Tag Archives: economy

Trump budget threatens dream of buying, owning a home

The NeighborWorks Alliance of Wisconsin Chair Noel Halvorsen issued the following statement in response to President Trump’s budget proposal which would eliminate the Neighborhood Reinvestment Corporation, commonly referred to as NeighborWorks America:

The proposal by the White House will have a detrimental impact on people in every part of Wisconsin when it comes to achieving and maintaining homeownership.

Communities throughout Wisconsin have experienced positive economic impact from the housing and community development activities provided by the NeighborWorks Alliance of Wisconsin, which is made up of six groups all chartered by NeighborWorks America.

In our most recent Economic Impact Study, it showed that in 2014 the impact of homeownership services and development activities from the NeighborWorks Alliance of Wisconsin sustained 495 jobs and generated more than $69.17 million in economic activity.

These findings demonstrate the value of NeighborWorks organizations in supporting homeownership and community development.

Losing NeighborWorks America would be a tremendous setback for communities across Wisconsin.

Although the agency’s budget is small, less than three thousandths of a percent of the federal budget, the 1.4 million that came to Wisconsin in 2016 was leveraged into tens of millions of direct investment in homes and neighborhoods and generated $13.8 million in real estate and income tax revenue at all levels of government.

Unfortunately, the White House proposal goes even further and includes elimination of:

• the HOME program.

• CDBG.

• CDFI.

• Funding for Habitat, Enterprise, LISC, and more.

Essentially, the budget proposal empties the federal toolbox for underserved market housing investment  and community revitalization.

That would mean fewer Wisconsin families buying homes and less renovation of blighted houses in at-risk neighborhoods.

The NeighborWorks Alliance of Wisconsin calls on Congress to reject the president’s proposal and craft a budget that maintains NeighborWorks America and other critical agencies and programs that help families achieve and maintain the American Dream and help all of us build stronger communities.

Things to know about Wisconsin’s state budget deficit

The budget Gov. Scott Walker submitted to the Legislature in February balances, as it’s required to under state law. But when that same budget is measured using generally accepted accounting principles, or GAAP, the picture is much different.

With that measurement, the state’s true budget deficit would grow to more than $2 billion by 2019 — the largest it’s been since 2012.

HOW COULD THE BUDGET BE MISLEADING?

For the budget to be truly balanced, the state would have to cut spending by the amount of the GAAP deficit _ the shortfall when the budget is translated into GAAP.

“There are a lot of budget manipulations you can use to make the budget look better,” said Daniel Neely, a University of Wisconsin-Milwaukee professor who specializes in governmental accounting.

Namely, the budget is prepared in a way that counts millions and sometimes billions of dollars the state is temporarily holding for taxpayers and smaller units of government as its own.

WHY DOES A DEFICIT MATTER?

A large deficit tends to mean cash reserves are low, which means the state is vulnerable to any kind of economic downtown or political shock, said Todd Berry, president of the Wisconsin Taxpayers Alliance, a nonpartisan advocacy group.

A large deficit is also one of the reasons credit agencies haven’t raised Wisconsin’s bond ratings in years.

WHAT DOES THIS HAVE TO DO WITH WALKER?

When he was running for governor in 2010, Walker vowed on his campaign website to “require the use of generally accepted accounting principles (GAAP) to balance every state budget, just as we require every local government and school district to do.”

During his first few years in office, he did chip away at the deficit, which had ballooned to $3 billion in 2010 under former Gov. Jim Doyle. By 2014, the deficit had dropped to $1.4 billion.

But it inched back up the following year and hovers around $1.7 billion in the most recent estimate. If Walker’s budget is adopted, the deficit would reach $2.1 billion — $365 for every person in the state — by 2019.

HOW DO OTHER STATES COMPARE?

Wisconsin is one of only a handful of states with deficits when using GAAP. It was one of 10 states in 2014, which is the most recent data available from the Department of Administration.

And Wisconsin had the third largest deficit that year, after California and Illinois, two states with well-known, perpetual funding woes.

There are a few contributing factors, Berry said. Wisconsin provides more aid to local governments and tends to solve cash flow issues through excess withholding of income taxes, both of which increase the deficit.

WHAT DOES WALKER THINK ABOUT IT?

Walker’s spokesman, Tom Evenson, did not comment on the fact that Walker’s budget would add to the GAAP deficit. Instead, Evenson highlighted that Walker will have decreased the deficit by more than 30 percent, from $3 billion in 2011 to around $2 billion in 2019.

WHAT ABOUT OTHER LAWMAKERS?

The CPA Caucus, a group of Republican lawmakers who are also certified public accountants, has proposed requiring the state to reduce the deficit or use GAAP several times in the past. Caucus member Sen. Chris Kapenga said it’s possible they will try again this session.

“If I were in the governor’s spot, and I had some things I wanted to get pushed through, it’s an easy way to get what I need done,” Kapenga said. “But we’re saying, ‘Let’s fix the accounting of this so that people know this is how much (that’s) actually going to be spent.’”

Obamacare came to Montana Indian Country and brought jobs

The Affordable Care Act created new health coverage opportunities for more than half a million Native Americans and Alaska Natives — and jobs have followed on its coattails.

In Montana, this is playing out at the Blackfeet Community Hospital. It’s the only hospital on the Blackfeet reservation and has been mostly funded — and chronically underfunded — by the Indian Health Service, which has been in charge of Native American health care since its founding in the 1950s.

But now, many Native Americans have been able to afford health insurance on the Obamacare exchange, and last year, Montana expanded Medicaid. Now, about one in seven reservation residents gets Medicaid.

Blackfeet Community Hospital needed to build an infrastructure to deal with the byzantine bureaucracy that comes with taking Medicaid and private insurance. The tribe’s community college started a new curriculum to help meet the growing demand for people in Indian country to process insurance claims.

Blackfeet tribal member Gerald Murray took the courses. “I got a contract before I graduated in April, and then the day of graduation in May it became permanent so I applied for it,” he said.

Murray’s experience is an example of the health care law’s transformative power in Native American communities, said Montana’s director of American Indian Health, Mary Lynn Billy-Old Coyote.

“To me, there’s opportunity there to not only build health care, but to build your entire community and build jobs,” said Billy-Old Coyote.

Unemployment on most of Montana’s Indian reservations is at least double the rest of the state. And people who are working don’t always get health insurance with their jobs.

So ACA subsidies that bring down the cost of insurance premiums are a big deal, Billy-Old Coyote said.

Most Montanans, Native or not, can now get policies for about $75 a month. It is a big change for the reservation communities where people are accustomed to the underfunded IHS, which often didn’t pay for care unless someone was in immediate danger of losing life or limb.

“Now you’ve got an opportunity for American Indian people to truly have access to private insurance,” she said. “You have access to greater networks of providers and specialists, and all the things we generally don’t see you have access to.”

Medicaid expansion had a lot to do with the number of health care jobs in Montana growing by 3 percent last year, according to state statistics. And schools in Montana, including tribal colleges, are offering more classes in health care fields.

At Blackfeet Community College, 23-year-old Leroy Bearmedicine is working toward certification as an emergency medical technician.

“I’d like to become a registered nurse at some point, maybe even work my way up to flight nurse — something to get the adrenaline going,” he says.

Native American leaders have seen the Affordable Care Act as a means to remedy a series of broken promises by the federal government to care for them. They now fear that promise, too, will fade. One estimate suggests Montana will lose 3,000 health care jobs if the Affordable Care Act is repealed.

This story is part of a reporting partnership with NPR, Montana Public Radio and Kaiser Health News. It is published here under a creative commons license agreement and courtesy of KHN.

Reducing food waste is good for the Earth AND your wallet

Remember how it was when you were a kid sitting at the kitchen table and your mother served up a healthy helping of rutabagas? Gross, right?

You slipped them to the family dog or spooned them into a napkin to get them out of sight. But there was no fooling Mom. Your failed sleight-of-hand resulted in a guilt trip and membership in the Clean Your Plate Club.

Fast-forward to today and you’ll find that wasting food has costly consequences extending well beyond your plate.

“Getting food from the farm to our fork eats up 10 percent of the total U.S. energy budget, uses 50 percent of U.S. land and swallows 80 percent of all freshwater consumed in the United States. Yet 40 percent of food in the United States goes uneaten,” according to the Natural Resources Defense Council.

The environmental advocacy group says that cutting food waste by just 15 percent would help feed more than 25 million people a year “at a time when 1 in 6 Americans lack a secure supply of food to their tables.”

Alice Henneman, an extension educator with the University of Nebraska-Lincoln, puts it another way: “Food tossed is money lost.”

Food rots when dumped in a landfill, and produces methane, a greenhouse gas said to contribute to climate change. Food wasted in stores and restaurants cuts into profits.

But incentives have been introduced to reduce food waste, many of them financial.

“Tax benefits are available for restaurants and stores for donating food,” Henneman said. “People are buying ‘ugly food and vegetables,’ or produce that is misshapen in appearance, in stores because stores are offering them at a discount.”

Michigan State University has been aggressive about fighting food waste in its 10 dining halls, where more than 30,000 meals are served daily.

“Food is expensive,” said Carla Iansiti, sustainability projects manager for MSU’s Culinary Services. “We train our staff members to get the most volume out of their product, only cut what you need for a recipe and be creative about using all the products.”

The university remodeled several of its dining halls to be trayless and stocked them with smaller dishes. “It makes a difference with smaller plates and fewer plates, and people always have the option to come back for more,” Iansiti said.

Additional tips for minimizing food waste:

• Think landfill diversion. Compost your leftovers for better crop or garden production, or mix them with animal feed. Freeze or can surplus garden produce or donate it to a food bank.

• There is value in sizing. Buy things that won’t spoil in quantity.

• Check your garbage. Cook dishes that have proven popular and don’t end up being thrown out.

• Buy often and buy fresh, eating as much as you can before it goes bad. Shop your refrigerator before purchasing more.

• Practice portion control. Share rather than discard leftovers. Ask for a sample when dining out if you’re uncertain about ordering something. Don’t rush through meals.

• Plan “cook-it-up” menus. Check expiration dates and move older food products toward the front of your shelves so they can be used first.

On the Web

For more about reducing food waste, see this Natural Resources Defense Council issue paper.

U.N.: Tourism to suffer under Trump’s travel ban

The U.S. travel ban on citizens of seven Muslim-majority countries will affect demand for travel to the United States, the UN World Tourism Organization said this week.

Alongside widespread protests at airports, the executive order by President Donald Trump has led to criticism from airlines and the travel industry.

“Besides the direct impact, the image of a country which imposes travel bans in such a hostile way will surely be affected among visitors from all over the world and risk dumping travel demand to the United States,” UNWTO Secretary General Taleb Rifai said in a statement on Tuesday.

Seeking to capitalize on the restrictions, companies and officials in Asia said they would target greater tourism and education ties with Muslims worried about the curbs.

The White House has said the move to put a 120-day hold on allowing refugees into the country, an indefinite ban on refugees from Syria and a 90-day bar on citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen, is to protect U.S. citizens.

UNWTO’s Rifai said it may worsen security risks.

“Global challenges demand global solutions and the security challenges that we face today should not prompt us to build new walls; on the contrary, isolationism and blind discriminatory actions will not lead to increased security but rather to growing tensions and threats,” he said.

U.S. airlines’ shares dropped on Monday over concerns on the impact of the immigration order, although analysts have said they did not expect a material impact for now.

The World Travel and Tourism Council, representing travel industry executives, also on Tuesday urged the Trump administration to rethink the ban, saying the travel and tourism sector was responsible for the livelihoods of millions worldwide.

“The U.S. has suffered in the past from similar isolationist policies. We urge the Trump administration to reconsider this ban,” WTTC President and CEO David Scowsill said in a statement.

The WTTC estimates the travel and tourism industry directly contributed 2.7 percent of the U.S. total gross domestic product in 2015.

Fed Chair Yellen cites income gap among long-term risks

The U.S. economy is on solid ground now but it faces long-term risks posed by slow productivity growth and the widening income gap, Federal Reserve Chair Janet Yellen says.

Speaking recently to a gathering of teachers, Yellen said that she sees no major short-term risks facing the economy.

However, sputtering productivity growth and growing income inequality are serious long-term concerns.

The Fed chair said both challenges are outside the scope of the Federal Reserve to handle with its interest-rate tools, so it is important for other policymakers to address them.

She cited a recent study that included a “very shocking finding” — death rates in the 45-to-54 age group are actually rising.

Yellen said there appeared to be a link between this increase and higher rates of suicide and health issues related to substance abuse.

“The thought is that this is a reflection of greater economic insecurity,” Yellen said. “Obviously these are very disturbing trends.”

To promote the study of economics, Yellen held a national town hall meeting with teachers gathered at the Fed’s headquarters in Washington and in groups listening in at Fed regional banks around the country.

In prepared remarks, she said the study of economics can help students manage their personal finances and also provide them with the skills for analytical and critical thinking needed for success later in life.

“Economics provides knowledge and skills of practical use in college and in the workplace and it also provides skills to plan and make wise financial decisions,” Yellen said.

Asked in the question period how an introductory course on money and finance should be designed, she said she would make a number of changes to how she taught such a course many years ago, incorporating the lessons learned in dealing with the 2008 financial crisis, the worst since the 1930s.

She defended the bolstering of the safety and soundness of the financial system brought on by the Dodd-Frank Act that Congress passed in 2010 to prevent a future crisis. Republicans in Congress and President-elect Donald Trump have said they want to roll back some of the changes to make regulation less burdensome.

In her remarks, Yellen said that economics training can play an important role in improving the capabilities and creativity of the workforce.

“Everyone is engaged in and depends on the economy and nothing is more critical to a healthy and growing economy than the capability, creativity and productiveness of its workforce,” Yellen told the teachers. “Whenever I am asked what policies and initiatives could do the most to spur economic growth and raise living standards, improving education is at the top of my list.”

Yellen said that consumers, whose individual spending decisions account for two-thirds of economic activity, can better weather hard times if they have the proper training.

“Stronger household finances overall can help sustain growth, stabilize the economy and mitigate an economic downturn,” she said.

Yellen also put in a plug for what she called the most important teaching aid the Fed produces, a 182-page book called “The Federal Reserve System: Purposes and Functions.” She urged the teachers to check out the new 10th edition of this book on the Fed’s website.

10 banks funding Dakota Access Pipeline decline meetings with tribal leaders

For the past six weeks, a global coalition has been pressuring banks providing project loans to the Dakota Access Pipeline to renegotiate or cancel their loans.

The Standing Rock Sioux Tribe and other Indigenous leaders in December requested the banks meet with tribal representatives to hear their concerns. The deadline for banks to respond to the meeting request was Jan. 10.

As of Jan. 16, four banks had declined, including. BayernLB, BNP Paribas, Mizuho Bank and Suntrust.

Six banks failed to respond, including Bank of Tokyo-Mitsubishi UFJ, BBVA Compass, ICBC, Intesa Sanpaolo, Natixis and Sumitomo Mitsui Banking Corporation.

However, seven banks met or agreed to meet with the tribe and its allies, including Citi, Crédit Agricole, DNB, ING, Société Générale, TD and Wells Fargo

Tribal leaders this week are stepping up their pressure on banks that refused to engage.

The Indigenous coalition at Standing Rock has a running billboard in Times Square asking millions of people to join the campaign to #DefundDAPL.

Organizers also continue to protest with bank occupations.

A news release from Standing Rock estimated the “brand-damaging campaigns … have already led to the closure of thousands of accounts worth a $46,314,727.18.”

To come is a “global week of action” to pressure the banks to discontinue loan disbursements to Energy Transfer Partners.

Standing Rock Sioux Tribal chairman Dave Archambault II said in a press statement: “We are pleased that some of the banks behind DAPL are willing to engage Standing Rock Sioux leadership, but maintain that all 17 should not be helping a company who deliberately ignores our concerns. We call on the remaining banks to agree to a meeting with the Tribe. We know that they have heard Energy Transfer Partners’ side of the story, and they need to hear our perspective as well.”

Ladonna Bravebull Allard of Sacred Stone Camp added, “I want the banks to know that the power of their investment comes from the people, and the people are saying we have the right to water, and we will stand for the water. Stop investing in destruction of the earth.”

Dallas Goldtooth, Keep it in the Ground Organizer, Indigenous Environmental Network said: “As a movement to stop this dirty Bakken oil pipeline, we are demonstrating the inherent power of organized communities and mobilized citizens. We are showing Big Oil and government leaders that we know the power of our capital, and as such we collectively choose to invest in life and water, not death and oil. As first peoples of the land and in defense of our Indigenous rights, we will continue to rise, resist, self-determine and divest until the Dakota Access pipeline is nothing but the defeated aspirations of a Energy Transfer Partners’ dream.”

Johan Frijns, Director of BankTrack said: “The Dakota Access Pipeline project is supposed to be in compliance with the Equator Principles, and therefore guarantee Indigenous peoples’ rights to be properly consulted. The refusal of leading EP banks to meet with the Sioux Tribe not only makes a complete mockery of that commitment, but also poses a severe risk to the very credibility of the Equator Principles.”

 

Yellen to college grads: Best job market in nearly a decade

Federal Reserve Chair Janet Yellen said Monday that college graduates are entering the strongest job market the country has seen in nearly a decade, and their degree is more important than ever.

Yellen said that with changes in the job market such as technology and globalization, succeeding in the job market is increasingly tied to higher education.

“Those with a college degree are more likely to find a job, keep a job, have higher job satisfaction and earn a higher salary,” Yellen said in remarks at commencement ceremonies at the University of Baltimore.

She said that annual earnings for college graduates last year were on average 70 percent higher than those with only a high school diploma. Back in 1980 that difference was only 20 percent, she said.

Yellen said the increasing demand for people with college and graduate degrees reflected the need for higher technological skills and the impact of globalization, which allows goods and services to be produced anywhere. She said those trends were likely to continue.

“Success will continue to be tied to education, in part because a good education enhances one’s ability to adapt to a changing economy,” she said.

In her remarks, Yellen did not make any comments about Fed interest-rate policies. The Fed last week boosted its benchmark rate by a quarter-point. It was the first increase in a year. In making the announcement, the Fed projected that it would move rates up another three times in 2017.

Yellen said that in addition to the improvement in the unemployment rate, which in November fell to a nine-year low of 4.6 percent, there have been recent signs that wage growth is picking up.

But Yellen noted that challenges remain.

“The economy is growing more slowly than in past recoveries and productivity growth, which is a major influence on wages, has been disappointing,” she told the graduates.

Globalization took hits in 2016; Will 2017 lead to more?

Globalization, the path that the world economy has largely followed for decades, took some hefty blows in 2016.

The election of Donald Trump as U.S. president and Britain’s decision to leave the European Union have raised questions over the future of tariff-free trade and companies’ freedom to move production to lower-cost countries.

Borders are back in vogue. Economic nationalism is paying political dividends.

“We want our country back” was the rallying cry of those backing Brexit, a sound bite that had echoes in Trump’s “Make America great again.”

The rise of Trump and the triumph of Brexit had their roots in the global financial crisis of 2008.

Eight years later, the world economy has still not yet fully gotten past that shock to its confidence — people are nervous, some are angry, and many are seeking novel solutions to their problems. Next year, there’s scope for more uncertainty with elections in France and Germany.

Here’s a look at the year’s top business stories for 2016:

BREXIT SHOCK

In what was a sign of things to come, Britain voted to leave the EU in a referendum in June. The decision came as a surprise — certainly to bookmakers and many pollsters who had consistently given the “remain” side the edge — and means Britain has to redefine itself after 43 years of EU membership. David Cameron resigned as prime minister after the vote and the new Conservative government led by Theresa May is planning to trigger the formal process by which Britain exits the EU early next year. There are many shades of potential Brexit, from an outright divorce that could put up tariffs on goods and services, to a more amicable parting that sees many of the current trading arrangements kept in place. The pound’s fall to a 31-year low below $1.20 at one point is testament to that uncertainty.

 

TRUMP CARD

Pollsters and bookmakers got it wrong again a few months later when Trump defeated Hillary Clinton in the U.S. presidential election. Whether he translates his “America First” platform into action following his inauguration in January will help shape the global economy for the next four years at least. Trump has railed against long-standing trading agreements, including the North American Free Trade Agreement, and vowed to punish China for the way it devalues its currency against the dollar and to tax U.S. firms that move jobs overseas. He has also laid out plans to bring America’s creaking infrastructure up to 21st-century standards, a new spending pitch that has the potential to boost jobs — but which could also lay the seeds of higher inflation.

MARKETS MARCH ON

Trump’s victory did not cause the bottom to fall out of the stock market rally that’s been largely in place since 2009, when the world economy started to first claw out of its deepest recession since World War II.

In fact, both the Dow and the S&P 500 rallied to hit a series of record highs. Stocks have also benefited from a raft of big corporate deals this year — executives are seeing takeovers as a fast way to generate growth in what is otherwise a low-growth global economy disrupted by non-stop technological innovations.

Notable deals in 2016 included the announcement of an $85 billion merger of Time Warner and AT&T and the $57 billion takeover of Monsanto by Germany medicine and farm-chemical maker Bayer. The $100 billion takeover of SABMiller by Budweiser maker Anheuser-Busch InBev was also completed.

FED FINALLY DELIVERS

During his campaign, Trump criticized Federal Reserve Chair Janet Yellen, saying she should be “ashamed” of the way she’s run policy since taking the helm in 2014. A year ago, the Fed appeared set to follow up its first interest rate hike in nearly a decade with three or four more in 2016. But there was no move until Dec. 14, when the U.S. central bank raised its main interest rate to a range between 0.5 percent and 0.75 percent. Many factors explained its hesitation to raise rates, including unease over the global impact of China’s economic slowdown and uncertainty surrounding the U.S. election. But with the U.S. economy continuing to do better than most developed countries — with unemployment below 5 percent and inflation on the way up — the Fed finally delivered another hike. The markets are predicting another three or four increases next year. Those expectations have helped the dollar rally, especially as other major central banks persevere with super-loose monetary policies to breathe life into their economies.

CHINA’S KEY ROLE

As the world’s second-largest economy, China is playing a bigger role in the functioning of the global economy. Nowhere was that more evident than in the early months of 2016, when jitters over the scale of the slowdown in China caused wild swings in financial markets. Stocks took a pounding while commodities tanked, with oil skidding to 13-year lows, as traders factored in lower demand from resource-hungry China. The slump in commodities weighed heavily on economies like Australia that are big exporters of raw materials. China’s economy is ending the year in relatively good health as authorities try to pivot the economy’s focus from manufacturing to more consumer spending. But Trump’s promises to take a tough stance in trade will be of concern to Beijing.

OPEC TAKES A STAND

For the first time since December 2008, at the height of the financial crisis, the Organization of Petroleum Exporting Countries cut its production levels in 2016. November’s cut, soon followed by more cuts by non-OPEC countries like Russia, helped push oil prices sharply higher. At over $50 a barrel, benchmark New York crude is markedly higher than the near 13-year lows around $30 recorded at the start of 2016, when investors focused on high supply and concerns over an economic slowdown. The oil slump helped put several crude-producing countries into severe recessions, including Brazil and Venezuela, and even saw wealthy Saudi Arabia cut back on spending. The question for 2017 is whether OPEC — and non-OPEC — countries can deliver on their production promises. If they do and higher oil prices stick, that will push up inflation in the global economy.

IT JUST GRATES

One of the major reasons why popular sentiment has turned against governments has been a growing distrust of elites. Perhaps nothing illustrated the issue more than the “Panama Papers,” a leaked trove of data on thousands of offshore accounts that helped the wealthy, the powerful and celebrities shelter their cash from the taxman, often without breaking the law. Critics say these tax schemes are the core of a system that gives an unfair advantage to big corporations and the wealthy. Outrage grew in the U.S. when it was revealed that Wells Fargo employees opened up to 2 million bank and credit card accounts fraudulently to meet sales goals. Bank employees also allegedly moved money between those accounts and created fake email addresses to sign customers up for online banking.

It just grates.

Scott Walker quotes nuclear war song in economic speech

Wisconsin Gov. Scott Walker says he knows a 1980s song he quoted to make a point about Wisconsin’s economy is about nuclear war.

Walker this week quoted the Timbuk3 song, “The Future’s So Bright, I Gotta Wear Shades,” while speaking at an economic development summit.

Walker even briefly donned a pair of dark sunglasses to make his point.

He quoted the 1986 song’s lyrics at both the beginning and end of his speech and again when speaking with reporters afterward.

When asked if he knew the song was about a pending nuclear war, Walker said, “That’s why I didn’t quote the whole song. Having been from the 1980s, I actually know the words.”

The band Timbuk3 was formed in Wisconsin.