Low wages = retail woes and store closings

January is a big month in the retail industry, as final Holiday sales figures start to come in, which can make or break a number of stores. It also gives a big indication on where the consumer stands as we go into the New Year. With that in mind, we got December's retail sales figures for this U.S., and they weren't that hot.

Retail sales ticked up 0.2% in December, according to a report from the Census Bureau. Economists were expecting sales to be flat from November.

November sales, however, were revised lower. The government said sales grew by 0.4% in November from October, down from the 0.7% it had originally reported last month.

The number was lifted by strong sales in food, clothing and accessories and gasoline -- necessities or gifts on the lower end of the price spectrum. Sales at nonstore retailers, which includes online shopping, increased by 1.4%.

But big-ticket items that are generally considered staples of the holiday season weighed on the number. Sales at electronic and appliance stores fell by 2.5%, and auto dealers saw a 1.9% drop.

Among those electronic stores suffering was Best Buy, which suffered a drop in overall Holiday-season revenue compared to last year, leading to its stock being hammered on Wall Street this week. Another retailer that struggled was J.C. Penney, who announced plans to close 33 stores nationwide, causing approximately 2,000 employees to lose their jobs in the coming months.

And the state being hit hardest by the J.C. Penney closings? Wisconsin, with 5 stores closing here, while no other state has more than 3. Why are Penney's closings hitting so hard in Wisconsin? That was a question that Sara Morrison tried to answer in this nationwide story.

J.C. Penney said the stores were "underperforming." The Chicago Tribune blamed it on the dominance of Penney "archrival" Kohl's, which is headquartered in the state.

Or perhaps Wisconsinites just like their businesses independent. The Wausau Center mall will be especially hard hit: it's also losing a Gap and a Hollister this month. Janke Book Store co-owner Jane Janke Johnson told the Wisconsin Rapids Tribune that she "gasped" when she heard the news, but "there are still some very strong, viable and unique businesses in downtown Wausau, and I feel those businesses and anchors will continue to draw customers." I have a feeling she's talking about a certain book store.

Indeed, the evidence from Wall Street does indicate that some people have outgrown the concept of going to crowded malls in general, and would rather shop online and in stand-alone stores, as the improved online sales from the Holidays would indicate. But that could be quite a rough structural change for plenty of communities that have relied on the old way of shopping as a commercial anchor, as the image of a Wausau mall with three empty stores sure isn't evidence of a vibrant economy, as well as being an eyesore that drives down property values in the area.

Or maybe there's something bigger going on. Maybe it's an indication that the average consumer doesn't have the money to buy that much these days, and that a lot of people still have yet to feel the economic growth that we keep hearing about in the Wall Street-Centric media. Take a look at the real wages and earnings information that came out this week, and you can see that the average worker isn't any better off than they were this time last year.

Real average hourly earnings for all employees fell 0.3 percent from November to December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease stems from a 0.1 percent increase in average hourly earnings being more than offset by a 0.3 percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings fell 0.5 percent over the month due to the decrease in real average hourly earnings combined with a 0.3 percent decrease in the average workweek.

Real average hourly earnings rose 0.2 percent, seasonally adjusted, from December 2012 to December 2013. The increase in real average hourly earnings, combined with a 0.3 percent decrease in the average workweek, resulted in no net change in real average weekly earnings over this period.

And in Wisconsin, we know that take home pay for public employees has been slashed with Act 10, and that Wisconsin has the lowest average manufacturing wage in the Midwest. Maybe, just maybe, demand matters, and if people aren't getting paid much, they don't spend so much. And you can bet the 300 or so J.C. Penney workers in Wisconsin that are now facing layoffs in 5 cities won't be willing to shell out any time in the near future either.

So these gloomy retail reports prove again that low wages and the resulting inequality in our two-tier society are the biggest economic problem we face. And until Main Street starts to get the same share of growth that Wall Street and Corporate CEOs are getting, the amount of growth we have will be limited. The oligarchs may like that, but it sucks for the vast majority of us in the real world.

It's a $1 billion surplus....AND a $1 billion deficit!

The big Wisconsin fiscal news of the day is that the Legislative Fiscal Bureau said that strong state revenue numbers from the last 6 months and a good economic outlook for the US meant that they were upping their revenue forecasts for the state's General Fund by nearly $912 million through the middle of 2015. The end of 2013 generally shown strong increases in revenues compared to the same time in 2012, and it explains part of the reason behind the state's surplus, even with income taxes being reduced in the 2013-14 fiscal year as the Koo-Koo tax cuts take effect..

...total general fund taxes are estimated at $14,399.9 million in 2013-14 and $15,017.2 million in 2014-15. These amounts are higher than the previous estimates by $387.7 million in the first year and $505.0 million in the second year. The biennial increase is $892.7 million, or 3.1%. The estimates for each of the three major taxes, and the cigarette tax, have been increased significantly, primarily based on strong year-to-date collections data. Smaller adjustments have been made to the estimates for the other taxes.

Individual Income Tax. State individual income tax revenues were $7,496.9 million in 2012-13 and are currently estimated at $7,410.0 million in 2013-14 and $7,800.0 million in 2014-15. Relative to the previous figures, the current estimates are higher by $115.2 million in the first year and $149.9 million in the second year. On a year-to-year basis, the current estimates reflect a decrease of 1.2% for 2013-14 and an increase of 5.3% for 2014-15. The revised estimates incorporate a number of law changes estimated to reduce revenues by approximately $350 million in 2013-14 and $385 million in 2014-15. The most significant law change is the income tax rate reductions and bracket reconfiguration enacted as part of 2013 Wisconsin Act 20. Those changes are estimated to reduce collections by $328 million in 2013-14 and $320 million in 2014-15. Act 20 contained a number of other provisions intended to simplify the state's income tax system, but they have a less significant fiscal impact.

General Sales and Use Tax. In 2012-13, state sales and use tax collections were $4,410.1 million, which was 2.8% higher than the prior year. Sales tax collections through December, 2013, are 7.9% higher than the same period in 2012-13. Accounting for law changes and a one-time tax refund paid in August of 2012, adjusted year-to-date sales tax collections are 6.8% above the same period in 2012-13. State sales and use tax revenues are currently estimated at $4,640.0 million in 2013-14 and $4,815.0 million in 2014-15, which represents increased revenue of 5.2% in the first year and 3.8% in the second year. These estimates are $142.4 million higher in the first year and $207.8 million higher in the second year than the previous estimates.

The LFB also notes that Amazon.com's agreement to collect Wisconsin sales taxes is giving an estimated boost of $28 million a year (since people weren't reporting the sales tax they should have been paying earlier). Also noted is a surprising increase of cigarette taxes, which the LFB says is due to Minnesota raising cigarette taxes past the Wisconsin rate, which encouraged Minnesotans to cross the border to get their smokes (and should be a cautionary tale about what may happen if Wisconsin has a large rise in sales taxes).

First of all, an option would be to ride things out and see what holds through the end of June 2015, and if the revenues hold out, $443 million would be banked into the state's Budget Stabilization Fund, giving solid protection against future economic donturns. Not surprisingly, with an election coming up in 9 1/2 months, the Republicans running the Legislature and living in the Governor's Mansion don't want to do that, and being Republicans, they'd rather follow in the ways of George Bush and blow this surplus revenue on tax cuts. Governor Walker even sounded like Bush today with his reasoning.

When we took office in 2011, we pledged to do away with the failed policies of the past and confront the fiscal and economic crises we faced. We made tough, but prudent, decisions over the last three years, and now our bold reforms are producing bold results for the people of Wisconsin. The additional revenue should be returned to taxpayers because it’s their money, and my administration will work with the Legislature to determine the most prudent course of action.

Actually, a decent amount of that excess money was taken from public employees and low-income Wisconsinites, but we'll let that obvious point go. What'll be interesting to watch for is to see if the proposed tax cuts that Walker will propose in the State of the State address will be income-tax based, property-tax based (through shared revenue increases and/or rebates), or some other type of reduction.

Of course, I have strong confidence that whatever Walker and the Legislature chooses to do will be the wrong thing, and not only because trickle-down economics is a total failure when it comes to creating jobs and raising living standards. It's also because other Wisconsin services and funds have serious funding needs that go past the $912 million in extra revenues.

The first involves the human services deficits that I have touched on the past. Because of increased poverty and Walker's silly pose on Obamacare, the state has to either come up with more funds for the state's low-income individuals, or subject them to serious cuts. Even the LFB mentioned the $92.6 million shortfall in Medicaid for this biennium in this revenue update, and the surplus announced today makes the decision to kick off 89,000 Wisconsin adults and children onto the Obamacare exchanges instead of spending $43 million to cover them for 3 months especially cruel.

And there are other needs that are gaping in the state, which makes this piece of Walker bragging especially dishonest.

The days of billion-dollar deficits and double digit tax increases are over, and we have led ourselves into a new era of financial responsibility and continued investment in Wisconsin’s priorities. Our state is heading in the right direction, and together, we are moving Wisconsin forward.

Well, being last in the Midwest for job growth and bottom 10 in the nation isn't exactly "moving forward" over your 3 years, Governor. And the days of billion dollar deficits are most certainly NOT over, because we have one in Transportation.

That's right, the Transportation Fund is even worse off than DOT Secretary Mark Gottlieb revealed last weekend (here's the link to my analysis of that issue). The LFB goes into that issue in the revenue estimates, and says that despite the Transportation Fund having an $84.6 million cushion for this biennium, the extra needs put them heavily in the red for the next budget.

...while the transportation fund is projected to have a positive, biennium-ending budgetary balance, the fund faces a structural imbalance heading into the 2015-17 biennium. In 2014-15 (the base year), total revenues, net of revenue bond debt service, are $11.4 million above total transportation fund expenditures. However, of the 2014-15 revenue total, $123.5 million is provided with one-time transfers from other funds ($107.5 million from the general fund and $16.0 million from the petroleum inspection fund). Without the one-time transfer revenues, base expenditures exceed base revenues by $112.0 million annually. Therefore, over the 2015-17 biennium revenues would have to grow by $224.0 million to fund expenditures at the 2014-15, base-year level.

In addition, other factors will increase current law expenditure commitments in the 2015-17 biennium. First, Act 20 provided a 4% increase in calendar year 2015 for the mass transit assistance and general transportation aid programs. Since only a portion of the 2015 aid increase, in both programs, is funded in 2014-15, an additional funding increase would be required in subsequent fiscal years to fully fund the increase. For the general transportation aid program, an additional increase of $9.0 million will be required in 2015-16 (or $18.0 million over the biennium if the 2015 aid level is continued), while in the mass transit assistance program, an additional increase of $3.2 million will be required in 2015-16 (or $6.4 million over the biennium). Assuming that the 2015 aid level is fully funded and that level is maintained, these commitments add $24.4 million to the structural imbalance.

Further, growth in transportation fund debt service, on currently-authorized bonds, will further increase 2015-17 expenditures. Typically, the full, annualized debt service on bonds authorized in one biennium is not paid until the following biennium. Based on current bond issuance assumptions, the Department of Transportation estimates that debt service on currently-authorized bonds will grow by $41.9 million in 2015-16 and by $45.9 million in 2016-17, above the 2014-15 base, for a biennial total of $87.8 million. Finally, the calculations described above do not include the impact of any other costs that the state may incur in the 2015-17 biennium in excess of the 2014-15 appropriation base. Notably, the Department of Transportation estimates that continuing work on the Zoo Interchange and Hoan Bridge projects in Milwaukee County will cost $957 million in the 2015-17 biennium. By comparison, the 2014-15 base appropriation for the southeast Wisconsin freeway megaprojects program is $86 million.

So over the two years of the biennium, the extra cost for the Milwaukee-area projects vs. this budget will be $785 million!

Let's add this up, shall we?

2015-17 start: +$84.6 million
Excess expenditures 2015-'17: -$224.0 million
Keep GTA and Transit aids level: -$24.4 million
Higher debt service due to borrowing: -$87.8 million
Extra costs for Milwaukee-area freeways: -$785.0 million

TOTAL STRUCTURAL DEFICIT FOR TRANSPORTATION FUND 2015-'17: $1,036.6 million...or $1.04 BILLION.

Hmmm, $1 billion up on one hand, but $1 billion down on the other. Sounds like we're basically even, aren't we? It also means any income or property tax cut that Walker may propose has to be made up with higher gas taxes, registration fees, or even more borrowing for Transportation in the other one.

Seems to be a straightforward solution to me- take care of our needs, move some funds from the General Fund into the Transportation Fund, and save some of the rest until we can see just what effect the Koo-Koo tax cuts will really have on revenue. Of course, this answer is far too pragmatic for this crew, so get ready for the exploding deficit come 2015!

Wisconsin pension solvency demands vigilance

Another piece of information came out this week that showed Wisconsin's public employee pension system is one that every other state can (and probably does) envy. The State of Wisconsin Investment Board (SWIB) reported strong returns for its pension fund in 2013, reflecting the booming stock market, and a continued successful strategy.

The Core Fund, the larger of the two WRS [Wisconsin Retirement System] trust funds with diversified holdings in domestic and international stocks, bonds, loans, real estate and private equity, ended the year with a preliminary return of 13.5 percent. The preliminary market value of the Core Fund on December 31, 2013, was approximately $86.5 billion. The Variable Fund, an optional, U.S. and international stock fund, ended the year with a preliminary return of 29.0 percent. The Variable Fund’s preliminary market value was approximately $7.2 billion on December 31, 2013.

SWIB’s U.S stock investments, which saw a return of 35.4 percent, had a significant effect on performance. The Variable Fund has 70 percent invested in the U.S. stock market and the remaining 30 percent of the fund is in international stocks that earned 13.9 percent. The Core Fund is 50 percent stocks split almost evenly between international and U.S. The Core Fund includes other types of investments used to help provide diversification.

Both funds surpassed their preliminary one-year benchmarks of 12.9 percent and 28.0 percent, respectively.

This keeps the pension fund at its 100% fully-funded status, and with 2013 ending, there was a second assist to the WRS fund, because of the "smoothing period." The smoothing actuarily averages funds over a 5-year period to keep the fund amounts from jumping around too much year-to-year, and causing large changes in taxpayer and employee contributions, which would create unnecessary stress and uncertainty. With the WRS fund having a 5-year smoothing period, it means the stock market crash of 2008 is finally off the books, and the 5 years of gains under President Obama are now the only stretch recognized. This should mean help for retirees, current public workers and other taxpayers going forward.

“This is great news for WRS members and all of Wisconsin,” said Robert J. Conlin, secretary of the Department of Employee Trust Funds. “These strong returns generated by SWIB, coupled with the fact that all of the losses from the 2008 financial crisis have been fully recognized, should mean a pay increase for annuitants in the spring of 2014. That’s money that will be spent in nearly every community in this state. It will also mean a reduction in contribution rates in 2015, which should help public employees and government employers throughout the state.”

The reduced contribution rates means that less taxpayer and state employee funding will be needed for 2015, helping the bottom lines for both the state budget and public employees, since they now split those contributions 50-50 (thanks to Act 10).

The concern you should have is that the full funding and reduced contributions for the pension fund makes for a juicy target for Republican officials for stealing in the name of more tax cuts. State Rep. Duey Stroebel said as much after the report came out.

“Secretary Conlin has already stated these great returns should mean increases in pension payouts. He declared, ‘That’s money that will be spent in nearly every community in this state.’ I encourage Secretary Conlin and the ETF Board to also focus on relieving the recent spike in contribution rates, not just raising annuitant payments above the core level. These markedly higher pension contribution rates to maintain solvency are paid by current public employees and by every Wisconsinite in the form of higher taxes. WRS contributions are taxed out of the private sector. That’s money that will not be spent in every community in this state.”

Apparently public employees like me who are double-paying into this system (both as an employee and taxpayer) aren't so much of a concern for the guy from the 262. Thanks, Duey.

We know that Walker had his eyes on messing with the WRS previously, before a state report in 2012 told him and everyone else in the state just how stupid an idea that was (Mike Ivey has a good rundown of this today in the Cap Times). But one thing we've learned with these guys is that they and their puppetmasters don't give up, regardless of what reality tells them. So the excess pension funds could be the real target, both to fill budget holes and offer up "tax relief" in the short term, and possibly depleting the fund to endanger it with the next economic downturn. At which time the Kochs, Bradleys, and their GOP front men can claim a "Detroit-style fiscal crisis," leading to radical, pro-corporate changes, with the premise being as false as the one which led to Act 10.

So as Gov. Walker tries to claim some sort of "upside revenue surprise" will give room for more tax cuts in one hand, take a look at the WRS pension fund that he may be reaching for with the other hand. Keep watching the WRS, cause you bet these guys would love to take some of it for them and their buddies if they can.

United Sportsmen scandal keeps dripping, and look who's feeding the funnel

It'd been a while since we heard from the United Sportsmen of Wisconsin scandal (click here for some of the backstory if you need to catch up). I feared the Journal-Sentinel had taken Jason Stein off the story because it was getting a bit too close to the (big-money) source. But Stein's back today with another update, and in a shocker, United Sportsmen still can't get their act together and be honest about where they get their money, and now they want to claim they merely misplaced a few things, and said an odd circumstance caused the delay.

Initially, the group presented itself as a nonprofit and then, when it was revealed it hadn't yet received federal nonprofit status, said it was a for-profit company. When the Journal Sentinel reported the group hadn't filed any state tax filing required for for-profit firms, United Sportsmen reversed itself again and said it was a nonprofit and had hired the law firm of Foley & Lardner to help get its state and federal filings in order.

In its unsigned letter, the group said the tax mistakes had largely been made by board member Scott Maves, who was in charge of its finances and who died in June.

"Prior to (September), the other board members of the United Sportsmen believed everything was being filed properly and had been taken care of," the letter reads.

Suuure, blame it on the dead guy.

So after lots of delay and other excuses for why they couldn't provide their information to try to get tax-exempt status, United Sportsmen have apparently finally gotten the paperwork in....AS REQUIRED BY LAW. And to the surprise of hopefully no one, they don't do a lot of the Sportsmen stuff, but they sure do a lot of politicking and collecting of money from other political groups.

The group last week turned over its filings to the newspaper as required by federal tax rules — some four months after they were first requested. The filings show that the group paid $118,400 in 2011 to an out-of-state Republican consultant, had only one donor in 2011 and ran a $29,000 deficit in 2012 just before seeking the taxpayer-funded grant for teaching state residents to hunt and fish.....

As previously reported, the political group Citizens for a Strong America Inc. gave $235,000 to United Sportsmen in 2011. The newly released filings show that single donation made up United Sportsmen's entire revenue for that year. The group spent most, but not all, of that donation and finished the year with $39,044.

The bulk of the money spent, $118,400, went to Arena Communications of Salt Lake City, Utah, a firm that helps design and send out mailings to voters. Arena has high-profile GOP clients around the country, including Walker; U.S. Rep. Paul Ryan, a Janesville Republican; the state GOP; and the committee representing Republican state senators.

United Sportsmen sent out a mailing in the 2011 state Senate recall elections.

And who is Citizens for a Strong America? The Center for Media and Democracy's Sourcewatch says they

...operate out of a UPS mail drop box, but spent $836,000 on ads in the 2011 Wisconsin Supreme Court race, and additional undisclosed amounts on state Senate recall races that year. Wisconsin Club for Growth provided CSA's entire $4.62 million operating budget in 2011; CSA's Treasurer is Valerie Johnson, wife of Wisconsin Club for Growth's RJ Johnson. CSA also funneled money to other groups active in the recall elections, as well as the controversial "United Sportsmen" group that was the beneficiary of a $500,000 taxpayer-funded "sweetheart deal" cut by the outgoing Assembly Majority Speaker.

The President of CSA is John W Connors, the "Director of Special Operations" at the Franklin Center for Government and Public Integrity, which operates Watchdog.org and Wisconsin Reporter. Connors is elsewhere listed as an employee of David Koch's Americans for Prosperity, and his consulting firm is at the same street address and building in Milwaukee, Wisconsin as AFP-Wisconsin. Connors registered CSA's web domain.

Hmmm, RJ Johnson, Watchdog.org, and Wisconsin Reporter, why have I been hearing those names recently? Oh yeah, because they're trying to stonewall John Doe Deux, which is looking into exactly this kind of money-laundering and tax evasion. PR Watch has a great rundown of how these sleaze merchants have been working together in defense of their "free speech," and illegally leaking details of the investigation.

The Wall Street Journal editorial board wrote on Friday that subpoenas issued to Citizens for a Strong America, Friends of Scott Walker, Wisconsin Manufacturers & Commerce Inc., and the Wisconsin Club for Growth were quashed by retired Appeals Judge Gregory A. Peterson, because they "do not show probable cause that the moving parties committed any violations of the campaign finance laws." (gee, wonder who leaked that info, and do you think the Murdoch Journal checked to see if this was actually what happened?)

This was the first time Citizens for a Strong America has been named as involved in the probe.

Since 2011, CMD has reported extensively on the activities of this group in the state, and revealed exclusively that the president of Citizens for a Strong America, John Connors, is “Director of Special Projects” for the Franklin Center for Government & Public Integrity/Wisconsin Reporter.

This helps explain the Franklin Center’s eighteen-part series attacking the John Doe as well as some of its unique insights into the case. The Franklin Center has failed to disclose Connors' connection to the issue and fails to regularly note that the Franklin Center's founder Eric O'Keefe (Director of Wisconsin Club for Growth) was subpoenaed in the investigation. On January 10, when Franklin Center / Wisconsin Reporter wrote about the quashed subpoenas for Citizens for a Strong America and other organizations, it did not mention its close ties to the group.

Lots of interesting timing with all of this. For the first time, we have it reported that Citizens for a Strong America (and United Sportsmen of Wisconsin as a result) was indeed part of this coordination of message and money. And there are connections feeding back to all parts of the Wisconsin Republican Party and the Koch empire from these groups, including Scott Walker's campaign. It's a remarkably incestuous group, and unlike what the Bradley Foundation's Charlie Sykes may say on the radio, John Doe Deux is far from over. In fact, it may be getting deeper, because even without subpoenas, there's still plenty of evidence to connect these groups to illegal coordination, evading tax laws (especially the right's "non-political" 501-c-3 and 501-c-4 orgs), and funneling money like the $500,000 of taxpayer funds that was steered to United Sportsmen by Koch-connected State Rep. Scott Suder, which is the act that kicked the United Sportsmen scandal into gear 5 months ago.

It's never the act itself, it's the things that lead up to the act and the cover-up that follows that always does these guys in.

Walker plans to fill Transportation Fund with...$200 registration fee?

Good to see a discussion of Transportation funding find its way into an in-depth article from the Journal-Sentinel's Patrick Marley. And while it's buried near the end of the article, I'm going to bring this bit of news up to the front.

The transportation fund will start the next two-year budget cycle with a deficit of about $750 million. That is because the governor and lawmakers relied on one-time funding — much of it borrowed — to help pay for the Zoo Interchange and the north-south portion of I-94 in southeastern Wisconsin.

About $600 million more will be needed from mid-2015 to mid-2017 to pay for those two projects alone.

When you combine it to the $725 million structural deficit we're in for the General Fund, it now means the state is facing overall budget deficits near $1.5 billion with the next budget that have to be filled. So much for the idea that the budget is "balanced" under Walker and WisGOP.

So how did we get here? A look at the LFB's rundown of the Transportation Fund shows that there is over $250 million being transferred from the General Fund and Petroleum Inspection Fund for this current budget, and that can't be counted on to continue. And of course, if this transfer from the General Fund DOES continue, then it blows up the General Fund deficit even higher, so good luck trying to do further income tax cuts when the budget already isn't balanced, Governor.

In addition, the 2013-'15 Walker/WisGOP budget borrows nearly $1 billion for transportation projects, with those debts having to be repaid in future years. $200 million of that will be on the Zoo Interchange project, and it's not like that project will go away on July 1, 2015, so that'll have to continue to be paid for. It's nice that this administration believes in paying for some infrastructure needs (who says they're not Keynesian? The Road Builders sure don't), but you do have to pay for these things in some way.

Well, how do we close this Transportation Fund deficit? Marley talked with DOT Secretary Mark Gottlieb, and the Secretary fleshed out some trial balloons that discuss how a second Walker term might finance some of these projects, including some of the ideas mentioned in the State's Transportation Finance and Policy Commission.

Lawmakers have rejected new funding sources for roads in recent years, but Gottlieb said they are becoming more aware of the need to invest in infrastructure.

"I detect much more willingness in general to discuss this issue because there's a growing recognition of what those needs are (for transportation)," he said....

Funding roads with new revenue would face steep challenges. In a recent interview, Assembly Speaker Robin Vos (R-Rochester) was cool to the idea of raising the gas tax or implementing new vehicle fees, even if they were part of a measure that reduced the overall tax burden.

Instead, Vos wants the state to start tolling on highways.

"I have consistently been a supporter of tolling," Vos said. "As people drive, they should pay. It makes perfect sense."

So the Assembly's GOP leader wants us to be like the FIBs and toll, eh? Of course, to do so, you'd need to build new lanes on the highways (aka "HOT" lanes, where you pay to get access to them), because current federal law doesn't allow a toll-free state like Wisconsin to put tolls on existing lanes (we'd have to give back a lot of federal highway funds, and because it's not passenger rail, the Walker folks won't dare do that).

So what do you think about the issue, Governor? Gottlieb is quoted in the article as saying he'll ask Walker for the TFPC's request of $6.8 billion in additional funds over the next 10 years. But the way they plan to pay for it appears to mostly involve trust in the magical thinking of most supply-siders that somehow the revenue will just be there.

Walker in the past has embraced hot lanes, but Gottlieb ruled the idea out for now because he said there are no road projects under consideration where they would be feasible. Installing the infrastructure for the tolled lanes would be costly and traffic levels would not be at a level where enough drivers would choose to use them, Gottlieb said.

Gottlieb declined to weigh in on other specific funding ideas. In its report, the commission backed raising the gas tax by 5 cents, to 37.9 cents per gallon; charging drivers 1.02 cents per mile they drive; and increasing registration fees for commercial vehicles by 73%.

The Department of Transportation will host forums around the state this spring to get the public's input on transportation revenue to help him refine his recommendations to Walker, he said.

And don't count on increased driving to raise gas tax revenues for the fund, especially when US PIRG's recent reports show the Madison and Milwaukee areas to have the 2nd and 3rd largest DECLINES in vehicle miles driven per capita.

So with gas usage not going up, the only option outside of tolling hot lanes and raising the gas tax becomes raising registration fees for vehicles to nearly $200 (using the Marley's article's estimate of $120 per typical driver to bring in the $680 million a year in revenue). Good luck selling that one, guys.

If Sec. Gottlieb and Gov. Walker's staff are searching for ideas that won't be DOA with rational voters, they are more than welcome to read what I had to say on the subject a couple of weeks ago. Not that I think they'll follow any of these suggestions (too realistic to sell on talk radio), but maybe someone whose administration doesn't want the state to go bankrupt could give it a listen.

Keep your eyes peeled on this issue, it's probably more important to our state's economic future than any ALEC-based "tax reform". And if the Burke and Vinehout campaigns are smart, they'll hammer Walker for putting this state deeper in the hole for its many transportation needs.

The swinging Kleefisches! And other GOP corruptions

Couldn't help but notice this strong bit of investigative reporting by the State Journal's Dee Hall, who discovered State Rep. Joel Kleefisch (aka the husband of Lieutenant Governor Rebecca Kleefisch) and Wisconsin GOP megadonor Robert Eisenga teaming up to try to limit the amount of child support that could be paid by rich people. And I'm sure this will shock you, but they aren't doing this for the greater good.

...the bill would require judges to lower child-support payments if they are 10 percent or more above the amount that would have been ordered using the new requirement. That requirement caps incomes subject to child-support payments at $150,000 a year.

Kleefisch’s bill also would prohibit judges from taking into account a parent’s assets in determining the level of child support.

Court documents show Eisenga, a Columbus developer, owner of American Lending Solutions and the former mayor of Columbus, was ordered to pay a minimum of $15,000 a month for his three children based on his 2010 income of $1.2 million and assets of $30 million.

The bill drafting records, which include emails, letters and handwritten notes, show Eisenga and his attorney, William Smiley of Portage, made numerous suggestions for changes to the bill aimed at helping Eisenga lower his child-support payments.

Eisenga wasn't exactly qualifying for Father of the Year before this bill either, because in May 2012, a Madison TV station reported Eisenga had put his kids on Badgercare after his divorce, despite having assets of more than $20 million. Unlike his kids' health care, Eisenga had no problems paying for politicians, as the article notes he his ex has given over $41,000 to Republicans in the last 8 years, including $3,500 to Joel Kleefisch, $7,500 to Kleefisch's wife, Lt. Gov. Rebecca Kleefisch, and $15,000 to Governor Scott Walker. This includes $5,000 that Eisenga gave to Walker last March, when he allegedly wasn't making enough to provide for his own kids' health care.

We already knew Eisenga's dedication to the Wisconsin GOP went beyond throwing money to candidates. He also was the guy who hired Walkergate criminal Kelly Rindfleisch after the heat from John Doe 1 got too hot before the 2012 recall elections. And what the "business" he and Rindfleisch were in seems as legitimate as United Sportsmen of Wisconsin.

A former aide and campaign worker for Governor Scott Walker who faces misconduct charges was affiliated with a business with ties to the largest alleged violator of the state's No-Call List.

Nevada state records show Kelly Rindfleisch as affiliated with National Lending Solutions, a business with a Columbus address, between December 2011 and March 2012.

Milwaukee County's district attorney has charged Rindfleisch with misconduct in public office for allegedly doing campaign work while on-the-job as deputy chief of staff for then-Milwaukee County executive Scott Walker. Rindfleisch was criminally charged at the same time she was listed as the business reservation holder in Nevada.

The business address for National Lending Solutions is identical to the address of American Lending Solutions, formerly First American Funding Company, owned by Michael Eisenga of Columbus.

And it's not surprising that Eisenga would choose Joel Kleefisch to try to sneak this child support bill through, because we already know J. Kleefisch can be bought, and will go to the wall for those who buy him. This was best shown in late 2011 and early 2012 when he told the Walker-appointed DNR official (and ex-state Rep.) Scott Gunderson to back off fining Herr Environmental as Herr was literally spreading shit near Oconomowoc.

Gunderson and other DNR administrators sought to iron out the problem in meetings with Herr and Herr’s state representative, Joel Kleefisch, R-Oconomowoc, who interceded on his behalf, records show. At one meeting, on Dec. 13, Herr said he spoke with [DNR Secretary Cathy] Stepp who assured him “no citations or forfeitures would be required,” according to [a DNR wastewater specialist's] notes.

Stepp, who declined several requests to be interviewed for this story, denied in an email she made such a claim to Herr. Asked if she knew Herr or had business dealings with him in the past, or if she spoke with him at all during the enforcement case, Stepp responded, “All are ‘no’ answers.”...

At a second meeting, on Dec. 20, Kleefisch — who also received $100 in campaign donations from Herr and whose wife Rebecca received $2,250 from the Herr family during her campaign for lieutenant governor — challenged Gunderson to reconsider the citations the DNR was weighing against Herr.

We know that Joel's wife Rebecca is also free to spread around affection to GOP supporters, as shown last month when she asked oligarchs in Beloit "How can we love you more?" when it came to proposing "tax reform" in Wisconsin. As the Root River Siren well put it, Becky has shown she's more than willing to trade keys with campaign contributors when her and Joel attend their little get-togethers.



And it all interconnects so well between the Kleefisches, influence-peddlers like Michael Eisenga, and GOP donors and officials. You think I was kidding when I called WisGOP one large, incestuous organized crime family? I wasn't. It makes for quite a bizarre bunch of love triangles, but they inevitably connect back to each other at some point. I just wish we had a real media outside of Dee Hall and a few others to look into those connections further.

Unemployment claims showing something lurking?

1. With today's surprisingly disappointing December jobs report (only 74,000 jobs added, after averaging just under 200K a month for 2013 up till then), it leads one to look at whether there is a slowdown afoot, or if it's merely an odd month that will be revised upward with further revisions. My instinct is the latter for now, because few other reports had indicated such a slowdown in job growth (ADP's payroll survey had come out on Wednesday and estimated private sector jobs in December went up 238,000, instead of the 87,000 the BLS had).

But let's take a look at unemployment claims, to see if they might be a tipoff for the December and January jobs numbers. Remember, both of these months often see large numbers of layoffs due to the weather growing colder (and the BLS especially noted that December's awful cold and snow played a role in this bad report), and a higher-or-lower number for these months especially can translate into big seasonally-adjusted changes in job "growth." The last couple of years we have seen year-over-year decreases in weekly jobless claims around 10% nationwide, so let's look at the 6 weeks since the week of Thanksgiving to see if that trend is changing.

Year-over-year change in unemployment claims, U.S.
Week ending Nov. 30 -12.17%
Week ending Dec. 7 -7.59%
Week ending Dec. 14 -3.52%
Week ending Dec. 21 +4.13%
Week ending Dec. 28 -1.14%
Week ending Jan. 4 -0.83%

So it's generally less than a 10% drop. But it's also still decreasing, and January 2013 was a decent month for job growth, with a seasonally-adjusted 164,000 private sector jobs added, and 148,000 overall. So this small sample size indicates that there may be slightly less job growth in January 2014 than in the same month last year, but nothing that would indicate the economy is going into recession or anything like that.

And scaling it down to Wisconsin, we're especially vulnerable to higher unemployment claims this time of year, not only because we get colder than most places, but also because Holiday-related jobs in retail and other sectors go away. It's why unemployment claims in Wisconsin have a typical cycle of peaking in the first week after New Year's, staying high through Winter, dropping through the Summer and Fall, and then going back up as the weather cools.

Wisconsin new unemployment claims by week, 2010-2013



As you can see in that graph, we ended 2013 with new unemployment claims around the same levels as we saw in December 2012, a month that saw a moderate gain of 2,400 jobs overall, and 3,300 in the private sector. The cyclical nature of unemployment claims is what makes the recent delays and lack of processing of unemployment claims at the Department of Workforce Development especially bad. Here's an example of that screw-up.

Ron Youngbluth of Pewaukee said he started calling to see whether he'd be eligible for unemployment after he was laid off from his part-time job as an optometrist in Brookfield on Dec. 6. He estimated he called up to two dozen times in the past month, sometimes several times a day. He got through to the automated system, but never to a person.

"I called them the past at least three weeks, I don't know how many times. I couldn't get ahold of anyone," he told the Public Investigator.

"Sometimes, I got a busy signal. Sometimes, they ask for information and I put my Social Security number in, my pin number. They said, 'We're experiencing peak volumes. We'll attempt to transfer you to an agent.' They said 'all our agents are busy with others. Call back some other time.'...

John Dipko, a spokesman for the Department of Workforce Development, said the department is working to handle the high call volume.

"We have additional staff working the phone lines and putting in extra hours to take calls during this temporary high-volume season, and we expect the situation will improve, especially now that the holiday-related office closures are behind us," he said in an email.

Well, apparently not enough additional staff. And given that more people are laid off this time of year, you'd think they wouldn't have a problem finding people, even in 4.0% unemployment Dane County.

What could be worrying looking ahead is that this was the first year in the last 4 that Wisconsin didn't see a sizable year-over-year drop in unemployment claims, which explains the upward swing past 0% in this graph.

Year-over-year change in unemployment claims, 2009-2013



The times in the last 2 years when year-over-year claims have spiked over 0% have generally coincided with months and time periods that have flat job growth or job losses (such as the Fall of 2012 and March and April of 2013). So if we start 2014 with the lines continuing above 0%, then it becomes likely that Governor Walker slips further and further behind the 250,000 goal of job growth that was made in 2010. It also means the Walker job gap will likely grow, as even with this low December report, November was revised up by 38,000 jobs, which means the private sector Walker jobs gap is now back over 50,000 as of November.



Suppose the only positive in today's bad jobs report if you're Scott Walker is that perhaps the jobs gap you created in Wisconsin will close some in December, even if Wisconsin's own gains are tiny. But it's still a long way to get back toward the U.S. pace for Walker's term, and if the unemployment claim numbers are an indication, it won't be closing that much in the next couple of months, at least.