Governor Scott Walker vs. Education

Financial FAQs

It is hard to believe, but prospective presidential candidate Wisconsin Governor Scott Walker’s main platform seems to be his antipathy towards education, and higher education, in particular. He has obfuscated his near hatred of higher education to date by getting his Republican-Controlled Legislature to first ban public union collective bargaining, especially unions for teachers and public health nurses.

But the veil that has obscured his anti-education agenda is lifting. His latest salvo is directed at the University of Wisconsin. He proposes not only to cut its budget, but proposed downsizing its mission from that of higher education to supply workers, whoever they might be. Walker’s new budget proposal would slash $300 million from the University of Wisconsin system over the next two years. That’s a 13 percent reduction in state funding.

That might be explained by the poor performance of the Wisconsin economy since he took office—an economy now ranked below all other comparable Midwestern states.

A harbinger of what Walker might face came in an immediate uproar on social media this month after his staff proposed changing the university’s focus on the pursuit of truth, known as the “Wisconsin Idea,” to a grittier focus on “workforce needs.”

"Inherent in this broad mission are methods of instruction, research, extended training and public service designed to educate people and improve the human condition," is part of the University of Wisconsin's mission statement.

What is wrong with that mission, you ask? It speaks to a well-educated mind, is Walker’s problem, apparently. If Walker gets his way, that sentence, along with "Basic to every purpose of the system is the search for truth," would be entirely cut from the charter. Walker also seeks to cut statements reinforcing the university's commitment to working with out-of-state institutions and its prioritization of "programs with emphasis on state and national needs."

In its place, Walker proposes language stating Wisconsin only provides a state education because it is constitutionally required and among its top priorities are meeting "workforce needs." So the U. of Wisconsin should be down-sized to a trade school?

On reflection, Walker’s anti-education agenda fits right in with the current Republican Party’s prejudice against modern education in general, scientific knowledge and empirical facts in particular, such as the denial of global warming. Republicans have even proposed abolishing the Department of Education, a cabinet position, which helps to keep their supporters in the poorer red states literally ignorant of those facts that would better their lives.

It was in 2011 that Walker pushed through a law, Act 10, that slashed the power of public employee unions to bargain, and cut pay for most public sector workers.  As a special slap to teachers, Walker exempted the unions of police, firefighters and state troopers from the changes in collective bargaining rights but not educators. 

Teachers protested for a long time, closing schools for days, but the law passed, and the impact on teachers unions in Wisconsin has been dramatic: according to this piece by Washington Past columnist Robert Samuels. The state branch of the National Education Association, once 100,000 strong, has seen its membership drop by a third, and the American Federation of Teachers, which organized in the college system, has seen a 50 percent decline.

Graph: Wisconsin Budget Project

The effect on Wisconsin’s economy has been even more dramatic. The latest comprehensive state employment data from the U.S. Bureau of Labor Statistics and the Quarterly Census of Employment and Wages (QCEW) reveals that Wisconsin continues to lag both the national rate of job growth as well as the rates of employment gain in most other states. Between December 2012 and 2013, Wisconsin gained 26,816 jobs, posting an annual employment growth rate of 0.98 percent, significantly trailing the national job growth rate of 1.75 percent during the same period.

Thus, Wisconsin’s year-over-year job growth in fourth quarter of 2013 was just slightly over half the national rate – a level of underperformance that has been consistent since 2011. Overall, Wisconsin ranked 37th among the 50 states in the rate of total employment growth between December 2012-13. Wisconsin trailed every single neighboring Midwestern state (Illinois, Indiana, Iowa, Michigan, Minnesota, and Ohio) in year-over-year employment growth between December 2012-13.

Walker is destroying Wisconsin’s economy, in other words. Right now he is pushing to demolish union organizing once and for all with his proposal to make Wisconsin a Right to Work state, which will further depress its economy. And this man wants to run for President of all 50 states?

Harlan Green © 2015

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Republicans Are the Real Socialists

Popular Economics Weekly

The new Republican Congress is exposing a not surprising fact. Its first actions are attempts to water down The Dodd-Frank Wall Street and Consumer Protection Act, and repealing Obamacare—which will pass the risks of financial meltdowns and medical catastrophes back to us, the taxpayers.

In economic parlance, it is socializing the costs of doing business in order to maximize the profits of business. The attempts to weaken financial regulations are “Kicking Dodd-Frank In the Teeth”, said Gretchen Morgenson in her most recent New York Times Sunday Oped.

“The 114^th Congress has been at work for less than a week, but a goal for many of its members is already evident: a further rollback of regulations put in place to keep markets and Main Street safe from reckless Wall Street practices.”

The story of Republicans opposition to Obamacare is no different. By attempting to roll back the eligibility of millions of uninsured Americans with the Repubs various challenges to the federal health exchange, Republicans will return the cost of maintaining health care once again to taxpayers; by putting those sickest Americans back in hospital emergency rooms, or on government welfare rolls, thus maximizing health costs (which have been declining since Obamacare kicked in). This is even though medical bankruptcies now outnumber all other bankruptcies.

Why don’t Republicans get that this flies in the face of their own ideals of self-sufficiency? Even more egregious for working Americans are their attempts to lower wages and salaries by weakening unions and the collective bargaining of government employees in states like Wisconsin. The result of Wisconsin Governor Scott Walker’s efforts has been slower growth, a larger budget deficit, and less incentives for government employees to increase productivity.

Even California Republican Ron Unz knew this with his initiative to raise the California minimum wage to $12 per hour, which would take many minimum wage-earners off the welfare rolls, yet California Republicans have even opposed that!

It is socialism in a big way that Republicans have always accused Democrats of—putting the cost of running the U.S. on government, rather than individuals and private industry.

It’s something President Roosevelt knew and voiced during the Great Depression. “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”

And until Republicans understand this, they will continue to be the minority party.

Harlan Green © 2014

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Michigan Republicans Repeat Economy Wrecking Doctrine

Financial FAQs

Michigan has become the latest Republican-led effort to wreck economic growth in passing a right-to-work laws that restrict unions. With all apologies to Naomi Klein’s Shock Doctrine, Repubs are no longer waiting for recessions to enrich their wealthiest supporters—such as passing GW Bush tax cuts during the 2001 recession and in 2003 that caused the largest budget deficit in history, precipitating the Great Recession.

Michigan is a text book example of how ALEC and Americans for Prosperity, the big business lobby and the Koch Brothers have worked to bust unions. Michigan is the 24^th state to enact Right-to-Work Laws that take away unions’ ability to organize and charge union dues to finance union benefits. But more insidiously it weakens the ability to bargain for their own wages and salaries. This is when corporate profits and CEO salaries are already the largest in history.

We know the result in the other 23 states. They are the poorest states, who require the most government assistance. So this exposes Republicans and conservatives agenda in general. Restricting union organizing and collective bargaining impoverishes the majority of wage and salary workers, which drives the poorest into government assistance at the slightest economic downturn. It therefore preserves the profits of the investors who live off of corporate profits, while passing on the costs of wrecking the incomes of the majority to government-financed programs—i.e., our tax monies.

Wisconsin’s direct restriction of collective bargaining rights for government employees was the most blatant example until now. By directly restricting their incomes and benefits, it puts a wrecking ball to economic growth in Wisconsin, putting it into the group of have-not states that have consistently lower standards of living.

Many studies have shown this, but the most convincing evidence is listing the have-not states. They include the most rural and red states in the South and Midwest dependent on government benefits to supplement the meager incomes and lower standard of living of their citizens.

The AFL-CIO has put out the latest statistics on union, vs. non-union incomes and benefits: Employees covered by union contracts receive 28 percent more in wages and benefits than workers without unions.  For women workers, the union advantage is 34 percent. For African American workers, the union advantage is 29 percent.  And for Hispanic workers, the union advantage is a whopping 50 percent.  When “right to work” laws weaken unions and drive down wages and benefits, workers have less to spend and the entire economy – particularly small business--suffers.

It should be blindingly obvious why Republicans are pushing their anti-union agenda. It increases their wealth and power at the expense of everyone else.

Harlan Green © 2012

Why Are Republicans Playing With Fire?

Financial FAQs

The reports that 4,000 FAA employees and up to 70,000 airport construction workers narrowly escaped being laid off until Labor Day is unbelievably true. And this is the height of the summer travel season.

In this case, Senate Majority Leader Harry Reid had to scotch together a last minute compromise after Republican Senator Orrin Hatch scotched an earlier compromise of the House bill negotiated by Senators Rockefeller and Kay Bailey Hutchinson that would have cut spending on rural airport subsidies, according to the New York Times.

In fact, such actions are putting into question the motives for Republicans’ opposition to any kind of stimulus spending to spur economic growth. Republicans have once again brought us ever closer to another recession by imposing their anti-government, anti-union agenda.

What else should we think? In fact, we just had the 30^th anniversary of President Reagan’s firing of 11,000 striking Air Traffic Controllers that Governor Scott Walker has been holding up as his model for banning collective bargaining of public employees in Wisconsin. (Though that may soon be reversed with next week’s Wisconsin recall elections.)

The only problem is that Reagan wasn’t against collective union bargaining according to Associate Professor Joseph A. McCartin of Georgetown University, author of a forthcoming book, “Collision Course: Ronald Reagan, the Air Traffic Controllers, and the Strike That Changed America.” And it exposes Scott Walker’s total disregard of both history and the truth.

“Although he opposed government strikes, Reagan supported government workers’ efforts to unionize and bargain collectively’” said Professor McCartin in a recent New York Times’ Op-ed. “As governor, he extended such rights in California. As president he was prepared to do the same. Not only did he court and win Patco’s endorsement (the Traffic Controllers union), he directed his negotiators to go beyond his legal authority to offer controllers a pay raise before their strike—the first time a president had ever offered so much to a federal employees’ union.”

How close are we to a double-dip recession? The latest revisions to Q1 and Q2 2011 Gross Domestic Product growth show that consumer spending has shrunk—mostly from a lack of confidence in the future, and household debt that is still too high. This is while DOW Jones plunged 512 points on Thursday—due to fears of another recession. So this is not the time for Republicans to be playing with fire.

It is why GDP growth has slowed so drastically. There are 4 indicators used by the National Bureau of Economic Research Business Dating Committee to determine a recession—employment, personal income less transfer payments, real GDP growth, and industrial production, as we have said. Of the 4, industrial production and GDP growth have been recovering since mid-2009. But they are really dependent on employment and personal incomes less transfer payments, which haven’t done so well. Personal incomes have improved for those who are employed, but the money is either being saved or used to pay down debts.

And employers are not hiring enough workers to keep up with population growth. So there is really no excuse for Republicans’ ideological blindness that opposes any kind of government action to stimulate growth, unless it is intentional. In other words, would they use another economic collapse to try to knock out Obama in 2012? It is a horrific thought, if so. Republicans should keep in mind the Blame Game can work in unexpected ways. Playing with fire during this economic conflagration could forfeit their chances of winning anything.

Harlan Green © 2011

More Jobs = Faster Recovery

Popular Economics Weekly

There really is an innate conflict between policies that create more jobs, and policies that advocate cutting budget deficits during hard times. Policy makers have to ask themselves, which is more important—creating more jobs, or reducing debt? It depends on the timing. Debts are accumulated during bad times—especially public debt—and paid down in good times. The question is when is the economy strong enough to begin to pay down the deficits that have been created.

Everyone knows too much debt was accumulated in the last decade—most from tax cuts; but also from two wars, falling personal incomes, and the last two recessions (2001 and 2007-09). Most of the federal deficits were created by falling revenues that couldn’t cover those higher debt loads incurred by financing tax cuts and wars with borrowed money, as Alan Greenspan has famously said.

So the Wisconsin debate on public employees’ right to collective bargain is bringing this debate front and center—which is a good thing. Most states have to balance their budgets each fiscal year by law. The question is whose budget to cut. Taking collective bargaining (for salaries, not benefits) away from Wisconsin’s public employees is the worst way to balance its budget, because it takes away the means to cure their deficit.

For by reducing salaries and or benefits of its public employees, Wisconsin takes away a huge engine of economic growth by reducing the spending and saving power of its consumers, who as wage and salary earners make up 80 percent of the workforce and 70 percent of all economic activity. The dilemma for policy makers is how to add jobs and keep manageable deficits, in other words.

In fact, the only real way to cure any budget deficit is by growing revenues, not reducing spending. The reason for the deficits (which usually occur during recessions, remember) is loss of tax revenues—whether at the state or national level. This unfortunately is not clear to either most pundits or ideologues. Revenues shrink during recessions, period. And it takes a long time to ‘regrow’ those revenues.

The latest Gross Domestic Product numbers tell us as much. It wasn’t until Q4 2010 just ended that GDP growth—a proxy for overall economic growth—was back up to the level before December 2007, the beginning of the Great Recession. It took all of 2008, 2009, and 3 quarters of 2010, in other words, to return economic growth to pre-recession levels.

(And, it was done with 7 million fewer employed!) Fewer workers are now producing more, so that labor productivity is soaring. But with so-called unit labor costs cut to the bone, productivity—or output per worker—will only decline, unless employers hire more workers.

That is why governments tend to borrow more during hard times, in the hopes that it will stimulate enough spending to stop a precipitous drop in demand, and so jobs. But it is a delicate balancing act, since the credit rating agencies that determine bond interest rates watch budget deficits closely, and will drop a government’s rating almost as quickly as those for corporations.

Collective bargaining is the right of employees to negotiate with their employers, a right that unions in particular have enshrined in their charters. And guess who make up the majority of union membership? Public workers make up 36 percent of public employees, vs. just 9 percent of the workforce in private business. It is a combination of both blue collar (police and firemen), and white collar (teachers and workers in government administration).

So in fact, reducing workers salaries and benefits that make up approximately 80 percent of the workforce in order to cut budget deficits does more than cuts the demand for goods and services. It starves governments of the revenues needed to cure those deficits. Some form of government stimulus spending is therefore necessary until employment returns to levels that create a sustainable demand.

Harlan Green © 2011