This is a nice followup to this morning’s post about why tax and spending limits need to be in the state Constitution.
WalletHub reports the 10 states (plus the District of Columbia) with the lowest per-person state and local taxes, and the 10 states with the highest state and local taxes.
And where is Wisconsin?
46
Wisconsin
$8975
29%
39
Number 46 from the bottom in terms of total taxes ($8,975), and number 39 in “adjusted rank (based on Cost of Living Index).” Put another way, Wisconsin has either the sixth or 13th highest taxes in the U.S.
The map that accompanies this news …
… does not demonstrate the dominant university’s athletic team colors, a preference for a color of peppers, or anything else besides the fact that Wisconsin remains a tax hell. Nearly the worst in the Midwest, in fact, exceeded only by Illinois and Nebraska if you consider Nebraska to be in the Midwest.
I suppose some would argue we should feel better about the 39th ranking given that we supposedly have a lower cost of living than other states. (Based on this year’s electric and heating bills, that’s incorrect anyway.) More importantly, though, the states in the worse levels of tax hell — New York, California, Nebraska, Connecticut and Illinois — are states with, except possibly Nebraska, higher incomes than Wisconsin. So Wisconsinites have less money with which to pay Govzilla every April 15.
WalletHub has additional bad news:
Economic mobility – that is, our ability to climb the proverbial ladder – has a strong correlation to where we live. Children from Seattle whose families are in the 25th percentile in terms of income, for example, end up at roughly the same economic stature as kids from the median family in Atlanta.
Why? State and local taxes. At least that’s what a group of Harvard and Berkeley researchers collaborating on The Equality of Opportunity Project have to say. They “found a significant correlation between both measures of mobility and local tax rates.”
That means, if you buy their conclusions, that Wisconsinites are prevented from making more money because of our higher state and local taxes. Wisconsin has few rich people of the Forbes 400 variety, and as you know from this blog, Wisconsin has trailed the national average in per-capita personal income growth since the late 1970s.
The fact that Wisconsin currently has a Republican governor and Legislature does not make Wisconsin a red state. This is, remember, the state that has voted for Democrats for president since Michael Dukakis. Be that as it may, through Govs. Lee Dreyfus, Tony Earl, Tommy Thompson, Scott McCallum, James Doyle and Scott Walker, and through every possible combination of party control of the Legislature, Wisconsin was and is a tax hell. And the tax cuts Walker is about to sign into law won’t change that either.
New research from the Heritage Foundation shows that proposed regulations, set to take hold January 2015, would hit Wisconsin’s manufacturing jobs the hardest.
If the new regulations go into effect, Wisconsin would stand to lose 11,702 manufacturing jobs. The state’s congressional districts would lose 1,463 jobs on average by 2023, the largest average in the nation. The sixth congressional district would lose an estimated 2,000 jobs.
The EPA regulations will limit the amount of carbon dioxide and other greenhouse gas (GHG) emissions for future power plants and will later create new regulations for existing plants.
Newly constructed power plants run by coal will have a limit of 1,100 pounds of CO2 per megawatt hour, a significant cut to the average plant that emits nearly 1,800 CO2 per megawatt hour.
New standards for existing power plants are expected to be released by June of this year.
Manufacturing will be hit particularly hard for several reasons.
As coal production is reduced, they must find a way to make up for lost supply.
Fuel switching to natural gas to make up for lost coal will increase the gas prices 28 percent by 2030.
These regulations will force new plants to install carbon capture and sequestration (CCS) technology to turn coal into gas, creating a huge cost burden on the industry. …
Here is a breakdown of the total jobs that would be lost in each state:
Wisconsin has eight Congressional districts, three of them represented by Democrats. Broken down by Congressional district, Wisconsin goes from 10th to …
… number one. That’s more than 4,000 jobs that will be lost in Congressional districts represented by Democrats. Milwaukee has, for now, a lot of manufacturing. Even Madison and La Crosse still have manufacturers.
The Democratic candidate for state treasurer wants the state to create, yes, its own bank:
Madison attorney and former Green County District Attorney, Dave Leeper, registered his campaign for the office of Wisconsin State Treasurer on January 21, 2014. Leeper is the son of former State Representative Midge Miller, and the brother of State Senator Mark Miller. …
Leeper points out North Dakota has had a state bank since 1919. The North Dakota Bank makes use of the credit and the resources of the state to provide banking services for banks, communities, businesses, and North Dakota residents. “I will work with the legislature and the governor to create a State of Wisconsin Bank that meets the needs of Wisconsin communities, businesses, and individuals,” Leeper explained.
“I’ve been working to improve our communities for over 30 years, yet the problems we face seem to grow larger and more urgent,” said Leeper. “Income and wealth inequality are growing. I know we can’t solve the problems we face until we regain control over our own resources. The time is right for Wisconsin to take control of its financial future.”
Yes, the problems of the state require state government to compete with business, specifically banks and credit unions. (Given the animus banks have toward credit unions because the former pays corporate income taxes and latter doesn’t, on this issue they might actually be in agreement.) That approach has worked so well in the Obama administration and was just swell during the Doyle administration.
(Here’s some irony for you: Leeper apparently was a district attorney. So was Doyle, who couldn’t be bothered to prosecute bad checks when he was Dane County district attorney. No media apparently reported this when he was running for attorney general, and then he became governor Deficit Doyle, the very model of bad government finance.)
It’s one thing to have the Federal Reserve Bank. I’m not a fan, though I’m not sure what should replace it. It is another thing entirely to have politicians and bureaucrats controlling a state bank, competing against investor-owned banks (most of which are nowhere near the size of, say, Chase) or member-owned credit unions, which are also businesses required to make a profit. The Soviet Union and its captive countries controlled their own “banking system” too.
Given that the chances of the Democratic Party getting control of even one house of the Legislature aren’t very good, I suppose this is a freebie for Leeper. He can channel his inner Fighting Bob, and Democrats who get elected and reelected in 2014, many of whom get campaign contributions from banking-related political action committees, can worry about having to actually vote on this turkey.
WKOW-TV in Madison reports the remarkable statement from Democratic gubernatorial candidate Mary Burke:
“If you look at, overall, all the money that state and local governments bring in from the people of Wisconsin, we’re more in the middle,” Burke told a gathering of Madison’s East Side Progressives on Sunday night.
Burke was responding to a question from someone at the meeting who asked how she planned to win over more conservative, anti-tax voters.
“In terms of a state, we’re not a high tax and fee state,” she said.
Collin Roth begs to differ, and unlike Burke, he has statistics to prove his point:
Not a high tax and fee state? That quote will haunt Mary Burke throughout 2014.
First, Burke avoided taking a position on the $912 million revenue surge, the number one issue facing state government. Deferring on this question is a clear signal that Burke’s strategists haven’t yet crafted a way to spend the money.
Second and more important, Mary Burke doesn’t think Wisconsin is a “high tax and fee state.”
Really?
Some statistics from the Tax Foundation suggest otherwise.
Wisconsin’s top income tax rate of 7.75% ranks 10th highest nationally.
Wisconsin’s 2014 Business Tax Climate was ranked 43rd nationally.
Wisconsin’s Tax Freedom Day is April 20, 11th latest nationally.
The most recent rankings have Wisconsin’s overall property tax collections per capita rank 12th highest nationally.
But then again, Burke’s experience in the Doyle administration would suggest a different definition of “high taxes.” …
Wisconsin has a long way to go in order to lower the tax burden and reform the tax structure – but at least Gov. Walker and the legislature are making strong attempts to lower taxes each year. In fact, Rep. Dale Kooyenga has made it his mission to get Wisconsin out of the bottom ten of the Tax Foundation’s rankings.
Mary Burke on the other hand doesn’t think Wisconsin’s taxes are very high.
Her words, not mine.
Gov. James Doyle, you’ll recall, promised to not raise taxes, and then did. The fallout from that continues to hamper the state’s economy today.
But Burke is not the only Wisconsinite who feels this way. Media Trackers reports:
A prominent liberal activist in Wisconsin is claiming that if Governor Scott Walker enacts yet another tax cut, it will be a misuse of “public office and public dollars.” Robert Kraig, the executive director of Citizen Action of Wisconsin, a prominent cheerleading organization for leftwing causes and policies such as ObamaCare, fumed in an interview late last week that another tax cut in Wisconsin would be a form of corruption.
“[I]ts not corruption at the level of Chris Christie, but it is an example of misusing public office and public dollars for personal, political gain rather than the public good,” Kraig said in his organization’s weekly podcast. …
Kraig then charged that by rolling out tax reform plan after tax reform plan, Governor Walker is just trying to boost his political profile headed into a re-election battle. The tax cut proposals amount to, “using the state’s resources for political gain,” he said. Walker is “just staging this stuff out so he can be in the headlines giving away money.” …
While Kraig’s accusation that tax cuts amount to illegal activity are pretty brazen, the voluble liberal policy wonk has a history of engaging in hyperbole to get his point across. In February of 2013 he asserted that if Walker didn’t expand Medicaid according to ObamaCare suggestions, people in Wisconsin would die.
“If Governor Walker turns down billions in federal money for BadgerCare, there is no doubt that many Wisconsinites will die as a consequence.”
Amazingly, his antics haven’t seemed to cost him his credibility with some media outlets who still seek him out for comment.
In the midst of tax reform discussions, the MacIver Institute makes an interesting contribution:
The idea that the government can help stimulate economic growth and create new jobs sounds like a productive idea on the surface. Using taxpayer funds to invest in companies that create jobs is a good thing, right?
Not so much, according to the data compiled by the John K. MacIver Institute for Public Policy. Specific tax credits, subsidies, grants and other incentives only help the few. They may even harm economic development – the exact opposite of what the incentives strive for. …
“If local subsidies worked as advertised, we’d expect to see greater economic growth in those states that give away more subsidies. But simple analysis of [Louise] Story’s data suggests that, if anything, there is a negative relationship between per capita subsidies and economic growth,” Mitchell wrote for Mercatus Center.
“I also ran a series of econometric tests, sometimes controlling for other factors (regional effects, the initial size of state economies, and economic freedom) and sometimes not. In every test I ran, per capita subsidies were negatively associated with state economic growth and often the relationship was statistically significant (I should note that the Mercatus measure of economic freedom was always positively and statistically significantly related to growth).”
Many studies have shown the economic value of having a lower tax burden. Businesses and workers pay less to the government, so they have more to spend and invest in the economy. That, however, is the argument for lower taxes in general.
Tax credits, instead, create an unfair playing field. Only businesses that qualify for the tax credit are rewarded, which may give them an advantage over other firms in the market.
“Even though credits lower the tax burden of a particular tax filer, in most cases we see them as poor tax policy,” Drenkard told the commission. “Some businesses might get the benefit of a preference, but other businesses that aren’t engaging in whatever activity is deemed “favorable” are stuck paying the full sticker rate of the tax.”
Typically these credits favor large firms with political connections. …
Boeing plans to begin production on their new 777X plane in 2017, and more than a dozen states rushed to offer incentives to the plane manufacturer, according to the Journal Sentinel. Wisconsin is one of the states that planned to make an offer.
As stated above, Washington already approved $9 billion in tax credits. But, Boeing still considered leaving the state until the labor union also approved a new contract that Boeing agreed to.
Experts argue that offering these massive incentives are actually an admission of failure. A state with a great business climate should be able to attract business without the need for extra incentives. If tax credits or other incentives are needed, the state is admitting it needs to work on making the climate better for all businesses.
A commonly used phrase among economists is, “the best economic development program is to not need one.”
The key to a productive economy is for producers and consumers to find an equilibrium where supply and demand meet each other at a certain price and quantity. When businesses sell a product or service in a fair market that is typically what happens. …
Government incentives, however, change the environment between producers and consumers. Instead of providing a product or service that consumers demand, businesses will provide whatever they are incentivized to provide. In short, a company will expend resources to gain a government incentive, rather than produce what the consumer actually wants.
This is known as “rent seeking.” Rent seeking is socially wasteful and in the end will hurt consumers with higher prices and less competition. …
While it may seem like a good idea to provide incentives to businesses in a state, the data shows that it is anything but. The government picks winners and losers, creates an unstable economy, and businesses will eventually make whatever gets them the best incentive from the government.
It is simple. Low (or non-existent) taxes that are more equitable across the board and fewer “winners and losers” incentives will lead to greater prosperity within a state. After all, the best economic development program is to not need one.
Leaving aside for the moment the fact that business climate, as readers know, is based on additional issues besides taxes, improving the business tax climate (in which Wisconsin ranks an abysmal 43rd according to the Tax Foundation) requires a few things.
The corporate income tax, which applies to subchapter-C corporations, needs to be eliminated, as does the personal property tax. The only property taxes businesses should pay should be for building-related services (police, fire, EMS, etc.), not for the buildings’ contents. The good news is that neither of those taxes contributes much to state finances, so eliminating them would have a relatively small impact.
The tax that needs reducing is the personal income tax, which is 10th highest in the U.S. Owners of sole proprietorships, partnerships and subchapter-S corporations don’t pay corporate income tax; they pay personal income tax on their companies’ profits. This year, income over $14,540 for a married couple filing jointly is taxed at 5.84 percent. That is a higher rate than Illinois’ income tax rate for any amount of income, even after Illinois’ 67-percent income tax increase.
In the case of the two previous paragraphs, the incorrect response is to reduce taxes by increasing other taxes. The income tax and the sales tax were created and, in the latter case, increased twice to provide property tax relief. Guess what the most unpopular tax still is? The property tax. Raising taxes to reduce another tax only increases taxes.
WPR played, at my suggestion, some appropriate music …
… though they could have played this too (which I didn’t think of until after the show):
Listeners got the chance to voice their opinions, and they were overwhelmingly opposed. That could be a manifestation of WPR’s overwhelmingly, reflexively anti-conservative demographics. It also could be evidence that what I’ve always heard from employers about the work ethic of the Wisconsin workforce isn’t true anymore. It also could be a sign of the dysfunctional relationship between Wisconsin employers and employees. It could also be a sign of our increasingly stressful times. (Which aren’t going to get any better, by the way.)
As readers know, at StevePrestegard.com something is either right or wrong based on its merits, not on whether or not it’s popular. Since I entered the full-time work world a quarter-century ago, I have never had a job that was limited to 40 hours a week, five non-holiday weekdays a week. In the news business, news has to be covered whenever it takes place.
I don’t think I have a work ethic superior to anyone else’s. But what I learned from my parents and others I’ve worked with is that work takes as long as it takes to be done well. The comment from a minister from Ladysmith reminded me that God wants and expects us to be productive. That’s evident from Genesis through at least Paul’s letters to the Thessalonians.
The argument I made on the show for passage of Grothman’s law is flexibility for employers. In today’s business world if a customer wants a product the customer needs it now, not next month or next week. Manufacturers do not keep parts in stock anymore, because inventory costs money. As for retail businesses, many are open seven days a week, particularly in tourist areas. If a business has a customer, it has to serve that customer whenever the customer wants to be served if that business wants to stay in business. (Unless you’re OK with waiting until Monday to have the furnace that died on Saturday fixed.)
None of those who opined during the show seemed to be employers. There remains a remarkable amount of ignorance about how business works, and perhaps that’s employers’ fault for not telling their employees how their businesses, their areas of business and the economy work. So here are some potentially harsh truths:
Businesses exist to provide a product or service to their customers. Businesses do not exist to employ people.
The number one responsibility of a business is to make a profit for its owners. When a business doesn’t make profits, or enough profits, doesn’t take place, customers don’t get served, and therefore employees don’t get paid.
An employee is employed to serve the business’ customers. In an at-will-employment state such as Wisconsin, you are there as long as your employer wants you there, and no longer.
An employee costs probably 50 percent more than his or her gross pay to the business. That’s because of the cost of various government-mandated benefits, as well as benefits employers provide to attract and retain employees.
Since a lot of my work has involved covering business, I’ve met a lot of business owners over the years. I’ve written before that, to paraphrase William F. Buckley’s comparison of the Harvard University faculty and the first 2,000 names in the Boston telephone book, I’d rather be governed by the members of any chamber of commerce than any elective governing body. Business people earn every cent they get, because every cent they get comes from a customer who decided that that business’ product or service is worth their money, more so than the potential alternatives.
Business owners work nights, and weekends, and holidays already. They get virtually no respect in this state from elected officials of a certain party whose name starts with D, and little respect from the allegedly smart people who get paychecks from a unit of government. The contribution of any business to its area far outweighs the taxes it pays, which is why I argue here that the correct level of business taxation is zero.
In addition to the general anti-business rhetoric listeners heard (and can read on Cardin’s Facebook page) today, I always find amusing how people ignorant of business feel free to tell a business how it should be run. The opposing view this morning said that businesses should hire more people, ignoring the fact that it costs less for a business to give its existing employees more work than to hire more employees. It’s unclear to me why a business should hire more people if there’s a reasonable chance that those people will have to be laid off if business dries up. (That makes me wonder how his union, which by the way is a business too, is run.) People are employed based on the business’ needs — businesses do not exist to employ people.
There was both an on-the-air comment and an online comment that some people work seven days a week already, so there needs to be no law to approve that practice. That’s a nicely small-L libertarian view that doesn’t mesh with reality in this very unlibertarian state (other than in alcohol issues) of ours. In this state, based on experience, it’s not that anything not specifically prohibited is allowed; it’s the other way around — anything not specifically allowed is prohibited. I suspect some business owners have inadvertently found that out.
If you believe the callers I heard, you would assume that every workplace is a 19th-century sweatshop, or would be if those evil businesses had their way. I work in a field that by reputation is the pits in terms of workplace environment. (Journalism, it is said, puts the word “fun” in “dysfunction.”) I wouldn’t say that about business, but then again I’ve dealt with more of them than apparently WPR listeners have.
It may be that some negative opinions of business come from people dissatisfied with their employers. (I always wonder where reflexive anti-business attitudes come from — someone’s own experience, the experience of someone that person knows, or what they claim to know based on what they’ve read.) Some of them may be dissatisfied with their work as a result of poor personal decisions they’ve made in their past in such areas as their own education — failing to make themselves more valuable in the workplace through education and training. I’m not unsympathetic to that, but I’m not sure what can be done about that, and government cannot undo, for instance, getting stuck in bad jobs because you had to go to work because you had a family younger than you should have.
The one comment after the show that brought up an original point was what happens to an employee of two businesses when employer A wants that person to work overtime when that person is supposed to be at employer B. I don’t have a good answer for that, and I suspect that, thanks to the wonderful job the federal government and current presidential administration is doing with the economy, that is likely be an increasingly prevalent dilemma.
The fact is that in a healthy economy (which this is not), employees always have the last word, because they can choose to work somewhere, or not. The evidence is the roaring 1990s, where minimum-wage jobs paid more than minimum wage because that’s what it took for employers to hire and keep employees. That’s obviously not happening now, which is why the state needs to be actively pro-business. I’ve argued here before that state policy is less anti-business, but it’s really not pro-business when bureaucrats remain free to enact regulations actively hostile to business and businesses and everyone else are all (still) taxed too much.
I will be on Wisconsin Public Radio’s Joy Cardin show today at 7 a.m. (Yes, I know today is not Friday.)
Wisconsin Public Radio’s Ideas Network can be heard on WHA (970 AM) in Madison, WLBL (930 AM) in Auburndale, WHID (88.1 FM) in Green Bay, WHWC (88.3 FM) in Menomonie, WRFW (88.7 FM) in River Falls, WEPS (88.9 FM) in Elgin, Ill., WHAA (89.1 FM) in Adams, WHBM (90.3 FM) in Park Falls, WHLA (90.3 FM) in La Crosse, WRST (90.3 FM) in Oshkosh, WHAD (90.7 FM) in Delafield, W215AQ (90.9 FM) in Middleton, KUWS (91.3 FM) in Superior, WHHI (91.3 FM) in Highland, WSHS (91.7 FM) in Sheboygan, WHDI (91.9 FM) in Sister Bay, WLBL (91.9 FM) in Wausau, W275AF (102.9 FM) in Ashland, W300BM (107.9 FM) in Madison, and of course online at www.wpr.org.
The subject today is a proposed state law to allow employees to work seven consecutive days. How do I feel about this? Tune in or log on and find out.
1) a woman, 2) who is highly educated, 3) who has a business background and is literally a job creator, 4) who has deep roots in Wisconsin and 5) is not a sitting politician.
You would think a person meeting the third and fifth of those criteria would not sound like the fifth criterion. But when the Milwaukee Journal Sentinel interviewed Burke for the first time, they got …
The Democratic challenger to Gov. Scott Walker said she would seek to avoid raising state or local taxes but stopped short of pledging no increases if elected.
In an interview Monday with the Milwaukee Journal Sentinel, former Trek Bicycle Corp. executive and state commerce secretary Mary Burke also said she had voted against a 2006 constitutional amendment that prohibited gay marriage and civil unions and supported allowing gay and lesbian couples to marry.
Burke, a Madison school board member, also said she would oppose making Wisconsin a right-to-work state but declined to weigh in on whether she would support a unionizing effort at the Waterloo bicycle manufacturer that was founded by her father.
On big questions such as taxes, Burke remained careful with her answers and avoided big pledges, saying simply she wanted government to be accountable and live within its means.
“I’d want to look at the totality. We collect revenue in a lot of different ways. I certainly wouldn’t look at raising (taxes), but I’d also want to look at it in the context of our finances, our budgets …” Burke said.
In other answers, Burke said she opposed a law passed by Republicans requiring voters to show a photo ID at their polling place and said she was skeptical of an effort to change the state’s American Indian mascot law for schools. …
In the interview, Burke made clear she opposed a so-called right-to-work law, which would prohibit requirements that workers in private companies pay labor dues even if they don’t belong to a union.
“The laws, as they stand on the books, work for Wisconsin,” Burke said.
Walker and GOP lawmakers passed a law in March 2011 that repeals most collective bargaining for most public employees, effectively putting right to work in place for government workers.
Burke declined to weigh in on whether Trek workers should be represented by a union.
“The issues regarding whether it’s Trek or any other company, I think, those lay with those specific companies,” she said. …
She said she wanted to better Walker’s progress on the state’s economy but offered relatively few specifics. To boost lagging rates of entrepreneurship in Wisconsin, Burke said the state should look at proven strategies for encouraging and supporting new businesses such as start-up accelerators like gener8tor in Madison.
Walker’s predecessor, Gov. James Doyle, famously said, “We should not, we must not, and I will not raise taxes.” That was a pledge (if you ignore fee increases) kept until Democrats took over both houses of the Legislature after the 2008 elections and Doyle decided he wasn’t going to run for reelection, and then all tax hell broke loose. “Raising revenue” is a buzzphrase for “tax increase” unless you can show how our overtaxed voters in Wisconsin won’t have more money coming out of their pockets for Govzilla.
Burke takes a minority (position) on voter ID, apparently because the Democrats think voter fraud is OK when it benefits them. I’d like to hear her explanation for why such schools as Mukwonago (Indians), Potosi (Chieftains), Belmont (Braves), and any school with “Warriors” as its nickname should knuckle under to the professionally offended or the Self-Esteem Caucus and spend taxpayer money to rid themselves of mascots and logos those school districts chose because of their positive, not negative, qualities.
Burke will have to figure out how to explain her role in Trek Bicycles and how that can translate to improving the state’s business climate. (For that matter, she’ll have to convince people in her own party that business climate matters.) She also will have to explain what she learned from being Doyle’s secretary of commerce and how to, again, improve the state’s business climate. (Hint: “Start-up generators” are necessary but not sufficient.) I’m not even sure how seriously one should take Burke’s comment about (the nonexistent) unions at Trek, given that her party’s official position is that government workers should be required to join and pay dues to unions. (Eliminating that was what Act 10 was about, but Burke, of course, opposes Act 10.)
And Burke really needs to do better at interviews than here. Someone seems to be telling Burke that all she needs to do is fork out millions of her dollars and be Not Scott Walker, and she’ll win. That’s not sufficient either. Challengers always have to convince voters not only to not vote for the incumbent, but to vote for the challenger.
“The Affordable Care Act is not just a website,” President Obama said at the Rose Garden today. “It’s much more.” It’s like a chamois, it’s like a towel, it’s like a sponge.
Another way of putting it is that ObamaCare isn’t just a technical failure. And it isn’t just an economically unsustainable scheme. Now it’s a rhetorical disaster too. Even by the standards of Obama speeches it was terrible. It was so bad, it was the ObamaCare website of political oratory. …
Much of the speech was devoted to an enumeration of various ObamaCare provisions that are thought to appeal to Obama voters and that apply to insurance plans outside the failing exchanges–the mandate that parents’ insurance cover “children” in their mid-20s, the “free” birth control and mammograms and so forth. This was delivered with Obama’s trademark condescension: “You may not know it, but you’re already benefiting from these provisions in the law. . . . You may not have noticed them, but you’ve got them and they’re not going anywhere and they’re not dependent on a website.”
Believe it or not, that was as good as it got. Obama actually tried to make a distinction between ObamaCare and what he variously called its “product” and its “essence”:
So the fact is, the product of the Affordable Care Act for people without health insurance is quality health insurance that’s affordable. And that product is working. It’s really good. And it turns out there’s a massive demand for it. So far, the national website, healthcare.gov, has been visited nearly 20 million times. . . .
The point is the essence of the law, the health insurance that’s available to people, is working just fine. In some cases, actually, it’s exceeding expectations.
This is nonsensical for multiple reasons. One is a point the president made himself, in the course of trying to reassure listeners there’s plenty of time to sign up: “Keep in mind the insurance doesn’t start until Jan. 1.” It’s Vaporcare!
Perhaps a physical product can be said to be “working” 10 weeks before delivery if it is functional in the corporate lab. But insurance–which ObamaCare redefines as a prepaid benefit plan–is a financial instrument. In order for it to “work,” the marketplace as a whole has to function so that policyholders are able to collect the promised benefits. Technical functionality is a necessary condition for the “product” to “work.”
But not a sufficient one. Obama boasted: “Every day people who were stuck with sky-high premiums because of pre-existing conditions are getting affordable insurance for the first time, or finding . . . that they’re saving a lot of money. Every day women are finally buying coverage that doesn’t charge them higher premiums than men for the same care.”
If Obama is accurately describing the typical ObamaCare enrollee, then the program’s economic death spiral is under way. ObamaCare can work only if people without pre-existing conditions prove willing to pay jacked-up premiums and, since he mentioned it, if men are willing to pick up the tab for those lowered (or less steeply raised) premiums for women.
As to the technical failures, Obama gave no reason to think they will soon be solved. “I called on the contractor to get its A-team here and give us 150%,” Saturday’s The Wall Street Journal quoted Health and Human Services Secretary Kathleen Sebelius as saying in an interview. Obama’s speech was equally platitudinous. He said “we’re well into a tech surge to fix the problem,” cleverly appropriating a Bush administration slogan that referred to–ulp!–Iraq.
At least the Iraq surge is generally understood to have been a success. Over the weekend an anonymous HHS blog post alluded to an even greater wartime failure: “Our team is bringing in some of the best and brightest from both inside and outside government.” Alas, Robert McNamara is still dead.
It’s telling, too, that Obama–even though he said “there’s no excuse for the problems”–offered as an excuse that the site was swamped by overwhelming demand. That’s the “Good Glitches” argument, offered Oct. 1 by former Enron adviser Paul Krugman. Is the president no more knowledgeable about ObamaCare’s failures today than Krugman was 20 days ago? Or is he concealing what he knows to forestall the political consequences of an honest accounting? It’s hard to know which of these possibilities indicates a greater calamity.
A Politico report last week suggests concealment was the prelaunch modus operandi:
Facing such intense opposition from congressional Republicans, the administration was in a bunker mentality as it built the enrollment system, one former administration official said. Officials feared that if they called on outsiders to help with the technical details of how to run a commerce website, those companies could be subpoenaed by Hill Republicans, the former aide said. So the task fell to trusted campaign tech experts.
The Daily Beast’s Andrew Romano has a telling interview with Michael Slaby, who served as the 2012 campaign’s “chief innovation and integration officer”:
What if the real lesson of HealthCare.gov is that the U.S. government, unlike Obama’s campaign team, is set up to make boneheaded websites no matter how hard it tries?
That, in effect, is what Slaby tells me when I call him and ask him to respond to the folks who have been contrasting the campaign’s successes with the White House’s failures. “I think a lot of the challenge here with the ‘they ran such a tech-savvy campaign, why are the [sic] having problems building a website?’ crowd is that this isn’t apples and oranges,” he says. “It’s more like apples and firetrucks.”
I ask Slaby to elaborate.
“The campaign was working in an environment that was vastly more unconstrained in terms of what we could do, what technologies we could use, how we could build, how we hired people, how we procured outside help,” he explains. “All of those variables would be wildly in favor of the campaign. They’re all really stacked against the White House. We have set a lot of the technical projects in government up to fail by being a little irrational.”
Which does not exactly bolster one’s confidence in the government’s ability to administer a complicated financial marketplace either.
Obama’s audience this morning consisted in part of purported ObamaCare beneficiaries, but the Washington Examiner’s Byron York looked at their stories and found “it’s clear the administration was stretching to present people who, beyond supporting Obamacare, have actually gained from it in any tangible way”:
For example, a Pennsylvania man named Malik Hassan was in the group, and this is the White House description of his situation, in full: “Malik Hassan works at a restaurant in Philadelphia. Hassan, who does not receive coverage through his employer, is looking forward to enrolling for health coverage this fall. He recently used Healthcare.gov. to process his application and is waiting for the options for potential plans in Philadelphia.” . . .
Then there is Nathaniel Hojnacki, who recently finished his schooling. Here is the White House description of his situation, again in full: “Nathaniel Hojnacki recently received his Master’s degree at Johns Hopkins University SAIS and is in an employment situation without benefits. Hojnacki recognizes the importance of coverage and is planning to enroll after he explores his coverage options on the DC exchange.” . . .
Then there is LaJuanna Russell, of Virginia. Here is the White House description of her situation, in its entirety: “LaJuanna Russell is the owner of Business Management Associates, a consulting company in Alexandria, Virginia. Russell says she is proud to offer her employees health insurance but that it can be difficult for a small business. Russell believes that the ACA provides stability for her and her employees and is exploring what new coverage options will be available to her company under the exchanges.”
Then there is another small business owner, Zohre Abolfazli of Tennessee. Here is the White House description of her situation, in its entirety: “Zohre Abolfazli has owned a small business outside of Nashville, Tennessee for almost twenty-five years. Even though she has been able to maintain her health insurance over the years, it has been a challenge to find affordable, comprehensive health insurance in the individual market place. Last night, Abolfazli was able to register through HealthCare.gov and now plans to comparison shop for the best plan that meets her budget and needs.”
Of the 13 White House success stories, only 2 actually seem to have bought policies through the exchanges. A few others have benefited from those other ObamaCare provisions that, according to the president, “you may not have noticed.” But you’d think the White House would be able to come up with a baker’s dozen people who’ve actually benefited in some way. And again, none of the success stories involve people who’ve willingly signed up to pay higher premiums–those without whom ObamaCare’s economics cannot work.
Obama ended his speech on a characteristically antagonistic note, denouncing Republicans and saying: “It’s time for folks to stop rooting for its failure.” As one who has indeed been rooting for failure, we must say we agree. It’s time for folks–above all the “folk” who lives at 1600 Pennsylvania Avenue–to acknowledge its failure.
Wisconsin’s current unemployment rate (6.9%) is shrinking faster than the nation’s (8.1%). The state’s median household income extended its lead over the U.S. from 2.2% to 4.0%, according to latest available figures (2011). And, spending on research and development grew faster here (41%) than nationally (21%) during 2005-10.
These are some of the signs from the state’s just-released yearly report card, Measuring Success: Benchmarks for a Competitive Wisconsin 2013, that suggest Wisconsin’s economy is moving again after the Great Recession. In another encouraging sign, the number of private firms in Wisconsin rose 1.6% in 2011, the first increase since 2008 and almost double the national increase (0.9%). Firm creation is key to job growth, according to much economic research, since new jobs are mostly created by young and small businesses.
Few report cards show all “A’s,” and Wisconsin’s is no different. Although the average wage here grew 11.3% (to $47,248) during 2006-11, compared to 10.2% for the U.S., it remained 12% below the national norm. And, as it has for decades, per capita income in the Badger State continued to lag the U.S. by 5.1%.
Despite falling joblessness, the report card shows mixed results on the jobs front. In 2012, Wisconsin employment grew 0.9%, compared to 1.7% nationally and at least 1.2% in the four surrounding states. That said, Wisconsin outperformed in manufacturing; job numbers climbed 2.2% here vs. 1.6% elsewhere. …
The job and income measures reported here reveal the improving position of Wisconsin’s economy during 2011-12, but the new report card also focuses on important building blocks for future economic success:
Good roads and highways are critical for getting materials to producers and products to market. In a new development, Wisconsin’s overall road quality appears to be slipping. Only 40.6% of state highway miles in 2011 were rated in one of the top two smoothness categories. That was down from 57.7% in 2009, and below the national average of 56.0%.
High school graduation rates rose―for the third consecutive year―to 86.8%, compared to 70.1% for the nation. However, average college entrance exam scores have fallen slightly in recent years. The percent of the state’s population with a bachelor’s degree is up slightly to 26.5% but remains below the national average (28.5%).
Energy costs remain important for many industries. During 2009 and 2010, Wisconsin’s natural gas prices declined from $11.76 per million British thermal units (Btus) to $9.34. However, due partly to recent investment in new plants, electricity prices rose from $26.38 per million Btus to $28.66. Despite the increase, electricity prices here are slightly below the national average.
Often, young companies with high potential turn to venture capital firms for funds necessary to sustain growth. In 2012, Wisconsin companies received an average of $34.23 per worker in venture capital, an increase of 6.5% over the past five years. However, the state remains below the national average ($200.94 per worker) and below all neighboring states, except Iowa.
That’s the state picture. Federally, reports the Washington Post …
1) Revisions. In truth, the most important parts of any jobs report are the revisions to the past two jobs reports. That’s because the initial estimate of how many jobs we added or lost in any given month is typically off by about 100,000 jobs. That’s how you get situations like August 2011, when the jobs report said we created no jobs but we later learned we’d created more than 100,000 jobs.
Revisions are where we get that better information. They’re the most accurate part of the unemployment numbers. And, in this jobs report, they’re a huge disappointment. “The change in total nonfarm payroll employment for June was revised from +188,000 to +172,000, and the change for July was revised from +162,000 to +104,000.” That means we added 74,000 fewer jobs than we thought in June and July.
2) The unemployment rate dropped for the worst reason. Unemployment dropped to 7.3 percent in August. Huzzah? Sorry, but no.
There are two reasons the unemployment rate dropped. One is that people get jobs. Huzzah! The other is that people stop looking for jobs, and so they’re no longer counted as technically unemployed. That’s what happened here. The number show 312,000 people dropping out of the labor force. That’ll be revised, but if the truth is anywhere close, it’s horrible.
3) Job creation was terrible. I know I said initial jobs reports are often misleading. And August jobs reports in particular have tended to see sharp upward revisions in recent years. But still, this report was a bummer: 169,000 jobs added. Plug that into the Hamilton Project’s handy-dandy jobs gap calculator, and you’ll find that this hiring pace will close the jobs gap sometime in 2023:
4) Unemployment among teenagers, African Americans and Hispanics remains insane. Among teenagers, the unemployment rate is 22.7 percent; for African Americans, it’s 13 percent; for Hispanics, 9.3 percent. And remember, those numbers only count people actively looking for work. Many others would like work but have stopping hunting. In these communities, then, the job market is somewhere between an awful recession and a severe depression.
Having been one of the Obama unemployed, I do not take schadenfreude out of reading Personal Liberty, other than to repeat the Facebook comment that Ignorance of the laws of economics is not an excuse:
The cynic might say that President Barack Obama is pushing to make war on Syria to distract Americans from the myriad scandals swirling around his Administration and/or his failed efforts at economic recovery. …
For instance, recovery summer never materialized — not in 2009, 2010, 2011, 2012 or 2013 — despite predictions by Obama and Fed Chairman Ben Bernanke. And guess who’s hurt the most by Obama’s policies. It’s Obama’s core demographic.
Obama received 51 percent of the vote in 2012. The five demographic groups he carried and the percentage that voted for him were youths (60 percent), single women (67 percent), blacks (93 percent), Hispanics (71 percent), and those without a high school diploma (64 percent).
According to a report by Sentier Research, since recovery summer was announced in 2009, households headed by single women have seen their incomes fall by 7 percent, and those under age 25 have seen their incomes drop 9.6 percent.
The incomes for black heads-of-household have dropped by 10.9 percent, and Hispanic heads-of-household have seen theirs drop 4.5 percent. For those with a high school diploma or less, incomes dropped 8 percent. (Incomes fell 6.9 percent for those with less than a high school diploma and 9.3 percent for those with one.)
In dollar terms, female heads of household saw their annual salaries drop by $2,300. Black-led households saw their annual salaries drop by more than $4,000, and Hispanic-led households saw their annual salaries drop $2,000.
Gallup released its monthly Payroll-to-Population survey yesterday. It showed that only 43.7 percent of the eligible population is employed, and it pegged unemployment at 8.7 percent. In 2012, those numbers were 45.3 percent and 8.1 percent.
Steve Prestegard.com: The Presteblog 