Paul Soglin: Waxing America

Dubai: Free markets, Unrestrained, Unregulated Capitalism. Phooey

As the world awaits the opening of U.S. markets, the heralded example of free markets and unregulated capitalism, Dubai, sent markets tumbling from Singapore to London.Dubai default fears push futures sharply lower and Dubai debt crisis raises financial turmoil fears

HONG KONG — The fallout from Dubai's debt crisis rippled across the globe Friday, raising concerns of another wave of financial turmoil and showing how vulnerable the world economy remains despite signs of recovery

Touted as an example for the United States to emulate by right wing economists and talking heads, What Dubai could teach the US about capitalism  (2007)

Dubai is a key center of hawala, an unregulated private system of payments and currency trading between the Middle East, South Asia, and Southeast Asia. Similar to a banking system of clearing checks, hawala brokers facilitate transactions and money transfers for a 1%-2% commission. For less money than a typical bank rate, the centuries-old payments system eases currency and gold transfers between Dubai's many migrant laborers and their families abroad.

Unfortunately, hawala is under pressure from the US government, which is trying to impose its own bank reporting and record keeping regulations throughout Dubai. The US regulatory efforts are a misguided attempt to prevent money laundering and the financing of terrorism. (emphasis added)

Dubai is delivering a sucker punch to investors who hoped that the steady recovery of American markets since last March would modestly correct and then keep advancing.

Obviously Americans are not the only skeptics.

 Free Market flawed, says survey: In the global poll for the BBC World Service, only 11% of those questioned across 27 countries said that it (free-market capitalism) was working well.

For a long time, progressives expressed skepticism about the ability of Dubai to maintain its unregulated commercial growth, October, 2006: Fear and Money In Dubai

The irony is that the Dubai failure slows the U.S. recovery.  Rush Limbaugh and Sean Hannity will not doubt blame it on President Obama.

Democrats in the Pumpkin Patch Part II

Jonathan B.* wrote a comment to Democrats in the Pumpkin Patch:

I would suggest--instead of trying to throw the whole thing out--that some changes to the implementation of the law allow a full assessment on those lands that are legally prepared for development regardless of pumpkins or corn or whatever--and that the land owner who feels aggrieved be simply allowed to rezone and de-plot their land back to agricultural permitted use to receive favored tax assessment.

Jonathan is correct. For example, the Tice family farm near Middleton fits the proper intent of the law. The land they own is within the urban service area, it is surrounded by development, but so long as they farm it, the land should be taxed as agriculture being the highest and best use.

It was estimated at the time of adoption that over 95% of the farmland, being too far from an urban or suburban area would not be impacted under the law.

We repeatedly asked for tighter regulations to make sure that land controlled by developers not benefit from the constitutional modifications. Perhaps bipartisanship support is appropriate in the next legislative session to remedy this problem.

It should also be noted that not only does this abuse mostly shift the exempted taxes to middle income residential property owners, but it also provides an economic advantage to the rural developer rather than the infill developer who is paying significantly higher property taxes.

*I assume most readers know who this would be.

Democrats in the Pumpkin Patch

Recently some hay was made of the agricultural status of land owned by Terrence Wall, prospective conservative challenger to Russ Feingold. Wall is benefitting from a tax break brought to Wisconsin, in part by Democrats.

Have You Visited Terrence Wall's $2 Million 'Pumpkin Patch'?In July of 2009, using the use-value property tax classification designed to assist farmers, the properties were reclassified as agricultural (G4) and the valuation for each was reduced to $300. Using the tax formula, Wall will likely now pay an estimated $10 in property taxes for the properties – a savings of $34,000.

It's the Great Pumpkin, Terrence Wall It's also the kind of crap that drives voters crazy. The electorate draws no moral distinction between tax avoidance (legal) and tax evasion (illegal). Wall may have to learn that the hard way.

The Problem with Terrence Wall: He's recently come under fire for using sneaky, but legal, means to avoid paying some Wisconsin taxes.

Lets get one thing straight about Farmland Use-Value Assessment.

Democrats are as responsible for this travesty as much as  Republicans.

The first step to creating this exemption to the uniformity clause of the Wisconsin Constitution was taken in taken in 1974. The Legislature adopted 1973 AJR 1 to place the proposed change on the ballot.  it was a bipartisan action in the Assembly 66 ayes (33 D and 33R) to 32 noes (29 D and 3 R).

 

Urban leaders repeatedly pointed out that:

• Real agricultural land, away from the urban areas, would get no benefit from the new law.
• The benefits would go to speculators and developers who would get a tax break.
• There would be leap frogging of development over the exempted land.
• That despite the non-partisan Legislative Fiscal Bureau stating, “The purpose of the [use-value] law is to slow urban sprawl and allow farmers to keep their land in agricultural production without burdensome taxation," that would not be the result and developers would get the tax breaks.

All proved to be correct.

In 1970's Milwaukee Mayor Henry Maier and I fought this, and again in the 1990's Milwaukee Mayor John Norquist and I fought the 1990's budget amendment that accelerated the tax breaks. 

While advocates of the measure claimed that the legislation was intended to preserve farm land by removing taxation pressures to develop it, all it did was provide a tax shelter for developers and shift $767 million in property taxes to urban and suburban communities by 2002. 

It was mostly homeowners in urban areas that picked up the $767 million tax shift.

Democrats played a role in this every step of the way.

I have friends who are developers. They know how I feel about this.

A candid examination of right-wing policies and the Democrats who play along ...

 

 

Getting Realistic About Wisconsin's Fiscal Crisis

This was not the best of news: 10 states face looming budget disasters

Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin join California as those most at risk of fiscal calamity, according to the report by the Pew Center on the States.

Waxing America readers know that I am skeptical of so many of these 'studies' and surveys, but the Pew Center is reputable. The point is not whether Wisconsin is in the top ten - we know the situation is serious - but whether we have a plan to do something realistic that will address two very real budgetary issues.

First we need a plan to grow the state's economy. That means more than developing real estate; it calls for investment in human capacity (education) and infrastructure. Decisions on funding schools, transportation systems, and communications must be be based on sound economic and social principles, not political ideology.

Secondly, we must build upon the recent efforts lead by Governor Doyle to create a meaningful unreserved, undesignated fund balance for 'rainy days.' 

Both require that Wisconsin's taxes work as an investment, not torture.

No to Proposed Dane County Automobile Registration Fee

A local vehicle registration fee is not a new idea. For forty years, first the city of Madison and then Dane County rejected this revenue enhancer. It is a rather simple revenue source - a flat $15 fee on every vehicle registered in the county. Collection is simple -- add it to the state registration, collect it with the annual state registration, and rebate it to the county.

Dane County Board proposes increasing vehicle registration fee by $15

The $15 "wheel tax" would be added to the state's $75 annual fee. It would generate about $5 million in transportation funding for the county, which faces major revenue shortfalls during the recession.

Rather than increase transportation funding, however, the goal would be to move other county funding out of transportation and into the human services budget and the general fund reserve, said Sup. Kyle Richmond of Madison.

It is attractive. Cities and counties can only collect whatever tax or fee is authorized by the state and until counties were authorized to collect a half cent sales tax, this and the property tax were it.

The problem with Wisconsin's vehicle registration fee is that it is a horribly regressive fee or tax. The wealthy owner of a Hummer pays the same fee as the owner of the small family passenger car. The fee is flat and is not ad valorem, and is not tied to either the value of the vehicle or its fuel efficiency.

Dane County Executive Kathleen Falk and County Board Chairman Scott McDonell are correct in opposing the fee.

This would be a good time for the state legislature to revisit the fee and make it a progressive fee tied to the value of the vehicle or its original EPA fuel rating.

Supervisor Richmond's intent to use the additional funds for social services is laudable, but the fee is regressive and there is no guarantee that once the revenues were place in the general fund, that it would be an 'add on' to existing human service budget. There is no way of segregating the fund and ensuring that other revenues for human services will not decline.

Working the Federal Spending for Wisconsin's Benefit

Marc Eisen made an invaluable contribution to the current discussion about Wisconsin's economic climate with his Isthmus article,  State of Chumps:

...I think the late Sen. Bill Proxmire — not genetics — is mostly to blame. But however you apportion responsibility, the legacy is the same: Wisconsin does wretchedly as a recipient of federal spending...

Insiders offer a matter-of-fact explanation for Wisconsin's dearth of federal spending. The state doesn't have any big military bases, so we don't get all those military salaries and big defense contracts. And those big federal regional offices wind up in Chicago and not in Milwaukee. So, of course, we don't get a lot of bucks from Uncle Sam. End of story...

Eisen is right. This story was written forty years ago; it was written thirty years ago. The insiders however, do not have to be right.

The lack of military bases does hurt our opportunities - but Bill Proxmire is dead and there are alternative sources of revenues.

For one thing we need to play to our strengths and do so aggressively. In areas of research with the entire University of Wisconsin system especially related to agriculture and genetics there are opportunities. Coordination and political as well as academic and business resources must be utilized.

In addition, the urban communities need to refocus. Despite his strong advocacy for cities, former Milwaukee Mayor John Norquist rejected federal aid and even mocked cities that pursued it. That lead to his leaving the U.S. Conference of Mayors.  Fortunately, present Milwaukee Mayor Tom Barrett brought his city back into that organization.

Other key Wisconsin cities like Madison and Green Bay are no longer members. That is unfortunate. During both of of my tenures as mayor (1973-79, 1989-1997), Madison played an active and vigorous role.

It benefited the city greatly, and some will recall the praise we often received for the significant federal dollars that came to Madison.

First, the US Conference of Mayors gets involved in the drafting of legislation - legislation with critical formulas that determine funding. Cities like Madison were critical to getting legislative support and adoption of the block grant, transit and other programs. The larger cities knew they needed Congressional support from areas like Madison, Wisconsin. Since we were equitably treated in the funding formulas, we worked vigorously for adoption.

Secondly, our contacts with the Conference were invaluable when we were looking for discretionary funding. The experience of the staff along with our own resources led to numerous successes.

I know Madison Mayor Dave Cieslewiz has reservations about some of the corporate funding sources for the organization, but I would suggest he reconsider and consult with Mayor Barrett.

Meantime, Eisen is correct about past failures, but futility in procuring federal dollars is not inevitable.

 

With Tea Baggers in Control, Can Moderate Wisconsin Republicans Survive?

The election of President Barack Obama last fall and the accompanying reaction from the extreme right wing worsens the condition of moderate Republicans. Here in Wisconsin, especially around metropolitan Milwaukee, where right-wing talk radio with Charlie Sykes and Mark Belling sways listeners, moderate Republicans continue to come under siege.

Now we see that on a national level the problem is worsening.

Tea partiers turn on GOP leadership

Whether it’s the loose confederation of Washington-oriented groups that have played an organizational role or the state-level activists who are channeling grass-roots anger into action back home, tea party forces are confronting the Republican establishment by backing insurgent conservatives and generating their own candidates — even if it means taking on GOP incumbents.

As we noted last August, Democrats, Libertarians, and No Republicans, Oh My

 ...(they) are not Populists in any sense of the word, they are libertarians...

...The Tea Baggers and the town hall protesters are really about reshaping the fundamental premise of our government. That is a challenge for the Republican Party. They will not quit until they either control the GOP or bolt to the Libertarian Party lead by Sarah Palin.

The real challenges for progressives and moderate republicans is finding their common ground. It will require positional shifts for both, which they need to accomplish anyway.

The left must realize there is a role for capital and that profits are not evil.

For moderate Republicans, it means accepting reasonable regulation in areas like financial services, consumer protection, and safety. It means putting distance between them and the far right.

The left and the moderate Republicans must recognize (this list is far from comprehensive):

• the existence of global warming and that we must do something about it.
• the need to integrate every American into the workforce.
• the value in education and training and the value of investment in infrastructure.
• the critical importance of the quality of the environment.
• the role of the government in protecting heath and safety.
• the need for limits to international trade until all markets are subject to the same labor and environmental standards.
• the need to welcome development that is compact and that makes transit systems more efficient.

The Feds, Buses, Bill Dyke, and The Institute for Mundane Studies

Madison

Bill Dyke was the mayor from April 1969-1973.  In 1976 he was the vice presidential candidate for Lester Maddox when they ran under the banner of the American Independent party.

 

As mayor, Dyke refused to sign documents required by the federal government.

From 1969 to1970 he refused to sign a federally required labor agreement known as a 13-C. Without this document, the city could not receive the federal funds required to purchase the old Madison Bus Company and make it a public entity.

 

Despite the fact that the common council had voted to override his veto of the purchase of  the bus system, Dyke would not execute the document.  

One evening in 1970, Dyke chose not to attend the city council meeting and instead dined in nearby Maple Bluff. City Council president Leo Cooper ordered the city clerk to bring him the unsigned 13-C labor agreement which guaranteed that the employees would not be worse off as a result of municipalization of the bus company.

 

With Dyke outside of Madison, Cooper, the acting mayor, executed the document, and the federal funds to purchase the assets of the Madison Bus Company and new buses were on the way.

 

In the mid 1960’s the city of Madison, the University of Wisconsin, and most of  the private businesses and property owners in the 600 through 900 blocks of University  Avenue agreed to what was to be called the University Avenue Renewal Project.

The private property owners fearful that the UW would take over the entire area saw the power of the federal government with its urban renewal programs as a superior way to halt the power of the UW and the state.

 

 

It was agreed that the UW would get the entire block between Murray, Johnson, Park and University for Vilas Hall and that portions of the remaining blocks would be divided between the UW, the private sector, and the city for housing.

 

By 1973, most of the acquisitions were completed, though not the demolitions and there were a few loose ends. One of the properties in question was a dilapidated frame house on, Brooks Street between University Ave.and Johnson St. know as the Institute for Mundane Studies.

Federal law covering urban renewal was very specific about relocation costs for tenants displaced by a project. Even if tenants were planning to move, there were requirements that they be compensated for their time and trouble. Relocation costs could run into the thousand of dollars per individual resident.

 

Bill Dyke was not happy. It was an outrage that UW students who were planning to move back to Manhattan upon graduation should be eligible for relocation if they had moved into the property while the urban renewal process was under way.

 

Dyke refused to sign the papers for The Institute for Mundane Studies. In April 1973, I defeated Dyke and took office on April 24^th. That week I signed the required documents and the relocation payments were  made to its residents.

 

As part of the federal governemnt requirements, the city was requried to aquire a new property to replace Brooks Street and that is how 622 N Henry St, subsequently known as Rivendell was aquired.

By coincidence, during my first year at the UW 1962-63, I shared the master bedroom at 622 N. Henry with three other students.

Dane County Budget is the Right Thing

The problems confronting Dane County will not be solved in the 2010 budget. The required tax increase to support a minimum level of services is not the dream of county residents.

 Falk proposes cut in county spending, hike in taxes

Falk is proposing a 7.9 percent increase in the property tax levy. Her previous high was 5.05 percent in 1998. The county's share of the property tax bill on an average Madison home of $245,000 would increase $38.07 to about $626. Previously the largest increase on the average Madison home was $25.68 in 2004.

The cruel irony of the right-wing inspired depression is that at the very time when Americans need critical government services, the state, the city, and the county are under pressure to reduce those services.

The 7.9% increase in the Dane County levy will not be welcome in our home. As a consultant whose income is dependent upon the economy, the last two years have not been pretty. It will be a challenge to come up with this year's property taxes.

The additional $50 for Dane County, like the rest of our property tax bill, is carefully spent.

During a mayoral campaign in 1975 I recall a Madisonian saying:

I know my property taxes are higher here than in other communities. My family does not need a lot of services. We are contributors, not users of most government services. As long as the money is wisely spent, I do not making those extra payments.

I wish we had most of our property tax money to pay for our two daughters who are still in college, or for retirement, but Dane County services, even with some exceptions, are of a high quality.

After the 2010 budget is adopted, the county must adopt a plan so that reserves are set aside for the next economic crisis. By adding a few million dollars a year to an undesignated reserve account, the goal should be to grow the fund to at least $30 million.

 

Madison Rail: Conservative Misconceptions About the RTA II

Yesterday in Madison Rail: Conservative Misconceptions About the RTA, I explained how the RTA works in Dane County.

Let us review.

The RTA is comprised of the Madison Metropolitan area, not Dane County. That is the city of Madison, and a number of surrounding cities (including Sun Prairie, Fitchburg, and Middleton), as well as several towns and villages.

Most knowledgable commentators know that the RTA is not coterminous with Dane County. I wish it were, but those who made the decisions did not heed my advice.

In any case, yesterday we discussed the proportional makeup of the RTA board in comparison to the population of the area served. Madison's mayor gets two of nine appointments. Madison's population is 70% of the district. It is not likely that the three appointments made by the governor and county executive will come from Madison. More likely, at least one of them will come from the towns in the RTA.

We received a comment yesterday from someone purporting to be David Blaska:

Paul, Madison has less than 50% of the population of Dane County. As I count the representation, Madison could well have 5 of the 9 members.

Mr. Whoeveryouare (I believe David Blaska is smarter than trying to pull such a distortion), why are you focusing on Dane County's population and Madison's population in proportion to Dane County?

We all know the RTA is not the same as Dane County. Why confuse people?