US retail sales, factories slip in May, and now oil jumps in June

There were a couple of bits of not-good economic news on Tuesday, starting with a sizable drop in retail sales for May.

Retail sales dropped by 0.9% in May according to the Census Bureau, worse than the 0.6% contraction that had been estimated by economists surveyed by Dow Jones. Excluding automobiles, sales last month eased by 0.3%, underperforming the Street’s expectation for a 0.1% increase. Gas station sales slid 2% in the month, which can reflect both lower prices but possibly slower economic activity.

Autos were a big reason behind the drop in May, as they fell a seasonally-adjusted 3.5% last month, which reversed all the pre-tariff gains that happened in March and April, and dropped sales amounts back to where they were in October.

We've also seen "core" retail sales (which doesn't include gasoline or the auto sector) flatten out in the last two months as the Trump trade policies bounced around.

Then later today, we got information that industrial production went down in May, with factory output barely growing last month. That's despite a big jump in autos being built with pre-tariff components.

U.S. factory production barely rose in May as a surge in motor vehicle and aircraft output was partially offset by weakness elsewhere, and the outlook for manufacturing remains clouded by tariffs.

Manufacturing output edged up 0.1% last month after a downwardly revised 0.5% decline in April, the Federal Reserve said on Tuesday. Economists polled by Reuters had forecast production rebounding 0.2% after a previously reported 0.4% drop. Production at factories increased 0.5% on a year-over-year basis in May….

Motor vehicle and parts output accelerated 4.9% last month after declining 2.3% in April. Production of aerospace and miscellaneous transportation equipment increased 1.1%. But output of fabricated metal products, machinery and nonmetallic mineral products all posted declines of at least 1.0%.

Durable manufacturing production rose 0.4%. Nondurable manufacturing production dropped 0.2%, pulled down by decreases in the output of printing and support, petroleum and coal as well as food, beverage and tobacco products.

Not only is it bad that overall industrial production continues to slowly deteriorate, with durable goods production down 0.2% outside of autos and auto parts, but what happens next month when the pre-tariff auto products and related items have rolled off the factory floor? It seems unlikely there would be continued demand to keep these products moving, especially with purchases already being pulled forward earlier this year and sloughing off now, so that indicates a strong chance of a Q3 slowdown in the auto sector to me.

The bad overall spending and output data puts a damper on last week’s good news of low inflation for May, both for consumers and producers (+0.1% for both). Those inflation figures seem likely to rise in the near future, as the tariffed products are assembled in factories and the higher costs are attempted to be passed onto consumers.

And now we have further inflationary pressures looming, give that oil price futures have jumped by 23% in June, with tensions rising again in the Middle East and Trump shooting his mouth off.

So watch for prices to rise at the pump sooner than later, and you’ve probably already seen some of that in your neighborhood. That's not going to help the economy in a time when most American consumers were already gloomy, and have been slowing their spending over the last 2 months.

WisGOP moves mean they're raising K-12 property taxes to pay for income tax cut

Thursday night, the GOP_led Joint Finance Committee held their most important budget meeting yet. It included a 10-figure income tax cut, and I wanted to discuss the two main parts of that reduction.

1. Expand 2nd Individual Income Tax Bracket (Paper #325). Beginning in tax year 2025, increase the amount of taxable income subject to tax at the second marginal rate (4.40%) by: (a) $28,150 for married-joint filers (to $67,300); (b) $21,110 for single/head-of-household filers (to $50,480); and (c) $14,070 for married-separate filers (to $33,650). Estimate reduced individual income tax collections of $323,000,000 in 2025-26 and $320,000,000 in 2026-27.

2. Retirement Income Exclusion. Beginning in tax year 2025, create an individual income tax exclusion for the first $24,000 of retirement income currently subject to state tax received by each individual who is at least 67 years of age before the close of the taxable year. For married-joint filers where both spouses have attained age 67, specify that the maximum exclusion equals $48,000. Prohibit a taxpayer who claims this exclusion from claiming any state income tax credits provided under current law in the same tax year. Prohibit nonresidents from claiming the exclusion, and specify that part-year residents may claim the exclusion only for the portion of their income which is sourced to Wisconsin. Define retirement income to include payments or distributions received each year by an individual from a qualified retirement plan under the Internal Revenue Code or from an individual retirement account established under 26 USC 408. Specify that the exclusion does not apply to any retirement income which is already exempt under current law. Estimate reduced individual income tax collections of $395,000,000 in 2025-26 and $300,000,000 in 2026-27.

The income tax cut is pretty straightforward – everyone with a taxable income above that level would get a similar-sized tax cut, since the lower tax rate cuts off for every dollar of income above the levels shown.

But I want to give a reminder about the retirement income tax cut, because a lot of income that retirees get is already tax-exempt in Wisconsin, as we saw in the LFB’s analysis of the GOP’s 2024 attempts to have this type of exclusion put in place.

Under current law, the following retirement income categories are excluded from Wisconsin AGI: (a) Social Security benefits; (b) payments from the U.S. military employee retirement system and U.S. government retirement payments received by members of the U.S. Coast Guard, the Commissioned Corps of the National Oceanic and Atmospheric Administration, and the Commissioned Corps of the Public Health Service; (c) income from certain public retirement systems if the individual was a member of, or retired from, that system prior to 1964; and (d) up to $5,000 of retirement income for taxpayers aged 65 or over with federal AGI of less than $15,000 per filer, or less than $30,000 for married-joint filers. Together, these provisions [were] estimated to reduce individual income tax revenues by nearly $950 million in tax year 2024 under current law (the exclusion for Social Security benefits accounts for an estimated $900 million [95%] of this total).

So this “retirement income” tax cut is really a lot of investment and pension income from non-military jobs, something that a lot of seniors don’t have a lot to draw from. Back in 2024, the GOP’s tax cut for seniors would have written off up to $75,000 per person in addition to Social Security , and that would have cost $1.13 billion in the first 2 years alone.

It was too rich for Governor Evers’ blood as a separate bill, and in addition to being nearly $450 million cheaper for the first 2 years, the new retirement tax cut is now included in the 2025-27 State Budget. So maybe that combination makes it more likely to go through this time?

Because of the lowered price tag of these tax cuts, there won’t be as big of a hole blown in future budgets vs what we saw the GOPs ask for in 2021-23 and 2023-25. But it still would erode all fiscal cushion we would have if we fully funded what Governor Evers wanted in this budget.

With that in mind, JFC also used Thursday night's meeting to take up the biggest expense of state tax dollars in the budget - K-12 education. I'll likely speak a bit more on where K-12 expenses are going in a later time, but there is also a key part that affects property taxes for Wisconsinites. That relates to general school aids and the total revenue limits, which combine the total amount of general aids and property taxes that can go into a public school district.

The GOPs on Finance added $229 million for regular special education aids and another $54.6 million for high-cost special education aids. That'll help public districts a bit, but the state funding still would only cover an estimated 37.5% of special ed costs for school districts, instead of the 60% that Governor Evers wanted.

And my State Rep Lisa Subeck got to what should be the bigger headline of the Republicans' K-12 motion. This is quoted from Rep. Subeck's email newsletter.

...They provided no general school aids, including no per pupil aid. This is the first time general school aids have not been included since the first Walker budget....

That's right, ZERO in added General School Aids. And in fact, this motion ends up losing General Aids for communtiy schools because $24 million more in this is being taken from public school districts in the next 2 years to fund vouchers for kids in private schools, to match up with the higher special ed reimbursments.

Put it all together with the earlier moves on sum-sufficients to uphold current laws (which gave automatic per-student increases to vouchers), and my crude estimation is that WisGOP has cut $2.88 billion out of the proposed $3.4 billion increase to K-12 schools for 2025-27. Which will pay for the $1.3 billion tax cut and then some.

However, there are a lot of other big-expense things to deal with in this budget, including prisons, the UW System, and Medicaid. Especially given the erraticness and idiocy coming out of DC, we may need all of that $1.4 billion that is in the bank to pay for everything else in the state, and maybe more than that.

Back to K-12. When you add in the $325-per-student increases in resources to K-12 schools that Evers locked in with his creative veto in the last budget, and Wispolitics notes that the GOP has essentially voted for higher property taxes for Wisconsin homeowners.

According to the Legislative Fiscal Bureau, the GOP motion would mean a higher property tax bill on a mythical median-valued home compared to the plan that Dem committee members had proposed. That plan largely followed what Evers put into his budget. According to LFB, the bill would be $160 higher on the bills that go out in December and $276 on the ones that will be sent to homeowners in December 2026 compared to the Dem motion [which would have restored Evers' K-12 plans to the budget]

The Wispolitics article quotes JFC Co-Chair Mark Born as saying the GOPs will still do something to lower the looming property tax increase they're currently allowing in this budget, and perhaps that'll be through a higher School Levy Credit or related thing. But make no mistake about it, WisGOP said on Thursday that they are trading relatively small income tax cuts for higher property taxes, and I don't think a lot of Wisconsinites would be happy with that decision.

Tax Scam 2.0 blows up the deficit, robs from the poor + gives to the rich.

The US Senate is still working on its changes to Big Beautiful Tax Scam 2.0, which passed the US House 3 weeks ago. And the Congressional Budget Office has recently been releasing their updated estimates of what the bill would do, both in total numbers, and in who would be helped or hurt by the bill's many changes to taxing and spending.

We'd already seen that the bill would increase deficits by large amounts, and they'd especially blow up in the next few years.

And that's not all for the increased deficits, as CBO notes higher deficits require higher amounts of borrowing, and higher interest rates to pay off that debt.

The Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) estimate that enacting the bill would increase deficits over the2025–2034 period by $2.4 trillion, excluding any macroeconomic or debt‑service effects. That change stems from a reduction in revenues of $3.7 trillion and a reduction in outlays of $1.3 trillion over the 2025–2034 period.

CBO estimates that the additional debt-service costs under the bill would total $551 billion over the 10-year period. That change would increase the cumulative effect on the deficit to $3.0 trillion. CBO estimates that the debt-service increase from the change in revenues would amount to $716 billion. Other provisions would, on net, result in a decrease in debt-service costs of $166 billion.

As a result, and net of any changes in borrowing for federal credit programs, the agency estimates that debt held by the public at the end of 2034 would increase from CBO’s January 2025 baseline projection of 117.1 percent to 123.8 percent of gross domestic product.

So we're really talking about a total of $3 trillion in added deficits, not $2.4 trillion, because of the added debt costs.

Then the CBO released their analysis of the "distributional effects" of Big Beuatiful Tax Scam 2.0 today. Bobby Kogan of the Center for American Progress gives the rundown of what CBO had to say on who gets hurt or helped by Tax Scam 2.0.

UGH! Let's look at the analysis ourselves and see how the CBO got there.

Resources for households in the lowest decile of the income distribution would decrease by about $1,600 per year (in 2025 dollars) compared with their projected income in CBO’s baseline projections (see Figure 1).5 That amounts to 3.9 percent of their income (see Figure 2). Those projected decreases are mainly attributable to reductions in in-kind transfers, such as Medicaid and SNAP.

Households in the fifth and sixth deciles (that is, in the middle of the income distribution) would see their resources increase by $500 (or 0.5 percent of projected income) and $1,000 (or 0.8 percent of projected income), respectively.

Resources would increase, on average, over the projection period by about $12,000 for households in the highest decile, amounting to 2.3 percent of their projected income. Those projected increases are mainly attributable to reductions in the taxes households in that decile owe.

Clear Robin Hood in reverse, and I wouldn’t count on the super-rich doing much positive for the rest of the country with that windfall (they sure haven’t over the last 45 years).

I also want to add one more layer onto the budgetary and economic changes that Trump/GOP are trying to put through. Upon request from Dem members of Congress, the CBO also gave their estimates of the effects that new Trump tariffs would have over the next year. That includes the amount of money that would go into the US government's coffers, and what would happen to the economy as a whole.

Before accounting for effects on the size of the economy, CBO projects that the increases in tariffs implemented between January 6 and May 13, 2025, would decrease primary deficits over the 2025–2035 period by $2.5 trillion relative to the agency’s baseline projections from January 2025. (Unless otherwise indicated, all years referred to in this letter are fiscal years.) Roughly half of that decrease stems from the increases in tariff rates on imports from countries other than China, Canada, or Mexico. Lower net outlays for interest resulting from the decrease in primary deficits would reduce total deficits by an additional $50 billion. As a result, total deficits over the 2025–2035 period would be $3.0 trillion lower than projected in CBO’s January 2025 baseline.

However, CBO says the total reduction in deficits would be a bit less than $2.8 trillion, because the economy will be slower in the coming decade.

CBO’s assessment is that the changes in tariffs will reduce the size of the U.S. economy. That effect would differ year by year; on average, from 2025 to 2035, the tariff changes would reduce the rate of real growth in gross domestic product (GDP) by 0.06 percentage points per year. By 2035, CBO estimates, the level of real GDP will be 0.6 percent lower than it was in CBO’s economic forecast from January 2025. That reduction in output reflects both negative and positive effects: the negative effects of higher tariffs through channels such as reduced investment and productivity, and the positive effects of additional revenues from tariffs, which would reduce federal borrowing and increase the funds available for private investment.

In addition to the slower economy, the CBO says prices will jump due to the tariffs, and stay at those higher levels as long as the tariffs are in place.

The increases in tariffs will make consumer goods and capital goods (the physical assets that businesses use to produce goods and services) more expensive, which will reduce the purchasing power of U.S. consumers and businesses. Those increases in costs will put temporary upward pressure on inflation. In CBO’s estimation, the policies analyzed here will increase the average annual rate of inflation, as measured by the price index for personal consumption expenditures, by roughly 0.4 percentage points over 2025 and 2026 relative to index will be 0.9 percent higher. After 2026, the tariffs will not have additional significant effects on prices.

The CBO doesn’t go into detail as to whether poorer or richer Americans will bear the brunt of those price increases and slower economies, because they couldn’t break down exactly which industries might grow or decline, and which products will have the largest price effects.

But would tariffs really be able to pay for the price tag of Big Beautiful Tax Scam 2.0? Let's look at how much the US government is bringing in for "customs duties" over the last 6 months, after May's Treasury statement was released this week.

So tariff revenue has basically tripled since Tariff Man got going. That would come out to around $15 billion a month in added taxes on products revenue, so maybe $180 billion a year? Then add in some inflation for the later years and could that $180 billion get to $250 billion a year on average? Seems unlikely, but not impossible.

So if we kept all these tariffs on, the already-large deficits wouldn't rise as much (although they'd still go up, especially for the rest of the 2020s). But I have a hard time believing that amount of tariff revenue would lead to an economic outcome most people would want – higher prices and a slower economy. In fact, if you put it together with Big Beautiful Tax Scam 2.0, and most us end up making less!

The worst effects on the economy from tariffs would hit in the next 2 years, while there would be tax hikes and more severe budget cuts coming in the later years of Big Beautiful Tax Scam 2.0....unless Congress and the 2030s president want to make even larger deficits by continuing with Tax Scam 3.0.

This is the other item that is hiding in plain sight - Big Beautiful Tax Scam 2.0 relies on accounting gimmicks to stay within the 10-year budget limits that would allow for 50 Senators to pass it through. But it cynically lays bombs of future tax increases and higher budget cuts that future Congresses would have to deal with. And if they don't want to deal with it and not cause more economic hardship for Americans with real jobs and real-life budget constraints, our deficits go up by even more.

Oh, but I'm sure the Koched-up GOPs in the Senate won't allow these exploding deficits and will put together a taxing and spending plan that doesn't handcuff our future and helps normal Americans over the donor class and.....HAHAHAHA!!! Do you think those MAGAts care about that, or you?

Now, Tax Scam 2.0 having 2/3 of Americans with opinions disapprove of it, which could make a whole lot of red states become purple for 2026, and their stocks and other investments tanking? That might cause them to deal a little bit with the reality of this budget-busting Scam.

Not just health insurance, but REinsurance

Looks like we're finally seeing the state budget process pick up this week. Among a list of items that the Joint Finance Committee will take up will be a modification to the state's reinsurance program, which is a subsidy to insurance companies to try to give Wisconsinites more choices on the Obamacare exchanges. The Legislative Fiscal Bureau broke down the program and the changes Governor Evers wants to put in.

The Office of the Commissioner of Insurance (OCI) administers the Wisconsin healthcare stability plan (WHSP), a state-operated reinsurance program that is intended to reduce premiums for health insurance policies sold in the individual market (for non-group insurance coverage, not sponsored by an employer). Reinsurance payments reimburse insurers for a portion of the total annual claims for individuals with high costs. Payments are made in accordance with parameters that are set each year based on the total reinsurance program spending target. Currently, the target is $230,000,000, an amount specified by statute.

Like most state reinsurance programs, WHSP pays a certain percentage (the "coinsurance rate") of the total cost of all covered services for an individual claimed in a year that exceed a minimum threshold (the "attachment point"), subject to a maximum threshold (the "reinsurance cap"). For instance, in 2019, the program had a coinsurance rate of 50%, an attachment point of $50,000, and a reinsurance cap of $250,000. If an insurer paid a total of $150,000 in medical claims in that year for a particular enrollee, the program would make a reinsurance payment to the insurer for that individual of $50,000, which is 50% of the difference between the total claim and the attachment point. The maximum reinsurance payment made on behalf of any individual in that year was $100,000, which is 50% of the difference between the maximum cap and the attachment point.

As you can see, the $230 million target/limit on payments to insurers means that the state wasn't able to pay the full 50% of costs in each of the last 2 years.

The Feds are currently taking up a sizable portion of this $230 million payment, as they give the state “pass-through” savings from the money that the Feds don’t have to pay in tax credits, which a large amount of Americans can receive for buying policies on the Obamacare exchanges.

The GPR share of the reinsurance payments has been lower since plan year 2021. For 2019 and 2020, about one-quarter of the total cost of reinsurance payments was supported from the GPR appropriation, while the state's share has ranged from 0% to 13% in the four years since then. This reduction can be largely attributed to a more generous premium tax credit formula enacted under the American Rescue Plan Act of 2021 and the Inflation Reduction Act of 2022 for plan years 2021 to 2025. If Congress does not extend the enhanced credits, the standard formula will be used again in 2026, which will also likely increase the state's cost of the reinsurance program. If, for instance, the state had to again contribute one-quarter of the $230.0 million payment total, the GPR cost would increase to $57.5 million, beginning in 2027-28, up from $30.9 million in 2025-26 and $6.7 million in 2026-27.

As shown in Table 3, reinsurance payments as a percentage of total insurance revenue reached a maximum in 2022, the year the target was increased to $230 million, but this percentage has declined since that time. With a fixed reinsurance target, and with growth in individual market enrollment or in premium collections, this percentage will naturally decline. In 2024, both enrollment and premium revenues increased by 25% from the prior year, which is a major reason for why the proportion of revenue that insurers collected from reinsurance payments declined. Although comparable data for the 2025 plan year will not be available until 2026, the reinsurance payments as a percentage of all insurer revenue will decrease further, given that enrollment in exchange plans increased by 18% over 2024 (based on the open enrollment periods).

Federal pass-through funding has gone up for reinsurance, since the Feds would have paid a lot more in tax credits in recent years due to 2 developments.

1. The higher income levels that were allowed to get credits for Obamacare in the last few years, and

2. More people getting insured from the Obamacare policies in general.

But as mentioned, the state couldn’t reinsure the full 50% associated with high-cost individuals in the last 2 years, as the total costs went over the $230 million limits in the last 2 years. So Governor Evers put in a budget provision to allow more payments (and a higher percentage of costs) to go to insurers.

In recognition of the growth in the individual market, Senate Bill 45/Assembly Bill 50 [the State Budget bill] would increase the reinsurance target from $230,000,000 to $250,000,000, beginning with plan year 2026, an increase of 8.7%. This would increase the share of total insurance revenue received from reinsurance payments, but would not restore the program to the same proportionate size as it was in 2022, the last time the target was increased (assuming that enrollment does not decrease substantially from current levels). To put this proposed increase into context, if the $250 million target had been in effect in 2024, reinsurance payments would have been 10.1% of total insurer revenues in that year, instead of 9.3%.

Interestingly, the LFB says that many Wisconsinites may not get any personal benefit from the reinsurance plan, because the lessening of premiums doesn’t end up reducing what the individuals end up paying in total, as they already get the difference back in higher tax credits from the Feds.

Although the reinsurance program reduces premiums, consumers who receive premium tax credits (PTCs) either do not realize any direct benefit from the reduced price, or realize a comparatively small reduction. This is because credits are calculated to equal to the difference between a percentage of the consumer's income (the "applicable percentage," which varying by income level) and the premium of the benchmark plan (second-lowest silver level plan). Thus, if the premium of the benchmark plan is reduced as the result of the reinsurance program, the amount of the premium tax credit is reduced, but the net cost to the consumer who purchases the benchmark plan will remain unchanged. To illustrate this, Table 5 shows the net premium owed by a consumer with a household income at 200% of the 2025 federal poverty level ($31,300 annually, or $2,608 per month, for a single-person household) under two scenarios. Under one scenario, the monthly premium is assumed to be $500, while in the other scenario, a reinsurance program reduces the premium for the same plan by 10%, to $450. This illustration uses the ACA's standard premium tax credit formula (with an applicable percentage of 6.5% of income), rather than the enhanced subsidies in effect for 2021 to 2025.

On the flip side of that, if Congress doesn’t continue the expanded tax credits for people going on Obamacare (and Big Beautiful Tax Scam 2.0 isn't continuing it), then any lower premiums resulting from reinsurance would help more Wisconsinites afford these insurance policies, since they wouldn't get as much from the tax credits to help them out.

So this reinsurance system is yet another example of where the Trump/GOPs can end up raising health care costs for the State of Wisconsin, as refusing to keep the expanded tax credits would mean the Feds will take up less of the cost reductions from reinsurance, and the state will pay more. And given that we don't know the outcome of the bill, it makes this reinsurance discussion all the more relevant for tomorrow's JFC session.

May jobs gains noted by Wall Street. March, April revisions and higher unemployment is ignored

It was Jobs Friday yesterday, and this was one that many were interested in, as it would be the first full month that the US was under widespread tariffs. I wasn't counting on much of an immediate effect (since the tariffs were just hitting product costs and generally haven't been sent to the shelves yet), but it's always worth looking at and seeing were the jobs market is.

So what did we find out?

Total nonfarm payroll employment increased by 139,000 in May, and the unemployment rate was unchanged at 4.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in health care, leisure and hospitality, and social assistance. Federal government continued to lose jobs.....

Health care added 62,000 jobs in May, higher than the average monthly gain of 44,000 over the prior 12 months. In May, job gains occurred in hospitals (+30,000), ambulatory health care services (+29,000), and skilled nursing care facilities (+6,000).

Employment in leisure and hospitality continued to trend up in May (+48,000), largely in food services and drinking places (+30,000). Over the prior 12 months, leisure and hospitality had added an average of 20,000 jobs per month.

Not bad overall, but take out the health care and leisure/hospitality sectors, and there's only a gain of 29,000 among the other 78% of American jobs. Not really strong fundamentals overall.

The unemployment rate may have stayed at a (rounded) 4.2%, but the household survey wasn't good at all, especially this part.

In May, the employment-population ratio declined by 0.3 percentage point to 59.7 percent. The labor force participation rate decreased by 0.2 percentage point to 62.4 percent.

That's because of a drop of 625,000 in the US labor force, and a decline of 696,000 people ID'ing as "employed". And while media reported the unemployment rate as staying "the same", it actually rose from 4.187% to 4.244%, and I bet that same media would have a different spin if another 10,000 people were unemployed and the rate "rose" to 4.3% due to rounding.

In fact, it's the most unemployed people we've had in this country in 3 1/2 years, when we were still somewhat in the overhang of the COVID economy.

Then I looked at the revisions of the prior two months of jobs reports, and saw this.

The change in total nonfarm payroll employment for March was revised down by 65,000, from +185,000 to +120,000, and the change for April was revised down by 30,000, from +177,000 to +147,000. With these revisions, employment in March and April combined is 95,000 lower than previously reported.

Which means if you take the 139,000 jobs added in May and subtract the 95,000 jobs that were revised down, you get a tiny gain of 44,000 vs previous reports. That's in line with what the ADP jobs report said on Wednesday, with only 37,000 jobs added in the private sector last month, a number that was protrayed as weak in the financial media.

I noticed that jobs in health care ended up declining in April after a significant runup over the last 3 years, a downward revision of 68,000 jobs. The sector would return to its previous job-gaining trend in May, with 62,400 jobs added.

That seemed newsworthy, but I hadn't seen any talk about it. So I looked to see if there was any explanation from the BLS.

April estimates from the establishment survey reflect the movement of workers between two different industries: home health care services and individual and family services. Changes in the administration of a New York state program caused workers who had previously been paid by establishments in the home health care services component of the health care industry to be included on payrolls in the individual and family services component of social assistance. This movement is reflected in the April 2025 estimates and contributed to an employment decline in health care and an employment gain in social assistance.

Sure enough, social assistance jobs were revised up by 94,900 for April, more than offsetting the 68,000 downward revision in health care. OK, all good there, except for the fact that this administration wants to defund research and medical access from these industries that have been keeping the jobs market above water in 2025.

But April jobs still were revised down overall, so what caused that? It was mostly in the industries where goods and services go from one place to another.

Revisions, Apr 2025 jobs report
Couriers and messengers -32,900
Warehousing and storage -10,100

Couriers/messengers had a small recovery of 6,500 jobs for May, but warehousing/storage lost another 5,100 jobs last month. Let's keep an eye on where those sectors go in the coming months, especially in light of Kohl's announcing yesterday that it would close a distribution center near JD Vance's hometown in Ohio, causing 768 people to lose their jobs.

Combine the losses in the labor force and the gain in unemployed, and the large downward revisions showing that the net gain was relatively small vs prior reports. I thought that meant Wall Street would be fearing recession and it would be a down day. So the reaction in the financial markets was....?

US stocks rallied on Friday, with the S&P 500 (^GSPC) breaching the 6,000 level following a moderate beat on the monthly jobs report and rising investor hopes of a cooldown in the acrimonious feud between President Trump and Elon Musk.

The S&P 500 (^GSPC) added about 1.0% to close at the 6,000 mark, its highest level since February. The Dow Jones Industrial Average (^DJI) rose over 400 points, or 1.1%, while the tech-heavy Nasdaq Composite (^IXIC) gained 1.2%....

...on Friday morning, the labor market showed more signs of resilience as Trump's tariffs continued to seep in to the economy. The US added 139,000 jobs in May, more than the 126,000 expected by economists as the hiring rate slowed and unemployment held flat at 4.2%.

ARE THESE PEOPLE OUT OF THEIR MINDS? Not only because they're trading based on the gosspiy sniping of two druggy, bloated oligarchs, but also because they're totally ignoring the significant revisions that make the net gain only 44,000.

I think there's a lot of denial and hopium going on with the markets these days. They front-ran DOOM and shorted the market when tariffs were first announced, but 8 weeks later, they don't want to admit that things might end up that badly. Yet there seems to be evidence that there is deterioration in manufacturing and construction as well as the wider job market, and most of the big price jumps on tariffs haven't hit widely as of this time. Then add in Big Beautiful Tax Scam 2.0, which will either be a bill that fails (and cause bailing out of the market because of it), or service cuts and higher debt costs and interest rates will be recessionary as a result of it.

I don't get why the markets and the financial media thinks things are OK, because the real economy sure seems like it's heading toward "worse" instead of "better" outside of the Acela Bubble.

Manufacturing and construction step back in April. But ATL Fed says that makes economy better?

Wanted to talk about a few recently released reports that looked at the dollar values of construction and manufacturing in America. Given that April was the first full month after wide-ranging tariffs were announced and a lot of upheaval in the financial markets followed, seems to be worthwhile to look at how businesses and consumers may have responded. Start with construction, where the new report from the Census Bureau indicates new construction in the US continued to decline in April, especially on the residential side. The dollar value of residential construction dropped by 3.9% between January and April, and much of that drop is in “private residential improvements”, which is work done on previously-completed homes. But there also was a notable decline that happened in home-building construction in the last half of 2024

Also interesting is that the public sector kept the construction sector from falling even further, especially in road-building.

In April, the estimated seasonally adjusted annual rate of public construction spending was $513.5 billion, 0.4 percent (±1.3 percent)* above the revised March estimate of $511.3 billion. Educational construction was at a seasonally adjusted annual rate of $110.9 billion, 0.1 percent (±1.5 percent)* below the revised March estimate of $111.0 billion. Highway construction was at a seasonally adjusted annual rate of $146.3 billion, 0.5 percent (±4.1 percent)* above the revised March estimate of $145.5 billion.

Public health care (+$0.5 billion/+3.3%) and the combined total of govt office and commercial construction also helped the sector last month (+$0.5 billion/+1.9%). But it still isn’t a good picture for construction, which has been a good growth sector for much of the 2020s.

A decline also happened in April for new orders for manufacturers, falling below not only the elevated levels of March, but also what we had in February.

If you take out the volatile transportation category (especially aircraft), manufacturing orders declined by a seasonally-adjusted $2.6 billion in March and $2.4 billion in April, and shipments also declined in those two months.

That report from the Commerce Department on April orders came one day after the Institute for Supply Management said manufacturing kept declining in May.

"The Manufacturing PMI® registered 48.5 percent in May, 0.2 percentage point lower compared to the 48.7 percent recorded in April. The overall economy continued in expansion for the 61st month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index contracted for the fourth month in a row following a three-month period of expansion; the figure of 47.6 percent is 0.4 percentage point higher than the 47.2 percent recorded in April. The May reading of the Production Index (45.4 percent) is 1.4 percentage points higher than April's figure of 44 percent. The index continued in contraction in March for the third straight month after two months of expansion preceded by eight months of contraction. The Prices Index remained in expansion (or 'increasing') territory, registering 69.4 percent, down 0.4 percentage point compared to the reading of 69.8 percent in April. The Backlog of Orders Index registered 47.1 percent, up 3.4 percentage points compared to the 43.7 percent recorded in April. The Employment Index registered 46.8 percent, up 0.3 percentage point from April's figure of 46.5 percent.

"The Supplier Deliveries Index indicated a continued slowing of deliveries, registering 56.1 percent, 0.9 percentage point higher than the 55.2 percent recorded in April. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Inventories Index registered 46.7 percent, down 4.1 percentage points compared to April's reading of 50.8 percent.

"The New Export Orders Index reading of 40.1 percent is 3 percentage points lower than the reading of 43.1 percent registered in April. The Imports Index plunged into extreme contraction in May, registering 39.9 percent, 7.2 percentage points lower than April's reading of 47.1 percent."

Spence continues, "In May, U.S. manufacturing activity slipped further into contraction after expanding only marginally in February. Contraction in most of the indexes that measure demand and output have slowed, while inputs have started to weaken:

And yet I look at the Atlanta Fed’s GDP Now estimates, and take a look at what they think will happen to economic output as a result of this information.

Somehow a decline in residential construction and new orders in manufacturing means more growth? I looked into their "contributions" number trying to figure out why, and I don’t see how you get residential home building becoming a positive or why they say consumer spending projections got better in the last 2 days.

Likewise, the stock market keeps climbing for no real reason. The DOW was up another 214 points today because….of optimism that tariffs won’t damage the economy more than they thought? People still pumping the AI Bubble?

Out in the manufacturing and construction sectors in America, I’m not seeing much in the data that would indicate anything beyond a drop in activity in April. And other than the end of the import surge that we saw in the first 3 months of the year, what has changed in the last month to make us think the economy is going to go back to strong GDP growth?

I just don’t get it. Are people just that tricked by the short-covering and dumb runup that we’ve had in the stock market?

What happened in 2024? IT WAS THE BROS

Wanted to give my reactions to the excellent work by Catalist, who looked at the actual voter files in the country, and draws a conclusion as to What Happened in [the] 2024 [elections]?

First of all, the voter files indicate that the overall US electorate was more urban and suburban and less rural in 2024 than in 2020, and even though battleground states like Wisconsin have more of its voters in rural and suburban areas than the rest of the country, they also trended toward having more non-rural voters last November.

In addition, there tends to be more Voters of Color in urban and suburban communities, as shown in this graphic of the electorate in battleground states.

That demographic change should have given Dems a sizable advantage, all things being equal. But a big shift in the 2024 election featured declines in Dem votes among Voters of Color and young voters. Especially among men of all ethnicities.

For Dems, the women did their part, as Harris only lost around 1% of the vote share Biden got in 2020 and Obama did in 2012. But Trump’s gains with men got him over the top, as it did when he faced Hillary Clinton in 2016.

Yep, IT WAS THE BROS.

There is also a difference between what happened in the 7 battleground states that all went to Trump after mostly supporting Biden in 2020, and the election that happened in the other 43 states. The changes in percentage and turnout in battleground states were smaller overall than they were in the rest of the country, and despite all the talk you hear about fewer overall voters, in close states like Wisconsin, turnout went up among many demographics.

Trump’s gains from 2020 were smaller in battleground states. While Trump did not secure an overall majority of the popular vote when accounting for all ballots cast, his performance improved in two-way support, which looks at only ballots cast for Democrats and Republicans. In 2020, he received 49% of the two-way vote and increased that share to 52% in 2024. However, his gains in the battleground states were about half the size, going from 49% to just over 50%. The major trends against Democrats in the election were mitigated in the battleground states – turnout was higher, support losses were lessened – which may be related to higher levels of campaign activity and more frequent election participation in these states.

But it was where turnout happened within states that helped Trump – bigger turnout in redder than bluer areas, and that was true regardless of how close the election was.

Voter turnout was high in the battleground states, but not consistently so, which ultimately benefitted Republicans. Figure 2 shows turnout change from 2020 to 2024 by census tract. The graph shows turnout change compared to 2020 Biden support. In non-battleground states, shown in black, turnout was about the same as 2020 in Republican areas, while it dropped by as much as 15% in Democratic areas. This was fairly obvious shortly after the election, looking at state-level and county-level turnout. What was not as obvious was the trend in battleground states, shown in red; here, the turnout advantage in Republican areas was nearly as strong, but these areas also voted at relatively higher rates compared to non-battleground states. Specifically, within the battleground states turnout in Republican areas increased by as much as 5%, while turnout in Democratic areas decreased by as much as 5%.

Another part of the Catalist report went into whether a voter casts votes every 2 years in November, or if they don’t. It was telling in several ways.

In each of the last 4 presidential elections, Dems’ candidate lost a majority of voters who had voted in the previous presidential election but didn’t vote in the current one. In the other 3 elections, they were able to make up for it by getting a sizable majority of the voters who didn’t vote in the previous elections.

But in 2024, the new voters trended toward Trump.

The folks at Catalist note that the demographics of those voters matches up with the voters that Trump made gains with.

In the previous sections we detailed Harris’s support losses among voters of color (particularly Latinos), young voters, men, urban voters, and finally, irregular voters, with losses compounding the more groups share these overlapping characteristics. Across demographics, new voters and dropoff voters look very similar to one another – they are more likely to be voters of color, substantially more likely to be Latino, less likely to have gone to college, and more likely to live in urban areas. Age is an exception – new voters are younger than dropoff voters, but both groups are younger than repeat voters.

On the other side of the equation are the larger number of Americans that do vote in back-to-back presidential elections. The Dems had a net loss of voters that went their way in the first election in both 2012 and 2016 (either to the GOP or to a third party), but Joe Biden picked up some voters that didn’t vote for Hillary Clinton. However, in 2024 Kamala Harris was the only Dem candidate not to get 50% of voters that went to the polls in the previous presidential election.

What’s worth noting is that repeat voters tend to be whiter, older, more likely to be college-educated, and less urban than new voters, which underscores the gains that Trump got among younger voters and non-white voters in cities in the last election.

But these results also underscore how soft Trump’s support was and is, because the group that got Trump just enough votes to win were irregular and young voters who are in general less likely to be dedicated to continuing to support any candidate. Especially when that candidate doesn’t do the things that they thought/were told they were voting for (like lower prices or better job prospects or not having goons run around on their streets and snatching people who look like them).

In addition, as Split-Ticket noted for Wisconsin in the wake of April's Supreme Court election, the voters most likely to come to the polls in the 2026 midterms and other future elections are going to be more likely to support Dems. So when I see JD Vance make comments about how “the voters gave us a mandate to do these things”, I say BULLSHIT. In fact, if we had a true national election in 2024 where all votes counted the same, it seems likely to me that Dems would have gotten more votes in the non-battleground states, because the election would have mattered.

Instead, many people in those states either did not vote because it didn’t matter enough, or were willing to cast a protest/contrarian vote for Trump. So my hot take about 2024's results is if we had a national popular vote election, it is possible that we would have seen enough of those voters in non-battleground states take their duty more seriously, choose to vote and/or vote for Dems, and Harris might have won the popular vote instead of losing by less than 1.5%.

Which makes it all the more infuriating that things are being wrecked as they are by Trump/GOP, because I don't think this is what a majority of Americans thought they'd be getting.

When you lie to yourself, live in an information Bubble of BS, and don't take the act of voting seriously, you end up with this. Now, if we have fair elections over the next 3 years, and the economy and quality of life drags (as it likely will), some of this can be corrected, as enough soft Trump voters and low-info dipshits will likely learn from 2024's outcomes, and all things being equal, Dems should win. But that doesn't mean those who voted for Trump 2.0 should be forgiven, as it can't be forgotten how we got here, and who caused it.

April shows a month in transition, when we have yet to meet tariffed reality

As the last business day of the month hit on Friday, we got the always-important income and spending report for April. That was a month that started with the Trump Administration’s announcement of tariffs and the loss of more than 11% in the S&P 500 in a week, and then most of those losses were recovered by the end of April.

The same report has inflation information for consumers, which would tell us if those tariff announcements were already raising prices, which would encourage the Fed from backing off from lowering interest rates from its still-elevated levels.

So what did we get?

The Fed's preferred Core PCE Price Index rose 0.1% in April, matching March's revised gain and consensus estimates, signaling that early-month tariffs had little impact on underlying inflation.

Excluding food and energy, core PCE climbed 2.5% year-over-year, also in line with forecasts and down from a 2.7% pace in March, while the headline PCE measure, which includes all items, increased 0.1% month-over-month and 2.1% annually. The data echo April's CPI report in showing muted tariff effects, as consumers shifted spending patterns rather than letting price spikes feed through to core inflation.

Personal income jumped 0.8% more than double the 0.3% consensus while personal consumption expenditures slowed to 0.2% growth, down from March's 0.7%....

A big reason for the boost in incomes was due to an increase of nearly $108 billion in Social Security benefits, which is odd because the annual inflation-indexing boost of benefits happens in January, not April. So how did this big jump happen?

Because of a bill signed by Joe Biden before he left office earlier this year that restored benefits to a sizable number of American workers.

In January, two provisions—the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)—that reduced Social Security benefits for millions of workers were repealed after bipartisan efforts in Congress.

Signing the act into law, former President Joe Biden said it would boost Social Security benefits by an average of $360 a month for more than 2.8 million recipients.

The WEP reduced Social Security benefits for individuals receiving pensions from public-sector jobs—such as those held by state and federal employees—that did not require Social Security payroll tax contributions. This reduction applied even if they contributed to Social Security through other employment and qualified for benefits.

The GPO reduced spousal or survivor benefits for retired federal, state and local government workers who did not pay into Social Security funds through their payroll taxes.

It continues an unusual trend where US income growth has been driven more by one-off bits of non-job income every month of 2025 instead of wages, salaries and other work-related compensation. Compensation of employees accounts for more 3/5 of overall US income, but was less than 2/5 of income growth for the first 4 months of this year.

There aren’t going to be continuing sources of non-job income like these for the rest of 2025 (not that I know of, anyway), so that’s not a recipe for sustained income growth in an economy that has more than 2/3 of its GDP based on consumer spending.

Combine that income info with the tanking of the stock market in April, then add the Trumpian-induced chaos from tariffs that were announced and put into place, but not yet being shown on the prices that consumers paid. This may help explain why there wasn’t much of an increase in consumer spending for April (only up by 0.2%, and 0.1% after inflation), and instead we had a big jump in the saving rate.

I also note that there was a slight cutback in durable goods spending after a big increase in March, which seemed to be intended to get ahead of the tariffs that were coming, and mirrors an increase in year-end durable goods spending that happened ahead of Trump’s inauguration.

So is that front-running of tariffs by consumers going to result in another retrench in durable goods spending for May, just as we see a large group of imports for Q1 2025 hit the market? Or is April’s decline just a breather after a big runup, and we will see the higher levels of durable goods spending continue for the rest of Q2 2025? Seems to be an important question going forward.

In general, it seems that the April data shows a lull between the rapid changes and economic concerns that came with the start of Trump Admin 2.0, and with what we see after tariffs affect prices, jobs and production levels. And now that the TACO trend (Trump Always Chickens Out) is becoming acknowledged by Wall Streeters, media and other Americans, what changes to consumer and business behavior will that cause?

I also thought that the strange recovery in stocks for May would be a boost to consumer sentiment. I think the headlines about the lower stock market in April signaled to everyday Americans that things were going bad, so why wouldn’t the recovery in stocks and warmer weather make people think things were OK?

But there wasn’t much of a rebound in sentiment at all.

Consumer sentiment was unchanged from April, ending four consecutive months of plunging declines. Sentiment had ebbed at the preliminary reading for May but turned a corner in the latter half of the month following the temporary pause on some tariffs on China goods. Expected business conditions improved after mid-month, likely a consequence of the trade policy announcement. However, these positive changes were offset by declines in current personal finances stemming from stagnating incomes throughout May. Overall, consumers see the outlook for the economy as no worse than last month, but they remained quite worried about the future.

In fact, consumers’ rating of the current economy was worse in May than in April, with expectations lower than their opinions of the current economic situation.

And despite some breaks and/or delays in tariffs, the Michigan survey shows that Americans are still counting on sizable inflation for the near-future.

Year-ahead inflation expectations were little changed at 6.6%, inching up from 6.5% last month. This is the smallest increase since the election and marks the end of a four-month streak of extremely large jumps in short-run expectations. Notably, long-run inflation expectations fell back from 4.4% in April to 4.2% in May. This is the first decline seen since December 2024 and ends an unprecedented four-month sequence of increases. Given that consumers generally expect tariffs to pass through to consumer prices, it is no surprise that trade policy has influenced consumers’ views of the economy. In contrast, despite the many headlines about the tax and spending bill that is moving through Congress, the bill does not appear to be salient to consumers at this time.

Oh yeah, Big Beautiful Tax Scam 2.0! I’m sure the thought of less support for health insurance and higher interest rates from rising deficits will do wonders for consumers’ views on the economy! (well, for the 2/3 of the country that doesn’t live in a Bubble of BS, anyway).

From what I can see with the data, the underlying economy didn’t change much at all in April, despite all the chaos that was happening in DC and on Wall Street in that month. And given that there hasn’t been a large increase in layoffs or other major damage being obvious in the last month, I wouldn’t think a lot would be different in May’s data either. But it all seems to be a false calm that is masking what’s to come.

It doesn’t seem like what’s coming is going to be good, whether we have more TACOs or not, since the distortions have already happened in the first 4 months of 2025, and the re-adjustment people and businesses make to those idiotic moves will be the story that determines how the economy ends up for much of the rest of this year.

How Wisconsin might be left with a Big Beautiful Tax Shift

After the House passed GOP Tax Scam 2.0 and its related budget cuts, state officials have been looking at what the bill would mean for Wisconsin. And among the changes are some big adjustments and new burdens in the food assistance program.

If implemented, the changes could upend food assistance for more than 12% of Wisconsin’s current recipients, Wisconsin Medicaid Director Bill Hanna said. Most affected would be people between 55 and 64 who previously weren’t required to work to receive the benefits, also known as the Supplemental Nutrition Assistance Program or food stamps.

Families with children who age 7 and older would also be newly subject to work requirements under the proposal narrowly passed by the U.S. House early Thursday. Households with children ages 18 and under are currently exempt.

The bill would also end exemptions for about 2,300 Wisconsinites who lack job options in rural counties, such as Adams, Marquette and Menominee, a largely tribal county, along with others in northern Wisconsin.

It also means large amounts of paperwork and new job duties for state employees, without the Feds paying for the extra work they would require. Which pushes those costs onto state taxpayers.

The changes could cost state taxpayers as much as $314 million starting in 2027, Hanna said. Much of that is due to a new provision fining states for even small errors of as little as a few dollars in calculating the amount of benefits individual recipients get.

The state would also have to pick up more of the costs of administering the program and documenting that recipients are working or volunteering. The proposed changes would also eliminate $12 million in annual education programing aimed at helping recipients eat healthy and stay active.

But I thought we were Making America Healthy Again? Oh wait, that’s by the standards brought to you by supplement companies and other new age BS that paid hucksters like RFK Jr and Internet influencers are promoting.

The state of Wisconsin is also looking at more changes and extra costs for its Medicaid programs, as much of the "savings" from the Big Beuatiful Pile of Garbage not only comes from kicking people off of ther health care coverage, but also because it would keep the state from using as many federal tax dollars to pay for services.

The changes would go into effect by the end of 2026, a timeline that was sped up after some House conservatives pushed for the requirements to go into effect sooner. The bill originally called for work requirements to start in 2029.

If passed, the measures would present recipients with more barriers to remaining covered and could result in millions of Americans losing coverage. Under the original bill, the House GOP's Medicaid provisions are expected to reduce spending by $625 billion but cause 7.6 million people to be uninsured by 2034, according to preliminary estimates from the nonpartisan Congressional Budget Office. Those numbers, though, could change after Republicans moved up the work requirement timetable…..

The bill also would limit how states raise money for their Medicaid programs through what are called "provider taxes," or taxes on hospitals and nursing homes.

Like other states, Wisconsin uses its provider tax revenue to draw down extra matching dollars from the federal government. It pays the money back to hospitals and nursing homes to supplement the reimbursements they receive for care provided to Medicaid patients.

Under the GOP legislation, the state would be prohibited from implementing any new provider taxes on hospitals and nursing homes or increasing existing tax rates on those providers, said Jennifer Tolbert, director of state health policy and data at [Kaiser Family Foundation].

One of the biggest hits to Americans would come from a significant jump in out-of-pocket costs for people who get their health insurance on the Obamacare exchanges, as the Big Beautiful Tax Scam reverses what helped a lot of Americans get insured in recent years.

The extended subsidies were passed via the American Rescue Plan Act during the pandemic, and covered plans in 2021 and 2022. The Inflation Reduction Act extended the benefit until the end of 2025….

Since the extended tax credits have been in place, the enrollment in the ACA marketplace grew from 12 million in 2021 to a record 24.2 million in 2025, according to a February report by the Commonwealth Fund.

Based on 2025’s enrollment figures, there's been a 63.5% increase in enrollment for Obamacare exchange policies in Wisconsin over the last 4 years, as Medicaid enrollments dropped post-COVID.

The premium credits and Obamacare exchanges are especially important here since Republicans have refused to expand Medicaid, so people making anything above the poverty line are limited to getting insurance either through their job (good luck with that on lower-wage gigs), or through Obamacare, or not getting insured at all.

If those tax breaks go away, it’s going to cost a lot of people in Wisconsin quite a bit more to keep their insurance.

If we go back to earlier thresholds, those who earn more than four times the federal poverty level — $62,000 for an individual or $128,600 for a family of four with 2026 coverage — would lose eligibility for subsidies and would have to pay the full cost for their health plans, according to KFF.

Researchers at KFF anticipate that between the potential lapse of the credits coupled with the proposals, enrollment could shrink by one-third, leaving about 8 million uninsured in the U.S.

One change in the House GOP tax bill would increase by 4.5% the share of people’s income that they pay for premiums after tax credits in 2026, according to Gideon Lukens, senior fellow at the CBPP. It would also increase the maximum out-of-pocket limit by 4.5% in 2026, he said.

So large numbers of Wisconsinites will be paying more for health insurance, and state taxpayers will be on the hook for hundreds of millions of dollars in unfunded, poor-bashing mandates. That's before we account for the lack of economic activity that'll result from the lack of stability or lack of funds available for other things, and the likely increase in interest rates that come from the exploding deficits in the next few years.

So what are us non-rich in Wisconsin getting out of this Tax Scam, again?

WisGOPs want to make costly voucher scam even larger?

While the Wisconsin state budget is on hold, let's go over a recent Ruth Conniff article in the Wisconsin Examiner which tells us that WisGOPs are more than willing to increase state funding on at least one item – school vouchers to private schools.

The plan, contained in two bills that failed in the last legislative session, would stop funding school vouchers through the same mix of state and local funding that supports regular public schools, and instead pay for school vouchers just out of the state’s general fund.

“It’s certainly something that I personally support. … I’m sure it will be part of the discussion,” Rep. Mark Born (R-Beaver Dam), co-chair of the powerful Joint Finance Committee, told Lisa Pugh on Wisconsin Eye when she asked about “decoupling” Wisconsin voucher school funding from the rest of the school finance system.

“Decoupling” would pave the way for a big expansion in taxpayer subsidies for private school tuition. While jettisoning the caps on available funds and enrollment in the current school formula, voucher payments would become an entitlement. The state would be obligated to pay for every eligible student to attend private school. It’s worth noting that most participants in Wisconsin’s voucher programs never attended public school, so what we are talking about is setting up a massive private school system with separate funding alongside the public K-12 school system. That’s more than Wisconsin can afford.

Anne Chapman, research director for the Wisconsin Association of School Business Officials (WASBO), has followed the issue closely. “It could come up last-minute, on very short notice,” she warns.

What’s funny is that I’ve long wanted a version of “decoupling”, but that’s because I think it’s ridiculous that most vouchers in Wisconsin are paid for by taking away state funds from the local public K-12 district, even if the child never attended a day of public school in that district.

The other effect of this is that the local public school district often has to raise property taxes to make up the difference in the lost state aid. And I think that if we are going to use state tax dollars to pay for 2 separate K-12 school systems (bad enough, but also the reality in 2025 Wisconsin with the GOPs still in control of the Legislature), then let’s pay the full costs of this scheme. Let's not not jack up property taxes in communities because some families choose not to send their kid to the local school and instead wants to have them attend a (usually religious) private school.

And let’s get some parity in per-student state aids between vouchers and public K-12 districts, as vouchers get significantly higher payments from the state than the community schools do. Chapman points out in Conniff's article that state taxpayers shell out twice as much for a student to get a voucher than we pay on a per-student basis for higher-need special education.

Yet, Chapman reports, we are now spending about $629 million for Wisconsin’s four voucher programs, which serve 58,623 students. That’s $54 million more than the $574.8 million we are spending on all 126,830 students with disabilities in Wisconsin, as school districts struggle with the cost of special education.

Chapman says we should watch for the GOPs in the Legislature to try to give even more of a funding advantage to these voucher schools and try to make us turn to a system similar to Florida’s, where the state government gives a handout to all parents of up to $8,000, resulting in a total cost of nearly $4 billion in the last school year. I don’t know about you, but I never want us to follow the lead of Florida in 2025. That's true for anything, but especially in government policy.

In the current budget, Governor Evers wanted to limit the amount of kids using vouchers in any district to 10% of the district’s enrollment, and limit the total of the (already larger than public school) payment for voucher schools to serve kids with special needs. But those were among the many provisions Republicans on the Joint Finance Committee removed from the budget earlier this month - the one bit of action they've taken on the budget so far.

So those limitations on the state costs of vouchers won’t happen, and on top of that, the Legislative Fiscal Bureau projects that the 3 main voucher programs will see their combined costs grow by another $140 million 2 years from now.

Any voucher expansion that Republicans may try to get through can fortunately be vetoed by Governor Evers, and I doubt we will see a repeat of the 2023 deal that greatly increased the number and amount of the vouchers in exchange for more spending and an increase in revenue limits for public schools over the next 2 years (which Evers later turned into increases in revenue limits for the next 402 years through a veto that was recently upheld by the state Supreme Court).

Which means that vouchers could be a main point of conflict as budget debates heat up in the coming weeks, and if the GOP tries to push to funnel even more of the hundreds of millions of taxpayer dollars they’ve been able to send to these mostly religious schools, it could increase what seems to be a higher-than-normal chance of a budget not being passed in time for the start of the next fiscal year on July 1.