The Scott Walker Economy

The Scott Walker Economy

The myth that Walker’s policies turned Wisconsin around still evokes emotional support among many ideological conservatives and is therefore dangerous. The more likely story is that Walker took power in the national recovery and rode it all the way up, yet trailed both the nation and nearby states in economic growth and job creation.

Reality: A Bitter Pill For Republicans To Swallow

Esteemed and world-renowned commentator Tomi Lahren rightly blasted Michelle Obama for claiming her husband, Barack Obama, was a great president.

Kidding.

Tomi Lahren is a right-wing mouthpiece with the depth of a Dixie cup.

Barack Obama, indeed, was a great president and Michelle Obama a great first lady.

Here's Tomi's tweet:

Here's Kathy Griffin's response to Tomi:

Let's take a look back at some of what was accomplished during the Obama administration. You know, as Democrats like to focus on, the facts.

Barack Obama is officially one of the most consequential presidents in American history

He signed into law a comprehensive national health insurance bill, a goal that had eluded progressive presidents for a century — and built it strong enough to withstand assaults from the Supreme Court and avoid repeal from a Republican administration. He got surprisingly tough reforms to Wall Street passed as well, not to mention a stimulus package that both blunted the recession and transformed education and energy policy. 

He's put in place the toughest climate rules in American history and signed a major international climate accord. He opened the US to Cuba for the first time in more than half a century, and reached a peaceful settlement to the nuclear standoff with Iran.

Barack's Increasing Stock

Labor Market Progress and the Employment Situation

Obama’s Top 50 Accomplishments, Revisited

The Republicans will, no doubt, continue their cognitive dissonance, but that doesn't change reality. Barack Obama's record is exemplary. He accomplished much for this country and did so with great dignity and statesmanship. 

Republicans' continual denial of reality and the accomplishments of the Obama administration are the last gasps of the Republican cabal of racists, nazis, bigots, hypocrites, sexists and frauds. The Republicans have done nothing for this country. They've done only for themselves and their donors. They are partisan cranks and abject failures as public servants. Their moans and cries denying this do not change that fact.

The Wisconsin Idea: The Possibilities Of Cooperation

The push and pull forces of development seem to be at odds across the State of Wisconsin. Rarely does it seem that cooperation or a more regional perspective takes precedence in molding economic development around the state. The Governor has his take, mayors have theirs and different private players in the different cities have theirs.

Transportation (and its routes) takes a certain shape in one locality, while a completely different strategy prevails elsewhere; with no cooperation between the two in the final product, even though agglomeration economies are there to be had.

Energy and environmental policy shares this same blinder. Rather than working together to decrease energy costs, to upgrade systems, to protect the environment, parochial self-interest prevails and we all end up less efficient and less attractive for businesses or residents.

Public policy (heavily influenced by private interests) seems to be encouraging a "me first" attitude. Which is fine for many decisions. But when transportation, the environment, education, and health care issues (which impact every citizen) are being planned, a broader metropolitan, statewide or regional perspective is imperative.

We need to retreat from the quick, flashy impulsive economic development paradigm that currently operates across the state.

PAY-TO-PLAY DEVELOPMENT

Corporate welfare is growing in Wisconsin. Scott Walker has transformed public aid to encourage private investment into a shadowy backroom shakedown. The former Commerce Department was turned into the Wisconsin Economic Development Corporation (WEDC) by Scott Walker.

The WEDC has been unaccountable and unable to track job growth or even keep good records on how much they are giving away and to whom.

Walker and Wisconsin Republicans have whole-heartedly embraced crony-capitalism. They are more than happy to mortgage the future of Wisconsin residents and the environment for flashy press releases, news conferences, and campaign contribution promises.

Giveaways to Amazon in Kenosha and the looming Foxconn welfare are the most recent examples of Scott Walker's corporate welfare bonanza. And, Amazon has their hand out again hoping to bribe their way to a few more bucks at the Wisconsin taxpayers' expense. As Henry Grabar wrote, "North American cities have debased themselves in the Amazon HQ2 reality show. The worst is yet to come."

As John C. Brown detailed:

The Foxconn project comes at a high cost with uncertain economic benefits, but clear political payoffs. The political economy of Foxconn suggests who the winners will be: the governor of the state, for whom the proposal is the cornerstone of an effort to redeem himself on a pledge of job creation; the Speaker of the House of Representatives, who can claim credit for a multi-billion infusion of investment in his district; and owners of land for the greenfield site, who will be paid sums well above the going price for farmland. For most of the rest of the state’s 2.8 million employed residents, the Foxconn deal likely misses the target. Near-term, it guarantees all residents will pay millions of net costs in higher taxes or reduced services. Promised for the longer term are jobs most likely concentrated in one of the most prosperous regions of the state and mostly inaccessible to those in the greatest need of an effective—and equitable—strategy for economic development.

Bruce Thompson concluded, "Bribing companies to relocate here doesn't work...Wisconsin’s attempts to lure companies—particularly manufactures—through subsidies have been largely ineffective and threaten to become increasingly expensive, by promoting an arms race among states...It is past time for our state’s leaders, particularly those charged with development in Wisconsin, to take advantage of increasing research data on what works and what does not."

Marc Eisen highlights better public policy pillars for economic growth:

ENVIRONMENT & DEVELOPMENT

In an odd (dis)incentive toward good environmental policy, Scott Walker is proposing a fee for Wisconsin electric and/or hybrid vehicles. A policy which would end up discouraging behavior that would be environmentally and economically positive. We would all (logically) prefer less dependence on oil, less pollution and the encouragement of green policies.

Walker's comments put him in the camp of Republicans who have argued owners of electric and hybrid vehicles should pay higher fees because they don't contribute as much toward maintaining roads. The state's 32.9-cents-per-gallon gas tax is its main source of funding, but electric vehicles don't use gas and hybrid vehicles use far less of it than standard vehicles.

It's all about the road-building cabal and the Republican's never-ending boosterism for such. The persistent march of sprawl ... wasteful, inefficient and unhealthy. Walker and Wisconsin Republicans would rather discourage clean energy (which results in cleaner air and water) and connective mass transit options; they prefer roads, interchanges and off-ramps.

Yet this continual spreading of concrete is also waterproofing the land from absorbing rain water...which is resulting in more destructive flooding.



Here, again, in numerous (environment, energy, development, transportation) instances we see the Republican position is in direct opposition to the best interests of the citizens. In fact, their position is wasteful, inefficient and harmful.

MILWAUKEE: WISCONSIN'S ECONOMIC ENGINE

Milwaukee has been on a roll. New development and redevelopment has been at a brisk pace for the past few years.

Often, surrounding such development, there are questions about funding, winners and losers, and equity in the location of these investments.

Recently there has even been talk of allowing a dedicated sales tax to fund certain programs.

Minneapolis/St. Paul and Indianapolis have been the economic stars of the Midwest over the past few decades. One of the key tools used in their ascension was the implementation of regional tax sharing. Rather than one suburb competing against another, or the city competing with a suburb, they pool tax dollars to enable an equitable growth to benefit the entire metropolitan area, rather than pitting one area against another.

As Whet Moser put it, "Building connections, both transit and political, between its municipalities while sharing the financial burden."

After speaking with Tom Weaver of the Minneapolis Metropolitan Council, Ed Brock reported :

Seven counties in the Minneapolis metropolitan area have had a tax-sharing agreement since 1971, says Tom Weaver, regional administrator for the Metropolitan Council. The point of the programs is to discourage competition for the tax base created by shared infrastructure. "All this public infrastructure is paid for by all of us, so you shouldn't have one particular community where this infrastructure just happens to be located that gets all the tax benefits from that infrastructure," Weaver says.

As the Institute for Local Self-Reliance wrote:

The drive for increased property tax revenue, and in some cases sales tax revenue, can lead local governments to make land use decisions that conflict with other planning and economic development goals. A community might reject much needed affordable housing in favor of expensive homes, for example, or forgo office buildings with high-paying jobs in favor of big box retail stores with low-wage jobs, in anticipation of generating more tax revenue with a comparatively smaller burden on public services. 

The quest for revenue-generating development creates competition among neighboring jurisdictions, which may engage in bidding wars to offer developers the biggest tax breaks or least stringent environmental regulations. From a regional perspective, providing subsidies for businesses that have already decided to locate in the area is unnecessary and even destructive. A big box store, for example, will cannibalize sales from existing local businesses and shopping centers and, for the region as a whole, there will be no net gain in economic activity. 

In metro areas, the “fiscalization of land use” or “cash box zoning,” as this problem is known, fosters sprawl and polarization. Some jurisdictions are winners; others are losers. New suburbs on the urban fringe with extensive new commercial development and relatively affluent homes will have high quality public services with a relatively low tax rate. The central city and older suburbs, with declining commercial centers and lower-income families, will be forced to impose higher tax rates and deliver poorer quality services. This disparity tends to snowball and engender a cycle of sprawl as more middle-income families flee to the suburban fringe. 

Regional tax-base sharing offers one way to alleviate this problem. Under tax-base sharing, all of the municipalities within a metropolitan area agree to share tax proceeds from new development. This eliminates inter-regional competition; facilitates other planning goals such as preserving open space or maintaining a vibrant downtown; encourages suburbs and central cities to cooperate on regional economic development goals; and leads to a more equitable distribution of tax burdens and public services. 

State legislation is generally required to implement regional tax-base sharing. 

Here again, the state seems to be unduly burdening the primary wealth generator of the state whilst also handicapping Milwaukee's ability to raise revenues. Sadly, Milwaukee and its surrounding neighbors have never had a meaningful conversation about regional taxation and our shared interests. This is the outside-the-box thinking we need from our public policies to make the state a more attractive place for living and for investment.

CONCLUSION

Until, as a state, we can get past our prejudices about what we think about the big city, a small town, a rural area, etc., we won't be able to thoughtfully and adequately address the issues that impact everyone in the state.

Clean air, clean water, efficient transportation options, clean energy and other smart public investments benefit all citizens. If this state has any practical and forward-thinking leaders, we should be able to move forward to address some of these policies and implement meaningful action plans to not only benefit the citizens of Wisconsin, but to also make Wisconsin a more attractive place for business and tourists.

The current "me first" blackmail and bribery school of development isn't working.



For Further Reading:
Ending Job Piracy, Building Regional Prosperity
Regionalism On Purpose
Regionalism For Financing Development
Multilateralising 21st Century Regionalism
Regionalism: The New Geography of Opportunity
Comprehensive Study of Regionalism
The Calculus of Coalitions
The Regional City
Reflections On Regionalism
Governing The Fragmented Metropolis
Metropolitics
A Policy Agenda For Older Suburbs In The Midwest
Chicago Metropolitics
Fiscal Regionalism Levels Playing Field
Regional Tax-Base Sharing
Progressive Policies For Raising Municipal Revenue
Regional [Metropolitan] Tax-Base Sharing
Introduction to Tax-Base Sharing
How Minneapolis Is Growing
U.S. Metro Economies
2016 Public Transportation Factbook

It's A Scandal! It's A Outrage!

Following up on some earlier thoughts about Milwaukee's (well, really the MMAC's) fascination with Oklahoma City (OKC) and their new basketball stadium, partially funded by a 1 percent sales tax.

An additional 1% on the sales tax to pay for infrastructure and other civic investments is a worthy idea, used by OKC to finance some of their new projects. (Taxpayers have already voted in favor of such a tax to support our parks.) But, is a basketball arena the first priority of such spending? Considering transportation, water, sewer, education, health care, and a host of other more immediate needs, is a sport venue the crucial link to fostering explosive growth?

What we have here is a self-interested cabal throwing everything they can think of at taxpayers hoping something finally persuades them into thinking that subsidizing a sport arena is a great investment (again).

Sports are fun, stadiums are economic catalysts, Herb Kohl is a good guy, we need the Bucks to be a "big league" city, etc. Now they're surveying the country, identifying the most recently completed basketball stadiums, and if that city or region is experiencing growth, abracadabra - the stadium is a defining element of that growth, and yet another reason why Milwaukee should get on this bandwagon.

OKC is growing ... and they just built a basketball stadium ... ergo, Milwaukee needs to get with the program if they want to experience growth. Nevermind our lack of an advanced rail system (when compared with other cities), shrinking bus routes, continual cuts to our parks, crumbling bridges and roads, declining schools, to name a few. For the majority of residents (businesses and individuals), these needs far outweigh a sport stadium.

For Further Reading: 
Are Basketball Arenas Catalysts Of Economic Development?
As Stadiums Vanish, Their Debt Lives On
Basket Case 
Buck The System 
Buck You 
City Lays Off Workers While Giving Millions To Pro Hockey Team
Economic Engine Or Albatross? 
Economic Of Sports Facilities & Their Communities
5 Cities Financing Pro Stadium Boondoggles
Growth Effects Of Sports Franchises, Stadia, And Arenas
Is There Anything A Stadium Can't Solve? 
NBA Arenas Lousy For Local Economies
Overblown Bradley Center Impacts 
Professional Sports As Catalysts For Metropolitan Economic Development
Selig Defends Taxpayer Subsidies For Stadiums
Should Cities Pay For Sports Facilities
Stadiums Don't Bolster Local Economies
Stadium Swindle
Will Herb Kohl Blackmail Milwaukee?

Bradley Center Boosters Keep Pounding That Drum

Sheehy Plans Task Force To Study New Arena

Don Walker begins the article stating, "By mid-2014, the community needs to have a good idea of what role the private and public sectors will play in the construction of a new, multipurpose arena in Milwaukee."

We hear tales about the omnipotent private sector and free market...so efficient, so perfect.

Simultaneously, we're also told how the government is wasteful, full of slackers, and just can't do anything right.

Yet (for some reason) the inefficient, know-nothing government needs to play a major role in the planning and funding of private sector activities.

Enter sport stadiums. These privately controlled initiatives are (supposedly) such game changers, job creators, catalysts, no-brainers. [They're not.] But, again, for some unexplainable reason, the inept public sector needs to invest heavily and absorb most of the risk.

Living wages, universal health care, pensions, unemployment insurance, Medicare, Social Security - that's just a bunch of welfare for moochers. But corporate welfare - such as the public sector picking up most of the tab to build teams new stadiums - is just good policy?

The question should be - why is the public sector involved, at all, in the financing of these private sector playgrounds? If Herb Kohl and the Bucks want a new stadium, go ahead and build one. But the public shouldn't have to shoulder most of the cost.

Where does such a corporate welfare policy end? This misguided corporate welfare is why we now must pay blackmail money to Harley-Davidson and Mercury Marine when they threaten to take jobs away.

If the public is now responsible for the cost of building private businesses, shouldn't the public have a greater say in the operation - the pay scales, the retirement plans, the health care options, the environmental footprint, etc.? If the public sector is a necessary partner in construction, financing, and maintaining the viability of a business, shouldn't they have a representative voice in the organization making sure the public is getting back a fair return on their investment?

For Further Reading:
Basket Case 
Buck The System
Buck You 
Economic Engine Or Albatross?
Is There Anything A Stadium Can't Solve?
Overblown Bradley Center Impacts
Stadium Swindle
Will Herb Kohl Blackmail Milwaukee?

Income Inequality

Does Income Inequality Hurt The Economy?
For Richer, For Poorer
Income Inequality & Mortality In MSAs
Income Inequality Seen Blocking Economic Growth
Grading Congress On Income Inequality
Worst State For Women To Make Money

Weekend Reading

Don't Let Business Lobbyists Kill The Post Office
Drivers Pay Secret Road Tax In $15 Billion For Car Repair
Four Fiscal Charts
Let's Just Say It: The Republicans Are The Problem
Retirement, Slipping Farther And Farther Away
Taxed By The Boss
Taxes And Employment
Tax Me, For F@%&'s Sake!
Worker Skills And Job Quality

Taxes

A Guide To Understanding Taxes In One Place
High Tax Rates Won't Slow Growth
Just How Progressive Is The U.S. Tax Code?
The Case For A Progressive Tax
There's No There There: Low Tax Rates & Economic Growth

Democrats Are Best For The Economy

Economy has grown the most when Democrats have been in power

The Gazoo Government

I happened to stumble across Turner Hall's 4th Street Forum this morning while flipping through the channels. Eric Isbister, CEO Gen Met Manufacturing, was part of a panel discussing Wisconsin's "business climate." Mr. Isbister obviously read his Republican business climate talking-points before going on the show. Government needs to get out of the way, government needs to regulate less, taxes need to be lowered...but the government should be training people and providing an educated workforce for the private sector and helping to fill positions for these private sector companies when needed.

Despite decades of evidence to the contrary, Isbister believes Repulican policies are better for small business in the long-term. Jon Perr elaborates on the failure of Republicans policies over the years, based on numerous economic indicators.

It's as if private-sector CEOs see the government as Gazoo, from the Flintstones. A magical entity that can appear only when you want and whom will make whatever you need happen and then go away.

The Fiscal Policy Institute has found, States with minimum wages above the Federal level have had faster small business and retail job growth. Raise The Minimum Wage has more on wages across the country. One would hope the U.S. would be trying to increase the wages, and thus the quality of life, for it's citizens.

Public sector compensation was a convenient scapegoat of the right-wing to blame for our recession. But, as the Center for American Progress has shown, State budget deficits are not an employee compensation problem. The Great Recession has crushed budgets all around. The busting of the bubble and subsequent lack of demand are the real culprits.

Empirical evidence has been quite clear - cutting taxes does not lead to economic, income or wage growth, nor does it lead to job creation. Lane Kenworthy has done international comparisons and found higher taxes aren't necessarily bad for the economy. Kenworthy has also discovered that the tax burden on the top 1% is lower now than it was in the 1970s. Alejandro Reuss also explains that lower tax rates do not increase government revenue, as conservatives illogically claim. The Center on Budget and Policy Priorities reports that higher state taxes bring more revenue, not more migration.

The "business climate" talking-point is merely an extension of the mythology that is trickle-down, neoliberal, supply-side economics. Another fable the conservatives can spin to claim regulation is burdensome, taxes are too high, and government is always to blame. People need to, finally, realize the right-wing has basically made this stuff up. The real world just doesn't match up with the stories Republicans are selling.

Looking at the evidence, reality does appear to have a liberal bias. It's time for all of us to stop giving equal time, equal weight or the benefit of believing their views are based on rational or reasoned analysis, to these Republicans fairytales of how the world works and what helps it work best.

Economic Engine or Albatross?

Marc Marotta, the board president for the Bradley Center, in the Milwaukee Journal Sentinel, declared the Bradley Center an economic engine.

Most of the workers are non-union, low-wage, seasonal and without benefits. Not the type of jobs most economic development aims to, nor should, create. Most of the millionaire athletes that play at the Bradley Center don't live in Milwaukee - their tax and spending dollars spillover outside Milwaukee. Often, the money spent on sporting events leaks outside the host region.

To be an economic engine, a project has to lure customers from outside the area that would not otherwise be spending money, or induce locals to spend more than they otherwise would. If people decide to go to the Bradley Center rather than a movie one night, there is no growth. This is merely a realignment of leisure spending. The majority of dollars spent at these events are simply a substitution of spending patterns (a basketball game rather than eating dinner out).

And, again, perplexingly, many whom would routinely be lumped in with the ultra-conservative, government-is-bad, no-new-taxes cabal are saying they need public dollars to continue their private entity. So...government can't do anything right, they don't know how to properly spend tax dollars...but when the government is giving millions to stadiums and arenas, they're investing wisely. Yes, screw public transportation, green energy, and modernized sewer and water systems. Sport stadiums are much more crucial to our economic future.

If extra-market forces (taxpayer subsidies) are good when it comes to stadiums, why aren't taxpayer subsidies good for public works programs, light rail, greening older buildings, or facilitating universal health care? Those subjects seem much more important to the average citizen than sporting facilities.

It's also very strange to claim the Bradley Center is an economic engine and then offer up nothing quantitative to back up that claim. But then again, actual studies looking into the effect of stadium subsidization have found that stadiums have little to minimal impact on the local economy.

For Further Reading:
Basket Case
Buck The System
Conclusions On Subsidies For Sports Franchises
Economic Impacts Of Tourism
Sports, Jobs, & Taxes
Stadiums & Convention Centers As Community Loss Leaders
The Stadium Gambit & Local Economic Development
Stadium Swindle

The Consumption Imperative

Insight from James Livingston:

• Private investment doesn't actually drive economic growth.
• Between 1900 and 2000, real gross domestic product per capita grew more than 600 percent. Meanwhile, net business investment declined 70 percent as a share of G.D.P. What's more, in 1900 almost all investment came from the private sector whereas in 2000, most investment was either from government spending or residential investment, which  means consumer spending on housing, rather than business expenditures on plants, equipment and labor.
• According to the Organization for Economic Cooperation and Development, retained corporate earnings that remain uninvested are now close to 8 percent of G.D.P., a staggering sum in view of the unemployment crisis we have.

We Have A REVENUE Problem

David Cay Johnston's latest completely discredits the Republican echo-chamber's mantra, "We have a spending problem."

• Total individual income tax receipts fell 30 percent in real terms.
• Individual income taxes came to just $2,900 per capita in 2010, down 36 percent from more than $4,500 in 2000. Total income taxes and income taxes per capita declined even though the economy grew 16 percent overall and 6 percent per capita from 2000 through 2010.
• Corporate income tax receipts fell 27 percent and declined 34 percent per capita, even though profits boomed, rising 60 percent.
• As a share of GDP, income tax revenues are at their lowest level since 1951.
• The two-year growth rate [2010-2011] is almost one-third below the 3.6 percent average annual real growth rate for the half-century from 1950 to 2000, but it is better than the measly 1.6 percent growth rate from 2001 to 2009.

Another Way

The Center for American Progress has a new report, "Restoring the link between economic growth and the earnings of workers so that the recovery re-establishes a prosperous middle class could help reverse the economic disparity in our nation and restore prosperity for all."

Supply-Side Sham

GOP Chooses Wealthy
Policies For Increasing Economic Growth (summary)
Reagan's Failed Trickle-Down

Unnecessary Economic Complications

You've got to love economic theories. Cute perfect-world scenarios wrapped up nicely in elegant algorithms. The problem is much of the assumptions are pure drivel.

I've always found that historical trend analysis seems to offer the most insight into where we've been and how to handle challenges presently and in the future. History is a wonderful guide in locating the norm (mean reversion) of whatever it is we're measuring. By just looking at how inflated the price-to-income and price-to-rent ratios had become towards the late 1990s, a few of our better economists were able to call the housing bubble back in 2002. They didn't have to dress-up the obvious in fancy mathematical models to show what was plain as day.

One particular Homo Economicus assumption I've seen popping up lately is the idea that people are averse to working more if they know it will lead them into a higher tax bracket. Of course this argument was brought out by conservatives as a warning against President Obama's plan to raise taxes on the wealthiest amongst us. [By the way, during our most robust period of growth from the late 40s to the late 60s our highest marginal tax rate varied from 90 to 70 percent.] It may be true that higher taxes lead millionaires to find more and more clever ways to avoid taxation, but regardless of the amount they are making, they always seem to be trying to avoid taxes. And, let's face it, can we really say many of these people are "working" that hard? Avoiding taxation isn't the same as doing less. This has more to do with profit and greed than some efficient decision about taxes and time worked.

This is especially true for the 85 percent of the population earning under $100,000. Most people work as much as they can for as long as they can. Which is why even though our productivity per hour has increased, so has our number of hours worked.

But I guess when our economic system is constructed toward rewarding the Haves every example displayed and the indicators used to explain what's going on will no doubt be more geared to their wealth -- the S&P, the Dow, Russell, Nasdaq, Goldman, etc. These have become the markers we all watch and live by. Yet the wealthiest control nearly all of the stock market. This misdirection is comparable to tracking sales at Neiman Marcus as a guide for the shopping patterns of average Americans.