Wisconsin Gov. Walker Played Accounting Tricks To Show Budget Shortfall To Undercut Worker Rights
Wisconsin's new Republican governor has framed his assault on public worker's collective bargaining rights as a needed measure of fiscal austerity during tough times.It is a well known chapter in the right-wing conservative playbook that if you cannot win the debate on facts, lie and lie some more. Sprinkle on some false accusations against your opponent and you have the gutter ideology of modern conservatism.
The reality is radically different. Unlike true austerity measures -- service rollbacks, furloughs, and other temporary measures that cause pain but save money -- rolling back worker's bargaining rights by itself saves almost nothing on its own. But Walker's doing it anyhow, to knock down a barrier and allow him to cut state employee benefits immediately.
Furthermore, this broadside comes less than a month after the state's fiscal bureau -- the Wisconsin equivalent of the Congressional Budget Office -- concluded that Wisconsin isn't even in need of austerity measures, and could conclude the fiscal year with a surplus. In fact, they say that the current budget shortfall is a direct result of tax cut policies Walker enacted in his first days in office.
"Walker was not forced into a budget repair bill by circumstances beyond he control," says Jack Norman, research director at the Institute for Wisconsin Future -- a public interest think tank. "He wanted a budget repair bill and forced it by pushing through tax cuts... so he could rush through these other changes."
[ ]...You can read the fiscal bureaus report here (PDF). It holds that "more than half" of the new shortfall comes from three of Walker's initiatives:
* $25 million for an economic development fund for job creation, which still holds $73 million because of anemic job growth.
* $48 million for private health savings accounts -- a perennial Republican favorite.
* $67 million for a tax incentive plan that benefits employers, but at levels too low to spur hiring.
In essence, public workers are being asked to pick up the tab for this agenda.
Stimulus raised GDP by up to 4.2 pct in Q1 2010 -CBO
The massive U.S. stimulus package put up to 2.8 million people to work and boosted GDP by up to 4.2 percent in the first three months of 2010, the nonpartisan Congressional Budget Office said on Tuesday.Republicans have made their agenda crystal clear, Gov. Walker a good example, they do not care about jobs or the families that rely on those jobs.
CBO's latest estimate does not differ significantly from its previous assessments of the impact of the $893 billion package, passed in 2009.
But it is sure to cheer congressional Democrats as they struggle to advance a smaller package of safety-net spending, tax cuts and other measures to boost the sluggish economy and bring down the 9.9 percent unemployment rate.
Vice President Joe Biden issued a statement saying the CBO report "is important validation that the action we took to rescue the economy last year has not only pulled us back from the brink, but put us on a firm path toward economic recovery."
Jamie Dimon's `Biggest Disaster' Is Waiting: Simon Johnson
Jamie Dimon, chief executive officer of JPMorgan Chase & Co., has harsh words for Fannie Mae and Freddie Mac. They are “the biggest disasters of all time,” Dimon told the Financial Crisis Inquiry Commission last fall, according to his just-released interview.The facts are relatively easy to research. Private banks made a lot of bad loans, and bets those loans would continue to increase in value (derivatives trading). Fannie and Freddie are not in the direct to homeowner lending business. Fannie and Freddie do not review loan applications or run credit checks on people - private banks are supposed to do their due diligence. Unknowingly Fannie and Freddie bought many of the bad loans banks made. That gave those banks more capital to make more loans. Now Wall St hustlers and Republicans are trying to pin the blame for the actions of private banks on Fannie and Freddie - the Freddie Made Us Do It school of deflecting responsibility.
Along with others, Dimon greatly exaggerates the role Fannie and Freddie played in the financial crisis, a theme my MIT colleague, Daron Acemoglu, has written about with great clarity.
Too many bankers assert some version of the refrain: Fannie Mae made me do it. As the FCIC’s report makes clear, it was the private sector that led us into the financial crisis by making massive subprime bets and then using complex derivatives deals to magnify the downside risks.
Nevertheless, Dimon makes a good point in the sense that Fannie and Freddie became too powerful politically, had too little equity relative to their debt levels and took on reckless amounts of risk. They blew themselves up at great cost to taxpayers.
Who are the government sponsored enterprises today? Which entities are too big to fail, in the eyes of lawmakers and regulators, and therefore are receiving implicit, no-cost government guarantees?
The answer is our largest bank holding companies such as JPMorgan, the second-biggest U.S. bank in terms of assets behind Bank of America Corp. This point is made in the latest quarterly report from Neil Barofsky, the special inspector-general for the Troubled Asset Relief Program.
Flawed Metrics
