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WI: Week in review — The fiscal cliff that stole Christmas

By   /   December 7, 2012  /   News  /   No Comments

By M.D. Kittle | Wisconsin Reporter

MADISON — Ah, ‘tis the season for festive lights, caroling, the joy of children and looming financial destruction.

Nothing says happy holidays like the ‘fiscal cliff.’

The perfect storm of fiscal disaster and the political inertia surrounding it dominated political headlines in Wisconsin this week, with Gov. Scott Walker putting the Badger State in the national spotlight again.

GRINCH: Fiscal cliffs, contentious mining bills, and tricky tax pledges may feel like stealing Christmas this less-than-happy holiday season.

Not to be left out, the mirth and merriment of a contentious mining issue  again brought out the Grinch in state lawmakers. And then there was the gift that keeps on giving — the never ending business incentives chase in Wisconsin and beyond, as chronicled through a comprehensive New York Times investigation.

Twas two and a half weeks before Christmas …

Walker joined a bipartisan group of governors in Washington, D.C., to meet with President Obama about the so-called fiscal cliff, the double whammy of automatic tax increases and spending cuts if Congress and the president can’t come to terms on a debt-reduction plan.

“As we look to the federal government in the coming months, I hope we will receive the flexibility necessary to not only help solve the federal deficit, but also provide relief to the states,” Walker said in his weekly radio address Thursday.

He compared the federal government’s $16 trillion-plus debt to Wisconsin’s handling of its fiscal problems. Through controversial spending cuts and improved income, the state has turned a $3.6 billion shortfall into a budget projecting excess revenue.

Meanwhile, the Obama administration released some tough numbers for Wisconsin taxpayers should the nation plunge over the fiscal cliff.

* On Jan. 1, income taxes are scheduled to go up for 2.2 million middle-income Wisconsin fam lies, and tax cuts such as the expanded Child Tax Credit, the 10 percent tax bracket, marriage penalty relief, and the American Opportunity Tax Credit all expire.

  • Each American family’s taxes would automatically increase — including the 99 percent of Wisconsin families who make less than $250,000 a year and the 97 percent of American small businesses that earn less than $250,000 a year. A median-income Wisconsin family of four (earning $79,600) could see its income taxes rise by $2,200.

The president is pushing higher taxes on the nation’s wealthiest citizens, while Republicans demand more spending cuts to entitlement programs.

Speaking of taxes, the mighty Grover Norquist — he of the Americans for Tax Reform and its Taxpayer Protection Pledge — has of late seen some defectors from the agreement’s stringent demand that political candidates and incumbents oppose any and all tax increases.

Chief among those having a change of heart is U.S. Rep. Tom Petri. The Republican, who has served Wisconsin’s 6th Congressional District for more than 30 years, signed the pledge in 1988, two years after Norquist created it.

“He signed the tax pledge in 1988 and it was based on the situation at the time,” Petri press secretary Neil Wright said of his boss. “He had no idea that it would be considered to still be operative decades later. He wants to avoid tax increases, but ultimately the pledge that counts most for him is his Oath of Office.”

Pressed on whether that means Petri will vote for a fiscal cliff package that includes a tax increase, Wright said, “Yes.”

All six of Wisconsin’s GOP congressional representatives, including U.S. Sen. Ron Johnson, have signed the taxpayer pledge.

Some have backed away from its all-or-nothing language.

It’s beginning to look a lot like impasse

Democrats, in control — for now — of a legislative mining committee, this week rolled out a proposal that would give the state Department of Natural Resources two years to review a mining application.

It’s a step toward a compromise bill, Democrats said, that would replace a Republican-led bill aimed at streamlining the iron-ore mine permit process. That bill narrowly failed in the Senate last spring.

Critics, including lobbyist for Gogebic  Taconite, the company that has proposed a $1.5 billion mine in northern Wisconsin, say the Democrat’s plan falls well short of the GOP-led legislation they support. Opponents of the Republican bill charge the language has effectively been drawn up by the mining company and that it doesn’t include proper environmental safeguards.

While some Republicans like incoming Senate President Mike Ellis of Neenah, say they want a compromise bill to come out of the next session, the ball is firmly in the GOP’s court. As they did in 2011 when they  passed controversial legislation on party-line votes, Republicans hold a big majority in the Assembly and will regain an 18-15 advantage in the Senate when the new session launches next month.

Santa Claus keeps coming to town

Two-hundred-thirty-eight dollars.

That’s how much every man woman and child in Wisconsin effectively spends each year on incentives to lure businesses to or keep them in the Badger State.

Through a variety of public funding sources at the state and local levels, Wisconsin spends at least $1.53 billion per year on economic incentive programs, according to a data base assembled by the New York Times.

That $1.5 billion is a conservative number, according to Louise Story, the investigative reporter who led the comprehensive NYT series, United States of Subsidies, examining business incentives and their impact on jobs and local economies.

Nationally, the Times review found more than $80 billion in freebies are annually handed out to companies — from tax breaks to zero-interest loans to walking around money.

The investigation paints a picture of a Wild West-style shoot-out between states, throwing an ever-increasing pile of taxpayer money at businesses in pursuit of the economic development brass ring.

The big problem remains accountability. Local and state officials don’t always keep complete records of incentives and the jobs they are supposed to create.

The Wisconsin Economic Development Corp. of late has had to explain that of the $56 million loan portfolio it had previously lost track of, borrowers were late on $2.7 million worth of past due payments.

Another $2.4 million has been written off, $2.6 million has been forgiven and performance reports are pending for $392,000 more in state-forgivable loans, as of June 30. Many of the loans in question were made by the old Department of Commerce, which was replaced by WEDC, one of the first acts of Walker’s administration.

Last week, the Milwaukee Journal Sentinel reported that as of Nov. 2, a total of $12.2 million in loans were past due, $3 million more than previously uncovered by the newspaper.

“I don’t want to point any fingers at this point, but there’s definitely room for improvement,” said Rep. Dale Kooyenga, R-Brookfield.

Contact M.D. Kittle at [email protected]


M.D. Kittle is bureau chief of Wisconsin Watchdog and First Amendment Reporter for Watchdog.org. Kittle is a 25-year veteran of print, broadcast and online media. He is the recipient of several awards for journalism excellence from The Associated Press, Inland Press, the Wisconsin Broadcasters Association, and others. He is also a member of Investigative Reporters & Editors. Kittle's extensive series on Wisconsin's unconstitutional John Doe investigations was the basis of a 2014 documentary on Glenn Beck's TheBlaze. His work has been featured in Town Hall, Fox News, NewsMax, and other national publications, and his reporting has been cited by news outlets nationwide. Kittle is a fill-in talk show host on the Jay Weber Show and the Vicki McKenna Show in Milwaukee and Madison.