Category: Tax Policy

Saturday Soother – July 28, 2018

The Daily Escape:

Quote by John Maynard Keynes posted on the wall at the School of Economics, St. Petersburg State University, Russia – 2018 photo by Conor Morrissey

Welcome to the weekend. US GDP hit 4.1% for the second quarter of 2018. Trump was out there on Friday saying that the economic winning has only just begun, and that it’s due to the GOP tax cuts, and his moves to impose tariffs on our trading partners. He neglects to mention this year’s $1 trillion budget deficit that he and the GOP created. That’s what’s fueling our current growth, and it won’t last.

Speaking of tariffs, NPR reports that US ham and other pork products now face very high Chinese tariffs of between 62% and 70% after retaliatory tariffs by China. What happened next shouldn’t be surprising:

In recent weeks, the US Department of Agriculture has reported zero weekly export sales of pork to China….So our exports to the country have pretty much collapsed.

Does this mean cheaper bacon for America? As we have heard, “Trade wars are good and easy to win”. Apparently, the Stable Genius can bring home the bacon, but he can’t sell it abroad. Thoughts and prayers to all the pork producers who got conned.

US farm subsidies were about $23 billion last year. A year ago, the Trump administration proposed a $4.8 billion cut to that. Now he’s increasing the subsidy by a one-time $12 billion to make up for the effects of his tariffs.

OTOH, in the EU, farm subsidies for the 2021-2027 period are scheduled to be reduced by five percent to $420 billion. Maybe there will be some additional winning for our farmers, assuming we can export more to the EU. But the US isn’t above criticism: US dairy producers now have a whopping 1.39 billion-pound surplus of cheese; 4.6 pounds per American. Wrongo is doing his part to cut into the surplus, what about the rest of you?

And at the same time there is overproduction, there’s growing risk to our health due to overuse of antibiotics on dairy farms. America shouldn’t give up its food security and become dependent on other countries, but it’s time for clear(er) thinking about our agricultural policy.

The big news on Thursday night was that Trump’s former attorney, Michael Cohen, is now saying that Trump knew beforehand about the June 2016 meeting between his top campaign staff, his son and Russians promising dirt on Hillary Clinton. If true, it would add a lot to a case of Trump obstructing justice.

We’ll see if Mueller ever makes a case in the court of justice, vs. only in the court of public opinion.

Are you fed up yet with being told “what you’re seeing and what you’re reading is not what’s happening”? Or having Trump say that Putin is a good guy? Or, that North Korea is no longer a threat, that Canada is our enemy? Or, that some black football players hate America? Or, that immigrants are ruining everything? That our allies are out to get us, and there was no collusion!?

This takes Wrongo back to Cohen. Maybe he has the lead-up to the June meeting on tape as well.

In any event, we’ve closed the book on another hard week. Time to kick back, get soothed, and stare vacantly at all of the yard work we aren’t getting around to doing.

To help you relax, let’s open a cup of Martinez, California’s States Coffee & Mercantile’s new Reserve Cold Brew ($12/24oz. bottle). It is brewed from Tanzania beans, and is a ready-to-drink bottled black coffee. The brewer says it is richly sweet, with an umami undercurrent, and that adding whole milk mediates the umami impression, while amplifying the chocolate and spicy floral notes.

Wrongo says, go for it! Add ice and milk, and chug a couple to get your day started.

Now, settle back and listen to Ana Vidovic playing “La Catedral” by AgustĂ­n Barrios MangorĂ© on solo guitar. MangorĂ©, who died in 1944, was a Paraguayan virtuoso guitarist and composer, regarded as one of the greatest performers on the guitar. “La Catedral” is considered one of the most colorful, and difficult, works in the guitar repertoire. It is Barrios’ tribute to Bach:

Those who read the Wrongologist in email can view the video here.

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Monday Wake Up Call – June 4, 2018

The Daily Escape:

The Blue Grotto, Malta – photo by SingularET. Not to be confused with THE Blue Grotto on Capri, the hangout of the Roman emperor, Tiberius.

NewdealDemocrat over at Angry Bear raised a few excellent points about historically low unemployment and stagnant wage growth: (emphasis by Wrongo)

As I noted several weeks ago, even though we are at least closing in on full employment, the percentage of employers not raising wages at all has gone up in the last year:

(The blue line is the percentage of employers who have not increased wages. The grey shaded areas are recessions.)

There was more bad news from Axios , reporting on a meeting with the Dallas Federal Reserve about how big companies aren’t planning on raising wages at all:

The message is that Americans should stop waiting for across-the-board pay hikes coinciding with higher corporate profit; to cash in, workers will need to shift to higher-skilled jobs that command more income.

Troy Taylor, CEO of the Coke franchise for Florida, said he is currently adding employees with the idea of later reducing the staff over time “as we invest in automation.” Those being hired: technically-skilled people. “It’s highly technical just being a driver,” he said.

The moderator asked the panel whether there would be broad-based wage gains again. “It’s just not going to happen,” Taylor said. The gains would go mostly to technically-skilled employees, he said. As for a general raise? “Absolutely not in my business,” he said.

John Stephens, chief financial officer at AT&T, said 20% of the company’s employees are call-center workers. He said he doesn’t need that many. In addition, he added, “I don’t need that many guys to install coaxial cables.”

The Civilian Non-Institutional Population (those who the government tracks for jobs analysis), grew 21.3% between April 2000 and April 2018, yet, full-time jobs grew only 11.7%. This means that we can’t possibly be at full employment, despite the government’s headline unemployment rate of 3.8%, the lowest since 2000.

And if most employers are thinking like those at Coke and AT&T, wages won’t increase, despite the country’s nine-year economic recovery. If wages will not be increasing, where do employers think increased demand will come from? And, if companies are freezing wages during the supposed good times, what will happen when times turn bad?

Corporate policies are designed primarily to respond to the requirements of its management and its institutional shareholders, not employees. Employers’ profits have been increasing steadily, but the wealth keeps getting transferred upwards. And it’s the employers who are responsible for layoffs, and who use other methods to increase profits, such as automation, which leave the surviving workers in an increasingly poor negotiating position when it’s time for the annual raise discussion.

Do workers “deserve” an annual increase? By performing their jobs, workers produce value for the company. If a company is profitable, workers should get a cut, and if profits go up, so should their share.

If a particular individual isn’t performing well, then in an efficient/well-managed company, they’ll be replaced. If the job itself is not structured to produce effectively, in an efficient/well-managed company, the job will change. And if the company fails to do either, then in an efficient/well-managed company, the company will change, or it will fail.

It appears that with their paltry increases, workers are losing ground. Rents are rapidly rising in most cities. Wrongo saw a story about a New York City couple who moved from Brooklyn, NYC to Westport, CT for cheaper housing. It wasn’t many years ago that Westport was substantially more expensive than Brooklyn. In fact, it was once the home town of Paul Newman and Martha Stewart.

Many workers are fighting for a 2% raise. (Remember, 2.6% is the average, which means many workers are getting less than that). Factor in the rising rents, food costs, and health care insurance, and you can see that the average hourly worker has little chance of upward mobility.

Is this an inevitable outcome caused by Mr. Market? Not really. Our government has its thumb on the scale via tax benefits to corporations, combined with a Federal minimum wage that is impossibly low.

Time to wake up, America! We must stop letting corporations hoard the profits! Capitalism is institutionalized avarice. Its purpose is concentration of power. And one outcome is the spreading of economic misery.

To help you wake up, here is the Soup Nazi who, says, “No soup for you! Come back 1 year!” Just like many employers say when hourly employees ask for a raise.

Those who read the Wrongologist in email can view the video here.

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Public Schools Are Hiring Immigrants As Teachers

The Daily Escape:

Another view of spring flowers in the Tejon Pass, CA – May, 2018 photo by Dianne Erskine-Hellrigel

While it appears that the teacher walkout in Arizona is over, red state education cuts are bad enough that teaching jobs are now being outsourced. The NYT reports that many US schools are filling low-paying teaching jobs with immigrants:

Among the latest states hit by the protests is Arizona, where teacher pay is more than $10,000 below the national average of $59,000 per year. The Pendergast Elementary School District…has recruited more than 50 teachers from the Philippines since 2015. They hold J-1 visas, which allow them to work temporarily in the United States, like au pairs or camp counselors, but offer no path to citizenship.

The NYT reports that according to the State Department, more than 2,800 foreign teachers arrived in America last year through the J-1 visa program, up 233% from about 1,200 who landed here in 2010.

Are public school teachers a new class of migrant workers in America? Is teaching becoming another category of “jobs Americans won’t do” in the Trump era?

Arizona has a reported shortage of 2000 teachers state-wide. This is a direct result of Arizona’s low teacher salaries, (43rd in the nation), and poor funding for public education. More from the NYT:

According to the State Department, 183 Arizona teachers were granted new J-1 visas last year, up from 17 in 2010.

Trump opposes immigration because he says it takes away American jobs. Yet, here we have an immigration program designed precisely to take away American jobs, and it is growing, because there is no alternative but higher taxes, which is not an acceptable solution to Republicans.

Poor school funding and low teacher salaries are a direct result of tax cuts that then require government expense cuts. Local governments can’t engage in deficit spending for very long without ruining their bond rating, so when tax revenues go down, salaries are frozen, maintenance is deferred, and expenses are slashed.

Wrongo’s home town has this very issue in front of us. Our student population has declined by about 11% over the past few years, but the town’s school budget has steadily increased, despite the declining student census. When the budget goes to voters in a few days, it is likely to be voted down, because so few people are willing to see their taxes increased.

This should be a wake-up call to all of us. Tax cuts do not create revenue growth in our towns, states or the country, regardless of what the faux economists say about trickle-down economics.

There is no “teacher shortage” in America. Do we say there is a shortage of Corvettes because we’ll only pay the dealer $25k for a brand new one? We are seeing across many job categories that fewer skilled individuals are willing to work for the low pay offered in both the private and the public sector.

It seems like a simple concept. The people who you entrust your children to for learning and personal growth should earn an adequate wage, and be able to remain members of the middle class.

If we denigrate a profession enough so that people are wary of investing their time and money to get an education and meet the needs of the job, we will have a teacher shortage. Hopefully, this won’t be the case and aspiring teachers continue to come forward with a willingness to learn the profession – click here to learn about online courses for teachers if you want to pursue this as a career. It would be a travesty if we put off our nation’s young people from seriously looking into teaching as an option for a career.

If we then hire foreigners who are willing to do the work for peanuts, we will complete the job of making teaching a low income profession.

This is a plan designed by the right and their hedge fund billionaire buddies to privatize and ultimately, break public education.

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Sunday Cartoon Blogging – April 22, 2018

Last week, the nation’s six big Wall Street banks posted record, or near record profits in the first quarter. They can thank the Republican’s tax cut. The tax cut saved them $3.59 billion last quarter:

While higher interest rates allowed banks to earn more from lending in the first quarter, the main boost to bank came from the billions of dollars they saved in taxes under the tax law Trump signed in December. Combined, the six banks saved at least $3.59 billion last quarter.

Before the tax law change, the maximum US corporate income tax rate was 35%. Banks historically paid among the highest tax rates, because of their US-centric business strategies. Before the Trump tax cuts, these banks paid 28% to 31% of their yearly income in corporate taxes.

Last week’s results showed how sharply those rates have dropped. JPMorgan Chase had a first-quarter tax rate of 18.3%, Goldman Sachs paid 17.2%, and the highest-taxed bank of the six majors, Citigroup, had a tax rate of 23.7%. Bank executives at the big six firms have estimated that their full-year tax rates will be about 20%-22%. If you annualize the quarterly savings, $3.6 billion is about $14 billion a year for the six largest banks in America.

Does anybody think that the savings will go to customers in the form of reduced service fees? Or employee raises? Nope, Bank of America announced in December that they will be spending $5 billion to buy back their shares.

This is a permanent annual loss of revenues for America. If the GOP stays in power, you know exactly what they plan to cut to make up these billions. On to cartoons.

Trump’s week looked like this:

(But you can’t fix FOX.)

The two guys who were arrested had a bad day. Maybe Starbucks shouldn’t say “shot”:

Rumors that you will be fired will cause anxiety:

(Maybe John Boehner can hook him up.)

What Syrians might say about Trump’s cruise missile attack:

Dems’ leadership isn’t up to the 2018 task:

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Teacher Strikes Are Pointing the Way to Change in 2018

The Daily Escape:

Baltimore Oriole in crab apple tree – 2014 photo by Wrongo

Happy (or unhappy) tax day!

Yesterday, we talked about two red state revolutions led by teachers who are demanding better pay and funding to address educational needs. We also talked about the shameful reactions of the governors of Kentucky and Oklahoma to the demonstrators.

But the governors are not the only local officials with tin ears. Valerie Vande Panne, writes in AlterNet:

In Oklahoma, the Oklahoma Education Association (OEA) is the primary teacher’s membership organization. It recently announced that the strike is over. But, Oklahoma teachers continue to strike, and are seeking a new union that would actually represent their interests. Meanwhile, legislators are seeking ways to punish the striking teachers, and have accused them of bussing in protesters, and local police call the teachers “terrorists.”

2018 is a gubernatorial election in Oklahoma, in addition to seats in the House and Senate. There are rumblings in the state to replace every single elected official this year.

Wrongo is indebted to Ms. Vande Panne’s article for the facts about Oklahoma below.

Despite the common view that Oklahoma is Republican red, most voters in Oklahoma are registered Democrats or are unaffiliated. Bernie Sanders won the 2016 presidential primary. Bernie got more votes in the 2016 primary than Trump. A third of Oklahomans are African Americans, Native Americans, Latinos, or are of mixed race.

And the demographics are changing rapidly: In Guymon, a small town in the Oklahoma panhandle, just north of the Texas border and hours from the nearest shopping mall, 37 languages are spoken in the public school system of 3,000 students.

Everyone knows that Oklahoma should be a wealthy state: Oil, gas, and coal are kings of the economy, but decades of sweetheart deals have left the state paying those industries more than those industries pay the state.

There seems to be a lot of red state unrest right now.

Are people finally getting fed up? Is the right wing’s mantra of too much government and not enough freedom starting to lose its grip? Has social media ended that mass media’s control of the narrative so much that opinion can easily be mobilized?

The strikes in West Virginia and Oklahoma are “wildcat” strikes. The rank and file basically decided to advocate for their own interests, and when “leadership” in WV (and apparently in OK) made an agreement with the legislature that was less than what the strikers had demanded, the rank and file defied its own union “leaders”.

These states have right-to-work laws, and few protections for labor, but when the teachers act together, they have political power. Without strong unions, labor has nothing to lose, if they mobilize enough of their rank and file. The union leadership has for years cozied up to local politicians, and now seems to have lost control over their own rank and file.

These reliably “red” states have a very different political history than we might expect. During the late 19th and early 20th centuries, Oklahoma, Kansas and much of the Confederate South were hotbeds of populist uprisings, from the Farmers’ Alliance and the Peoples’ Party. These parties even elected Members of Congress, and Senators. The Peoples’ Party merged into the Democratic Party in 1896.

This sets the stage for the 2018 elections. Those who want change on the local or national level shouldn’t run simply as anti-Trump. They need to address local issues that are resonating, like teacher pay and school funding. At the root of these issues is the continued cutting of taxes for corporations and the wealthy. Without revenues, schools cannot be improved, and teachers’ pay will stagnate.

Fight for equal pay for the same jobs, work to eliminate the barriers to voting, and end gerrymandering.

Run on these issues. See what happens.

 

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Sunday Cartoon Blogging – April 1, 2018

Hopefully, none of you brought any of these cute little babies home for Easter. Wrongo’s parents once brought home some baby chicks for the holiday. The family dog ended their stay very quickly. Just don’t do it!

Easter falls on April Fool’s Day. We’ve been invited to a family party. We’re hoping someone’s really home when we get there. The men’s college basketball championship is sandwiched around April 1st, and Wrongo will be watching. Sadly, the UConn women’s basketball team lost in their final four for the second year in a row.

We endured another week of non-stop foolery by our elected representatives, and this week’s cartoons show just that.

There will be new census questions, but its doubtful that these will make the cut:

The new questions come with a few new tools:

The Roseanne show reboot was cause for concern by Dan:

Trump has the best irony. Trump should pay more and so should Amazon:

We didn’t hear Bob Dylan at the #March for our lives, but Congress should have:

Trump’s legal problems actually have an easy solution:

Trump’s careful diplomatic approach will certainly win the trade negotiation with China: (from the Economist)

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It’s Past Time To Make Changes To Our Economic System

The Daily Escape:

2011 Art piece by Steven Lambert

Does capitalism work for you? Well, you certainly work for capitalists. The real question is whether capitalism still provides economic security to all of us.

Steve Lambert, the artist who designed the sign, engaged with people across America over a three-year period about whether capitalism was still working. He learned that people were split about 50/50 on the premise:

People usually first react to the piece by falling back on the comfort of abstractions and repeating popular myths. For example, the true/false dilemma is much easier to resolve when the only alternatives to capitalism are presumed to be failed communist dictatorships. It’s also much easier to pretend that the only “true” definition of capitalism is the kind of free-market extreme idolized by thinkers like Ayn Rand and Friedrich Hayek

Or thinkers like Paul Ryan, Mitch McConnell and Donald Trump. Lambert learned that people generally agreed with the concept, assuming “you are willing to work hard, or work smarter”:

I’ve always found the formulation “work hard, work smart” disturbing. When you invert the expression, it implies: if capitalism doesn’t work for you (that is, if you’re poor, out of work or have a demeaning job), it’s your fault. To put it more bluntly, you are lazy and stupid.

If we ignore the fact that until recently, wages have stagnated for decades, and that what most people earn in a lifetime is insufficient to cover a modestly comfortable retirement, maybe you can say that capitalism is working.

We have been told that federal budget deficits impair our ability to grow the economy, or to put food on our individual tables. In fact the opposite is true. This idea makes us believe that our ability to earn a living requires some degree of suffering by other Americans.

As Claire Connelly says: (emphasis by Wrongo)

“We can’t afford it” has been the proverbial comforter of opponents of the welfare state harking back to the Clinton / Blair days….This argument has been used as an emotional crutch for people who don’t want to admit that they’re comfortable with homelessness and unemployment….If their bottom line is stable.

This lie sets us against each other, implying that the well-being of everyone else is a direct threat to our own. And who wins? The beneficiaries of the newly lowered taxes, corporate America and its management teams. More from Connelly:

Do we really want to live in a world….Where most people will be lucky to earn minimum wage, or wait for months to get paid. If at all. A world where we are not entitled either to a job, or an education, or affordable health care or a social safety net?

We are likely to see a $1.3 Trillion budget pass both houses of Congress this week. It is deficit spending run wild. Wrongo knows that both parties believe that deficits don’t matter, and to a great extent, he agrees.

But these deficits are larger than they had to be, due to the massive corporate and wealthy individual tax cuts the Republican House and Senate just passed. And it’s not only the size of the deficits, it’s the mis-allocation of funds by our neo-con overlords.

This is what capitalism has delivered for America: More than 45 million of us (14.5%) live in poverty. In 2016, another 49.5 million Americans were age 65 and older, and half of them (24.75 million) had yearly income of less than $23,394.

That adds up to about 70 million (22%) of Americans.

One idea that is gaining attention is a Jobs Guarantee program. The Center on Budget and Policy Priorities (CBPP) recently released a paper arguing for a national jobs guarantee through a national infrastructure bank. The CBPP plan envisions an infrastructure bank that would fund vital projects and ensure that jobs are well-paid. The government would use this job-creating ability to expand jobs in sectors where the market won’t currently invest, like a national high-speed internet network.

Government guarantees of employment aren’t radical. They aren’t communism, or socialism. We did it before with the New Deal. It reinforces traditional American values around work, and it builds the tax base by taxation on the jobs created. Here’s a final quote from Steve Lambert:

My favorite response to the sign was from a 17-year-old high school student in Boston. She said: “Capitalism can’t work for everyone. If it did, it wouldn’t be capitalism.”

This is where the conversation needs to go: We have to change an economic system that fails so many.

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What Lessons Can Dems Take From Conor Lamb’s PA Victory?

The Daily Escape:

Lambs are carried by a donkey in a side-saddle carrier, moving to their summer feeding grounds, Lombardy Italy – 2018 photo by Elspeth Kinneir. Lamb riding on a donkey. A metaphor for how Conor Lamb was carried to victory in PA?

This week, at least, the Lamb carried the donkey in PA. The LA Times thinks that Conor Lamb’s victory is due to the failure of the GOP’s tax cuts to mean much on the ground in PA:

The most dangerous outcome for Republicans in Tuesday’s special House election was not the prospect of a Democrat taking over one of their seats. It was the shrugging off by voters of the party’s biggest legislative achievement: the tax cut measure that Republicans hoped would be their major campaign message as they head toward a turbulent midterm election.

More:

Though the popularity of Trump’s tax plan has grown since it was passed last year, it stalled as an election issue in Pennsylvania, leading Republicans to shift away from it late in the campaign in search of another topic to energize supporters of state legislator Rick Saccone.

If Republicans can’t run on their $Trillion tax cut, they may be well and truly screwed. Some right wing outlets are saying that Lamb is really a Republican sheep in Democrat’s clothing, but that’s simply political spin. Let’s take a look at Lamb’s positions.

He took a few Republican positions:

  • Opposed to House Minority Leader Nancy Pelosi becoming Speaker
  • Supported gun ownership
  • Supported Trump’s tariffs

He was a Democrat on others:

  • Opposed to the Trump tax cuts
  • Supported Obamacare
  • Supported labor unions

On abortion, Lamb was Obama-like: Personally opposed, but wants it to be safe and legal.

His positions resonated. Public Policy Polling’s exit polling indicated that health care was another top priority issue to voters in his district. And that voters believed Lamb’s views were more in step with theirs, saying Lamb better reflected their views by 7 points (45% to 38%) over Saccone. It didn’t hurt that voters in this heavily Republican district disapproved of the Republican efforts to repeal the Affordable Care Act by 14 points (53% to 39%).

Tax cuts were the Republican’s early message in the district, but Business Insider reports that ads mentioning the tax law by Saccone’s campaign dropped from nearly 70% of all messages in the first two weeks of February, to less than 1% by early March.

Is the Lamb strategy for victory a road map for Democrats? The NYT thinks so. They report that Lamb has given the Democrats a road map for Trump country.

Wrongo disagrees. Each congressional district has its own issues that will energize its voters. What works in one will not necessarily work in all. Perhaps Conor Lamb’s strategy would work in borderline red districts, or in purple areas. But what may be a winning argument in PA wouldn’t work on the ground in LA.

National Democrats wisely chose to keep a largely low profile in this election, except for visits by Joe Biden, who many consider a local. The GOP did not stay away. Trump, Pence, and Donald Jr. all visited the district. Towards the end of campaigning, the GOP even tried saying that Lamb was “not one of us”.

That failed, because Lamb is clearly a local. His family is well-known. He’s part of a local Democratic dynasty. And after college and then the Marines, he came back to become a federal prosecutor.

When we think about broad messages that will resonate everywhere, it should be that Trump ran as a populist, driving what Nancy Tourneau has called “the politics of resentment”.

But Trump has governed just like any conventional conservative Republican.

That may explain why Democrats who were willing to roll the dice with him in 2016 didn’t respond to messages about the GOP’s tax cuts in the PA-18 election.

Maybe, people feel they gave Trump a chance, and now, they’re saying that they didn’t like the results.

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Rural Towns Have Polluted Water. Will Trump’s Plan Fix It?

The Daily Escape:

Valley of Desolation, Eastern Cape, South Africa – 2018 photo by Ottho Heldring

The Trump infrastructure plan asks states and cities to partner with private equity to build their roads, bridges and water treatment plants. As the WSJ explains, private equity says they are not interested. Apparently, they don’t want to build things; they prefer to purchase existing assets: (emphasis by Wrongo)

Fund managers say they are mainly looking for assets that are already privately owned—such as renewable energy, railroads, utilities and pipelines—and not the deteriorating government-owned infrastructure like roads and bridges that helped attract the capital in the first place. To the extent they are interested in public assets, the focus is more likely to be on privatizing existing infrastructure than on new development—the heart of Mr. Trump’s push.

One area where private equity may think they have a role to play is with America’s threatened water systems, which are existing assets. When people think of water crises, they think of places like Flint, Michigan, because a failed urban water system affects huge numbers of people. If you’re worried about the quality of your drinking water, take a look at https://waterfilterway.com/.

But most health-based violations of drinking-water standards occur in small towns. Of the 5,000 US drinking-water systems that racked up health-based violations in 2015, more than 50% were systems that served 500 people or fewer.

But when we add up the total number of people affected, rural America’s drinking-water situation is an order of magnitude greater than Flint’s. Millions of rural Americans are subject to unhealthy levels of contaminants in their drinking water, largely from agriculture and coal mining.

And as the rural/urban economic gap grows, this basic inequality won’t get fixed unless something radical is done to improve water quality in rural America.

Agriculture is the culprit in many rural towns, and unhealthy levels of nitrates is the primary cause. Nitrogen-based fertilizer runs off of farmlands and into the nation’s fresh water. The health impact of ingesting nitrates is serious:

  • Two-thirds of communities with nitrate levels at or above 5 ppm are in 10 states where agriculture is big business.
  • Almost three-fourths of communities whose drinking water is at or above the legal limit are found in just five states – Arizona, California, Kansas, Oklahoma and Texas.

Remediation costs vary, but a 2012 report from the Center for Watershed Sciences at UC Davis gives a yardstick. They say that a community of just under 5,000 people could incur annual costs ranging from $195,000 to $1.1 million to build and operate an ion exchange system, while a reverse osmosis system would cost from $1.1 million to $4 million a year. A $4 million system would cost $800 per citizen.

These costs may be far beyond the ability of small towns to finance. What is really going on here is another case of “socializing losses”. Farms are polluting the water, and the town is left to pay for remediation. And the big agriculture lobbies are making sure that their members avoid any liability for poisoning their towns.

We know that we haven’t been able to fund Flint’s water remediation with public funds. How will we deal with the rest of America’s polluted drinking water? It isn’t likely that towns and cities can do much more. Some cities have debt capacity, the capital markets may be willing to lend to them. However, hostility to new taxes on the local level means that issuing new debt is difficult politically for mayors and town councils.

Trump’s infrastructure plan opens up the Clean Water State Revolving Fund (CWSRF). This federal financial assistance program for water infrastructure projects would allow private firms to both manage and repair water infrastructure at taxpayer’s expense. Previously, only states and municipalities could access the fund.

Funneling CWSRF funds to private water system providers means our most vulnerable towns will have to turn over basic infrastructure to for-profit companies. And those companies will charge for the privilege. On average, private for-profit water utilities charge households 59% more than local governments charge for drinking water, an extra $185 a year.

When your water is poisoning you, should you agree to raise water rates to fix it, or do you expect to get pure water for the money you are already paying?

What if you are unable to move to a place where the water is safe?

If your water system will cost $ millions for a town of 500, how can it possibly be paid for, except by public funding?

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Thinking About Trump’s Infrastructure Plan

The Daily Escape:

Lincoln Highway – photo by Andrew Smith. The Lincoln Highway was the first highway to connect the east and west coasts of the USA in 1916. It was a combination of newer and older roads of varying quality.

Eisenhower’s National Highway System had its origin in a road trip that he took across the country in 1919, 33 years before he was elected president. From Atlas Obscura:

Lt. Colonel Dwight D. Eisenhower traveled with the military in a motor convoy across the country, from DC to San Francisco… This was one of the first major cross-country road trips, and it planted the idea in Eisenhower’s mind that the federal government could and should make improving US highways a priority…

In 1919, America’s network of roads that Eisenhower traveled on was, for the most part, still rudimentary.

In 1916, the Lincoln Highway had been designated, but it wasn’t a proper highway. The Eisenhower convoy mostly traveled the Lincoln Highway, with some detours. The motorcade included more than 80 vehicles. It left Washington DC on July 7, 1919, and took seven and a half hours to reach its first stop at Frederick, Maryland, a distance of 46 miles. That’s where Eisenhower joined the group.

That 6 miles an hour pace is what the convoy would average in its drive across the country. It took them 62 days to make it to San Francisco.

In 1919, usable roads hardly existed west of Indiana. When it rained, vehicles got stuck in soft spots on the roads, up to their hubs, and had to be pushed out. In Nebraska, they found sand to be the enemy. One day, it took seven hours to pull all the trucks through 200 yards of quicksand.

Elected in 1952, Eisenhower hoped to build the highways that he had talked about for years. The Federal-Aid Highway Act of 1944 had authorized the construction of a 40,000-mile “National System of Interstate Highways”, but hadn’t provided funding to pay for the construction.

Eisenhower’s new Federal-Aid Highway Act passed in June 1956. It authorized the construction of a 41,000-mile network of interstate highways spanning the nation. It also allocated $26 billion to pay for them. The federal government would pay 90% of the costs of construction, using a national fuel tax.

Thereafter, that great American institution, the road trip, could begin. Today, the Interstate Highway System is more than 46,000 miles long.

Flash forward to 2018. We know public spending peaked at 2.2% of inflation-adjusted GDP in 2009 and has fallen ever since. By late last year, it was down to about 1.6%.

President Trump said while introducing his new infrastructure plan:

It is time to give Americans the working, modern infrastructure they deserve.

Reading Trump’s plan, it is clear he thinks we deserve nothing. Disagree? Start by looking at Trump’s budget proposal. Jared Bernstein says:

The budget proposes $200 billion over 10 years, but as budget analyst Bobby Kogan tweeted: “The budget cuts $178 billion in
transportation [not including cuts to] water, broadband
and energy. This means [Trump is] giving $200 billion with his left hand but taking away that much with his right.”

$20 billion a year doesn’t go very far. The plan shifts at least 80% of the investment in infrastructure to private investors, states, and cities. This is problematic, because Trump’s tax plan significantly lowers the amount of federal taxes that state and local taxpayers can deduct from their tax bill. This will make it much harder for states and cities to raise the revenue to support infrastructure spending, or any other public needs.

The LA Time’s Michael Hiltzik says it best: (brackets and emphasis by Wrongo)

The whole package should mostly be seen as [typical of] the Trump administration’s approach to governing: programs with virtually no rationale and without adequate financing, along with a commitment to getting government off the backs of the people so Big Business can saddle up.

This is Right Wing ideology at work. They passed a huge tax cut in order to “starve the beast” that is the US government, while at the same time, they will “feed the beast” via $trillions of deficit financing. Cities and states are not flush with cash for new infrastructure projects, and the private sector won’t do anything that reduces shareholder return, so Trump’s plan is dead on arrival.

As for financing America’s roads, increase fuel taxes. Let drivers amortize the building costs, a system Eisenhower used. Add tolls where we must. Make the traffic move faster and safer.

Trump should be like Ike: Pay for our infrastructure!

Claw back some tax cuts. Cut defense spending. Pay for purer water for our towns and cities. Pay for better schools, a smart electric grid, and better ports and airports.

Pay for them all with federal dollars.

(Wrongo is indebted to the tywkiwdbi blog for covering the Eisenhower road trip on Lincoln’s birthday)

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