Sunday, February 28, 2021
Saturday, February 27, 2021
Friday, February 26, 2021
A fresh round of government stimulus checks sent personal income up to its biggest monthly gain since April 2020 though inflation remained tame, the Commerce Department reported Friday. Personal income jumped 10% after a 0.6% increase in December. That was even higher than the 9.5% Dow Jones estimate. The gain came from the issuance of $600 stimulus payments that Congress approved for millions of Americans, along with enhanced unemployment benefits. Consumers took those checks and spent them quickly, sending retail sales surging and pushing overall expenditures up 2.4% for the month, a touch below the estimate of 2.5%.Very good stuff, particular given that incomes had stagnated in the latter half of 2020 as previous stimulus measures faded. However, if you dig into https://www.bea.gov/sites/default/files/2021-02/effects-of-selected-federal-pandemic-response-programs-on-personal-income-january-2021.pdf> the supplemental tables on COVID-era legislation, you see that almost the entire increase in income is due to measures that passed Congress and were signed into law (after some delay) by President Trump in late December 2020. Increase in income, annual basis, Jan 2021
$600/$1,200 stimulus checks +$1,660.9 billion
$300/week unemployment add-on +$261.2 billion
All other income +$32.6 billion (+0.176% vs December) You can see how this boost in income was a smaller version of what we saw last Spring in the CARES Act, and that the underlying fundamentals in income growth barely changed at all.
The $340.9 billion increase in current dollar PCE in January reflected an increase of $277.2 billion in spending for goods and a $63.7 billion increase in spending for services (table 5). Within goods, the increases were widespread across all categories, led by recreational goods and vehicles (notably, information processing equipment) as well as food and beverages, based on Census Monthly Retail Trade Survey (MRTS) data. Within services, the increase was led by spending for food services and accommodations (more than accounted for by food services), based on MRTS data. Spending for health care (led by outpatient services) also increased, reflecting data on the volume of visits as well as revenue data. Partly offsetting these increases was a decrease in housing and utilities (led by electricity and gas), reflecting data from the Energy Information Administration.The rebound in food service spending is an especially good sign, because that sector had been battered as COVID resurged in the last 3 months of 2020. And even with a stronger January, spending in that discretionary area is still quite a bit below its September peak. And several sectors still have not returned to the levels of spending that they were at in the pre-COVID World.
Thursday, February 25, 2021
DOT indicates transportation fund collections continue to be negatively impacted in 2020-21 due to adverse effects from the COVID-19 pandemic. The Department projects that gross revenues will be $122.3 million less in 2020-21 than the amount estimated in 2019 Act 9, including the motor vehicle fuel tax and title fees below their respective estimated amounts by approximately $100.1 million (9.2%) and $61.2 million (22.3%). However, in 2020-21, the lower revenues will be partially offset by an estimated $44.9 million less in debt service on transportation revenue bonds due to slower than anticipated issuance as well as interest savings and bond premiums associated with a 2020 refinancing.Combine that with another shortfall in the 2020 Fiscal Year for many of the same reasons, and it means that on the state funding side, WisDOT would have a $172 million deficit to fill.
Under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, the Department was allocated $186.6 million in additional federal aid for highway infrastructure programs as well as $27.0 million in federal appropriation supplement as part of the Consolidated Appropriations Act of 2021. In addition, the Department was allocated $50.0 million in federal redistribution aid for federal fiscal year 2020, which is any federal highway aid unobligated or unallocated by states that the Federal Highway Administration is required to redistribute to states that are able to use that authority. This redistribution amount was $30.0 million higher than anticipated at the time of 2019 Act 9. Including the $733.5 million the Department was allocated through regular federal highway aid formula funding, the Department was allocated a total of $997.1 million in federal highway aid in 2020-21, which is $209.9 million, or 26.7% higher than the $787.2 million in federal formula aid appropriated in 2019 Act 9. All of this federal aid remains available for obligation until September 30, 2024, except redistribution aid was required to be obligated no later than September 28, 2020.So as a result, the LFB says that despite the lower amount of state-generated revenues, WisDOT not only will avoid cutting back on road projects, it’s actually going to be able to send more aid to local communities to help them get their roads fixed, as well as put in more money to fix state highways.
Under the federal portion of its plan, the Department requests the appropriation of the additional $209.9 million in federal aid to increase the expenditure authority for corresponding federal appropriations to replace the amounts lapsed from program's continuing appropriation balances proposed under its deficit reduction plan. Under the Department's plan, many appropriations would experience no net change in funding. Two programs, the state highway rehabilitation program and the local roads improvement program, will receive a net increase in funding of $25.7 million and $25.0 million, respectively. Projects in the local bridge improvement assistance program are typically eligible for federal funding while projects in the local roads improvement program are not typically eligible for federal funding. In order to increase funding for the local roads improvement program, the plan would reduce SEG funding by $25.0 million in the local bridge improvement assistance program segregated appropriation, and provide an equal amount to the corresponding federal appropriation for that program. Reducing the local bridge improvement assistance program segregated appropriation and replacing that funding with federal aid would make available $25.0 million in segregated revenue to re-allocate to the local roads improvement program under the plan.
Tuesday, February 23, 2021
Walker: The other thing is more long-term, and that is, after this, um, you know the coming days and weeks and months ahead, particulary in some of these, uh, more swing areas, a lot of these guys are gonna need, they don’t necessarily need ads for them, but they’re gonna need a message out reinforcing why this was a good thing to do for the economy and a good thing to do for the state. So to the extent that that message is out over and over again, that’s obviously a good thing. (this is soliciting an illegal in-kind campaign contribution, folks). "David Koch"/Murphy: Right, right. Well, we’ll back you any way we can. But, uh, what we were thinking about the crowds was, uh, was planting some troublemakers. Walker: You know, the, well, the only problem with that — because we thought about that. The problem — the, my only gut reaction to that is right now the lawmakers I’ve talked to have just completely had it with them, the public is not really fond of this. The teachers union did some polling of focus groups, I think, and found out that the public turned on ’em the minute they closed school down for a couple days. The guys we’ve got left are largely from out of state, and I keep dismissing it in all my press conferences saying, ‘Eh, they’re mostly from out of state.’ My only fear would be is if there was a ruckus caused is that that would scare the public into thinking maybe the governor has gotta settle to avoid all these problems. You know, whereas, I’ve said, ‘Hey, you know, we can handle this, people can protest. This is Madison, you know, full of the ’60s liberals. Let ’em protest.’ It’s not gonna affect us. And as long as we go back to our homes and the majority of the people are telling us we’re doing the right thing, let ’em protest all they want. Um, so that’s my gut reaction, is that I think it’s actually good if they’re constant, they’re noisy, but they’re quiet, nothing happens, ’cause sooner or later the media stops finding ’em interesting.Hmm, planting troublemakers in the crowd, and causing a "ruckus" so that the people in power have to back down from what they plan to do? This sounds like something I heard another WisGOP talking about today.
And no matter what reality says, Walker and Johnson have learned GOP strategy well. Keep hammering "a message out reinforcing" the Big Lie, so it gets drilled into the brains of low-info rubes, and forces media to talk about the BS under your frame. The benefits of public sector employees were never a real problem that hurt the state's economy or budget. But GOPs felt they had to do something about these "issues" (to gain political advantage by handcuffing Dem-leaning groups of people). And so you got GOP austerity through Act 10 and Walker's related budget cuts to public services. Likewise, large numbers of voters deciding to vote absentee during a pandemic isn't problem either, but Senators like Ron Johnson promoted Trump's Big Lie that there was some kind of sketchiness with the votes in Wisconsin. So WisGOPs in the gerrymandered Legislature run with that Big Lie, which allows for plenty of coverage on race-baiting AM Radio as they try to "solve" the problem of too many people voting (Dem).
Ron Johnson is using his questioning time during the Capitol security hearing to promote a conspiracy theory that the January 6 insurrectionists weren't actually Trump supporters, but were "provocateurs" and "fake Trump protesters" pic.twitter.com/t72QkHDbaG— Aaron Rupar (@atrupar) February 23, 2021
Republican lawmakers seek to overhaul voting in Wisconsin https://t.co/w9sGwwVKT9— Patrick Marley (@patrickdmarley) February 22, 2021
The package of bills released Monday would put in place new rules for absentee voters, a voting group targeted by attorneys representing the former president who unsuccessfully sought to change the outcome of Wisconsin's presidential contest that President Joe Biden won by just about 21,000 votes. The effort, being led by Sen. Duey Stroebel of Saukville, would require absentee voters to provide an ID for every election (even if the ID is current and on file), limit who can automatically receive absentee ballots for every election and create more paperwork for those who vote early in clerk's offices. The proposals would also put new limits on when voters are considered indefinitely confined because of age or disability. Under a long-standing law, confined voters do not have to show ID to receive absentee ballots and do not have to regularly reapply for ballots.All of these items are indicative of a Wisconsin GOP that knows they can't win on their ideas, so they scapegoat these people to try to stir up resentment and dupe mediocre white people into voting Republican to "stick it to those people.", and then try to grab any political advantage they can. It's transparent and desperate, and the WisGOPs deserve to get drilled in elections for decades for what they've done. And we can't allow this scumminess to get memory-holed over the next 20 months.
Monday, February 22, 2021
Following a record year for home sales in 2020, the Wisconsin existing home market started the new year on record pace even as inventories continued to tighten statewide, according to the most recent analysis by the Wisconsin REALTORS® Association (WRA). January home sales increased 9.8% compared to that same month last year, and the median price rose 10.5% to $210,000 over that same period. This established a new January record in Wisconsin for both home sales and the median price, according to the report. “January is typically the slowest month of the year, so it’s encouraging to see such a strong market to start 2021,” said WRA Board Chair Mary Duff. In a typical year, the month of January accounts for just 4.8% of annual sales. In contrast, sales usually peak in June, and the volume is nearly two and half times greater, accounting for 11.6% of sales. Duff cautioned that the record pace is unlikely to continue due to a severe shortage of homes for sale. “Unfortunately, January ushered in another Wisconsin record, and that’s record-low inventories,” said Duff. There was just 2.1 months of available homes for sale in January, down from 3.5 months a year earlier. The last time there was a balanced market in the state was in summer 2017 when there was about six months of supply, and it has been a seller’s market ever since. “Going forward, we may be able to surpass the depressed level of home sales last spring, but we will struggle to keep pace with 2020 unless inventories improve,” said Duff.It's remarkable that this big jump in home prices and sales is happening at the same time that millions of Americans continue to receive unemployment benefits, and are living paycheck to paycheck. Oil prices have also been climbing, and the recent cold snap in Texas is making it go up even more.
Oil prices rose nearly 4% on Monday, boosted by the expected slow return of U.S. crude output after last week’s deep freeze in Texas shut in production. U.S. producers shut anywhere from 2 million to 4 million barrels per day of oil output due to cold weather in Texas and other oil producing states, and the unusually cold conditions may have damaged installations that could keep output offline longer than expected. Brent crude settled at $65.24 a barrel, rising $2.33, or 3.7%, while U.S. oil settled at $61.49 a barrel, jumping $2.25, or 3.8%. The U.S. benchmark crude contract for March delivery expires on Monday, and the more widely-traded April contract was up $2.44, or 4.1%, at $61.70 a barrel.That will likely keep the consumer price index on the rise for the near term, and will go on top of something else that will keep the "surging inflation" memes going in the next few months. That's the year-over-year numbers, which will start spiking up because they'll be compared to the depths of the COVID-related shutdowns last Spring.
Sunday, February 21, 2021
[Born and Marklein] signaled support for the guv’s proposals to expand mental health care, bring high-speed internet to rural communities, increase funding for agriculture programs and increase public school spending, but they don’t approve of some of the broader proposals such as expanding Medicaid and legalizing marijuana. The pair also said they strongly oppose: *$15/hr. minimum wage increase; *Allowing local municipalities to raise sales taxes; *Allowing the UW System to receive loans; *$1.6 billion K-12 school budget.Not overly surprising, although self-centered and disappointing, because WisGOPs care more about stirring up resentment against the UW and bigger cities than actually doing something that would help the overall state economy. The sales tax item is especially infuriating because in another article covering the press event, Marklein says that Lafayette County and "[his] townships" would not benefit from a sales tax. But what Marklein doesn't mention that he also "represents" much of Sauk County, which has a lot of places like this. Lake Delton and Wisconsin Dells to raise their own sales taxes after an approved referendum in 2014, but God forbid more places be allowed the same opportunity to keep more of the money they generate. And the reasoning Marklein gives behind not wanting to expand Medicaid is another type of circular BS.
Marklein also said Medicaid expansion isn’t as big of a priority in Wisconsin as it is in other states because of existing state-sponsored health care offerings. “I believe we do a great job in this state of covering our residents and providing opportunities for them to be covered in insurance,” Marklein said, adding that while Medicaid expansion is one method to improve coverage, “the problem in our state is not nearly as significant as what it is in some other states.”Most of those "opportunities for them to be in insurance" is through the Obamacare exchanges, which Republicans spent much of the 2010s complaining about. Using those same exchanges as a crutch to avoid Medicaid expansion is quite the way to dodge a reason to save state taxpayers hundreds of millions of dollars while expanding services. That being said, I think there is plenty that can be improved in this budget. I wish the sales tax increase had been tied in to lowering/limiting property taxes (it's done in a more roundabout way in Evers' budget, where higher state aids limit the increases). We have a system of funding local government that doesn't work well, and the budget would have been a great opportunity for Evers to present himself as a "reformer" and force GOPs to respond. Especially since many Wisconsinites can't write off their property taxes on the Federal tax returns due to 2017's GOP Tax Scam. Another complaint I would have is that the added spending combined with tax hikes gives an easy target for Republicans to go after while not having to deal with the policy ideas that Evers is promoting that most Wisconsinites agree with. While the Manufacturing and Agreiculture giveaway is absurd and should go away, it's harder to ask for it in a time when Wisconsin's corporate taxes are rising, largely due to more businesses re-classifying as corporations because the Tax Scam makes it more worthwhile at the Federal level.
Saturday, February 20, 2021
As Texans continue to go days without power or heat, shale-driller Comstock Resources Inc., a publicly traded company of which Jones is the majority stockholder, has, according to NPR, been selling gas at “super-premium prices.” It has been “like hitting the jackpot," Roland Burns, Comstock’s president and CFO, said on a Wednesday earnings call. This is business to Jones, as defensible to him as—I’m being hypothetical here, of course—another billionaire claiming that not paying taxes “makes me smart.” Jones does not need the money, but need has nothing to do with this. Making more money for himself is one way he keeps score. (Winning Super Bowls is the other, though he hasn’t done that in almost three decades.)And I'm sure it will shock you to learn that Oil Man Jerry is a sizable donor to GOP causes - nearly $400,000 to GOP politicians before 2020, and he also gave $1 million to Donald Trump's sketchy Inagural Committee. It also helps explain this picture with then-Presidential candidate Chris Christie after a rare Cowboys playoff win in 2015.
The citizens of Arlington contributed $325 million to fund Jones’s playhouse, AT&T Stadium. Jones pays the city a paltry $2.5 million per year to operate the stadium. This deal is supposed to be an economic generator for Arlington, and maybe it has been. But an implicit reason for agreements like these is that a team does not just belong to the franchise owner. A team belongs to the citizenry that cheers it on. Right.... Jones won three Super Bowls early in his Cowboys tenure and has desperately tried to win a fourth ever since. In that way, his desires seem aligned with those of his fan base, but still: He is doing this for him, not them. He did foot most of the expense of the stadium, but that was not because he wanted to boost the Arlington economy. He wanted the world’s fanciest stadium. In the 11 years since it opened, the Cowboys’ franchise value has gone from $1.6 billion to $5.7 billion, according to Forbes.Rosenberg ends his column by noting that the business activities of Jerry Jones is symptomatic of the type of oligarch who only sees dollar signs, and their opinion of right and wrong doesn't go beyond what affect his personal bottom line. And like most rich businessmen, they won't pay a price long-term for their greed, because they're in charge of the things that people want to consume.
Jones should be embarrassed, but billionaires don’t get embarrassed by what they see as good business deals. They get embarrassed when many people call them out, or when the public shame is so great that the good business deal morphs into a lousy one. Cowboys fans can show Jones how angry they are by cutting down on their financial support of the team. Logic says they should. History says they will not. Jones is betting that he can make money by price-gouging the very people he purports to represent. In that sense, he is a fitting owner of America’s Team.You wonder why I hate that franchise more than any other?
Friday, February 19, 2021
Advance estimates of U.S. retail and food services sales for January 2021, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $568.2 billion, an increase of 5.3 percent (±0.5 percent) from the previous month, and 7.4 percent (±0.7 percent) above January 2020. Total sales for the November 2020 through January 2021 period were up 4.6 percent (±0.5 percent) from the same period a year ago. The November 2020 to December 2020 percent change was revised from down 0.7 percent (±0.5 percent) to down 1.0 percent (±0.3 percent).WOW! Where did that come from? It was wide-ranging, too, with every sector measured by the Census Bureau going up, and even the beaten-up sector of bars and restaurants (+6.9%), electronics/appliance stores (+14.7%) and clothing stores (+5.0%) had sizable jumps in seasonally-adjusted sales. Ah, but there’s the catch – the seasonal adjustment. January always has a falloff from December in retail sales as Holiday shopping season ends, it’s just a question of whether it’s more of a falloff than normal. And so in January 2021, that falloff was less than we usually see, which translated into a large “gain” in sales.
Thursday, February 18, 2021
Weekly unemployment claims unexpectedly surged last week, rising above 800,000 as the labor market recovery stalled…. At 861,000, new jobless claims posted a surprise back-to-back weekly increase to reach the highest level in one month. The prior week's new claims were also upwardly revised to 848,000, from the 793,000 reported previously. The four week moving average for new claims ticked down slightly by 3,500 to 833,250, as claims steadied at an elevated level after a December and January surge. And new weekly claims remain multiples above their levels from before the pandemic, when claims were coming in at an average of just over 200,000 per week.That big upward revision for the week of February 6 may be even more alarming than the even larger amount of claims for the week of February 13, because it means 6 straight weeks of new claims above 800,000. with this.
Feb. 6 – New PUA Applications, Payment Fix As a result, Ohioans new to PUA will be able to apply, claim weeks and receive benefits. In addition, an estimated 155,453 PUA claimants who had balances on their accounts of up to seven weeks can again be paid, provided they have no other issues holding their claims. Eligible individuals also will receive the $300 FPUC payments.So that big one-week increase likely accounts for multiple weeks of PUA claims for all of 2021. Likewise, Illinois saw PUA claims more than double last week, and had a major increase in PEUC claims (over 88,000) for the last week of January. Both seem related to their unemployment agency’s computer updates around that time. So what this tells me is that the job market likely fell off even more at the start of the year than we thought, and that there is still a large amount of people losing their jobs every week. And it retierates the need to get stimulus checks out ASAP, and to have the add-on amounts extended beyond their March 14 expiration date. Also note that this is the week before crippling winter weather hit Texas and other parts of America in this week, which likely will translate into another spike in new claims, assuming the agencies can actually process them. It may seem like things are improving on the COVID side, but that doesn't mean it's translating to improvement in the job market, at least not yet. Don't take my word for it, listen to what the head of the San Francisco Fed said this week.
So we gotta act like unemployment is much higher than 6.3%,. Which means we need to stay hard at work on both crushing the virus and in stopping the COVID-influenced job losses that aren't just due to shutdowns, but also because the typical American doesn't have the confidence to resume activities at the same level that they did a year ago.
What is the real unemployment rate? Not 6.3%.— Mary C. Daly (@MaryDalyEcon) February 17, 2021
How can we know? Look around. Millions of people on unemployment benefits. Lines at food banks. Countless workers out of the labor force taking care of families.
This is a long way from full employment.
Wednesday, February 17, 2021
The Joint Finance Committee today reworked Gov. Tony Evers’ special session bill to modernize the state’s unemployment insurance system, adding a Republican provision to provide businesses and others liability protections from COVID-19 lawsuits. The amended bill doesn’t provide the $5.3 million in state funds that Evers had requested in the special session bill to get the overhaul rolling. Instead, the proposal would require the Department of Workforce Development to seek and exhaust federal funds for the project. The agency would also have to issue a request for proposal for the project within 30 days after the bill took effect.... The liability protections would bar lawsuits over death, injury or damages for exposure to COVID-19 unless there is reckless, wanton or intentional conduct. The provision, which would impact businesses, nonprofits, schools, churches and others, would bar any claims after the law took effect.Hey, why make a down payment to upgrade the computer system when you can bail out corporations for putting their workers at needless risk for COVID? But there is a positive part of this new bill, which helps explain why it passed the JFC unanimously, and is scheduled to be voted on by the full State Senate tomorrow. It will restore many of the provisions that expired with the end of the CARES Act in late December 2020, including the expansion of Work-Share programs, keeping employers from being charged as much for new benefits, and the removal of the 1-week waiting period to get benefits. That waiting period came back last week, and is adding costs to the state in the process.
[Removing the waiting week] made the state eligible for enhanced federal matching funds. But the suspension ended Feb. 7 and is costing the state $1.3 million a week in enhanced matching federal funds to cover claims. Those who are laid off but don’t claim the maximum of 26 weeks unemployment are also now losing a week’s worth of checks. The COVID bill Evers vetoed sought to extend the suspension through March 13, and the amendment the committee approved today includes a similar provision.The bill is intended to be retroactive and allow all weeks to be paid, but we'll see if the Feds are OK with that. And while it would be nice to get some of these stimulus-based provisions back into Wisconsin law, we still need the Biden-backed stimulus to become law for all of these things not to expire in less than a month. Worse, tens of thousands of Wisconsinites are still waiting for the benefits they've applied for over the last 6 weeks, as the old computer system "turned off" the PUA and extended PEUC programs when they expired on December 26 because Donald Trump failed to sign the stimulus bill in time. And for some reason, these programs have yet to be turned "back on", and claims for both PUA and the new Mixed-Earnings program won't be paid for two more months, according to the Wisconsin DWD.
Tuesday, February 16, 2021
Finally, the relief package answers a burning question on the minds of borrowers: Yes, business owners can claim deductions for expenses covered by PPP loan proceeds. Appearing on CNBC’s “Squawk on the Street” Monday morning, Treasury Secretary Steven Mnuchin confirmed that Congress agreed to permit tax deductibility on those expenses. The issue has been a contentious one. Forgiveness of the PPP loan is tax-free, but the Treasury and IRS have said that covered expenses aren’t deductible. Allowing the deduction would create a double tax benefit, the agencies previously said. Treasury and the IRS said last month that business owners who “reasonably believe” their PPP loans will be forgiven can’t deduct the costs.Nice to have that bit of help in the right places, eh? What was brought up by Dems in the Assembly today was that there no restrictions on the level of income that a PPP-receiving business could have, or the amount of expenses they could write off. This means that a company could still take the “double deduction” even if it ended up being an overwhelmingly profitable business in 2020. The other problem that Dems had with the tax cut is that the provision is not refundable. Which means that you have to be in position to earn a profit before the PPP-paid expenses are written off. As you’d imagine, a lot of businesses are taking a loss in 2020, even after taking into account the PPP loans they may have received. This means they can’t write off a thing under this “double deduction” until a future year, when they might be profitable. This is why the Legislative Fiscal Bureau notes that this tax cut will be used by businesses beyond this tax season, and would take a bite out of the 2021-23 budget that Governor Evers is going to produce tonight. PPP version 2.0, which was also part of that December bill, and won't have any of the funds go out until 2021 (and wouldn't be written off until 2021 taxes are filed in early 2022). That being said, it was only this provision that drew opposition out of a large number of tax changes that were passed today to align with the Feds' moves. And it's worth noting that the full bill still passed the Assembly by 90-6 and the Senate 27-5. I also wouldn't expect (or recommend) that Governor Evers veto the bill, because there are many needed items such as an expansion of the state's Earned Income Tax Credit that allows for income in 2019 or 2020 to be used, and gives another $30 million of assistance to lower-income Wisconsinites. But let's not kid ourselves. For a lot of profitable businesses that may have taken a PPP loan when the effects of the COVID World were unknown, are now looking at yet another windfall, with funds that could likely be used for many other circumstances that may give more bang for the buck. I just hope Governor Evers takes this into account as budget talks develop over these coming months, and reminds WisGOPs that many businesses just got an extra bailout with the adoption of this questionable Federal provision.
Monday, February 15, 2021
Changes Since CBO’s Previous Projections. Relative to its estimates from September 2020, CBO’s estimate of the deficit for 2021 is now $448 billion (or 25 percent) larger, and its projection of the cumulative deficit between 2021 and 2030 (at $12.6 trillion) is now $345 billion (or 3 percent) smaller. In 2021, the costs of recently enacted legislation are partly offset by the effects of a stronger economy. In subsequent years, the largest changes stem from revisions to the economic forecast. CBO now projects stronger economic activity, higher inflation, and higher interest rates, boosting both revenues and outlays—the former more than the latter.
The Economy. As expanded vaccination reduces the spread of COVID-19 (the disease caused by the coronavirus) and the extent of social distancing declines, real (inflation-adjusted) GDP is projected to grow by 3.7 percent in 2021, returning to its prepandemic level by the middle of the year. With growth averaging 2.6 percent over the 2021–2025 period, real GDP surpasses its potential (maximum sustainable) level in early 2025. The unemployment rate gradually declines through 2026, and the number of employed people returns to its prepandemic level in 2024. Real GDP growth averages 1.6 percent over the 2026–2031 period. That average growth rate of output is less than its long-term historical average, primarily because the labor force is expected to grow more slowly than it has in the past. Over the forecast period, the interest rate on 10-year Treasury notes is projected to rise gradually, reaching 3.4 percent in 2031….. Real GDP expands rapidly over the coming year, reaching its previous business-cycle peak (which was attained in the fourth quarter of 2019) in mid-2021 and surpassing its potential level in early 2025. The annual growth of real GDP averages 2.6 percent during the five-year period, exceeding the 1.9 percent growth rate of real potential GDP (see Figure 2-1).That's a situation we can hope comes to reality. But it's only going to happen if we keep hammering down on both the virus and in stimulus/stabilzation to deal with the COVID-caused crater in several aspects of our economy. And the deficit should not be thought of as a reason to avoid giving stimulus checks this year to some people that got them in 2020, as is being rumored. Now let's not panic too much yet, as the current stimulus bill in the House allows more people to get checks than before, and will be fully paid at higher income levels. Conversely, the House stimulus checks phase down faster than December's stimulus bill, and all single filers making $100,000+ and joint filers making $200,000+ still would get nothing.
Sunday, February 14, 2021
Gov. Tony Evers will try again to expand Medicaid coverage in Wisconsin, announcing Wednesday that his state budget proposal will also have more than $150 million in other health initiatives, including bolstering student mental health support, addressing the opioid crisis and increasing telehealth accessibility. "The COVID-19 pandemic has only further exacerbated the need for and underscored the urgency of making sure we have affordable, accessible services available to folks when they need it most, and that's why it's a top priority in our budget," Evers said in a statement.... Other funding proposals Evers announced Wednesday include: — $40 million to increase Medicaid rates to bolster access to outpatient mental health services, including substance abuse treatment and psychiatric services for children and adolescents. — $25 million for a variety of measures to combat the state's opioid crisis, including expanding the BadgerCare Medicaid program to cover room and board costs for Wisconsin residents receiving treatment in residential substance use disorder treatment facilities. The money would also be used to allow for acupuncture and other alternative care methods to be covered under Medicaid; increase grants supporting needs of tribal communities and programs that provide needle exchanges, peer support and recovery coaches.Wisconsin Examiner noted recently that it could be even more advantageous for the state to expand Medicaid this year, due to some recent changes in Federal law, and proposals from President's Biden's stimulus bill.
States whose residents have lower average incomes get higher reimbursement rates. In March, Congress increased the reimbursement rate for all states for as long as the COVID-19 emergency remains. The Biden administration has said it will extend that emergency until at least the end of 2021. The House proposal would further increase the reimbursement rates for new expansion states by 5 percentage points. The new incentives would be part of a larger congressional effort to address the fallout of the COVID-19 pandemic. Democrats’ relief bill covers everything from distributing vaccines to supporting transportation networks to doling out stimulus checks.Wisconsin would be one of those “new expansion states”, and it would translate into getting another 35%+ of expenses covered by the Feds. It's not like additional federal funds for health care is something that WisGOPs are completely opposed to, as they have been fine with taking the expanded coverage of Medicaid expenses from the current COVID emergency for nearly a year. In fact, a big reason that the state has more money to play with in 2021 is the projected surplus of nearly $615 million in state Medicaid dollars, despite an increase in Medicaid expenses overall. the WisGOPs to call for more tax cuts. So why wouldn’t they want to save even more money and more Wisconsinites covered by expanding BadgerCare under the ACA? You know, besides Koched-up corruption and anti-Obama race-baiting? I have little doubt the WisGOPs in the gerrymandered Legislature will find some lame reason not to expand Medicaid in the 2021-23 budget. Maybe they'll claim that we have enough of a surplus so it's not needed, or maybe they'll claim that Wisconsinites living just above the poverty line really don't need to have their health care taken care of. Maybe they'll cry crocodile tears about the US budget deficit (while ignoring the GOP Tax Scam and negligence on COVID-19 that are the main reasons behind that deficit). But there is also little doubt that the COVID World, and the bumps in aid from DC that followed, have illustrated how absurd WisGOP's prior stances against government-assisted health care were. And it has shown how our current, private-based health system leaves so many behind, and requires a public option like BadgerCare to give support and options to people who insurance companies don't consider important enough or profitable enough to be offered affordable and adequate coverage. Evers has the advantage of public support on the issue of expanding BadgerCare, and on health care in general, and it looks like he is going to press it. As he should.
Saturday, February 13, 2021
This came largely from increasing vehicle registration fees for the first time since 2008, and vehicle title fees for the first time since 2011. This generated a sizable increase in revenues from these fees, as shown in Figure 1. Combined revenue from vehicle fees increased from $704.3 million to $839.2 million in fiscal year 2020. These figures do not include local vehicle registration fees imposed by municipal or county governments, also called wheel taxes, which increasingly have become an option for financially strapped local governments in recent years. Meanwhile, consumption of motor fuel declined for the first time since 2013 – as did state fuel tax revenues, which dropped from $1.07 billion in Fscal 2019 to $1.02 billion in fiscal 2020. The impact of this trend, coupled with recent vehicle fee increases, is a fundamental shift in the revenue mix for the transportation fund.
Figure 2 shows Federal Highway Administration (FHWA) preliminary estimates of VMT on all roads in 2020 in 12 North Central US states, including Wisconsin, relative to recent prior years. During September, October, and November, the most recent months for which we have estimates, the FHWA data for all 50 states estimate VMT was down a combined 9.5% from those same months in 2019…. State officials are forecasting less driving in the upcoming 2022 fiscal year. In late 2020, WisDOT projected fuel tax revenues would remain below 2020 levels for the next two years. Total revenues in 2022 are projected to be the lowest since 2013.added $188 million in federal transportation funds for Wisconsin road projects, and an additional $80 million for transit. In addition, there should be more coming through a Biden infrastructure bill that will be coming in later months. So even with the lower amount of driving in the COVID and post-COVID worlds, Wisconsin should be able to do plenty with roads. Wisconsin could even use their current budget surplus in the General Fund to give a one-time boost to the Transportation Fund, and do a mini-stimulus themselves. But if this state's gas tax is not raised, then it becomes imperative to not be as reliant on that dwindling source of revenue as it declines. And what road we take toward WisDOT sustainability is something to look for as Governor Evers releases his budget on Tuesday.
Friday, February 12, 2021
Evers wants to allow Sconnie communities to have local sales taxes. It is necessary and long overdue
Under the governor's plan, counties could increase the sales tax by 0.5% and municipalities with a population of more than 30,000 could do the same. Voters would have to approve any increase in a referendum. Currently, Wisconsin imposes a 5% sales tax and almost all counties impose a 0.5% sales tax. That means the sales tax is 5.5% in most parts of the state — low compared to many parts of the country. Evers would allow the rate to go up to 6.5% in places where voters approved the maximum increases at both the municipal and county levels. In a few spots, it could go even higher because existing law allows communities that are tourist attractions, such as Wisconsin Dells and Eagle River, to levy additional sales taxes.I am all for this. Local communities have been held back for years by a failing system that relies far too much on shared revenues coming down from Madison, and on property taxes as the main method of raising funds. Wisconsin traditionally has kept its sales taxes down, and relied on income taxes (at the state level) and property taxes (at the local level) to fund government. The idea was that the state would pass down shared revenues at a sufficient level that locals could fund their services at a sufficient level, but the state has consistently shared less of its revenue over the last 20+ years. (other than the handful of small, touristy communities that can levy a premier resort tax). One of the few ways that the locals could get money in to fix their roads and release pressure off of the property tax was to institute local vehicle registration fees. As the Wisconsin Policy Forum noted in its state-local tax report, the previously rare “wheel tax” became widespread in the state during the Age of Fitzwalkerstan. hearing on a bill in the first week of March to allow a referendum to come before voters... and then COVID shutdowns started the next week (the Assembly had already adjourned anyway). If you look at the Wheeler Report, take a look at the wide range of organizations in Wisconsin's largest city and county that backed Evers' move, along with the statewide organizations that represent local government.
Thursday, February 11, 2021
That's the first time we've been above 20 million continuing claims since November, and the recently-extended PUA and 26+ week unemployment programs are the reason why. Powell said that the "official" unemployment rate isn't accounting for many Americans that are out of work.
NEWS: The US has 20.4 million people receiving unemployment benefits -- a sign of ongoing hardship and lack of job opportunities.— Heather Long (@byHeatherLong) February 11, 2021
1.1 million *new* unemployment applications were filed last week (UI + PUA) as job losses continue.
Nearly 5 million are on long-term unemployment pic.twitter.com/FR9IJ917vY
The real unemployment rate in the U.S. is closer to 10 percent, Federal Reserve Chairman Jerome Powell said Wednesday, after misclassification errors are factored in to the official government figure. The current unemployment rate, as reported by the Bureau of Labor Statistics last week, is 6.3 percent. "We are still very far from a strong labor market whose benefits are broadly shared," Powell said, in a virtual speech for the Economic Club of New York on the state of the labor market. "The pandemic has led to the largest 12-month decline in labor force participation since at least 1948," he said.... "The Bureau of Labor Statistics reports that many unemployed individuals have been misclassified as employed," Powell said. "Correcting this misclassification and counting those who have left the labor force since last February as unemployed would boost the unemployment rate to close to 10 percent in January."If so, then things are truly dire for a large number of Americans, and President Biden's economic rescue package needs to get through Congress and get signed sooner than later. Especially the parts that allow for expanded benefits and survival checks, as many Americans are still struggling to find work and keep jobs 11 months after COVID first started hitting the overall US economy. Those people need all the help they can get, so they can keep paying their bills, and keep the economic damage from spreading beyond the hard-hit service sectors that have been battered in the COVID World.
Wednesday, February 10, 2021
The bulk of the bill was an agreement lawmakers and the Evers administration struck last session to change the tax code to match federal provisions. A similar bill was in the works last session, but failed to pass amid the pandemic. The net impact of the more than two dozen proposed changes in the bill is a $540 million reduction in tax revenues through mid-2023. Because some of the cuts would take effect in the current fiscal year, the impact also would reduce the expected ending balance for the general fund. That in turn would reduce the expected transfer to the rainy day fund by $126.9 million. The amended bill would have to pass both houses and be signed by Evers to take effect.This was done by amending a small tax measure, and the largest move involves giving Wisconsin businesses that received PPP loans and related assistance to write off hundreds of millions of dollars of expenses - even if PPP paid for those expenses in the first place. The Legislative Fiscal Bureau says that most of these write-offs will hit in the next 2 fiscal years, then most of it fades out in 2023. initiatives in mental health, help to farmers and several other items that will be revealed in the coming weeks. My guess is that the full Assembly will quickly try to pass these tax cuts when they next meet on Tuesday, which happens to occur right before Evers will release his budget details. And then the debate goes on full-force. Let's just be aware of how much might be truly achievable (or not), based on the taxing and spending decisions that are already starting.
WisGOPs decide to take from their own school districts to force kids/teachers back into the buildings
The Committee has two options available to it in addressing the plan submitted by the Department [of Public Instruction]. First, it could approve the plan as submitted. Second, the Committee could adjust the amounts in the plan related to the state agency set-aside ($68.6 million) which, under the plan, would be allocated for: (a) a minimum grant of $100,000 for local education agencies ($2.4 million); (b) a minimum per pupil grant of $395 ($65.0 million); and (c) administrative costs ($1.2 million). Under the federal act, the state must allocate $617.5 million according to the formula used for the 2019-20 distribution of Title I Part A funds.So the Republican-dominated JFC could have signed off on DPI’s plan, and it would go in as written. But they decided they wanted to put their own stamp on how some of the Federal money went out. So here’s what the GOPs did.
Under the GOP motion that was approved 11-4, DPI’s administrative costs were cut to $700,000. The remaining $65.5 million will be divided up based on a formula that accounts for the hours of in-person instruction in the 2020-21 school year. The amount of the grants wouldn’t be known until the end of the school year, when in-person instructional hours are reported.In it's paper on the subject. the LFB listed every district in Wisconsin and what it would get out of the extra federal money, as well as whether their extra funds were entirely based on the district’s Federal Title I allocation, or if DPI had to move funds around in order to give them the $395 minimum. The districts that had DPI add money to get to $395 are the ones who stand to lose from this plan, since that money is now going to be spread out among many more districts. State Rep. Evan Goyke noted that many Wisconsin districts would lose out in this change, and here is a list of the districts that stand to lose the most as a result of this move. Districts that were to get most reobligated aid under DPI plan
Elmbrook $2,473,848 McFarland $2,225,943 Middleton-Cross Plains $2,196,035 Kimberly $1,696,418 Hudson $1,665,340 (Sussex) Hamilton $1,617,889 Mukwonago $1,580,075 Muskego-Norway $1,468,273 Waunakee $1,452,224 Wauwatosa $1,419,225 All suburbs/exurbs of bigger cities, with high property tax bases (and therefore heavily reliant on property taxes versus state aids). Most are represented by Republicans, and it was GOPs that voted to take away funds from those districts.