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Waiting for Prosperity

Waiting for Prosperity. Federal budget decisions and local communities. Investment bankers are back on their feet, but many Wisconsin workers are not so lucky. Wisconsin job growth has been the slowest in the U.S. Feds say Wisconsin leads nation in job loss Fox News April 25, 2012.

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Waiting for Prosperity

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  1. Waiting for Prosperity Federal budget decisions and local communities

  2. Investment bankers are back on their feet,but many Wisconsin workers are not so lucky

  3. Wisconsin job growth has been the slowest in the U.S. Feds say Wisconsin leads nation in job loss Fox News April 25, 2012

  4. Wisconsin budget cuts have left communities struggling to maintain services needed for growth Transportation Education Job training Highway maintenance

  5. Why the state cut so much funding Wisconsin has a structural debt – more money going out than coming in. WI cut taxes for 20 years, losing billions of dollars The 2008 recession tanked the state economy which decimated public income (sales tax, property tax & income tax declined due to more unemployed) Federal aid to the states has not been adequate to meet depth of needs created by Great Recession

  6. Tax cuts reduced the state revenue base “We cut taxes in the very first budget and haven’t stopped since. We cut taxes 91 times totaling $16.7 billion”. Governor Tommy Thompson: State of the State Address Jan 31, 2001 “Over $2 billion in tax cuts are either funded in the budget or phased-in over the next four years.” Governor Jim Doyle: Address to the State Senate on October 26, 2007 “In his first month, Walker focused on spending money through tax cuts adding about $117 million to the state's budget problem over the next two years” Associated Press Feb. 1, 2011

  7. Why isn’t the federal government doing more? Conflict in the Capitol: Fundamental differences on the role of government

  8. ARRA invested $787 billion into the economy $288 billion in tax breaks to: -- individuals ($237 billion) -- businesses ($51 billion) $499 billion in Investments: $144 billion in state aid ( mainly education and Medicaid) $111 billion infrastructure and science $81 billion for low-income households $59 billion for healthcare modernization $51 billion for education and training $43 billion for energy $ 8 billion in miscellaneous expenditures Source: Economic Policy Institute, Good Jobs First, recovery.gov

  9. The Recovery Act helped Wisconsin families Gave almost every employee a $500 tax break in 2009 and 2010 Saved 59,000 jobs Provided $153 million in support for laid off workers Supported health care for 1.3 million elderly, disabled and low-income families

  10. The Recovery Act saved or created over 3 million jobs – but the funding spent by March 2012

  11. Treasury and the Federal Reserve rescued the big banks & continue to provide them with cheap money Treasury (TARP +) Liquidity Loans for Banks and Financial Firms $292.4 B Toxic Asset Purchases 98.0 B Support for GSEs (Fannie Mae, Freddie Mac, FHA) 533.9 B IMF Expansion 100.0 B Total $1,024.3 B Federal Reserve Purchase of Mortgage-backed Securities $1,121.0 B Loans to Banks and Financial Companies 1,847.6 B Purchase of Toxic Assets 152.6 B Foreign Central Bank Currency Liquidity 582.7 B Total $3.7 trillion Source: As of Q1 2010; Financial Crisis Tracker www.prwatch.org – updated monthly

  12. Financial sector profits are back to pre-Recession levels Source: Bureau of Economic Analysis, National Income and Accounts Table, Corporate Profits by Industry, 2101

  13. But employment has been slower to recover

  14. Spending went up in response to the recession Source: Office of Management and Budget, 2012

  15. Federal deficit is now being used to justify cuts and refusal to aid state and local government Why is the US facing such a serious deficit ? • Massive tax cuts in 2001, • more in 2006 • Two wars fought on • borrowed money • The worst financial crisis • and recession since the • Great Depression

  16. Causes of the federal deficit

  17. Who Benefits Most from the Bush Tax Cuts?

  18. Investment vs Austerity for 2013 budget A Tale of two budgets:

  19. House of Rep./Ryan Budget Plan Make all Bush tax cuts permanent Maintain capital gains tax rate at 15%, no Buffet Rule Maintains current FICA cap, no increase above $110k Reduce tax rates for wealthy to 25% - average gain = $175,000 Reduce other tax rates to 10% Cut the formal corporate tax rate to 25% Eliminate taxes on overseas profits Repeal Alternative Minimum Tax and taxes in Affordable Care Act • Estimated Reduction in Revenues over 10 years: $10 trillion

  20. Impact of Spending Cuts in House/Ryan Budget • 17 million people lose access to health care • 21 million low-income Americans lose Medicaid within 7 years. • 8 million people lose Food Stamps • 2 million children removed from Head Start • 1.8 million women, infants, and children lose food and healthcare support (WIC) • Over 1 million students lose Pell Grant support

  21. New Investments in Obama FY2012 Budget

  22. New revenue in President’s FY2013 Budget Estimates are in billions, over ten years Repeal Bush Tax Cuts for Families Earning over $250,000 $849 Reinstate the 36% and 19.6% top tax rates 442 Tax qualified dividends as ordinary income 206 Reinstate the limitation on itemized deductions 123 Limit itemized deductions to 28 percent 584 Return Estate Tax to 2009 levels ($7 m, 35%) 143 Impose a Financial Responsibility Fee on Banks 71 Total revenue proposed: $1,561 trillion over 10 years One half of revenue used to pay down the deficit.

  23. The taxes corporations actually pay fell from 42 percent in 1974 to 13 percent in 2011 Source: Bureau of Economic Analysis and Congressional Budget Office

  24. Many very profitable corporations paying no federal taxes, despite record profits Source: Citizens for Tax Justice, 2011

  25. Public Wants Higher Taxes On Corporations Tax rates on corporations should be higher Democrats Independents Republicans Weak GOPs Mod/lib GOPs GOP women 80% 61% 38% 49% 57% 44% Tax rates on corporations should be lower Tax rates on corporations should be higher Tax rates on corporations should be keptat current rate

  26. In the past, both Democratic and Republican administrations taxed the wealthy at higher rates when the country needed revenue for public investments We asked those who benefited most from the American system to support the country - during wars and economic downturns Eisenhower Truman Wilson Roosevelt Johnson Harding Reagan Clinton Bush Jr. Bush Sr. Coolidge Afghanistan / Iraq Great Depression WWII Korean War Vietnam War Gulf War WWI Source: Internal Revenue Service, 2009

  27. Investment Austerity Crisis

  28. High tax rates on the wealthy do not slow economic growth Economic Growth Rates

  29. The Public Wants Higher Taxes On Corporations Tax rates on corporations should be higher Democrats Independents Republicans Weak GOPs Mod/lib GOPs GOP women 80% 61% 38% 49% 57% 44% Tax rates on corporations should be lower Tax rates on corporations should be higher Tax rates on corporations should be keptat current rate

  30. And Supports Taxing The Richest 2% Which one of these statements comes closer to your point of view? 1. We should raise income taxes on the richest 2% of households Stronglyagree 56% 63% Mixed feelings Strongly agree 29% 2. We should not raise income taxes on anyone at this time 32%

  31. In Order to Support Public Investments Increase fundsfor education, research, and transportation Favor 77% Strongly favor 40% Oppose 23% Cut fundingfor education, research, and transportation Favor 17% 83% Oppose Strongly oppose 49% 75% of voters believe that spending more on transportation, education, and research will strengthen our economy and create jobs.

  32. Most Voters Are Either “Pro-Tax” Or “Anti-Tax,” One-Third (Independents) Want To Tax The Rich But See No Need For Revenue Combined View: Taxing Rich/Need for Revenue Anti-tax voters:cut spending Pro-tax voters:Tax the rich/ Need more revenue Swing voters:Tax the rich/ cut spending

  33. Austerity story • Washington has a spending problem. • We are broke. • We are shackling our children with debt. • To create jobs, we need to lower taxes on the wealthy and on corporations, and undo the regulations that handicap business.

  34. Investment story We need to invest in America – create jobs, invest in education and transportation – and build a 21st economy for our children. Those who have done well in America, need to do well by America. We can’t afford to give tax breaks to profitable corporations and the wealthy. We can invest in the economy and pay down the deficit if everyone pays their fair share.

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