UW-Extension.
The bill would provide $1,000,000 GPR annually beginning in 2019-20 in the UW System's general program operations appropriation and require the Board of Regents to allocate $1,000,000 in each year from that appropriation to provide additional funding for state specialists providing extension services at the UW-Madison College of Agricultural and Life Sciences in the field of applied agricultural research. The bill would specify that this amount be in addition to any other amount allocated to UW-Madison by the Board of Regents, and that it be a bona fide increase of funding above the level that would otherwise be provided in the absence of this provision.
Seems odd that they would offload these duties to UW-Madison when they could have done this in-house at the Department of Agriculture, Trade and Consumer Protection (DATCP). But then you realize that this allows the WisGOPs to get more say over what UW-Madison does, and takes that program away from the Evers Administration, and it makes a bit more sense.

Here are some of the other bills passed through JFC as part of the farm package, even if some of the items won't necessarily go to farmers.
AB 742/SB 665, which would increase by $239,800 annually the funding provided by the Department of Health Services to help pay for training of emergency medical technicians.
Not a bad idea here, as it gives help to local services that are often short on funding availability in the Age of Fitzwalkerstan.

Another item in that group of "farm bills" took a proposal from Governor Evers' special session, and then made a minor modification.
*SSAB 7, which would give small dairy processing plants preference when DATCP awards grants. The committee amended the bill to define small processors.
The bill adds another $600,000 a year for those grants, but the definition of "small processors" is one that makes "no more than 50,000,000 pounds of processed product per year". I don't know whether 50 million pounds is a lot or not, but it seemed OK for the JFC, as all 14 members present on Tuesday gave it the OK.

Another bill that got through JFC started from that special session, as part of an Evers proposal to set aside money to try to expand markets for state farmers. But it's now quite a bit bigger.
SSAB 6, one of Evers’ special session bills. Evers wanted to provide DATCP $1 million as part of an effort to increase dairy exports to 20 percent of the nation’s milk supply by 2024 and authorize two positions at the agency. The committee signed off on an Assembly amendment to expand the bill by requiring WEDC and DATCP to work on increasing the state’s dairy exports to 20 percent of the nation’s milk supply by 2026, along with increasing meat and crop exports. The amended version also would require WEDC and DATCP to propose in their 2021-23 budget requests how to achieve the objectives with proposals of up to $5 million.
I can go overseas, too!

It's a nice goal, but do we really need to be trying to pump out more and more milk and other products? Isn't that part of the problem? And while I don't mind the idea of government having more input on the direction of our agricultural economy, relying on marketing and exports seems risky and could end up having us get stuck in future years if the markets and/or prices don't make it economically sensible to be pushing exports like this.

I also note that the GOP Amendment that passed JFC (with zero votes from Dems on the Committee) moved the location of the new Wisconsin Initiative for Dairy Exports from DATCP to WEDC, but then makes DATCP use a couple of staffers to help WEDC. It's a subtle change, but quite telling that GOPs would rather the effort be overseen by the still-GOP controlled WEDC Board than the Evers Administration.

In general, these have been a rare example of bipartisan solutions that are likely to be signed by the Governor, even if they have some flaws. And they're a lot better than a lot of the garbage that'll get shoved through in tomorrow's "hurry up and go on our paid vacay" Assembly session.