Drug Companies Are Totally Out of Control

While Madison is discussing how to solve the opioid epidemic in Wisconsin…from both prescription and illegal forms of the drug…watching TV in a Chicago hotel Sunday night…I was bombarded with ads for drugs to solve Opioid Induced Constipation. The use of opioid painkillers is so endemic and long term that we have a new side effect that requires another drug to ‘cure’?

If this isn’t another indication that we need a coherent policy on drugs and drug abuse, I don’t know what is.

So Raise The Damn Gas Tax All Ready!

Wisconsin continues to debate how to increase funds for transportation (in Wisconsin that translates to build more freeways) as gas tax revenues continue to fall as cars get more fuel efficient or don’t use gasoline at all. Instead the governor continues to put highway construction on the credit card or extends the completion dates for major projects (which increases their costs through inflation and often overlooked, loss of utility and increased travel times for users) to balance the transportation budget.

There have been a number of discussions in the legislature around increasing the gasoline tax, vehicle registration and just recently, converting state freeways into toll roads.

Of course Governor Walker continues to stick to his no tax increase pledge by threatening to veto any gas tax increases if they aren’t balanced by tax cuts in other areas. This brings up a number of points. If gas increases are balanced against other tax cuts, those paying increased gas taxes aren’t necessarily the people getting the new offsetting tax cuts. I can’t imagine that will make drivers very happy.

And second, how is reducing other taxes to balance gas tax increases not essentially the same as using general funds to pay for transportation? And isn’t using general funds for transportation now verboten? I am sure many of you can either correct me on that or support my statement.

So about those toll roads…that is a very very slippery slope. Somebody is going to have to spend the initial capital to build the infrastructure to measure and collect tolls. Where’s that money going to come from? Wisconsin already doesn’t have the funds to fix the roads, build new ones, etc….how can it add tolling facilities? (this all assumes the federal government would permit the conversion of freeways to tollways…not unlikely under the President Trump regime)

But the talk is that private investors would pay for the new infrastructure…and then reap benefits from the tolling. And how many years would it take to implement? If we look at the Zoo interchange, years maybe decades. Hmmmm. Who controls the fees and determines the profit margins when private enterprise controls public utilities?

But if you are going to be ‘Open For Business’, you had better have first rate infrastructure, not just a low tax rate…businesses need to get their employees to work on time, need to get their raw materials to their businesses, and need to get their finished products to market. Subpar streets, roads and highways don’t work for them.

So for the quick and dirty, the current Wisconsin gas tax is 30.9 cents a gallon. Take a quick 5.1 cent increase and gas tax revenue jumps 16.5% and takes a lot of stress off of the transportation budget. Increase it 10.1 cents and it’s an increase of 32.7%. When I first suggested this gas in Milwaukee was around $2.00 a gallon and even now at $2.29, a 5 or 10 cent hike isn’t going to be that discernable.

You want some simple background into the issue, please read Ernst-Ulrich Franzen’s article on the resignation of the Secretary Mark Gottlieb from the Wisconsin Department of Transportation…he apparently got tired of speaking truth to power.

Labor Shortage Solved By Capt Obvious at JSOnline

In a business column in the Milwaukee Journal Sentinel (JSOnline) interviewing ‘futurist’ and Milwaukee businessman Bob Chernow…MJS writer Steve Jagler quotes Mr. Chernow’s solution to an anticipated labor shortage in the Milwaukee market area:

Chernow says one possible solution would be to provide transportation for workers living in the inner city to jobs in the suburbs.

You think? Helping get labor to available jobs would help?

But isn’t that exactly what the suburbs have been trying to prevent since for EVER? Keeping ‘those people’ in the city?

Ceding Federal Lands to the States

Over the last decade or so…as a part of the Bundy federal lands grazing incidents and their takeover of federal lands in Oregon…the subplot was state’s rights and federal lands should be ceded to the states. Well those conversations seem to be coming up again since the Donald Trump win on November 8th.

First, ceding federal lands to the states under these conditions is giving into terrorists…something that the US have vowed never to do.

But on what I perceive to be legal and historical grounds, the state’s have no rights to the federal lands within their borders. Because they are federal lands. They belong to me and you and every other citizen of the United States and not just to the residents of Oregon or Wyoming or South Dakota. They are held to benefit all of us as a nation not to the individual states.

And then there is the fact that most of those federal lands have been owned by the United States before any of those states even came into existence. What right do the states have to pre-existing domain?

But I fear that this will come to the forefront sometime during a Trump regime…and it must not be permitted to happen. Federal lands should be held in perpetuity for the common good.

Added 12/21/16: From the NY Times: It’s Our Land. Let’s Keep It That Way.

The Future Of American Manufacturing Under a Trump Regime!

President-elect Donald Trump has continued his threats against American manufacturers who move their plants and the related jobs out of the country with 35% tariffs on the manufactured goods that they import back to the states. The lure of low wages in countries like Mexico and China and Viet Nam may be too overwhelming to prevent those job migrations despite those threats. And here is just what might happen (and there is a hint of this in some of the press around the Carrier plant and a rumored American iPhone plant).

We might very well see new small highly automated American plants building cell phones, TVs, washers, dryers, lawnmowers, microwaves, textiles, etc…plants that stay or come back. Plants that employ 120 people instead of 800 like 15 or 20 years ago. And their productivity will be huge! Just huge! And their output will be sold in the American market and the American market only…cause it’s gonna cost 30, 50, 80% more than products made overseas.

And American plants and American jobs will continue to move overseas but their output will be sold overseas in Europe, Japan, China, India and emerging markets worldwide. They won’t be re-imported…they won’t incur the 35% tax…and the American economy will suffer. Suffer bigly. Suffer from higher prices and a loss of jobs for exported goods when those foreign markets retaliate by not purchasing American manufactured goods or agricultural products or American services.

Trump Loves Spending Other People’s Money

During the campaign, the self proclaimed billionaire was touting his charitable contributions via the Trump Foundation. But one of the major papers, I think the Wash. Post, discovered that Donald Trump hadn’t contributed to the foundation in years…and the charitable activities he was bragging about were being done with other people’s money…money donated to his foundation by others.

So it should come as no surprise that his highly publicized saving of jobs at a Carrier plant in Indiana works kinda the same way. I am sure you have read or seen at least one article talking about how he convinced UTX, the parent company, of Carrier to keep 700 or 800 or 1000 jobs (depending on which media outlet) in a plant in Indiana instead of moving them to a new plant in Mexico. And of course downplayed in all of that is like 1000 or 1200 or 1300 jobs are still moving to Mexico but never mind.

So Donald Trump is taking credit for saving these jobs…something he made a great deal of during the campaign…but in order to seal the deal, the state of Indiana is giving Carrier a $7 million tax credit. Coincidentally VP-elect Mike Pence is governor of Indiana. So President-elect Trump just saved maybe 1000 Indiana with a combination of threats and Indiana tax payer dollars.

One side question is how come Mike Pence couldn’t have done that without Mr. Trump’s help…or did they know this was going to happen and hold the news back until post-election? I guess that doesn’t actually make any difference.

But isn’t this the same Mike Pence who clawed back a previous tax credit from UTX when they moved other jobs that they were supposed to keep in Indiana? Wonder how this will work out this time?

And did Mr. Trump threaten UTX with loss of government contracts (reportedly 10% of their business) in order to get them to stay. btw: it’s a good chance those jobs are eventually gone anyway since UTX will automate the plant to make it economically feasible in Indiana.

Democratic Senators Side With Trump?

The Washington Post reports that six Democratic senators from states that went for Donald Trump are supporting punishing corporations that outsource labor.

Six Democratic senators from Rust Belt states won by President-elect Donald Trump called Tuesday for a swift congressional crackdown on U.S. companies that send manufacturing jobs abroad, claiming common cause with Trump’s crusade against outsourcing.

Trump on Sunday tweeted that “any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. without retribution or consequence, is WRONG!” He threatened to impose a 35 percent tariff on goods those companies seek to import.

I don’t think that this is sound economic policy…whether Mr. Trump is saying it or my senator is saying it…and what I find troubling is…my senator is saying it.

The Democratic senators from Indiana, Ohio, Michigan, Pennsylvania and Wisconsin stopped short of calling for a protectionist tariff regime. But in a letter to congressional leaders Tuesday, they applauded “the recent attention President-elect Trump has brought to the issue of outsourcing and its impact on middle-class families” and called for legislation that would penalize companies that send jobs abroad.

Those penalties, they say, should include taking into consideration any history of outsourcing while awarding federal contracts and potentially keeping outsourcers from receiving tax breaks and other federal incentives, and “clawing back” those incentives if companies later ship jobs out of the country.

“The loss of manufacturing jobs in our states has contributed to the decades-long trend of the declining middle class,” the letter reads. “We believe these principles — which we intend to introduce as legislation — are critical to our shared commitment to encourage companies to invest in the United States and in American workers.”

Yes it is time to have a national discussion on economic issues in this country…a discussion on trade…on tariffs…on sanctions…on inducements. But there needs to be sound discussions. Educational discussions. Not shoot from the hip emotional reactions. There is far more going on in corporate decisions that deserve to be examined and discussed.

But I have to wonder if the six senators are serious? Or calling Mr. Trump’s bluff? Or patronizing their local constituency who voted for Mr. Trump? All three possibilities make me even more uneasy about the future relationships between Congress and the White House.

The lead signer of the letter was Sen. Joe Donnelly (D-Ind.), who praised the decision last month by Carrier Corp., under pressure from Trump, to reverse its decision to send hundreds of Indianapolis manufacturing jobs to Mexico. Also signing the letter were Sens. Sherrod Brown (D-Ohio), Tammy Baldwin (D-Wis.), Robert P. Casey Jr. (D-Pa.), Gary Peters (D-Mich.) and Debbie Stabenow (D-Mich.).

Where Is The New American Diaspora?

During the campaign, one of the continuing narratives (and continuing today) was the lack of jobs for blue collar workers.

Some of the election coverage around Wisconsin talked about lack of blue collar workers in the smaller cites, places like Wausau, where the population no longer supports the needs of local manufacturers. But we know of large areas in the state with high unemployment…one of them particularly urban. So why isn’t there a concerted effort to recruit, relocate and retrain the necessary talent to the factories? Well, we can guess why. But since capital investments are hard to relocate it only makes sense to draw labor from other areas to your jobs.

And during interviews in the Kentucky coal mining region, a welder was complaining that he was laid off because his employer, a mining equipment repair firm, didn’t have work since the mines were closed. For the past year we’ve read on any number of occasions in the local press that Wisconsin manufacturers are having issues finding experienced welders. Why aren’t they recruiting the skilled work force they need from the areas in decline?

This wouldn’t be an unprecedented event. Companies hire and relocate individuals all of the time. And the first 60 years of the 20th Century saw mass migrations of labor from the rural south to the industrial cities of the mid-west or east coast. And dust belt migrants from Oklahoma and Texas to California. Aren’t companies willing to do that anymore? The frackers in the Dakotas seem to get it. Or are people unwilling to move for a job in the 21st Century? That doesn’t seem correct either as we watch millenials move to exciting urban or tech areas after finishing their educations.

So how do we get the blue collar workers to the blue collar jobs that do exist?

Kansas: The Canary in the GOP Goldmine

Governor Sam Brownback of Kansas was the poster boy of supply side economics…cutting taxes to stimulate the Kansas economy in a pure experiment of Reagan economics. Only it hasn’t worked out the way he and the GOP planned…in fact it has turned out exactly as you would expect when you cut tax revenues: record deficits and little business growth:

In February 2015, three years into the supply-side economics experiment that would upend a once steady Midwestern economy, a hole appeared in Kansas’ finances.

To fill it, Gov. Sam Brownback took $45 million in public education funding. By April of this year, with the hole at $290 million, Brownback took highway money to plug it. A month later, state money for Medicaid coverage went into the hole, but the gap continued to grow.

Today, the state’s budget hole is $345 million and threatens the foundation of this state, which was supposed to be the setting for a grand economic expansion but now more closely resembles a battleground, with accusations and lawsuits flying over how to get the state’s finances in order.

The yawning deficits were caused by huge tax cuts, championed by Brownback and the Republican-dominated Legislature, that were supposed set the economy roaring. They didn’t.

To those of you who live in Wisconsin, some of these things may sound familiar to you…although WI hasn’t yet sunk this deeply into the trickle down sink hole. But there are already complaints around funding for education from around Wisconsin and they are just getting going. But here’s what we can expect if things don’t change here:

“The finances are making it hard to meet the needs of our kids,” he (Steve Jameson,the principal of Columbus Kansas’ Park Elementary) said. “The climate makes it hard to recruit good teachers. If you hear the legislators bashing you all the time, the governor bashing you all the time, you can choose to go to another state.”

And this Reagonomics is exactly what Donald Trump is promising on a national level and economists are warning about trillion dollar increases in the deficit if he reduces tax revenues…something like we are seeing in the test bed of Kansas:

It was a risk Brownback ran when he overhauled the state budget based on an interpretation of fiscal conservatism that dramatically cut personal income taxes.

The state would thrive, he pledged, because the tax cuts would help keep businesses and smart, young Kansans in the state, not fleeing “to Houston, or Dallas, or Chicago or somewhere else.”

“It will pave the way to the creation of tens of thousands of new jobs, bring tens of thousands of people to Kansas, and help make our state the best place in America to start and grow a small business,” Brownback wrote in 2012. “It will leave more than a billion dollars in the hands of Kansans. An expanding economy and growing population will directly benefit our schools and local governments.”

Well it hasn’t been happening…so what do you do in this situation? Repeal the tax cuts? Hell no:

Unwilling to scale back the income tax cuts, the state did increase the sales tax. Now Kansas has the second-highest sales tax in the nation, and such reliance on sales taxes has saddled the state with additional problems: Deflation is dropping the prices of goods and the taxes the state collects on them.

Kansas has the second highest sales tax in the nation? Kansas? Wha?

Is this where Wisconsin is heading now that the GOP has solidified it’s hold on the state capitol? Is this the path that Donald Trump will lead the nation down? Pay attention to the ailing canary in Kansas. Supply side is an interesting theory but we can’t afford to live there.

But you know, how could anything go wrong?

“We’re going to continue to grow the economy,” Brownback has said in response to questions about each new revenue shortfall.