 |
|
|
| 7/28/2009 9:45:00 AM | Email this article • Print this article | In Wisconsin, a rose is not a rose by any other name
Does Alabama say, ‘Thank God for Wisconsin?’
News Analysis
You have to hand it to Gov. Jim Doyle and his administration, they have a knack for painting a rosy picture, even in the toughest of times.
In January, after the governor unveiled the next phase of his Grow Wisconsin economic initiative, the Wisconsin Department of Workforce Development not only said the efforts would take the state's economy "to the next level" but provide investments "that will sustain growth for generations to come."
To say the investments would sustain growth was to imply there was growth already, when in fact the state Department of Revenue had already acknowledged that Wisconsin was in a recession.
Then, too, in his State of the State address, though he acknowledged difficult times "in the national economy," the governor was even rosier than his DWD, painting the current climate as more of a lucky day than a real-life nightmare for struggling families.
"Not only must we seize this opportunity - Wisconsin can lead the way," the governor said. " . . . With this plan, we will make aggressive investments in the next generation of Wisconsin's bedrock industries, build an economy based on innovation and unleash the entrepreneurial sprit of Wisconsin."
Perhaps, but in a report published by the Wisconsin Policy Research Institute, "Wisconsin Flunks its Economics Test," authors Thomas Hefty and John Torinus Jr. asserted that Wisconsin wasn't leading the way in virtually any economic realm, but, to the contrary, had been moving to an increasingly inferior position throughout the Doyle years.
During those years, Hefty and Torinus wrote, the state had failed to create new jobs, while, since 2005, average wages had fallen to approximately 85.6 percent of that of the national average, or to about the level of wages paid in the state of Alabama.
"Wisconsin is falling behind," Hefty and Torinus wrote. "Our economy is suffering, and so are our citizens. We need to build a more competitive economy or reconcile ourselves to becoming the Alabama of the north."
What's more, they argued, the state's economy was based less on innovation, as the governor asserted in his speech, and more on smoke and mirrors; what Doyle had unleashed, they argued, was not an entrepreneurial spirit but an economic outlook, a moxie if you will, informed by outright statistical deception.
When the state's employment numbers began to slide after 2005, the authors observed, the Doyle administration revised the way it calculated joblessness in a bid to camouflage the growing bad news.
"In one month, 30,000 unemployed workers disappeared from the data, the largest one-month drop in recent history," Hefty and Torinus wrote. "The unemployment rate showed an apparent (but unreal) dip. Presto, once again Wisconsin unemployment appeared to be below the national average."
Unfortunately for Doyle, the authors said, the camouflage didn't fool the Federal Reserve Board, which called the new counting method "rosy or smoky."
So, as it turned out, in Wisconsin, the economic rose was not an economic rose by any other name; what you called it depended on how you tended the statistical garden.
Two views
There are, then, two views of that garden - Doyle's (it's been wilted by the national environment but is still beautiful and poised for a spectacular blossoming), and those who think the flowers are all but dead, the garden all but given over to weeds.
To Doyle and his supporters, there have been glitches, but overall things point to a solid future.
For example, Wisconsin lost out to Michigan on a new General Motors plant but some observers dismiss that as a problem because, they say, new tax breaks targeting investment, research and development in newer industries could end up luring those firms of the future to the state.
In this view, who needs the dinosaurs of the past?
In his State of the State address earlier this year, Doyle said that economic strategy, not to mention the results, was sound.
In recent years, he said, Wisconsin's share of venture capital investment had doubled, and the state had been well prepared to take on the national recession, enacting spending and tax cuts, and depositing $50 million in a rainy day fund.
"Jobs are up in Wisconsin," Doyle said. "Exports are up. And from Uline in Pleasant Prairie to Logistics Health in La Crosse, we're attracting new companies and we now lead the Great Lakes in job creation."
What Doyle was obviously seeing was pretty flowers, but, to Hefty and Torinus, the bloom long ago fell off the Badger state economy.
Among other things, they quoted from data from the Center on Wisconsin Strategy, the national economy has grown more rapidly than in Wisconsin, and the state's per capita income has fallen to more than $2,500 behind the national average.
Comparisons to other Midwestern states didn't make the authors feel any better.
For instance, they reported, Minnesota's per capita income was nearly 20 percent greater than Wisconsin's, though 25 years earlier the two states' economies were roughly equivalent, while Illinois also outpaced the state, and in Iowa job growth between 2006 and 2008 was three times that of Wisconsin, with overall economic growth 70 percent higher.
Overall, they observed, since 2006 Wisconsin has trailed Iowa, Illinois and Minnesota in average annual job growth and average annual economic growth.
For a national comparison, they put Wisconsin's job growth from 2000 to 2005 at zero, compared to annual national growth of 0.3 percent, while from 2005 to 2007 state job growth was 0.7 percent, compared to a national average of 1.5 percent.
Meanwhile, with the recession, the recent situation does not seem to resemble Wisconsin's lucky day. In the past 12 months, the DWD reports, Wisconsin has lost 133,800 jobs. Of those, 61,000 jobs were lost in the high-wage, high-benefit manufacturing sector. Since 1998, according to the department, Wisconsin has lost 159,900 manufacturing jobs.
The result of all this?
According to Hefty and Torinus, there has been an out-migration of people since 2005, while in 2008 Forbes ranked the state 43rd in the nation for business climate.
Taxes, budget
Of course, how one looks at the economy determines how one looks at the recently signed state budget.
To the Doyle administration, as cited above, business tax cuts that have been tied narrowly to new investments with an aim of spurring angel and venture capital will nourish capital formation, new company start-ups and will further lure businesses to Wisconsin.
On the other hands, critics says those tax cuts are dwarfed by overall tax increases of more than $2 billion, including an up tick in the capital gains tax and increases in the tax rate for the richest Wisconsinites.
In fact, while some states have resisted tax increases, Wisconsin and some others have gone the other way.
According to the National Conference of State Legislatures, the latest July reports show 16 states - including Wisconsin - increasing taxes by more than 1 percent, one state cutting taxes by more than 1 percent and 19 states making no significant tax policy changes.
Nine states increased income taxes by at least $1 million each while 10 states reduced them, the NCLS stated. Hawaii, New Jersey and Wisconsin raised taxes on high-income earners, while Wisconsin joined Colorado and Vermont in scaling back capital gains preferences, the conference stated.
Wisconsin also reduced corporate tax breaks and joined Arkansas, Delaware, Mississippi, New Hampshire, and Vermont in raising the tobacco tax.
Some states reduced business taxes, among them North Dakota, which cut business income taxes by $5 million.
All totaled, the Wisconsin state budget increased spending by 6.2 percent, from $58.6 billion to $62.2 billion. The budget also increased the government's full-time equivalent payroll by 109 positions, from 69,247 to 69,356.
The number of tax-paid positions increased by 263.
|
Reader Comments
Posted: Wednesday, July 29, 2009
Article comment by:
Belleville
Ditto! As a previous outsider to Dane County, and now residing there the past 2 years, its clear Madison exists to serve itself. That is, economics is not based on the greater good for all, but to those who can be appointed into positions to spend future taxpayers revenues today. The chief of state is in denial and merely hanging unto a pension formula date, like most of those around him giving him useless advice. Even our top notch economics wizards at UW havent created an idea worthy of an administration appointment let alone a best selling book. The best an brightest left along time ago, we have the best of the worst, and it shows.
|
Comment on this story
|
|
|
|
