Getting SALTy again as Tax Scam 2.0 is debated

One of the reasons that Trump/GOP's Big Beautiful Tax Scam 2.0 is up in the air is because of a provision where I stray from most progressives. It deals with what's known as the SALT Cap, and it's something I've long called to be fixed, even if the outcome favors higher-income Americans.

To backtrack, let's talk about how we got here. The standard deduction was nearly doubled in the original 2017 Tax Scam, which likely cut taxes for lower-income Americans who may not have itemized to begin with. There was also an argument that it would make tax filing easier, because someone could just take the standard deduction without having to keep so many records and figure out strategies and documentation for certain tax deductions.

vs this

But as a way of limiting the cost of the Tax Scam, there were limitations put on other deductions, and the limitation that ended up being the most common was the write-off for State and Local Taxes (SALT). This was set at $10,000 for single filers and for married couples filing jointly, and hasn’t changed in the 8 years since.

Meanwhile, the standard deduction has been allowed to grow with inflation, and as you can see, it totaled $29,200 last year for married, joint filers. This means more Americans have gotten hit by the SALT Cap, since their incomes and taxes got higher, but the amount they could write off in SALT didn’t change, making it less likely to have $29,200 in itemized deductions in 2024, which pushed them to take the standard one.

The guy who signed the 2017 Tax Scam into law said he would get rid of the SALT Cap if American voters would let him avoid prison return him to the White House.

Trump, the Republican presidential candidate, made waves September 17 by appearing to indicate he wants to overturn the $10,000 SALT cap established by the Tax Cuts and Jobs Act in a post on Truth Social about his upcoming campaign rally on Long Island, New York. Trump signed the TCJA into law in 2017.

“I will turn it around, get SALT back, lower your Taxes, and so much more,” Trump wrote.

The Trump campaign didn’t clarify Trump's stance on the cap in a request for comment from Tax Notes, instead bashing Democratic presidential candidate Kamala Harris’s “out of control inflationary policies” and saying Trump plans to quickly advance tax relief for working people and seniors should he take office.

Not surprisingly, Trump/GOP was in “say anything” mode last Fall to slip back into office. But now that they are in power, and the costs of Tax Scam 2.0 are slamming into reality, Trump is trying to backtrack on those words.

On Monday, the President told House Republicans that there now needs to be some kind of SALT Cap in Tax Scam 2.0, and that those from states that got hit with the Cap should stop asking for so much.

In a private meeting with House Republicans, Trump singled out the lawmakers from New York, New Jersey and California who have rejected the $30,000 deduction limit — three times the current cap — contained in the legislation moving through the House. Trump told lawmakers he wants to leave the SALT deduction limit “where it is” in the current version of the legislation, Representative Bruce Westerman of Arkansas said after the meeting…..

House Speaker Mike Johnson met with SALT holdouts late Monday, but left without an agreement.

In the meeting, the speaker offered to raise the cap on the SALT deduction from the $30,000 limit set in the legislation to $40,000 but only for four years and for people making less than $751,000, said a person familiar with the matter. After four years, the limit would snap back to $30,000 with a $400,000 income limit.

SALT caucus members said Tuesday they do not want a temporary increase and have said they want a doubled cap for joint filers.

Well the LEAST that should happen is to have the cap be doubled for joint filers. You know, like how pretty much all other deductions are, including the standard deduction, which is the item that two-income married couples often end up taking because it gives them a bigger write-off than they can get from itemized deductions because of the SALT Cap.

Then Trump did some kind of public whining about how changing the SALT Cap would be more likely to help people in states that generally vote for Democrats (I’ll spare you the stupidity of the quote). In addition to the sick idea that people in states that vote one way should be punished for doing so, it conveniently ignores that many of those blue states pay more in taxes than they take out (unlike the poorer red states that many of those tax dollars are funneled to).

For the record, I’m fine with redistributing taxes that come from richer places to poorer places, as I don’t believe that certain people should have a second-class existence just because there isn’t as much income and wealth to be had in those places. But the fact that richer blue states then pay higher state and local taxes to make up the difference IS THE REASON WE HAVE A SALT DEDUCTION IN THE FIRST PLACE.

On the flip side, it’s also laughable to hear Coastal GOPs claim that $30,000 or $40,000 is still too low of a SALT Cap. Think about how big your incomes + property taxes have to be in order to owe more than $40,000 in those types of taxes. For example, my wife and I have a combined income that puts us around the top 20%-25% level of US household incomes, and our most recent SALT write-off would have been somewhere around $19,000 if we didn’t have the $10,000 limit. Being able to write off $19,000 in SALT may have allowed us to write off our mortgage interest and charitable contributions instead of taking the standard deduction of $29,200, or at least made us consider actions that would get us beyond that level.

And that’s why expanding the SALT Cap and getting rid of the marriage penalty would be an especially useful reform that would help upper-middle class, 2-income couples. If you limit the SALT Cap to something like $30,000 joint and $15,000 single, you keep it targeted and don't give as much to the super-rich and wealthy. So this means we don't go back to the pre-Tax Scam days where hundreds of thousands of dollars could be written off because there wasn’t any SALT Cap at all. And while I'd like to see the GOP Tax Scam banished, I understand that also means no SALT Cap and a huge giveaway to certain rich people would return. So $15K/$30K would be a good compromise measure that helps both ways if some kind of Tax Scam 2.0 has to happen.

I'm not sure what might be in the pile of crap that might emerge onto the full House floor, but the fact that the Rules Comittee is supposed to start its meeting at 1am overnight tells me that there isn't going to be anything they want normal people to see. Let's watch to see if the Coastal GOPs get what they want on SALT for Tax Scam 2.0, or if they get nothing and accept it anyway. At which point, I'd expect a whole lot of them to lose in 2026 just like several of their GOP counterparts did in those states in 2018, after selling out constituents on the SALT Cap.

Friday news dump - GOPs can't agree on Tax Scam 2.0, and US downgraded

Couple of big bits of fiscal and monetary news that broke Friday afternoon. Starting with the attempt to install GOP Tax Scam v 2.0, which isn't working out as the realities of the Big Beuatiful Bill set in.

The GOP-led House Budget Committee voted to reject a sweeping package for President Donald Trump's agenda on Friday, dealing an embarrassing setback to Speaker Mike Johnson, R-La., and Republican leaders.

The vote in the Budget Committee was 16-21, with a band of conservative hard-liners who are pushing for steeper spending cuts joining all Democrats in voting against the multitrillion-dollar legislation, leaving its fate uncertain...

“I have to now admonish my colleagues on this side of the aisle. This bill falls profoundly short. It does not do what we say it does with respect to deficits,” {Republican Rep. Chip] Roy said. “That’s the truth. Deficits will go up in the first half of the 10-year budget window and we all know it’s true. And we shouldn’t do that. We shouldn’t say that we’re doing something we’re not doing.”

“This bill has back-loaded savings and has front-loaded spending,” Roy added. “I am a no on this bill unless serious reforms are made today, tomorrow, Sunday. Something needs to change or you’re not gonna get my support.”

As a reminder, in order to get around a Senate filibuster and only require 50 GOP votes for Tax Scam 2.0 to go through, it needs to be under the outline of the budget resolution that was passed a month ago. That resolution gives total numbers over 10 years that total deficits and tax cuts can't exceed over that time, and if the bill goes beyond those costs, then it has to go through a Senate filibuster and the 60 vote threshold to get to the floor. And as weak and pathetic as I think Chuck Schumer is, even he won't allow 7 Senate Dems to let any Tax Scam go through.

The Committee for a Responsible Federal Budget has a good rundown of these budgetary boundaries.

But the resolution doesn't give a set amount that has to be cut in each year, and that's where Rep. Roy's complaint comes in. The CFRB also did an explainer on this topic earlier this week.

The legislation’s spending and tax cuts are quite front-loaded, while offsets are back-loaded. We estimate about 55 percent of the gross deficit increases – $2.8 trillion – would take place in the first half of the budget window. Meanwhile only 40 percent of the offsets – $970 billion – would accumulate over that period. As a result, 70 percent of the non-interest borrowing would occur in the first five years.

The tax cut and spending increase provisions are front-loaded, in large part, due to the use of “arbitrary expirations” designed to limit reported costs. A number of provisions – including the enhanced Child Tax Credit and standard deduction, no tax on tips and overtime, 100 percent bonus depreciation for equipment, and new ‘MAGA accounts’ – are scheduled to expire in 2028 or 2029. The bill also relies on one-time appropriations for defense and immigration, which must be obligated by 2029. And finally, the bill includes a large number of retroactive provisions that provide a one-time windfall for activities already undertaken.

Meanwhile, many of the offsets don’t begin or ramp up until late in the budget window. Medicaid work requirements, for example, save $300 billion through 2034 but do not take effect until 2028. In addition, while some of the Inflation Reduction Act (IRA) energy credits are repealed at the end of 2025, the most expensive ones only begin phasing out in a few years with some restrictions taking effect sooner. And the Supplemental Nutrition Assistance Program (SNAP) state matching fund requirements do not start until 2028.

It's cynical gimmickry (because it blows up the deficits short-term, and kicks the real deficit-reducing cuts and tax increases to a later date), and related to that, a problem certain Republicans like Rep. Roy have is that not enough people are being hurt by the bill right away. Among the GOPs in that crowd is Wisconsin's Senior Senator.

As House Speaker Mike Johnson, R-La., feverishly works to finalize the details of a massive package that includes major portions of President Trump's agenda, many Senate Republicans are dismissing the legislation before it is even finished in the House.

"Unfortunately, it's a sad joke," Wisconsin GOP Sen. Ron Johnson said Wednesday.....

Some conservatives in the House are pushing for $2 trillion in cuts — but that's not far enough for Johnson, who wants spending levels to revert back to what they were pre-pandemic. Sen. Johnson told reporters that he believes it was a mistake for leaders to try to pass so much of Trump's agenda in one single bill, instead of three separate pieces of legislation that could be considered individually. As a result, he said he'd oppose the House bill "as it's currently constructed."

Me and my donors took ours, fuck the rest of you.

I'll remind you that price levels have risen over 20% in the five years since COVID broke out and there are more people in this country as well. But apparently those realities mean little to RoJo and the other GOP "fiscal hawks", now does it?

And then late on Friday afternoon, after the budget bill had been shot down and the stock markets had closed, we got more bad news that connects to these rising deficit numbers.

Moody’s Ratings downgraded the United States’ debt on Friday, stripping the country of its last perfect credit rating. The move could rattle financial markets and push up interest rates, potentially creating an additional financial burden for Americans already struggling with tariffs and inflation.

Of the three major credit rating agencies, Moody’s was the lone holdout, maintaining its outstanding rating of AAA for US debt. Moody’s held a perfect credit rating for the United States since 1917.

It now ranks US creditworthiness one notch below that, at Aa1, joining Fitch Ratings and S&P, which lowered their credit ratings for US debt in 2023 and 2011, respectively.

The decision to downgrade debt was influenced by “the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” Moody’s said in a statement. Moving forward, Moody’s said it expects borrowing needs to continue to grow and for it to weigh on the US economy as a whole.

Oh? Well maybe it's not such a great time to continue the Tax Scam that blew up the deficit in the first place, eh? Especially when you consider that 60% of Tax Scam 2.0 will be going to Americans making over $200,000, and more than 1/6 of the benefits will go to millionaires.

We also know that cutting medical and food assistance for lower-income Americans is something that hurts the overall economy. And if our already-higher budget deficits and borrowing costs are a big concern, why would you want to both slow down the economy and make those deficits skyrocket in the next few years?

Well, we know why. It's the same reason Ron Johnson's "fiscal concerns" got assuaged in the last GOP Tax Scam.

GOP megadonors Diane Hendricks and Dick and Liz Uihlein were able to claim a combined $215 million in deductions in 2018 because of provisions ⁦@SenRonJohnson⁩ put into the tax cut Trump signed, according to ⁦@propublica⁩. https://t.co/mniK4o6R0I

— Patrick Marley (@patrickdmarley) August 11, 2021

And guess who put up tens of millions to get RoJo to ooze back into the Senate by 1% the next time he was up for election?

The $22 million that Wisconsin Truth PAC has spent so far places it as the sixth highest-spending super PAC in the midterms cycle and the highest-spending single race-focused super PAC, according to OpenSecrets. The group was formed earlier this year by Republican consultants to back Johnson in the battleground race.

Building materials company CEO Diane Hendricks has contributed at least $6.5 million so far this year to the Wisconsin Truth PAC. Shipping and packaging supplies company CEO Richard Uihlein and his wife Elizabeth have given the PAC at least $3.5 million. Those figures are as of the most recent disclosures covering through the end of July, so it is possible they have donated more or that additional wealthy donors have contributed to the PAC since then.

The Big Beautiful Theft bill is far from dead at this point, and requires strong vigilance for the next few months as GOPs try to come up with something that fits within their tight margins and massive deficits. But at least as of now, it's clear that there isn't enough agreement on how to pull off the next Scam within the GOP's caucus, let alone how hated this thing will be from a public who got a taste of strong government supports during the early 2020s, and liked it.

Trumpian economic idiocy lowers Wis revenues, delays Wis budget moves

Late Thursday, the Legislative Fiscal Bureau gave its always-important update to revenue estimates, which tells Wisconsin lawmakers how much money is available for the last 6 weeks of this fiscal year, as well as the next 2-year budget.

Let’s start with how things look for the rest of Fiscal Year 2025.

In addition to the $22.0 million in increased tax collections, it is estimated that departmental revenues will be $8.7 million above the January 29 projection and net appropriations will be $39.5 million below the earlier estimates.

The net result of these estimates is that the projected gross balance in the general fund will be $4,337.7 million, which is $70.2 million above the January projection of $4,267.5 million.

Well that’s good! There will be plenty of money to carry over to the next budget. How’s the outlook for the 2-years that this budget will be in effect?

Based on our review of collections data and the economic forecast, general fund taxes will be higher than previous estimates by $22 million in 2024-25, and lower than the previous estimates by $321 million in 2025-26 and $36 million in 2026-27. The three-year decrease is $335 million, or 0.49%, reflecting a lower forecast for individual income taxes ($370 million) and corporate income/franchise taxes ($90 million). These reductions are partly offset by an increased forecast over the three-year period for general sales and use taxes ($65 million), insurance premiums taxes ($46 million), and miscellaneous taxes ($14 million). The estimates for utility taxes and excise taxes have not been changed since January.

Oh, not good, especially in the next Fiscal Year.

The LFB says the main reason for the lower revenue numbers is because of the economic outlook has dimmed since Donald Trump returned to the White House in January.

S&P Global's May, 2025, economic forecast projects weaker economic growth than the January forecast, which was used in preparing the earlier tax revenue estimates. Nominal and real (inflation-adjusted) gross domestic product (GDP), personal income, and sales of light vehicles are expected to be lower in 2025 through 2027, compared to the January forecast. Inflation, as measured by the consumer price index (CPI), is expected to grow at a faster rate in 2025, but at lower rates in 2026 and 2027, compared to the January forecast. Similarly, nominal personal consumption expenditures (PCE) are expected to be higher in 2025, but lower in 2026 and 2027, compared to the January forecast. The Attachment outlines the May, 2025, economic forecast by S&P Global, as well as changes to the forecast since January, for 2025 through 2027.

That said, the revenue picture is still a bit better than what the Evers Administration estimated 6 months ago. We just don’t have the amount of additional revenue that the LFB projected in January, which Gov Evers based the budget off of.

Rep. Mark Born and Sen. Howard Marklein Chair the Joint Finance Committee and say these lower revenue numbers mean that there isn’t as much of a cushion as the $4.3 billion in the bank would indicate.

“While we are not surprised by these new estimates, we remain cautious as we work to craft a budget that invests in our priorities, funds our obligations, and puts the State of Wisconsin in a strong fiscal position for the future.

“The cost-to-continue remains high and our collections are down slightly compared to January estimates, therefore we must continue the success of Republican budgets of the past in order to ensure that we can meet our ongoing obligations. (So the last 6 years of having Evers stop tax giveaways but not following Evers’ plans to re-invest in public schools are “Republican budgets”? You go on with that, guys)

“We are calling on Governor Evers to take these revenue re-estimates seriously. Come to the table with legislative leaders and work with us to craft a reasonable budget that works for Wisconsin.”

Does that mean Howie and Mark and the rest of the GOP are also are going to take the revenue estimates and slowing economy seriously, and not throw away funds and future budgets on tax cuts to the rich? Especially when the GOP in DC is trying to put in even more tax cuts for those who get plenty of breaks already?

Whaddya think, guys?

The JFC’s Democrats had a similar theme to Born and Marklein. But it was from a different direction, recommending that Wisconsin’s budget has the flexibility to withstand the next 2 years of Trumpian economic idiocy.

“Now, more than ever, Wisconsinites are struggling to put food on the table and maintain a roof over their heads. This projection shows it’s going to get even worse, especially when our communities start to feel the direct impact of the Trump regime’s trade war around the globe.

“Together, we need to ensure Wisconsinites have the resources to get through the chaos and uncertainty that lies ahead.”

And uncertainty seems to be the cloud that hangs over whatever might happen with this budget. That’s true for the prospect of possible tariff-induced inflation or a recession caused by cutbacks, and it’s also true when it comes to whatever cuts and thefts come from DC’s funding of services that the state also helps to pay for.

Those uncertainties especially makes the thought of large-scale, permanent tax cuts a risky (if not outright reckless) proposition, because we might well need to use more state tax dollars to pay for the same services due to the shenanigans playing out in DC. And given that the Federal debate on taxing and spending may have several weeks or even months left to play out, will that hold up Wisconsin’s budget beyond the July 1st start of the biennium as well?

Not much inflation yet from tariffs other than coffee

After Donald Trump announced widespread tariffs in early April, this week's inflation reports would tell us if prices were rising as a result. Well, Tuesday's CPI report seemed pretty good. And interestingly, what kept the CPI down in April was a sizable expense that had been rising in previous months – groceries.

Food at home declined by 0.4% after a 0.5% increase in March, and leading the way down was a product that had risen by nearly 1/6 in the 2 months prior to April.

…Five of the six major grocery store food group indexes decreased in April. Driven primarily by a 12.7-percent decrease in the index for eggs, the index for meats, poultry, fish, and eggs fell 1.6 percent in April after rising in recent months. The fruits and vegetables index decreased 0.4 percent over the month and the cereals and bakery products index declined 0.5 percent. The index for other food at home decreased 0.1 percent in April and the index for dairy and related products fell 0.2 percent. In contrast, the nonalcoholic beverages index increased 0.7 percent over the month.

Yes, eggs are still up nearly 50% in the last 12 months, but at least we got a month of declines to retrace what we’d been seeing at the start of 2025.

The biggest notable increase in grocery prices for April came with another product that often gets consumed in the morning. Coffee went up 2.4% last month, and has gone up more than 5% in the last 3 months. Some of this is due to droughts and floods in coffee-producing countries that has caused a shortage of supply, but we are also likely starting to see the effects of Trump tariffs, as most coffee in America has to be imported from other places.

The tariff hit is even coming to coffee places in Wisconsin, as shown in this Wisconsin Public Radio article from this week.

TJ Semanchin is a co-owner of Wonderstate Coffee, a Viroqua-based company with four locations throughout Wisconsin. He told WPR’s “Wisconsin Today” that recently-imposed tariffs from the Trump administration could spike the price the company pays for beans from countries like Nicaragua by as much as 28 percent.

The Trump administration has currently imposed 10 percent tariffs on goods from most countries. As part of a package of “reciprocal tariffs,” it also proposed a range of different tariffs on individual countries, including an 18 percent tariff on Nicaragua…

Coffee can only be grown in tropical environments, limiting the ability for farmers to grow coffee beans at scale in the United States. More than 99 percent of coffee consumed in America is imported, according to the National Coffee Association of USA.

Wonderstate Coffee purchases beans from Peru, Colombia, Guatemala and Mexico among other countries. Semanchin said even a 10 percent tariff is a significant dollar figure for his business to pay.

“For us, a container of coffee might cost around $200,000. So that tariff tax, if it stays at 10 percent, will be $20,000. That’s an additional $20,000 that we need to come up with. I’m literally borrowing that money from our bank to pay that tax,” Semanchin said. “We get hit with that upfront, and then as we absorb those costs, eventually we are going to have to look at increasing prices again.”

But I awaited Thursday’s report on the Producer Price Index to see if the tariffs were boosting prices for other businesses. And that was certainly NOT the case.

The Producer Price Index for final demand fell 0.5 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in March and increased 0.2 percent in February. On an unadjusted basis, the index for final demand rose 2.4 percent for the 12 months ended in April.

The April decline in the index for final demand is attributable to prices for final demand services, which decreased 0.7 percent. The index for final demand goods was unchanged.

Prices for final demand less foods, energy, and trade services edged down 0.1 percent in April, the first decline since falling 0.8 percent in April 2020. For the 12 months ended April 2025, the index for final demand less foods, energy, and trade services advanced 2.9 percent.

Now a lot of the drop in services is due to a drop in margins for wholesalers and retailers, and maybe that’s a tariff effect due to an inability to pass on higher costs. But I’ll also note that there was a second straight month of declines in the PPI’s index of food prices, which has unwound increases in producer costs of food for the first 2 months of 2025.

Eggs led the way in the decline, with a drop of more than 39%, and the added spike in egg prices that we had at the start of 2025 has now faded, at least for producers.

However, I’ll note that PPI for coffee went up another 1.9% in April after rising 2.0% in March, and coffee is up more than 20% for producers in the last 12 months. So don’t be expecting any relief from higher coffee prices at the store or in restaurants any time soon.

The only other places I’m seeing significant jumps in Producer Prices is for steel mill products (up 5.9% in April and 16.5% in the last 3 months), and various other types of metals (several have had price increased between 7-10% in the last 3 months). But the bigger economic concern I draw from the PPI may be the fact that the prices of several unprocessed farm products are dropping, and the declines are speeding up.

That’s an awful lot like when Trump had his last trade war in 2018 and 2019, which led to large increases in farm bankruptcies due to lower prices and an inability to sell to other countries. And likely helps explain why Trump/GOP are trying to sneak through $60 billion in farm subsidies in their “big, beautiful” scam of a tax bill.

Maybe it’ll be tomorrow’s release of the import/export prices that definitely show an effect on product prices after Trump announced his tariffs. But at least for April, prices seemed to remain in check for many parts of the economy, even if the expectation of price increases was there.

Fed keeps rates the same, and Trumpian idiocy keeps them from making moves

No surprise that the Federal Reserve Open Markets Committee kept interest rates at the same level today. The underlying economy hasn't gone into recession as far as we can tell, and the full effect of inflationary tariffs hasn't hit store shelves. But what was worth looking at was if the Fed statement would give clues about what they thought might happen with the economy in the near future.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

Mostly a non-statement, although "higher uncertainty" is not something Wall Streeters usually like to hear from central bankers. So there was a post-meeting wobble in the stock market after the 2pm Eastern release of the Fed statement, but it mostly recovered to the pre-2pm level by the time the market closed.

And Fed Chair Jerome Powell repeated that theme when he met with the media a 1/2 hour after the rate decision.

Fed Chair Jerome Powell knocked down any notion of taking preemptive rate cuts as inflation is still running above target. “It’s not a situation where we can be preemptive, because we actually don’t know what the right responses to the data will be until we see more data,” Powell said.

The Fed has been on hold since its last cut in December as it waits to evaluate the tariff impact....

“What looks likely — given the scope and scale of the tariffs — is that we will see certainly the risks to higher inflation, higher unemployment have increased. And if that’s what we do see — if the tariffs are ultimately put in place at those levels, which we don’t know — then we won’t see further progress toward our goals,” he said. “We might see a delay in that.”

Powell specified that this could delay the Fed’s timeline for the next year or so.

“In our thinking, we would never do anything but keep achieving those goals. But we would at least for the next, let’s say year, we would not be making progress toward those goals — again, if that’s the way the tariffs shake out,” he added. “The thing is, we don’t know that. There’s so much uncertainty about the scale, scope, timing and persistence of the tariffs.”

And let's be honest, if Powell took longer than he should have to lower rates from 23-year highs when inflation was lower than it is now, why would he drop rates and encourage more speculation and higher prices in other areas of the economy? I believe in jobs >>>> inflation, but there's no way we can tell at this time whether inflation or unemployment (or both!) will be heading toward 5% in the coming months, so no changes can or should be done today, and likely for a few months.

Which means that the fault in keeping rates elevated (by 2000s standards, anyway) lies entirely with Donald Trump's big mouth and the GOP Congress that won't reign him in. And I don't think we get this resolved when the Fed next meets in 6 weeks.

The only side that now wants to cut property taxes in Wisconsin? Gov Evers and Dems!

Every budget cycle, the Legislative Fiscal Bureau releases an analysis of what would happen to property taxes on a median-priced Wisconsin home if the Governor’s budget would go through. The 2025-27 budget’s version on that breakdown of property tax bills was recently released by the LFB, and it goes over the main factors in the budget that would affect how much Wisconsin homeowners would pay.

For school districts, the Governor's budget bill (SB 45/AB 50) would make several changes that would affect statewide school levies, including: (a) indexing the current law $325 per pupil adjustment under revenue limits to inflation starting in 2025-26 (estimated by the Administration at $334 in 2025-26 and $345 in 2026-27); (b) increasing the low revenue adjustment under revenue limits from $11,000 per pupil in 2024-25 to $12,000 per pupil in 2025-26 and $12,400 per pupil in 2026-27; and (c) providing $494 million in 2025-26 and $700 million in 2026-27 for state aid under general school aids. SB 45/AB 50 would also make a modification to the definition of revenue limits so that the personal property aid payment associated with the 2023 full exemption of all personal property from taxation would be under revenue limits, which would decrease school district levies by an estimated $57.4 million annually…..

….Beginning in 2026, counties and municipalities would be eligible to receive an aid payment from this newly-created program if their property tax levies in the year of the payment are less than or equal to their levies in the prior year (for the first year of payments, 2025(26) tax levies would be compared to 2024(25) levies). The amount of the payment would be equal to 3% of the county or municipality's payment year levy. After the first year of the program, if the county or municipality had received a payment in the prior year, the amount of its payment would be equal to 3% of its payment year tax levy, plus 1.03 multiplied by the payment it received in the prior year. The Administration estimates that this program would distribute $111.8 million in 2025-26 and $227.0 million in 2026-27. This aid program would be expected to reduce statewide county and municipal levies by an estimated $49.4 million in 2025(26) and by $108.5 million in 2026(27), compared to estimates of those levies under current law….

In addition to the changes that may affect the gross levies for local taxing jurisdictions, SB 45/AB 50 includes additional funding for the school levy tax credit. The bill would provide an additional $125.3 million in 2025-26 and $249.7 million in 2026-27, resulting in total funding for the credit of $1,400.3 million in 2025-26 and $1,524.7 million in 2026-27. Compared to current law, this would decrease net statewide property tax levies by the amount of the additional funding for the credit in each year.

So put it together with some relatively minor adjustments, and what do we get?

Total equalized values are expected to increase faster than the statewide median home value in both 2025(26) and 2026(27). As a result, the estimated property tax on a median-valued home will increase by less than the rate of change in overall levies in both years. Under the bills, statewide net property tax levies are estimated to increase by 1.3% in 2025(26) and by 2.4% in 2026(27). In comparison, the estimated net tax bill on a median-valued home is estimated to increase by 0.1% in 2025(26) and by 1.3% in 2026(27). Net tax bills are estimated at $3,421 for 2025(26) and $3,467 for 2026(27) under SB 45/AB 50, compared to $3,600 for 2025(26) and $3,761 for 2026(27) under current law.

And given that the LFB projects the median Wisconsin home value to go up by 6.5% this year and 3.0% in 2026, this means that the tax rates would continue to fall if Governor Evers’ property tax-related plans would be adopted.

The school funding plans aren't among the items that will be removed from Gov Evers' budget by Republicans on the Joint Finance Committee later this week (click here for the list) , but the incentive program for communities to freeze their taxes is on the chopping block.

Another item on that removal list is Evers; proposal to expand the state's Homestead Credit to catch up to inflation and higher Social Security incomes. The Homestead Credit offsets property taxes, and the income limits for it have not been increased since the Republicans took power in the State Legislature in 2011. Not surprisingly, this has cut the number of Homestead Credit recipients by nearly 2/3 in the state since then, and the LFB says that the amount of Homestead Credit paid out has gone down by an estimated $87.5 million.

So if Wisconsin Republicans want to keep property taxes from rising by another $344 in the next 2 years, keep tax rates from going up, and allow more Wisconsinites to get back some of their property tax payments with the Homestead Credit, they can go along with Governor Evers’ plans in the state budget. The GOPs should vote to increase resources for our community schools while limiting the taxes that pay for those K-12 schools, and can go along with Evers’ incentive payment for local governments that don’t raise property taxes.

Increasing state funding and reducing the burden of property taxes on Wisconsinites seems like a great way to use some of the $4 billion we have in the bank, and a much better idea than using those funds to cut income taxes for the rich. If the GOPs don’t go along with limiting property taxes while maintaining investments, every Dem across the state should directly blame Republicans next Winter if/when those tax bills go out to Wisconsin households.

April jobs report - not losing yet, but the danger is far from over

While the Trump Administration has ignited panic and fears of recession due to its arbitrary, punitive and often outright stupid economic policies, we have yet to see much that indicates the underlying economy has indeed started to retract. Yes, we had 1st Quarter GDP come in at -0.3%, but that was due to a surge in imports to get ahead of Trump-imposed tariffs, a surge that caused GDP itself to go down by 5%, and inventories to rise (and add to GDP) by more than 2%.

But while we keep getting news of announced layoffs in the federal government and layoffs starting to be announced in manufacturing as a reaction to the tariffs, we still have not seen much change in US unemployment. And the April jobs report released on Friday indicated that we were still in the same steady job growth trend as Q2 2025 began.

The US economy added a stronger-than-expected 177,000 jobs in April despite swirling recession fears: cnn.it/4iGLd8V

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— CNN (@cnn.com) May 2, 2025 at 8:17 AM

The US economy added a surprisingly strong 177,000 jobs in April, a slight slowdown from March’s downwardly revised 185,000 gains, according to Bureau of Labor Statistics data released Friday. April’s gain was stronger than the average pace of monthly job growth in the prior three months.

Meanwhile, the unemployment rate was unchanged at 4.2%, a historically low level....

April’s jobs report marks another solid month of employment gains and a continuation of a historic expansion of the labor market, but that’s on the backdrop of growing recession fears. And the April jobs report released on Friday indicated that we were still in a job growth trend as Q2 2025 began. It might have downshifted from the big finish to 2024 and start of 2025, but it's in line with what we were doing a year ago, and beating the lower gains we were seeing last Spring and Summer.

As usual, it was health care leading the way in job growth, with just over 50,000 jobs added in April. That takes the overall gains for 2025 in that sector to 195,000, and over 2.1 million Health Care jobs have been added in America since January 2022.

Seems like quite the growth industry. Why would we ever do something stupid like cut billions in medical research and treatment initiatives?

The White House on Friday revealed President Trump’s budget request for fiscal 2026, which includes cutting a quarter of the discretionary funding designated to the Department of Health and Human Services (HHS)....

The 2026 proposal is seeking to cut $33.3 billion in discretionary funding for HHS, representing a 26.2 percent reduction compared to the fiscal 2025 budget.

This includes a $3.6 billion reduction in discretionary funding for the Centers for Disease Control and Prevention (CDC), an $18 billion reduction for the National Institutes of Health (NIH), a $674 million reduction for the Centers for Medicare and Medicaid Services (CMS) Program Management and a $240 million reduction for Administration for Strategic Preparedness and Response (ASPR) Hospital Preparedness Program.

The only health program that gains discretionary funding in the proposal is HHS Secretary Robert F. Kennedy Jr.’s Make America Healthy Again (MAHA) Commission, for which the budget provides $500 million.

The budget claims these funds would “allow the Secretary to tackle nutrition, physical activity, healthy lifestyles, over-reliance on medication and treatments, the effects of new technological habits, environmental impacts, and food and drug quality and safety across HHS.”

Hey, why rely on data and invest in the biggest job growth sector in America when we can rely on feelings and quack remedies we made up to grift money on heard about on the Internet?

Back on the jobs report, UW-Madison's Menzie Chinn looked into the numbers underneath the jobs report, and found some strange items that aren't going to hold up in future months.

What about taking out transportation and warehousing employment, presumably booming relative to what post-tariff levels will be, look to be on a lower trajectory. Taking into account the fact that Federal workers on leave/furloughed and taking buyouts will eventually be counted as not employed suggests a lackluster employment growth rate since January.

The low estimate from CNN is 121K, while the high estimate of Federal government workers on leave, furloughed, fired or took buyouts is 280K. Some portion of the workers are probably not counted as jobs, so the red square is a guess.

Taken literally, using the red square, underlying net job creation is on the order of 100K — rather than 155K — over the last three months.

Those transportation and warehousing jobs went up by 29,000 in April, and include the trucking, rail, and air travel and transport industries. Given the collapse in foreign travel to the US and the major falloff in traffic and orders to US ports, you'd think those job gains reverse rather quickly. And as Prof. Chinn notes, at some point soon, we will see the amount of federal government and fed funding-related layoffs hit the jobs numbers full force.

In addition, the jobs numbers of February and March were revised down by a total of 58,000, which means that with the April report, we really were only up 119,000 compared to what was reported before that report. Which makes me wonder why the Wall Street traders have been jumping back into this market in the last 2 weeks, including a 564 point gain in the DOW Jones yesterday. It's like these coked-up fools don't understand that the tariff effects are mostly yet to come, along with the slowdowns in consumer spending, higher prices and possible shortages of some products, and the piling up of inventories in some others.

I'll also note that there is a lot of post-"Liberation (from your wallet) Day" economic data to be released, and if we started to see a consumer reaction as the stock market tanked in the first half of April. Just because the jobs report that reflects how things looked 3 weeks ago didn't have a lot of people newly out of work, it doesn't mean that it's all good and clear for the rest of Q2, or for that matter, 2025.