Monday, January 31, 2022

Omicron likely is slowing down spending. But is that also bringing us back into balance?

As the omicron variant of the COVID-19 virus exploded nationwide at the end of 2021, it's worth asking how much that development might weight on the economy. And last week's income and spending report for December included what seems to be an alarming drop in consumption.
The $95.2 billion decrease in current-dollar PCE in December reflected a decrease of $147.2 billion in spending for goods that was partly offset by a $52.0 billion increase in spending for services. Within goods, decreases were widespread across most components and were led by recreational goods and vehicles, "other" nondurable goods (which includes newspapers, household supplies, and games and toys), and furnishings and durable household equipment. Within services, the largest contributor to the increase was spending for health care.
The amount of consumer spending was further lowered in this report as November’s spending growth was adjusted down from 0.6% to 0.4%, below the 0.6% rate of inflation for that month.

But we've also seen recent reports from the National Retail Federation that said 2021 was a record year for Holiday shopping. So what gives?

Looks like it’s all a matter of when people shopped, as “Holiday shopping” isn’t just happening between Thanksgiving and Christmas anymore.
“We closed out the year with outstanding annual retail sales and a record holiday season, which is a clear testament to the power of the consumer and the ingenuity of retailers and their workers,” NRF President and CEO Matthew Shay said. “Despite supply chain problems, rising inflation, labor shortages and the omicron variant, retailers delivered a positive holiday experience to pandemic-fatigued consumers and their families. Consumers were backed by strong wages and record savings and began their shopping earlier this year than ever before. This is, in part, why we saw a decline in sales from November to December. NRF expects further growth for 2022, and we will continue to focus on industry challenges presented by COVID-19, the supply chain, labor force issues and persistent inflation. The numbers are clear: 2021 was an undeniably outstanding year for retail sales.”
And if you widen the numbers out to the recent past, that bears that out. August, September and October were outstanding on a seasonally-adjusted basis, and it likely reduced the amount of added sales that we typically see for November and December, which goes in the books as a “decline".

The spike in omicron cases didn’t start kicking in until mid-December, so it likely did not have a big effect on that month’s numbers. But what about January? These figures from FiveThirtyEight’s Nate Silver aren’t a good sign, at least for the restaurant industry.

That being said, a decline in customers compared to 2019 doesn't necessarily mean that we are back in the depths of last year's COVID Winter, which saw sales at bars and restaurants be more than 9% lower than 2 years prior....BEFORE inflation.

While it's not the month-to-month comparison that Silver makes, it is worth remembering that January has a dropoff in spending anyway. For example, look at the Census figures from another January affected by COVID and cold weather, and even the pre-COVID Dec-January change before then.

The Census bureau counts on a significant drop-off in spending, so how much of January's decline is omicron, and how much of it is a typical January? Double-digit declines are a lot, and likely will reflect in some kind of decline, but let’s not panic too much at this point.

In fact, this month’s slowdown may prove to be useful in leveling out the shortages in certain industries, as that was a common complaint even before omicron started keeping some workers at home. It can make the re-set easier as omicron (hopefully) fades in February, and get us back toward some balance and good growth by the end of Q1 2022.

So while the omicron effect is certain to create a headwind that slows an economy that had 6.9% growth after inflation in Q4 2021, let’s not panic too much about it unless we’re seeing those numbers stay low for the next couple of months. Let’s all do our part to diminish omicron and let’s get back toward normal, shall we?

Saturday, January 29, 2022

Weekend reading - the RW are the REAL affrimative action cases. Dems must break the Bubble of BS

With the inevitable whining that we'll hear from GOPs about how President Biden is going to live up to his promise of putting the first Black woman on the Supreme Court, let's not forget who really gets the breaks in these times.

This tweet sums up one of the more infuritating things of the last few years, which turned an already annoying trend into hyperdrive.

And boy have we seen that in Wisconsin, most notably in the increasingly absurd (and expensive) Gableman investigation.

Assembly Republicans last summer hired former state Supreme Court Justice Michael Gableman to look into the election. His work is expected to cost taxpayers $676,000....

[Speaker's Office attorney Steven] Fawcett's testimony came in one case that has centered on whether Vos did enough to identify records that were responsive to some of the group's requests. American Oversight has asked Bailey-Rihn to hold Vos in contempt of court for how he handled the requests.

In more than two hours of testimony, Fawcett acknowledged he had not initially asked Gableman to search his records in response to requests from American Oversight. In addition to the shoddy record-keeping of both communications and expenses, Robbin' Vos' attorney admitted that he wasn't doing much to follow up on making sure whether Gableman was doing the taxpayer-funded work that he was contracted to do.
Gableman's initial contract with the Assembly requires him to keep a weekly report of the findings of his review. Gableman publicly released a report in November but has never made available any weekly reports...

The judge expressed surprise that Fawcett does not know whether Gableman is producing those reports given that the contract names Fawcett as the "point of contact" between Gableman and the Assembly.

You tax dollars at work under the "fiscal watchdogs" at the Republican Party.

But when you're not held accountable for such incompetence and scumbaggery, there's no incentive for you to stop it. And a big part of that is the Bubble of BS that is built from the RW disinformation and propaganda complex that pollutes cable TV, AM radio, and the Internet. Which is how the Big Lie still festers today, to the point that retiring GOP State Senator Kathy Bernier says "conspiracy theorists have taken over the party" in Wisconsin.

Too many Dems still seem to be stuck in a 20th Century mentality of "let reason the System win out over time" instead of actively fighting the 21st Century propaganda war that we are in. This article came out last month, but we re-brought to my attention this week via social media, and hits it right on the head.

The article features an interview with Matthew Sheffield, who founded the anti-liberal Website Newsbusters in the early 2000s, but now has backed away from much of RW World as their media world view grew darker. Sheffield talks about how the Human Centipede of GOPWorld operates, and how Dems still haven't caught on as to how to properly respond in these times.
When the right has problems, it gravitates toward tactical modification, not policy modification. Instead of changing the policy ideas they want, Republicans focus on how to better engage their base of voters. Democrats seem to think the public is more aware of their policy ideas than it actually is. This is likely a function of most left-leaning economic and social policies being more popular.

When polling showed weak support for the Republican tax cut bill, they passed it anyway. This was the story of most of Donald Trump’s administration. They’d come up with ideas and then just do them. By contrast, with Joe Biden, Democrats seem to be focusing their efforts on policies they see as popular. This is an obsolete approach.

Instead of focusing on how to alter larger political dynamics, as Republicans do, Democrats suppose that passing popular legislation, and spending nothing to market it, will prove beneficial. It hasn’t. People aren’t aware of what’s in the bipartisan infrastructure bill.
Republicans are all about marketing and use their media to test their messages. It doesn't matter to them if what they say is easily-provable BS and is destructive to the state/country, as long as it works with enough voters.

While socially it is a good thing that Dems respect voters enough not to outright lie to them, they don't make Republicans pay a price for being such amoral, lying scum. And far too often, they trust voters too much, expecting them to pay attention to issues and nuance when most people simply don't have the time or interest to do so. While Patrick Marley and a few others in Wisconsin media have done a good job calling out the wasteful sham "investigation" that Gableman and WisGOP are doing Sheffield notes that it is a rarity that "regular" media will actually hold GOPs to account for their BS.

But Dems still often pass off the duty of exposing those shenanigans to a mainstream media that doesn't want to tell the full truth. Sheffield says that passive approach by Dems and belief in "governance over politics" (especially in DC) means that the voters who decide elections often don't hear Dem messages and attacks on Republican awfulness until it is close to elections - a point at which many casual people tune out everything political.
[Sheffield:] The mainstream press is interested in “filling the news hole” more than anything else. The profusion of elite journalists who withheld critical information about Donald Trump to make money selling books has demonstrated that media elites are not interested in public service.

Elections are decided by both swing voters and by casual party loyalists, that is, people who are more against the opposition rather than in favor of the party for which they vote. For all the focus in DC on physical infrastructure by Democrats, they have spent almost nothing on creating an infrastructure of democracy. You have to go where the people are and to explain yourself. Flushing millions of dollars down the TV ad toilet is not explaining yourself.
And no, knocking on doors in the sticks and giving a friendly smile isn't going to counteract the constant barrage of GOP BS that many WIsconsinites are subjected to every day. Dems need to be blasting out billboards, radio ads, digital communications and mailings that remind people of the clownery and repressive garbage WisGOPs are pushing on a daily basis.

This tweet should be turned into billboards and pamphlets all over Wisconsin suburbs.

Dems should follow those anti-GOP messages with targeted, positive ones to casual voters, which state that they are only ones that care about whether policies work, and are the only ones trying to change the failing status quo into something that actually helps communities and everyday people. None of this needs to go to Dem primary voters, who generally know better already.

We also can flip "divide and conquer" and the culture war, portraying the GOPs as whiny book banners - weak people who can't deal with the reality of the 2020s, don't want Wisconsin to compete and excel in the modern world, and don't have the ideas to win in a fair fight.

You got 8 months, Dems. GET TO WORK NOW. Make Wisconsinites know who the bad guys are, and what they're doing.

Fight the war, fuck the norm
Now I got no patience
So sick of complacence

Friday, January 28, 2022

GDP reflects a Biden Boom in 2021, well past the rise in inflation

You can complain about the Biden Administration not doing enough to dig us out of the mess that America was in at the end of 2020 (I certainly do at times), but you also can’t deny that it was a Biden Boom in his first year in office.
The U.S. economy notched its strongest growth in nearly four decades in 2021 after the government pumped trillions of dollars in COVID-19 relief, and is seen forging ahead despite headwinds from the pandemic, strained supply chains as well as inflation.

A surge in gross domestic product in the fourth quarter as businesses replenished depleted inventories to meet strong demand for goods was the final push. Last year's robust growth reported by the Commerce Department on Thursday supports the Federal Reserve's pivot towards raising interest rates in March.

The economy grew 5.7% in 2021, the strongest since 1984, as the government provided nearly $6 trillion in pandemic relief. It contracted 3.4% in 2020, the biggest drop in 74 years.
And I'll add that this is REAL GDP growth, which is measured after inflation is removed. On a nominal basis, we saw GDP rise by a cool 10.0% percent, with consumption accounting for more than 90% of the increase.

There is no doubt that the added income from stimulus checks, higher unemployment benefits along with a lessening of COVID as an overhang (well, at least for most of 2021) led to a restoration of spending for Americans last year. It fact, for all the talk about supply chain woes, it’s worth noting that the extra demand led to imports rising by 14% on an annual basis, resulting in a record trade deficit that kept GDP from going even higher.

UW’s Menzie Chinn notes that the strong recovery from the COVID recession of 2020 has now put the US economy back near its full potential (shown in green in the chart below), and it happened a lot faster than our last 3 recessions.

The large annual GDP growth number for 2021 was boosted by an even stronger 4th Quarter, up by 6.9% on an inflation-adjusted basis, and 14.3% on a current-dollar basis. That number comes with a caveat, as Professor Chinn points out more than half of that gain in Q4 was building back inventories that had been decimated in the earlier part of the COVID era.

I’ll also note that government purchases of goods and services actually declined in Q4, and didn’t add much at all for the last 9 months of 2021. How can that be, when we’re running huge budget deficits? Part of it is because much of the spending already happened in 2020 and early 2021, and then backed off as needs reduced.

But it’s also because much of what we identify as “spending” was in the form of transfers of cash to individuals and businesses, and that doesn’t really show up in GDP until someone does something with the cash. There hasn’t been a big increase in government employees or direct government investments in actual things, no matter how the deficit scolds push it.

I find that an interesting point, and it means that Government GDP number may well go up in 2022 as we see payments to medical providers rise at the state and federal levels, along with the infrastructure bill paying to do work that has been long backlogged.

But what about inflation? It knocked off around 43% of the growth for the year, and more than half of the current-dollar gain in Q4. But that’s still a lot of growth left-over, and I think people prefer 6.9% PCE inflation in Q4 to the 6.7% unemployment that we had at the start of this year. Or they should if they’re not poisoned by Faux News.

I also note that big rise in inventories, which in any kind of normal capitalism will result in lower prices or at least a limiting in price growth. And while it’s a bit worrisome that December and January are showing signs of slower consumer spending and confidence with OMIcron’s emergence, it also should slow down the cycle of price increases.

Looking forward, it’s clear that 2021’s Biden Boom got us back toward a more typical economic situation, except with higher wage growth on the lower end (that’s a good thing, folks). Now if we can fix our still-flawed safety net and offer more support and choices for Americans so they can have a better situation for both work and play, the 2020s economy might actually be the first one in a while that has worked for the everyday person.

Thursday, January 27, 2022

Evers plans for the surplus - rebates, caregiver help, and schools

Well that didn’t take long. Governor Evers is already out with a plan on how to use some of our recently-announced $3.8 billion surplus.
In response to the new projections, and in contrast to Legislative Republicans who indicated they have no immediate plans to use the windfall prior to the next biennial budget that will likely not be passed until summer 2023, Gov. Evers emphasized that Wisconsinites cannot wait for over a year to be provided relief from rising costs at the checkout line and gas pumps. The governor’s plan announced today invests nearly $1.7 billion of the projected revenue surplus to provide a $150 surplus refund to every Wisconsin resident, provide $131.8 million in targeted tax relief to caregivers and families, and invest almost $750 million in education, while holding the line on property taxes.

Let’s dig into the proposed bill and get the details, and give a look at some of the items that aren’t necessarily getting the top billing.

The rebate basically goes to anyone who will be filing taxes in the coming months, and it looks like residents that don’t have to file taxes would also get the rebate check – they just have to fill out a form at DOR’s website. It’s a flat $150 for everyone, “multiplied by the number of personal exemptions," which led to this tweet from Evers on the rollout.

That’s not cheap, as the estimated price tag would be $815.7 million. But it’s also less than ¼ of the $3.8 billion available.

As for the education funding, the Legislative Reference Bureau says there are three main forms for K-12, and that the UW and Tech College systems also get added state funding for the next school year.
The bill provides additional funding in the amount of $111,000,000 for the University of Wisconsin System in fiscal year 2022-23 under its general program operations appropriation; additional funding in the amount of $28,000,000 for state aid to technical colleges in fiscal year 2022-23; additional funding in the amount of $172,643,000 in fiscal year 2022-23 for special education aid DPI pays to school districts, independent charter schools, cooperative educational service agencies, and county children with disabilities education boards; and additional funding in the amount of $188,000,000 in fiscal year 2022-23 for general equalization aids for school districts.

The bill also increases the per pupil amount for per pupil aid paid to school districts to $870 beginning in the 2022-23 school year. Under current law, the per pupil amount for per pupil aid is $742. Per pupil aid is funded from a sum sufficient appropriation. The amount of per pupil aid paid to a school district is calculated using a three-year average of the number of pupils enrolled in the school district and a per pupil amount set by law.
Along with that $188 million in equalization aid is the fact that revenue limits are raised by $200 a student, which the Evers Administration estimates at $162.4 million. In addition, while the Evers’ Administration’s “fact sheet” says that voucher and charter schools would get an extra $642 per student for next year, $15.5 million of the remaining $25.6 million in state-funded property tax relief will fill the “voucher hole” that usually is filled with property taxes.

Can’t say I’m thrilled with voucher schools getting another 7% per student for next year, but it probably was done to soothe some of the DeVos/ALEC crowd that would have whined about public schools getting all the funding. And there’s not a lot to lower property taxes overall for next year or for any kind of structural change in our formula, but maybe Evers is trying to keep it as simple as possible.

The UW and Tech College aid is helpful, given that the GOP Legislature limited UW to ZERO in general tax dollar increases, and the Tech Colleges only got an extra $2.25 million a year. Given that costs have gone up quite a bit since the budget was passed back in June, it would take off the pressure that comes with limited funding from the state and frozen tuition rates (That said, I’m not sure if the Tech Colleges can use the funds for the classroom since I don’t see their revenue limits going up).

There are two other “family-oriented” tax breaks that are put in Evers’ package, with the first being a long-overdue tax credit for caregivers.
The bill creates an income tax credit for individuals who pay for items that directly relate to the care or support of a family member who requires assistance with one or more daily living activities and is over the age of 18. The credit equals 50 percent of the expenses, limited to a maximum annual credit per family member of $500, or $250 for married spouses filing separately. If more than one individual may claim the credit based on the same family member, the maximum annual credit amount is apportioned among the individuals based on expenses paid. For married couples filing jointly, the credit phases out between federal adjusted gross income (AGI) of $150,000 and $170,000, and no credit may be claimed if federal AGI exceeds $170,000. For all other taxpayers, the phase out range is between federal AGI of $75,000 and $85,000, and no credit may be claimed if federal AGI exceeds $85,000. Under the bill, expenses that qualify for the credit include amounts spent on improving the claimant's primary residence to assist the family member, purchasing equipment to help the family member with daily living activities, and obtaining other goods or services to help care for the family member. Expenses that do not qualify for the credit include general food, clothing, transportation, and household repair costs, as well as amounts that are reimbursed by insurance or other means. The credit is nonrefundable, which means it may be claimed only up to the amount of the claimant's tax liability.
This helps many Wisconsinites who are taking care of elderly or high-needs family members in their homes, and while it’s likely not near enough for people having to take on that extra strain, you’d think “family values” Republicans would be all about this. Especially at a cost of $102.5 million – or less than 3% of our current surplus.

The other tax credit goes along with a new child care credit that kicks in for 2022 and matches up with the Federal write-off, and doubles what Wisconsinites can get at the state level.
Under current law, an individual who is eligible for and claims the federal child and dependent care income tax credit may claim 50 percent of the same amount as a nonrefundable credit on his or her Wisconsin income tax return. The Wisconsin credit may not be claimed by a part-year resident or nonresident of this state. Under the bill, an individual who is eligible for and claims the federal child and dependent care income tax credit may claim 100 percent of the same amount as a nonrefundable credit on his or her Wisconsin income tax return.
Comparatively small price tag on that one, $29.3 million in a time where taking care of kids is such a big concern and potential barrier to work. Seems like something that is very worthwhile.

Even with all of this, the Evers package wouldn’t even use half of the projected surplus - $1.7 billion out of $3.8 billion. You divide it up with these 3 main areas, and it looks like this.

And Republicans can’t give a complaint about “long-term costs”, because most of these items are one-time shots that only effect the next 12 months, and don’t have permanent increases in spending or tax breaks.

So do I think this means we can count on the GOP Legislature to give this relief to Wisconsinites and our schools?

Yeah, not really. Sure enough, Senate GOP Leader Devin LeMahieu is already whining about "Biden Bucks", saying Evers should use COVID-related stimulus funds (which can't be used for tax cuts) instead of state funds. It's a really pathetic criticism, when you think of it. But they really don't have anything else.

That being said, let’s see if WisGOPs are so far gone into hackery that they decide to do nothing with our windfall. If they are that cynical, then Evers and other Dems should pounce by running against “do-nothing” Republicans who clearly couldn’t care less about stabilizing and improving things for the vast majority of Wisconsinites.

Wednesday, January 26, 2022

With the $3.8 billion, Evers/Dems can cut taxes, fix roads, and help schools/local govts. DO IT!

So now that we have $3.9 billion to play with in Wisconsin for the next 17 months (see this post if you don't know why), what can we do with it? This post from State Rep. Evan Goyke earlier this week identifies a key area to look at.

Shared revenues had already flatlined in the late 2000s, but Republicans took over state government in 2011, you can see that they cut shared revenues to local governments, and never did much to replace them. (And if you try to say "the tools of Act 10", that was a one-time shot more than 10 years ago, while the shared revenue cuts remain).

With that in mind, I want to focus in on a few types of shared revenues that we can use our surplus on - roads, schools and other local government operations. Let's start with the roads, and let's go back to a recent paper from the Wisconsin Policy Forum that noted local governments were slated to collect $62.8 million in wheel taxes in 2021, and over $50 million higher than it was 6 years prior to that.

And a big reason why is because wheel taxes are one of the few ways for local governments to add resources in Wisconsin, since state law prevents most cities, villages and towns from imposing a sales tax, and growth in property taxes have been near-zero due to Republican-imposed revenue limits. In order to get roads fixed and continue transportation services, many local governments in Wisconsin put in the wheel tax to try to keep up with these needs.

But what if the state "bought off" those local wheel taxes? Using the $62.8 million figure from 2021, it would cost around $251.2 million for 4 years, and could be set up as an incentive program, where the community passes a resolution getting rid of the wheel tax and the state sends the same amount of money to that community. Those payments would be exempt from revenue limits and tied it to the same items that the current wheel taxes pay for.

That seems to be a pretty good investment to me, especially when Wisconsinites in those communities see their registration fees go down. And for communities that haven’t had to put in a wheel tax yet, they shouldn’t be shut out of getting help, and should also get some additional local road aids to take pressure off of the property tax. We could do that through a “bonus pool” of road aids to local communities that can only go to places that don't have wheel taxes, and then distribute funds by the current road aid formula out of that.

Using the 2023 amount as a base (which will be what these communities use when determining budgets), county and municipal aids total $526,137,000. If we made the “bonus pool” $62.8 million for each of the next 4 years, that would be a bump of at leat 12%, and likely more given that a lot of wheel tax communities are included in that total. You could even add in a provision where all bonus pool communities cannot put in a wheel tax for those 4 years.

On the school aid side, I note this recent LFB memo to Dem lawmakers brings up that the state’s voucher and charter programs are taking away $202.6 million from K-12 public schools in this school year, and nearly $180 million outside of Milwaukee. Property taxes can be raised to make up the difference, but I'll ask a simple question - Why should those districts have to raise property taxes?

Instead, why not use state funds to replace the property taxes used to backfill the losses for vouchers? If GOPs complain about Milwaukee being included in this (since MPS is receiving an outsized share of the state’s stimulus allocation), then you can leave them out and have the other $180 million go to districts for next year, and that and then some for the year after that.

On top of the voucher backfill, we can use extra state funding to give further flexibility to schools and local governments, by giving an extra distribution of state aid, with 1/2 of that being added to a community’s/district’s revenue limit, and 1/2 being used to cut property taxes by using state funding instead.

We can do this first as a rebate for property taxes paid this Winter (sent out by the local communities, after getting a payment from the state), then have another payment for 2022-23 (with the cut coming in the December property tax bills), and another for 2023-24.

So how much money would that be? The Legislative Fiscal Bureau made estimates last year of how much Wisconsinites would pay in property taxes, and it looks like this.

If we wanted a 4% drop in property taxes paid for schools, municipalities and counties, that’s a $433.1 million rebate for this year, and $435.2 million for 2022-23. However, you’d have to double it up to increase the revenue limits, so $866.2 million this year and $870.4 million in the next year. A 4% drop in property taxes would be around $135 (based on the LFB's chart, though your situation may vary), and for equity's sake, let's also include a $135 rebate for anyone taking a renter credit in 2021, and add $135 to the $300 limit for that credit for 2022's taxes (a 45% increase).

I'll guess that renters make up 40% of the $430 million that was given out in the combined Property Tax/Rent Credit (PTRC) in 2019. So let’s use 45% of that $172 million, and add it up.

Wheel tax refund $62.8 million x 2 =$125.6 million
“Bonus pool” for local transportation $62.8 million x 2 = $125.6 million
Fill “school voucher hole” of property taxes for 2022-23 $180 million
Cut prop taxes/increase local govt aids $866.2 million + $870.4 million = $1,736.6 million
$135 renter's rebate $77.4 million x 2 = $154.8 million TOTAL $2,322.6 million

That leaves us with a little less than $1.58 billion left at the end of the semester. I suppose you’d see GOP crocodile tears about “longer-term costs”, so let me take a look at what LFB estimated for the 2023-25 “structural budget” (based on laws when the budget became law in July), but I’ll use the updated figures from the revenue estimates.

That’s a “structural surplus” of about $1.1 billion a year, before we talk about revenue growth or program/spending growth. So if we’re adding around $1.25 billion a year for these tax moves, that becomes a structural deficit of around $140 million, and we’d start eating into that $1.74 billion. Sure, this would reduce the cushion we'd have for an economic downturn goes down over time, but we've also got $1.73 billion in a Rainy Day Fund that's so high the state legally can't add any more to it!

So we have the capacity to go big with this kind of structural reform, where we restore funding to our local governments and reduce our reliance on property taxes. We can if we choose to, and I certainly think Governor Evers and Capitol Dems should give it try with bills and a very vocal push.

Tuesday, January 25, 2022

Wisconsin now has another $3.8 billion to play with?

After seeing December's numbers, I had predicted that the Legislative Fiscal Bureau would show a big jump in available funds for the state of Wisconsin when it released their revenue estimates for the next 2 fiscal years.

Sure enough today....JACKPOT! And that's even after a $709 million decline in projected revenues due to the Evers Administration deciding to have withholding tables catch up to 8 years of tax changes at the start of this month, increasing take-home pay for workers.

Here are the LFB estimates. Most of the increased funds have to do with another 2-and-a-half billion in projected revenues over the next 17 months, along with some stimulus help.
The $2,881.7 million is the net result of: (1) an increase of $2,509.2 million in estimated tax collections; (2) an increase of $33.1 million in departmental revenues (non-tax receipts deposited into the general fund); and (3) a decrease of $339.4 million in net appropriations.

The $339.4 million reduction in net appropriations is primarily due to the following: (1) an estimated lapse of $270 million in the appropriation for medical assistance benefits because of an enhanced federal medical assistance (MA) matching rate; (2) a reduction of $34.2 million in the sum sufficient appropriation of state funding for the Wisconsin Healthcare Stability Plan due to modifications made in the American Rescue Plan Act of 2021 (ARPA); and (3) an estimated reduction of $23.4 million in the amounts necessary to fund general fund debt service. A further State of Wisconsin explanation of the MA and Healthcare Stability Plan appropriations is presented after Table 1. In addition, the status of the state's budget stabilization fund is discussed.
As I mentioned last week, the LFB notes that income tax revenues were still rising throughout the state in the last half of 2021, but LFB expects the growth to quickly reverse in the first half of this year.
…Total individual income tax collections were $9,283.4 million in 2020-21, an increase of 6.2% over the prior year. Actual revenues in 2020-21 were 0.4% ($33.4 million) higher than this office's previous estimate. Based on preliminary collections information through December, 2021, total year-to-date income tax collections are higher by 13.7% ($562.3 million) than such receipts during the same time period one year ago.

However, revenues are projected to decline over the rest of 2021-22 by $1,626 million (31.4%) relative to the same time period in the prior year. This estimated revenue decrease over the rest of the year is driven primarily by: (a) the income tax rate reduction included in 2021 Act Page 16 58, which lowered the rate in the third income tax bracket from 6.27% to 5.30%, beginning in tax year 2021; and (b) the Department of Revenue's decision to update the income tax withholding tables beginning January 1, 2022, to reflect the income tax rates, brackets, and sliding scale standard deduction (SSSD) in effect under current law for tax year 2022. Together, these two provisions are estimated to reduce income tax collections by $1,729 million in 2021-22. On a year-over-year basis, total income tax revenues are estimated to decline by 11.5% to $8,220 million in 2021-22 ($249.3 million higher than the previous estimate).
But the LFB adds that the projected decline in income tax revenues will be smaller than originally expected for this year, and the LFB expects the number to return near 2021's levels for 2023.

Sales taxes also continue to rise. The recovering economy is already giving a big boost, and on top of that, the LFB notes that the state is getting a whole lot more in sales taxes from online sales than they thought they would.
Sales tax collections through December, 2021, are 13.2% ($332 million) higher than the same period in the prior year. The strong year-to-date growth in collections reflects growth over months in the previous year in which COVID-19 vaccines were not yet available and consumers engaged in less in-person economic activity. It is estimated that, over the rest of 2021-22, sales tax revenue will increase at a slower rate of 5.7%.

Prior to the start of the pandemic, it was estimated that Wisconsin would collect $146.3 million in 2020-21 in sales tax from remote sellers and marketplace providers. Actual sales tax collections from these sellers amounted to $401.4 million in 2020-21, which is $255.1 million more than the 2020-21 estimate. It is believed that the pandemic resulted in a large and continuing shift in consumer spending from physical stores to online stores, which is reflected in this data. Year-to-date sales tax collected by marketplace providers and remote sellers in 2021-22 has increased 31.2% ($42.2 million) compared to the same period in the previous year. If sales tax collections were adjusted to exclude the increased collections from marketplace providers and remote sellers, year-to-date growth in collections would have been 11.5%.

The LFB also mentions that corporate tax revenues are expected to remain near the high levels that they hit in Fiscal Year 2021, partially due to Wisconsin companies deciding to become "corporations" because they received such a write-off at the federal level due to the GOP Tax Scam of 2017.

Put it together, and it offers an opportunity to make real structural changes and/or allow for funding at the state and local levels that allow us to regain the economic advantages and services that we have lost over the last decade-plus. If we choose to.

Monday, January 24, 2022

First signs of omicron slowdown in early 2022?

A couple of signs that omicron’s breakout may finally be having an effect on the economy. Retail sales had a sizable (seasonally-adjusted) decline in December, but were way up compared to where we were at the end of 2020.
Advance estimates of U.S. retail and food services sales for December 2021, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $626.8 billion, a decrease of 1.9 percent (±0.5 percent) from the previous month, but 16.9 percent (±0.9 percent) above December 2020. Total sales for the 12 months of 2021 were up 19.3 percent (±0.5 percent) from 2020. Total sales for the October 2021 through December 2021 period were up 17.1 percent (±0.7 percent) from the same period a year ago. The October 2021 to November 2021 percent change was revised from up 0.3 percent (±0.5 percent)* to up 0.2 percent (±0.3 percent)*.

Retail trade sales were down 2.1 percent (±0.4 percent) from November 2021, but up 14.4 percent (±0.7 percent) above last year. Gasoline stations were up 41.0 percent (±1.6 percent) from December 2020, while food services and drinking places were up 41.3 percent (±4.0 percent) from last year.
But much of this reflects the fact that Holiday shopping isn’t the one-time boost that it used to be. Americans actually spent a lot more dollars in December compared November. It just wasn’t as much of a boost as it usually is.

It’s a warning sign, but to me I want to see whether January has a “gain” simply because the dropoff isn’t as much as the past, as shopping may well not change from month-to-month as it may have a few years ago.

A bigger worry is what we’ve seen with January reports in the last few days, particularly a sizable rise in unemployment claims last week. It may be a seasonal quirk as well (an actual decline of 83,400 in the week after New Year’s = seasonal “gain” of 55,000), or maybe some places are shutting down due to a lack of staff/business due to omicron.

We also saw that IHS Markit reported softening business conditions in January, with omicron cited as a big reason why.
Adjusted for seasonal factors, the IHS Markit Flash US Composite PMI Output Index posted 50.8 in January, down notably from 57.0 in December. The resulting upturn in activity was only marginal, and the slowest since July 2020.

The slowdown in output growth was broad-based, with both manufacturing and service sector firms reporting near-stalled output as the steep spike in virus cases associated with the Omicron wave meant ongoing supply issues and labor shortages were exacerbated by renewed pandemic related containment measures.

Although output was constricted by the Omicron wave, demand growth remained more resilient. New orders for goods and services continued to rise strongly, albeit registering the weakest rise since December 2020. The upturn in new orders was supported by the service sector, as manufacturers stated that new sales growth was often held back by weaker demand from clients amid price rises and efforts to work through inventories. Renewed restrictions in key export markets and raw material shortages also led to a softer upturn in new export orders.
Granted, 50.8 is still growth, but it does seem to indicate the Biden Boom of 2021 may be slowing as some people don’t go out as much or can’t produce as much due to the cloud of omicron that has loomed over much of this month.

On the flip side, the same report listed inflation slowing to its lowest levels since May, so this may be how things even out for a bit. At 3.9% unemployment, we probably shouldn’t expect to have much further to go anyway, but Wall Street’s fears of having their low-rate cocaine party end concerns over foreign instability means wild rides like today’s 1,100+ point difference between peak and valley may be happening more than most would like.

So keep it smart and safe in the coming days and weeks, and let’s see if we get a better idea on direction for 2022 as things mellow out. If they mellow out.

Sunday, January 23, 2022

On last night's Meltdown in Titletown

The Packer defense only gave up 6 points? Dang, that's an easier win than I thought! Great effort!

Uhh, WHAT?

And boy are they having a field day online with our whiny, anti-vax QB. And rightfully so.

Some thoughts from a great Wisconsinite who wrote "When Pride Still Mattered" about Vince Lombardi and the others who turned Green Bay into Titletown.

Naturally, there are paralells to other Wisconsin idiocy these days.

Wait, the Wisconsin GOP? Maybe there's a different reason the Pack seem cursed in the postseason and can't win the big one.

Walker: Yeah, well thanks. This is an exciting time. This is, I told my cabinet, I had a dinner the Sunday uh, excuse me, Monday right after [February] the sixth. Came home from the Super Bowl where the Packers won, that Monday night I had all my cabinet over to the residence for dinner, talked about what we were going to do, how we were going to do it, we'd already kind of built plans up but it was kind of the last hurrah before we dropped the bomb.
It always goes back to that a-hole, doesn't it? The Pack haven't gotten back to the Big One since "the bomb" was dropped. Just saying.

Between Walker and Rodgers, they sure have done a lot to take out the pride of being a Wisconsinite, and instead made us have to explain to others "we're not all morons. Really!".

And both Fitzwalkerstan and Rodgers have run their course in this state. It's gotta be over.

Saturday, January 22, 2022

Yes, there's a lot of COVID here. Vaxxed/boosted? It's merely annoying. But if not...

Hey look, Wisconsin is Number 1 in America! Oh wait...

Which means we had the highest per-capita rates of reported new COVID cases in America over the 7 days between last Friday and yesterday. Sort of. As the Wisconsin Department of Health Services noted, some of this is due to catch-up from positive cases in prior weeks that they're just now getting into the system.

That accounted for more than 38,500 "new" cases on Sunday, which was 20,000-25,000 more than any other day. So you can expect that 7-day average to decline by around 3,000 or 4,000 when you next see it on Monday for that reason alone.

But 13,000 cases a day is still double the previous record of 6,500 a day that we had in November 2020. That being said, the amount of Wisconsinites dying from COVID in this latest wave is less than half of what it was at the worst of 2020.

This indicates that vaccinations are strongly succeeding at keeping people from having complications from COVID, even with much fewer restrictions on access to events and places compared to the end of 2020. And another release from the Wisconsin DHS backs that up, which shows that despite the large increase in COVID cases across all vaccination types, it's still the unvaccinated that are more likely to get the virus, and are MUCH more likely to have worse outcomes once they do get it.

And that's even more the case in heavily vaccinated and 64% boosted Dane County, as the Dane County Department of Public Health showed this week. Despite a large increase in cases, the disparities were clear for December.

The numbers are really clear - you get vaxxed and boosted, wear masks in crowded indoor situations, and bad things don't happen to you with COVID. If you don't, then they very well might, and it is affecting the rest of us with higher infection rates and increased absenteeism from work.

And I certainly don't think we need to "respect the rights" of the people who are allowing this pandemic and the related crowding of hospitals to happen. We need to keep calling it out, because the data and the disparities are obvious, and it is threatening the economic Biden Boom that we saw for most of 2021.

Thursday, January 20, 2022

Big job and revenue gains in Wisconsin for 2021

Two bits of positive economic news in Wisconsin today. The first showed that our already-tight labor market grew even tighter (and better) in December.
The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of December 2021. The data shows that Wisconsin's unemployment rate declined to a record low of 2.8% in December, down from 3.0% in November. The data also showed that the total number of people in Wisconsin who are counted as unemployed declined to a record low of 86,200.

Place of Residence Data: Wisconsin's labor force participation rate in December was 66.4%, 4.5 percentage points higher than the national rate of 61.9%. Wisconsin's unemployment rate in December was 2.8%, a record low for the data series.

Place of Work Data: Wisconsin total nonfarm jobs increased from November 2021 to December 2021 by 6,300, while private-sector jobs increased by 5,300 over the same time period. The monthly increase in jobs was driven by the state's manufacturing sector which added 4,800 jobs.
The manufacturing increase feels a bit too good to be true, but it certainly was a strong 2021 for the sector in Wisconsin, with 18,600 more jobs reported vs what we had at the end of 2020. It now means that there are more jobs in manufacturing in the state today than there were before the pandemic.

The 2.8% unemployment rate is rightfully getting headlines, and it continues great numbers in the household survey in 2021. Nearly 55,000 Wisconsinites were added back to the labor force, and nearly 90,000 more people ID’d themselves as “employed” compared to the end of 2020.

It again illustrates how completely BS the WMC/WisGOP meme of “workers sitting out collecting unemployment” is. UW-La Crosse PoliSci Professor Anthony Chergosky looked at the data, and rightfully said we should instead be trying to improve quality of life and services in Wisconsin instead of trying to hurt the poor and unemployed.

The strong job market is underscored by Wisconsin tax revenues continuing to grow at unprecedented levels. The Wisconsin DOR released the December revenue totals today, and it showed double-digit growth in all major types of taxes vs the end of 2020, despite no increases in tax rates being put in place.

Overall tax revenues are also up 11.7% for the first half of the 2022 Fiscal Year vs the last 6 months of Donald Trump’s presidency. Pretty big stuff, and well beyond the level of inflation.

Even though some of this increase will likely decline due to income tax cuts that will cause both higher refunds and take-home pay in early 2022, it’s worth noting that the Wisconsin 2021-23 budget expected taxes to be $1 billion LOWER than what we had at the end of 2021.

So even if all of the 11.7% increase in revenues for the first 6 months of FY 2022 is given back over the next 6 months, we still would have $1 billion more to use for the rest of the budget.

We'll see just how many more funds we might have when the Legislative Fiscal Bureau releases new revenue estimates next week. We could learn that we have a whole lot of funds to play with and/or give back in creative ways very soon, and perhaps that can help deal with a Wisconsin jobs situation whose main non-COVID concern is in finding enough people to keep this good thing going.

Wednesday, January 19, 2022

WisGOP tries same old BS bashing of poor, unemployed

For the last 2 years, we’ve seen Team WMC/WisGOP claim that expanded unemployment benefits were causing a worker shortage and that people were taking the benefits over taking jobs, and that this was a real bad thing for the economy.

Problem was, it wasn’t true. Unemployment claims continued to fall in Wisconsin throughout 2021 as the economy improved, even as $300 add-ons and the PUA/PEUC programs remained. Then after those programs ended in September, claims bottomed out in October, and had its typical seasonal rise in November and December.

Wisconsin quickly recovered to near-record lows of 3.0% unemployment in late 2021, with a workforce participation rate that continued to grow, and ultimately peak in August and September. Since the COVID-era unemployment programs ended in September, our participation rate has slightly declined, so it didn't prompt a flood of Wisconsinites to go back to the work force.

This indicates the real problem today in Wisconsin is a lack of available work force. But those facts aren't stopping Team WMC/WisGOP, and they’re back with more “punish the jobless and make them desperate” BS, which they revealed yesterday.
Republican lawmakers said Tuesday they plan to pass legislation by next month that in the short term would nearly halve the amount of time people could receive unemployment benefits.

Other bills they plan to pass would put in place more drug testing and work requirements for unemployment benefits and food stamps, cut off unemployment benefits for those who don’t show up for job interviews and suspend people’s access to public health insurance if they turn down job offers.

Republicans said their efforts were aimed at getting more people off of public benefits and into the workforce just as businesses are clamoring for workers.

“No person has ever become prosperous and independent on welfare checks,” Senate President Chris Kapenga of Delafield said at a news conference at the state Capitol.
Scot Ross reminds us that the Delafield Dumbass really shouldn’t be complaining about “welfare checks”.

In addition to the tired and obvious race-baiting, there are clear flaws when you apply these bills to the real world, as Tamarine Cornelius of the Wisconsin Budget Project points out.

Let’s be real. These bills are just culture war crap that Team WMC/WisGOP float up there to try to distract rubes from the fact that their economic policies suck. If there is any economic policy that this is based on, it’s the idea that everyday workers need to be made as desperate as possible, with few options beyond accepting lousy work for bad pay.

George Carlin pegged it perfectly nearly 20 years ago.

“They want more for themselves and less for everybody else, but I’ll tell you what they don’t want:

They don’t want a population of citizens capable of critical thinking. They don’t want well-informed, well-educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interests. That’s right. They don’t want people who are smart enough to sit around a kitchen table and think about how badly they’re getting fucked by a system that threw them overboard 30 fucking years ago. They don’t want that!

You know what they want? They want obedient workers. Obedient workers, people who are just smart enough to run the machines and do the paperwork. And just dumb enough to passively accept all these increasingly shitty jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and vanishing pension that disappears the minute you go to collect it, and now they’re coming for your Social Security money. They want your retirement money. They want it back so they can give it to their criminal friends on Wall Street—and you know something? They’ll get it. They’ll get it all from you sooner or later ‘cause they own this fucking place!

It’s a big club, and you ain’t in it! You, and I, are not in the big club.

Tuesday, January 18, 2022

In COVID Winter 2, restaurants still hurting. Wis seems likely to help them out

With omicron hitting new highs and the coldest part of Winter coming in for much of America, it's setting up for another rough time in the restaurant industry.
Indeed, even with creative workarounds, nearly 60% of restaurants across the country reported sales decreased by more than half in December, according to a survey of 1,200 conducted by the Independent Restaurant Coalition. Meanwhile, 46% of restaurant owners said Omicron impacted their operating hours for more than 10 days.

And spending at restaurants and bars dipped in December as surging cases driven by the variant have weighed on consumer activity.

We expect a further decline this month,” Ian Shepherdson, Chief Economist of Pantheon Macroeconomics, wrote in a note on Friday.
There was some help for restauranteers earlier this year, with bailouts given in COVID relief packages. But there wasn't enough aid available to pay for all applicants for that aid, and DC lawmakers have yet to give a second round of help.
Still, the ongoing headwinds from the pandemic have impacted and become more challenging for businesses that didn’t get a slice of the Restaurant Revitalization Fund (RRF)— a $28.6 billion federal effort to rescue struggling businesses that was part of the $1.9 trillion COVID-19 relief package.....

Yet there’s been no movement on legislation to replenish RRF funding, prompting the IRC to release last week a letter in a Congressional call to action, signed by current and former mayors from 27 cities.
More locally, Wisconsin State Rep. and restaurant owner Francesca Hong has joined the calls for more RRF assistance.

Speaking before state legislators last week, Wisconsin Restaurant Association CEO Kristine Hillmer noted that needs were so great that a majority of state restaurant owners that applied for RRF aid could not get it.
The RRF provided $28.6 billion for grants equal to the pandemic-related revenue loss of an eligible restaurant business (minus any PPP loans taken). Restaurant businesses of 1-20 locations were eligible - which directed the funds at small independent and franchisee restaurant owners and ownership groups. While $28.6 billion sounds large, only one-third of the restaurants who qualified for relief received funds, leaving over $40 billion in unfunded applications. At the federal level we are working hard to have the fund replenished as soon as possible to meet this need.

In Wisconsin, 5,871 restaurant businesses applied for just under $995,000,000 in RRF grants. Of those, 2,095 restaurants were funded for just under $279,303,000.
Hillmer was testifying in support of a bill that would give recipients of funds under the Restaurant Revitalization Fund the same tax-free treatment as PPP loans, and ARPA-related grants that Governor Evers has given for owners of movie theaters, live music venues and lodging industries. Hong is also part of a bipartisan group of legislators that have signed onto this bill (which will be voted on in committee this week). Hillmer added that giving restaurant owners a tax break that comes in the early part of the year is especially critical, due to the seasonal decline that happens in Wisconsin in the first 3 months, and compounded by omicron-related issues.
Just as the Wisconsin Legislature approved earlier this year for PPP loans, SB 690 would adopt the federal tax treatment of RRF grant proceeds. What does this mean revenue wise? If Congress does not replenish the RRF, then $280 [million] in Wisconsin tax revenue would be treated the same as PPP funds. If Congress does replenish the RRF, then Wisconsin would treat nearly $1 [billion] in tax revenue the same as PPP funds.

Yes, the restaurant industry is beginning its long journey back. We estimate that we lost 10-15 percent of restaurants to permanent closure. We also know that we have many restaurants who are still on the verge of not surviving the devastating economic effects of the pandemic. They took on huge debt in 2020, trying to stay in business and retain their team members. Many had a busy holiday season, but winter is here in full force, and many still do not have the cash reserves to survive the inevitable slowdown of customer traffic and sales. Many restaurant economists are predicting that during winter, consumers will return to pandemic-like hibernation, which will further reduce seasonal winter customer counts. Those restaurants that receive RRF grants need the ability to take advantage of the additional tax deductibility to help them stay in business for the long run and emerge stronger this spring.
While there is a legitimate argument to be made as to why this grant money shouldn't count as income (an argument I made about PPP recipients this time last year), the price tag is relatively small (a little over $27 million for the next 3 years) and if it improves the chances of many of these important local employers to survive this second COVID Winter, it seems a small price to pay at this time.

The state tax break for RRF recipients seems set to pass the full Legislature by the end of this month, and if signed soon enough, would allow for those business owners to use the write-off when they file their taxes in the coming weeks. But given the omicron and its related disruptions may cause especially big hits to a restaurant industry that already has suffered enough, lawmakers in DC probably should also step up to help.

Saturday, January 15, 2022

Here’s how clueless Kyrsten Sinema sounds

A quick thought on this monent of DC dimwittedness.

So it's more important for Kyrsten Sinema to have the Senate get along, than to actualky DO SOMETHING to ensure equal voting access and fair elections for all Americans.

Given that it is MLK weekend, lets hear what the man had to say about a minority of Senators blocking the rights of minorities. Give airheaded Sinema 1 week to come up with a voting rights plan that at least 1 Republican will vote for, and agree to change the rukes to allow that bill to pass with 50 votes.

When she gets played and that doesn't happen, all Dems need to publicly say the following.

"You are either with the voters, or you are with the vote suppressors and the election-riggers. Pick a side." And make them show their choice WITH A PUBLIC VOTE.

Wednesday, January 12, 2022

COVID keeps floating around, but WisGOPs would rather help the unvaxxed than slow the virus

Well, none of the bits of information on this map from the Wisconsin DHS offers much solace on the COVID front.

And while it seems that OMIcron isn't going to be as rough on the typical Wisconsinite as Delta has been, there's been no relief for hospitals Wisconsin hospitals yet.

Given that new cases didn't start going bonkers until around Christmas, it may well still be Delta that is driving quite a few of these record hospitalizations. But regardless, the over-capacity hospitals are a major problem that's impeding treatment of less-avoidable ailments.

I'm definitely interested in seeing DHS's update next week on the different COVID outcomes for the unvaxxed vs vaxxed in the state, and to see if the severe illness side has narrowed between the two groups like the caseloads apparently have. Or not, which would be its own set of news.

But despite more than a year of evidence that vaccines and (especially) boosters lead to fewer deaths and hosptializations, that didn't stop WisGOPs from taking the side of the irresponsible today. And today's pro-COVID foolishness at the Capitol included this doozy.

Wonder if Treig's constituents at Norske Nook and the Trempealeau Hotel like this "reasoning", letting big-government Republicans prevent them from taking the health measures that they think are appropriate.

Also take a look at the large crowd of anti-maskers/anti-vaxxers who somehow had plenty of time on a Wednesday afternoon to go over to and literally pollute our Capitol to support these "all vax statuses matter" bills.

So tired of being dragged down by these people. Me and a majority of Wisconsinites have done what we can and should do for the bette part of 2 years, and I'm tired of these dimwits prolonging and spreading this virus well past a point that we ever should have been at.