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Today's Blog: Time for the Guv to morph into Chris Christie
My husband and I and a couple hundred friends watched in Green Bay as ...(more)

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Time for the Guv to morph into Chris Christie (6/28/2011)

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2/11/2008
Something for everyone

The “gap between the haves and have-nots in America: really interesting stuff in How Americans Spend Their Money, by W. Michael Cox and Richard Alm. Cox is the senior vice president and chief economist and Alm the senior economics writer at the Federal Reserve Bank of Dallas. For a couple of economists, the piece is straightforward and instructive.

Cox and Alm address.” They say the debate, in comparing incomes, is wrong-headed and must instead compare spending – consumption per person.

When you compare income, the gap is 15:1, comparing the highest fifth of household incomes with the lowest fifth. But when you compare expenditures per person, the ratio drops to about 2:1. A very interesting piece – well worth the read.

Resurrect Wisconsin’s Estate Tax from the dead?
Fred Dooley from Real Debate Wisconsin, has put up a petition after learning of the move afoot to bring back the just eliminated Wisconsin estate tax. If you’re into this kind of thing, sign the petition and send it on. It’s absolutely the right course. This tax hasn’t been dead more than 40 days and more than one Wisconsin liberal is actually serious about an effort to bring it back. Unbelievable. A piece by Senator Lazich explains the situation well (and was included last week in FoxPolitics News).

McCain and judges
James Wigderson points out an interesting Ann Althouse piece that fleshes out the kind of judges a President McCain would appoint. Althouse – and I think James as well – believe they can count on McCain to, as James says it, “complet[e] the transformation of the courts begun so long ago under Ed Meese and President Reagan.” Wonderful. Hear, hear to that.

Talking about Senator McCain – his name was not invoked but once (that I heard) at the Americans for Prosperity Defending the American Dream (AFP DAD) Summit Saturday. I think it was Rep. Leah Vukmir who talked about the importance of Republicans sticking to principles and working together. Referring to the assumptive GOP presidential nominee, it was stressed that our job was to hold the candidate to his message. No more whining about the candidate. We’ll be doing our job if we hold him to his message. And that’s the right message.

Unions aren’t our granddaddy’s unions anymore
Again from the AFP DAD Summit, Milwaukee County Sheriff David Clark mentioned his support for a state “paycheck protection act,” which would require 100% approval from a union’s members before money is spent on political involvement. Clark pointed out that it used to be working conditions, waste, fraud and abuse that were addressed by unions – and well they needed to be. But now the unions exist to be political – and Clark believes the current system doesn’t serve taxpayers well.

Wisconsin’s fiscal hole
Wisconsin Taxpayer Alliance President Todd Berry, at AFP DAD, suggested that we’ll soon begin to see the past all over again, as our representatives try to dig Wisconsin out of the budget hole we’re in. Berry said watch for:

“Hiring/travel rhetoric” (freezing hiring, limiting travel – that’s already happening)
Past tricks: new transfers/ fund raids, debt refinancing, accounting tricks
“Shift the shaft” to UW students, property taxpayers
Look for new fees, “loopholes,” “[politically] safe taxes”
“Securitization” – copying the one-time use of tobacco money

Berry wasn’t kidding. We are in a budget jam – no blinders allowed – by the governor or by the legislature.

COMMENTS

The effect of transfer payments isn't mentioned; I suspect that in addition to folks spending reserve cash because they're between jobs - or retired, spending is greater than income in low-income families because income in the form of government aids isn't mentioned. I would think that would include food stamps, unemployment income and disability payments, but can't be sure from the facts in the Times article.
The extent of the recession becomes an important question when considering the impace of a "stimulus package." I'm not convinced the economy needs a boost, especially to the tune of $148B.

Jo E. (Mon Feb 11 07:52:21)

Jo,
The spending vs income piece was published in yesterday's NY Times. It is very interesting. I believe there is a question that connects that piece to the earlier blogs in Fox Politics regarding what kind of economic stimulus has the biggest impact. The study shows that other than housing, vehicles, and food (the graphs on the net are hard to read presumably) there isn't a whole lot of dollar difference in the spending amounts per capita from upper income families versus lower. The percentage impact of course is huge. This stands to reason I suppose. Another interesting fact is that the lower income people have a negative income (they spend significantly more than they earn). The authors suppose this difference comes from savings whereas the upper income folks have a huge savings and investment component. So, long story short, the lower income people still need a base level of income to survive and take it from savings (or elsewhere). Upper income people don't need the extra income because their spending caps and they save/invest the excess. Therefore, economic stimulus going to lower income people will be spent immediately so they don't draw on their savings. Economic stimulus going to upper income people will simply add to their investment portfolio.

dave allen (Mon Feb 11 07:32:39 2008)

For many years large estates have been taxed at high rates. I believe some relief is in order but I am not certain that a total removal of the Wisconsin Estate tax makes sense when the state and federal government are unable to keep promises to fund the courts, child support enforcement and other programs for our most vulnerable citizens. It would have made more sense to match the federal unified credit. This would have raised the threshould for taxable estates to aggregate amounts transfered to nonspouses over two million dollars. Amounts transferred to surviving spouses have always been free from estate tax. Another consideration is that Wisconsin estate taxes are a deduction against the federal estate tax. Any savings to estates from the lapse of the Wisconsin Estate tax end up being shared with the federal government. Other Wisconsin tax cuts aimed at the well off will also take effect soon. If spending is not controlled a fiscal disaster is certain.

Mark L. Harris (Mon Feb 11 17:18:13 2008)

Mark: What Wisconsin tax cuts for "the well off" will take affect soon? How do you think we should go about addressing spending cuts? I appreciate Sheboygan County's PEPC (Say "Pepsi") approach, about which I've written more than once. Do you know of it?

Jo E. (Mon Feb 11 17:29:34)

Starting in 2008 Wisconsin will no longer tax 1/2 of social security income for higher income retirees.This change will not effect most retirees because most do not reach the threshold where social security starts to come into the tax base.The point is that if spending growth continues unabated and taxes are decreased for one class of taxpayers, then the rest of the taxpayers or future taxpayers will eventually face an unreasonable burden.
If you are referring to a ranking or scoring of all government services as a budgeting tool Winnebago County went through the same process as Sheboygan. In the end Counties can only cut spending by performing the same services with less people or by decreasing the services performed. Winnebago has reduced its workforce about 8% over the last three years but the process becomes more painful and possibly counterproductive as you go.

Mark L. Harris (Tue Feb 12 07:37:42 2008)

Mark:
I commend you for using the same process as Sheboygan on setting priorities. I wish Outagamie County would do the same before our next budget process, which will probably be the most difficult one we will have to face. As you know, the 2% cap will be real since we will not be able to rely on growth to give us a higher cap.
Have you thought about utilizing Lean Manufacturing principles in the public sector environment? Several non-manufacturing service firms(Theda Care and Affinitiy) have begun the journey with Lean techniques.
These techniques address the process and the waste of time in the process rather than the people. I think it would be worth looking at since there must be efficiencies to be gained in the normal public sector environment.

Mike Thomas (Tue Feb 12 09:18:13 2008)

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