Paul Soglin: Waxing America

The Point of Caperton v Massy

Last week I made the point that the importance of the Caperton v Massy decision may be its indirect consequences.  To make the case meaningful, there must be disclosure as to who contributes to issue committees in judicial races. I wrote  The Real Problem Caperton v. Massey poses to WMC and the Right Wing Fronts. "...For the U.S. Supreme Court decision to have any meaning, there must be disclosure as to the source of the funds. WMC, All Children Matter, Americans for Prosperity, all will have to reveal the funders..."

Legal scholar, legal commentator, and law school professor (I am none of them) Rick Esenberg makes two critical suggestions in his recent post, What Caperton ought not to mean.

Esenberg argues that the facts are so unusual that this kind of occurrence is not likely to happen again. After all Massy poured millions into the West Virginia race dwarfing other contributions. No doubt the standards will vary.  A contribution of $25,000 will gain little notoriety in a $3 million race but it might be significant in a $100,000 campaign.

Esenberg also notes that "...In fact, one might just as well argue that there is no due process problem as long as the donors are anonymous. The judge has no idea where the money came from and, therefore, does not know who she is "indebted" to..." 

That, of course, is an enormous leap of faith. There are always efforts to build a firewall between the judicial candidate and the issue committee so they do not run afoul of the law. I am not about to accept the fact that the judicial candidate does not get information about who is raising money for the issue committee. The rest of us do not know, but I am not about to accept a denial from Ziegler or Gableman that they had no knowledge or suspicion as to where the millions of WMC Issue Committee funds were raised.

Raise and spend the money - but disclose.

Who Pays For WMC Watch

Someone with the initial 'B' wrote a comment to the post, The Real Problem Caperton v. Massey poses to WMC and the Right Wing Fronts:

I'd like to know an itemized list of where the money for WMC Watch is coming from. If you demand accountability from others, you have to have the integrity and honesty to list your donors as well. Pot calling the kettle black?

These guys just do not get it. But let us try one more time.

WMC and the other fronts like All Children Matter raise millions of dollars to be put into elections. The money goes to buy media -TV, radio and mailers. The money is spent to elect candidates by purchasing advertising in an election.

All the money Soglin Consulting LLC. and WMC Watch receives that is used to elect a candidate is revealed. The amount is zero. Nada. Zilch. Zip.

Soglin Consulting LLC does have income for doing research and monitoring WMC and the other right wing groups. That income is not spent on electioneering. None of that money is spent on electioneering.

A majority of Americans believe that the sources of money used to finance campaigns should be disclosed. No one is telling WMC it cannot participate in the electoral process within the law.

The only issue for WMC and the others, like Americans for Prosperity, is disclosure.

The Real Problem Caperton v. Massey poses to WMC and the Right Wing Fronts

Some are missing the point when it comes to understanding the implications of Caperton v. Massey. This is the recent United States Supreme Court case where the majority ruled that campaign contributions cannot undermine the impartiality of the courts.

As those who follow our successful WMC Watch program know, we focused not so much on Wisconsin Manufacturers and Commerce inserting itself into judicial races as much as the fact that the public does not know who is paying or who is authorizing the "Willie Horton" style ads that are the characteristic of WMC and its clones.

Writing at Shark and Shepard, Rick Esenberg notes, "WMC rarely has a personal stake in a case and, putting that aside, there were very few cases pending or imminent at the time of the election in which it could be said to have a more general interest."

True, Rick. And very little of the $2-3 million that went into the Ziegler or Gableman judicial races came from WMC, or for that matter its WIsconsin members.

But the money came from somewhere. It came from some big players. For the U.S. Supreme Court decision to have any meaning, there must be disclosure as to the source of the funds. WMC, All Children Matter, Americans for Prosperity, all will have to reveal the funders.

WMC, the Wisconsin Budget, and the Absence of Truth: Part II

Despite the WMC allegations, the modifications to Wisconsin taxation of capital gains taxes is not an attack on small business. It does increase taxes and correct some inequities in Wisconsin tax collections but the analysis of the impact of the tax shows struggling small business owners have little to worry about.

When WMC attacks the state budget it wraps itself in the flag of small business owners, even though their real intention to look out for the interests of the wealthiest Wisconsinites and to cripple government by limiting its resources.

Here is the impact in the change in capital gains taxes:

• For the average couple, filing jointly in Wisconsin, the change means a $27 increase or 8/10ths of one percent. I doubt that is going to break any small business. It it does, WMC can lower its membership dues by $28.

• At the high end, for that top 5% of income earners in the state, it will mean an increase of 1.6% or $246 annually. My guess is that most small business owners, told that they could have the top 5% of income in Wisconsin, would gladly pay the $246. I know I would.

• And if you make it into the top 1% of incomes in Wisconsin, the difference is $926. Chump change for those who can afford to send in thousand of dollars to elect Michael Gableman to the Wisconsin Supreme Court.

Last month, May 15 we posted we posted WMC, the Wisconsin Budget, and the Absence of Truth: Part 1

It was in response to a Wisconsin Manufacturers and Commerce (WMC) commentary Insight: Wisconsin at the Crossroads. where claims were made that increases in the capital gains taxes would effect retirement accounts and:

Under the populist guise of “soaking rich people,” the Governor’s budget would increase state taxation of capital gains by 50 percent — hitting small businesses who use their gains to create jobs and grow their companies.

Since the publication of that post WMC recanted and admitted the claims pertaining to retirement accounts were incorrect but it keeps up its bogus defense of small business.

Rick Berg on Wisconsin's Fiscal Problems. And Other Stuff.

Friday I scanned the Wisopinion.com list of posts and came across a link to Rick Berg's Isthmus article, Wisconsin's woes are part of grand scheme of fiscal irresponsibility - From bad to worse to worser still.

OK, this ought to be interesting. I read, I read, and I read and I read some more. At word 500 of his 750 word count he finally moved from California to Washington D.C. to Wisconsin where Berg queried:

..someone by now would have asked the governor a simple question: "What did we learn in May that we didn't already know in February?"...

...Or "Why was no action taken to correct the fiscal trajectory of the state before we got in this deep?"

Good questions Rick. The answer to the first one was that the estimated revenue collections from the sales tax, and also the income tax, were far lower than originally projected. In fact, from state to state, and county to county where there is a dependence upon the sales and income tax, these revenue projections were off regardless of the party in power.

I will take issue with the original estimates - far too bullish for me - but the error is shared by Republicans and Democrats alike.

The second question is even more tantalizing. I love the word trajectory. Far more invigorating than worser.

We have been on this trajectory for close to twenty years. It was authored and created by Republicans when they controlled the governor's office and most of the legislature.

Unfortunately in heady times, more tax loopholes were created, tax refunds were issued, more tax loopholes were created, and spending increased.

Democrats, short in numbers and often intimidated by the Republican mantra of the time, played along.

As the man said, "A candid examination of right-wing policies and the Democrats who play along and the horrid liberal  right- wing policies designed to assuage the moderates WMC but end up irritating everyone. And other stuff."

Wisconsin Club For Growth Talks Trash

Never content to discuss the issues, the Wisconsin Club for Growth came up with this gem on Wednesday. (If anyone can figure out a direct link, I would appreciate it.).

PROFESSOR PIMPS FOR HIGHER TAXES

In a brief appearance on Wisconsin Public Television, U.W. Applied Economics Professor Andrew Reschovsky advocated for 5 new tax increases to fix Wisconsin’s perpetually growing budget deficit.

For starters, Reschovsky wants to increase the capital gains tax which he predicts would not cause further harm to Wisconsin’s bleak employment picture....

Reschovsky would also like to increase the state income tax, because, and we're not joking, “it's a tax that's only paid by people that have jobs.” ...Yet he doesn't explain how state and local governments spending $1.3 billion a year for employee pension plans helps to educate children, or how wasting hundreds of millions of dollars on failed computer projects has helped Medicaid recipients.

Obviously these folks, taking a page out of Rush Limbaugh's play book, have no intention is contributing to the quality of public discourse.

Perhaps they would like to disclose the nature of the pension plans of their fattest wallets. It is interesting that they do not believe that public employees are entitled to a pension, especially when they took reduced pay checks to get the pension contributions.

Steve Nass Jumps the Shark

A press event was held Tuesday by a coalition of 65 Wisconsin organizations asserting that deep service cuts could destroy Wisconsin families and that increased taxes should not be ruled out. Among the sponsors were the Wisconsin Counties Association, the Wisconsin Council on Children & Families, the Institute for Wisconsin's Future, the Wisconsin Association of School Boards, ADAPT Wisconsin, League of Woman Voters of Wisconsin, Wisconsin Alliance of Cities, Disability Rights Wisconsin, the Coalition of Wisconsin Aging Groups, and the Wisconsin Catholic Conference. Their statement argued:

Families left jobless by the recession, people with disabilities, children, and seniors would be among those hit hardest by proposed budget cuts to state safety-net human service programs...

With so many people in need, this is the worst possible time to cut services.  Now more than ever, we must maintain the safety net and stay true to our Wisconsin values.  Many prominent economists have noted that making cuts during a recession hurts the economy even more than carefully targeted tax increases. 

“These cuts will have real consequences for our communities,” said Fond du Lac County Executive Allen Buechel. Buechel noted that because of the recession, Fond du Lac and other counties are already seeing increasing demand for FoodShare (food stamps), Medicaid, and other services for families in need. Most of these programs are funded by the state and federal government but administered by Wisconsin’s counties.

Buechel and other advocates for families, people with disabilities, children, and seniors warned that those harmful effects will only get worse if lawmakers and the governor try to balance the state’s $6.6 billion budget deficit solely by cutting state spending.

“We need to take a balanced approach that includes spending reductions and targeted revenue increases,” Buechel said. “We simply cannot cut our way out of this crisis.”

The group suggested some sources of revenue:

There are revenue options available that could generate over one billion dollars in the next years, substantially reducing the need for further cuts. The money would be raised from taxpayers with the greatest ability to pay. Options include restoring the estate tax, taxing capital gains like ordinary income, and increasing the top income tax rate by one percentage point more than Gov. Doyle proposed for households with incomes over $300,000. If these revenue options were enacted, the funds generated would almost fill the new budget hole, put people first and protect vitally important human services. 

  Once this group raised the dreaded idea that some taxes might need to be increased, the reactions were swift and of the knee-jerk reflex variety.  Typical was Republican operative Brian Fraley, writing for the WMC sock puppet MacIver Institute for Public Policy:

Especially in tough times, spending decisions must be prioritized. 'Needs' must get priority over 'wants.'  The problem with this loose affiliation of groups, now billed at over 60 organizations, is that they all would obviously prioritize their own niche need.  The only consensus displayed by this confederation is 'More, please.'

Reckless spending and questionable bonding has left Wisconsin's Budget in dire straits, just as the national economy went into the tank. Over-burdened taxpayers and people who have come to rely on government-provided human services will be hit the hardest as the Doyle Administration tires (sic) to right the economic ship after years of neglect.

Now, some of these groups may have a point about their need.

But they err when they assert that the 'tough' thing to do would be to raise taxes. The real tough thing to do would be to examine state spending and prioritize spending so that pressing, legitimate needs are met without increasing taxes.

That "increasing taxes" is the taboo that really should never be mentioned in earshot of the WMC and its allies.

Maybe that's why the event pushed Rep. Steve Nass' hot button and generated this over-the-top reaction:

  State Representative Steve Nass (R-Whitewater) reacted to a press conference orchestrated by the Wisconsin Counties Association calling for higher taxes in Wisconsin.  The Counties Association was joined by two other groups known for their support of unlimited tax increases and unchecked growth in government spending, the Wisconsin Council on Children and Families and the Institute for Wisconsin’s Future.  The groups are upset that Governor Doyle is only willing to raise taxes by nearly $3 billion.
 
     “The Wisconsin Counties Association is a group funded with taxpayer dollars and continues to use those funds to call for punishing families with all sorts of higher taxes.  Almost $3 billion in tax increases during a massive recession isn’t enough for the Counties Association.  These vultures want to squeeze every last drop of blood from the hard working people of this state,” Nass said. (emphasis added)

Vultures? The Wisconsin Counties Association, sure. But the Wisconsin Association of School Boards, ADAPT Wisconsin, League of Woman Voters of Wisconsin, Wisconsin Alliance of Cities, Disability Rights Wisconsin, the Coalition of Wisconsin Aging Groups, and the Wisconsin Catholic Conference? Huh?

Blood squeezing vultures? Don't vultures eat mostly carrion? Maybe Nass meant vampires. Starts with the same letter. It's always hard to tell exactly what Rep. Nass has in mind when he speaks.  Vampires, that's the ticket. The League of Woman Voters of Wisconsin are vampires.

And Nass probably wonders why his releases haven't been getting the media play they used to when his party ran the Legislature.

- Barry Orton

WMC, the Wisconsin Budget, and the Absence of Truth: Part II

The Wisconsin Manufacturer & Commerce (WMC) campaign to subvert the state budget is in full swing. Last week when we posted WMC, the Wisconsin Budget, and the Absence of Truth: Part I there was more to offend reasonable people than just the erroneous "the budget proposes a 50 percent increase in taxes on retirees’ IRAs and 401(k)s."

The "50 percent increase" sounded ominous and conclusion was wrong. What WMC failed to say was this:

• Depending upon how it is calculated, Wisconsin has the second or third lowest rate of taxation on capital gains in the United States.
• The proposed modifications with the ominous sounding "50 percent" will take Wisconsin to the seventh lowest rate of taxation.
• In Wisconsin, 72% of all capital gains taxes are paid by those who are in the top 5% income bracket.

WMC recanted but we still have concerns about the disastrous course they chart for our state.

Wrapped in the flag of the small business, and lower taxes, WMC fails to provide a context to its positions. The problem begins and ends with a flawed and basic assumption contained in the original WMC edict on the matter:

And if tax hikes in the middle of a recession aren’t chilling enough to slow economic growth, the Governor’s budget is crammed with policy changes that will add to the cost of doing business in Wisconsin, and undermine our competitiveness in an increasingly global marketplace...But the alternative road would be to enact laws that add to our business competitiveness so that we can grow our way out of the recession and put people back to work. (emphasis added)

Translated into language the rest of us understand, business competitiveness means "what is good for Wisconsin business as defined by WMC." That means lower taxes, less environmental regulation, and no legislation that protects consumers and workers.  In a word, they are selfish.

WMC presents an unarticulated premise, namely that is what is good for Wisconsin business is good for the state. Sometimes that is the case, but not always.

In the hands of WMC, business competitiveness is a slogan that is selfish. The reality is they got us into this mess by straggling state revenues with unreasonable tax cuts for the wealthy that left state coffers depleted in times of need.

WMC, the Wisconsin Budget, and the Absence of Truth: Part I

Wisconsin Manufacturers & Commerce (WMC), always quick to misstate the facts, pronounced earlier this week that:

Said another way — the budget proposes a 50 percent increase in taxes on retirees’ IRAs and 401(k)s.

This was in commentary posted by WMC President James S. Haney, Insight: Wisconsin at the Crossroads.

It  came at the conclusion of a larger flawed misrepresentation about the proposed changes in capital gains taxes.

I spoke who three different experts on taxation and retirement accounts. They all had difficulty understanding the WMC conclusion.

The first problem was interpreting the claim.

Is the allegation based on a complete analysis of the entire budget, or is it a conclusion based on the WMC accusations about the impact of the modifications to the way capital gains are taxed? 

In any case it is nonsense.

It is more alarmist chatter from people who are bright and know better and have no use for a rational discussion about the budget.

Earnings within a 401(k) or a conventional IRA are not taxed within the qualified plan. When the retiree withdraws the funds, pursuant to the IRS and Wisconsin tax regulations, the income is taxed in the same manner regardless of how it was earned. It makes no difference if it was a capital gain, or from dividends, or interest.

WMC must be held accountable for these misleading claims. If there was ever evidence in these difficult times that we need vigilant journalism, this is it.

WMC needs to provide proof that the claim is true - that the modifications in the capital gains taxation propose a 50% increase in taxes on retirees' IRAs and 401(k)s.

That is a generalization. WMC did not say 'some,' nor did they say 'one elderly man living in a cave outside of Verona.'

Reflections on the Election

Shirley Abrahamson's re-election to the Wisconsin Supreme Court was rewarding:

• She proved that you do not have to run from your core beliefs to win a state wide election to the court. Neither Louis Butler or Linda Clifford ran from their core beliefs but they both lost.
• Among the WMC, All Children Matter crowd, those who called for a full all-out negative television campaign against Abrahamson and successful Superintendent of Pubic Instruction candidate, Tony Evers, were vindicated. Clearly the anonymous bundled millions of dollars that were used by the issue committees in the fall 2008 and the previous two Supreme Court races in 2007 and 2008 was effective. The absence of these funds in this election was obvious. Expect WMC and its surrogates to come to the next gunfight well armed.
• Look for Randy Koschnick to return for another Supreme Court race. WMC and the Americans for Prosperity left him out on a limb, having encouraged him to run, promising money, and then sitting out the election. They will repay him if Dave Prosser does not seek reelection in 2011 with a full press, state wide effort.
• Shirley Abrahamson  proved that a non-partisan progressive candidate can put together a solid functioning campaign. Credit goes to  Heather Colburn, Rick Phelps, and the rest of the crew that managed and strategized the victory.

I was quite pleased that Bridget Maniaci won the Madison second aldermanic district race over incumbent Brenda Konkel. I was surprised, upon hearing the results, that I felt sad for Brenda in her defeat.

Other thoughts:

• Kathleen Falk, re-elected as Dane County Executive, proved she is mortal. While no longer the Teflon candidate, now measured by normal standards, her victory over Nancy Mistle was convincing and impressive.
• Biggest winner in Madison who was not running: Mayor Dave Cieslewicz. He got victories in the two most critical city council races where he made endorsements.
• Losers who deserve better and we hope to hear more from them: Hamilton Arendsen who lost in Madison's fifth aldermanic district to Shiva Bidar-Sielaff, and Stephen Ehlke, who was defeated by Julie Genovese for Circuit Court Judge, Branch 13. Congratulations to both of the victors.
• Sly, the morning maverick at WTDY AM, 1670, reminded us that in a discussion with Charlie Sykes he suggested that maybe right-wing Milwaukee radio, not Madison, is the 70 square miles surrounded by reality. He may have something there.